Your directors have pleasure in presenting their Seventy Sixth AnnualReport on the business and operations of the Company together with the Audited Statementof Accounts for the year ended 31st March 2019.
The Hon'ble National Company Law Tribunal (NCLT) Mumbai Bench hasapproved the Composite Scheme of Arrangement and Amalgamation (Scheme) involving theinternal restructuring of the various businesses of the Company and its two wholly ownedsubsidiaries viz. Tatanet Services Ltd. (TNSL) and Nelco Network Products Ltd.(NNPL). Thenecessary steps for obtaining approvals from Department of Telecommunications (DoT) arebeing taken after which the Scheme will become effective. In the first phase of theScheme Nelco will transfer its two businesses to NNPL on a going concern basis by way ofslump sale. These businesses are (a) ISSS and (b) sale and maintenance of VSAT and relatedequipment. In the second phase TNSL will amalgamate with Nelco. Post the saidrestructuring the VSAT Communication service business will be in Nelco which is thelisted parent entity and the related equipment business will be in NNPL. The VSAT licensewill be transferred from TNSL to Nelco.
1. Financial Results
Pending the DoT approval the Scheme has not been given effect to inthe financial results for the year ended 31st March 2019.
| || || || || ||(र in lakhs) |
|Sr. No. ||Particulars ||Standalone ||Consolidated |
| || ||FY 2018-19 ||FY 2017-18 ||FY 2018-19 ||FY 2017-18 |
|A ||Continuing Operations || || || || |
|a ||Net Sales / Income from Other Operations ||3357 ||3190 ||19101 ||14961 |
|b ||Operating Expenditure ||2914 ||3064 ||15502 ||12448 |
|c ||Operating Profit ||443 ||126 ||3599 ||2513 |
|d ||Add:- Other Income ||245 ||290 ||428 ||494 |
|e ||Less:- Finance Cost ||439 ||478 ||738 ||593 |
|f ||Profit before Depreciation and Tax ||249 ||(62) ||3289 ||2414 |
|g ||Less :- Depreciation / Amortization/ Impairment ||93 ||61 ||1296 ||949 |
|h ||Less : Minority Interest ||- ||- ||- ||- |
|i ||Add : Share of Profit of Associates ||- ||- ||9 ||57 |
|j ||Net Profit / (Loss) after Minority interest and Share of Profit of Associates ||156 ||(123) ||2002 ||1522 |
|k ||Exceptional items ||- ||- ||- ||- |
|l ||Current / Deferred Tax Expenses ||(779) ||- ||(227) ||311 |
|m ||Net Profit / (Loss) after Tax Minority interest and Share of Profit of Associates from Continuing operations ||935 ||(123) ||2229 ||1211 |
|B ||Discontinuing Operations* (being transferred to Wholly Owned Subsidiary) || || || || |
|n ||Profit from Discontinuing operations (before exceptional item and tax) ||1192 ||1274 ||- ||- |
|o ||Add:- Exceptional Profit ||- ||- ||- ||- |
|p ||Tax Expenses ||355 ||174 ||- ||- |
|q ||Profit after Tax from Discontinuing operations ||837 ||1100 ||- ||- |
|C ||Profit after tax from Total operations ||1772 ||977 ||2229 ||1211 |
|r ||Add : Other Comprehensive Income/ (expenses) ||(21) ||(18) ||(22) ||(21) |
|s ||Total Comprehensive Income ||1751 ||959 ||2207 ||1190 |
* Operations that are being transferred to Nelco Network Products Ltd.(Wholly Owned Subsidiary) as a part of internal restructuring.
Based on the Company's performance the Directors are pleased torecommend for approval of the Members a dividend of 15% (र 1.50 per share ofर10/- each) for FY2018-19.
3. Financial Performance and the state of the Company's affairs
On a Standalone basis your Company achieved revenue र 3357Lakhs in FY 2018-19 from Continuing Operationsof as against र 3190 Lakhs in FY2017-18. On a total operation basis your Company achieved revenue of र 12632 Lakhsin FY 2018-19 as against र 9363 Lakhs in FY 2017-18. In FY 2018-19 the Companyearned a net profit after tax of र 1772 Lakhs from total operations as againstprofit of र 977 Lakhs in FY 2017-18. This profit was higher due to highermargin in service income of VSAT division reduction of losses in Automation & Controldivision and reduction in interest expenses.
Profit from Discontinuing Operations are calculated considering thedirect cost of those Operations and interest on identifiable loans that are beingtransferred under the Scheme. The entire corporate overheads are considered part ofContinuing Operations.
On a Consolidated basis revenue from Operations र 19101 Lakhsin FY 2018-19 as againstwas र 14961 Lakhs in FY 2017-18 i.e. increase by 28%over previous year.
The segment wise performance (Consolidated) from total operations forthe year was as follows:
The revenue from Automation & Control segment was र 361 Lakhsin FY 2018-19 as against र 243 Lakhs in FY 2017-18. The segment loss was र 284Lakhs in FY 2018-19 as against loss of र 340 Lakhs in FY 2017-18. This segment isbeing operated on a restricted mode and currently completing only its existing contractualobligations.
The revenue from Network Systems segment was र 18740 Lakhs in FY2018-19 as against र 14718 Lakhs in FY 2017-18. The segment profit was र4119 Lakhs in FY 2018-19 as against profit of र 3633 Lakhs in FY 2017-18. TheCompany added 23844 VSATs during FY 2018-19 and the installed base is approximately71500 as on 31st March 2018.
The Company earned a net profit after tax of र 2229 Lakhs fromtotal operations as against profit of र 1211 Lakhs in FY 2017-18. There were nomaterial changes and commitments affecting the financial position of the Company whichoccurred between the end of the year under review and the date of this Report.
The Consolidated revenue (% wise) from each segment was as under:
| ||FY2018-19 ||FY2017-18 |
|Network Systems comprising of VSAT and SATCOM business ||98.11% ||98.38% |
|Automation & Control ||1.89% ||1.62% |
F urther information in detail has been given in the ManagementDiscussion & Analysis which forms a part of this report.
The Board of Directors has not proposed any amount for transfer toreserves for the year ended 31st March 2019.
5. Subsidiary and Associate Company
5.1 The Company has two wholly owned subsidiaries viz. Tatanet ServicesLtd. (TNSL) & Nelco Network Products Ltd.(NNPL) and one Associate Company i.e. NelitoSystems Ltd. (NSL).
TNSL holds the VSAT License as well as the Inflight & MaritimeCommunication (IFMC) licence issued by Department of Telecommunication (DoT). The Revenueof TNSL for FY 2018-19 was र 9827 Lakhs against र 8788 Lakhs for FY2017-18. The Profit after tax was र 468 Lakhs against र 211 Lakhs in theprevious year. The profit was higher mainly due to increase in overall turnover of theCompany against increase in cost.
5.2 The organizational and operational structure would be simplified onimplementation of the Scheme of Arrangement and Amalgamation with the VSAT communicationservice business vesting in the Company the flagship listed parent entity and the relatedhardware business vesting in NNPL. This would result in the recurring revenue from VSATcommunication service being in the Company and the revenue from sale of hardware includingVSAT equipment being in NNPL. The enhanced net worth of the Company after the Scheme iseffective will improve its ability to bid for larger projects and pursue biggeropportunities. Also there will be increase in overall efficiency in terms of utilizationof assets employees etc.
5.3 During the year the National Company Law Tribunal("NCLT") approved the scheme vide its order dated November 2 2018 (the"Scheme"). As required by the NCLT Order the Company intimated the Registrar ofthe Companies ("RoC") about the approval of the Scheme by NCLT stating thatDepartment of Telecommunications ("DoT") approval has been pending. The RoCrecords were however updated to reflect the Scheme as effective and Company as"amalgamated" with the Nelco Limited. Based on legal advice the Company hasapproached NCLT to direct the RoC to amend their records to reinstate Company to itsearlier status and cancel the effect of the Scheme with immediate effect. The hearing onthis matter is ongoing. The Scheme will be given effect to in the financial statements onreceipt of all necessary approvals.
5.4 The Board of Directors of the Company at its meeting held on 21stSeptember 2018 has decided to exit from Nelito Systems Limited (an Associate Company).Considering the intent of the Board this investment in the Associate has been classifiedas Assets classified as held for sale' in accordance with IND AS 105. Thisdecision has an impact on the way Company account for its investment in Associate. TheCompany has stopped recognising its share of profit/ loss in Associate and valued itsinvestment in Associate at cost or realisable value whichever is lower.
There has been no major change in business of the aforesaid Companies.Also none of the existing Subsidiaries or Associates of the previous year ceased to beSubsidiary/ Associate of the Company during the year under review. The report on theperformance and financial position of each of the Subsidiaries and Associate Company hasbeen provided in Form AOC-1.
The Policy for determining material subsidiaries of the Company hasbeen provided in the following link: http://www.nelco.in/pdf/Policies/Policy%20for%20determining%20Material%20Subsidiaries.pdf
6. Directors and Key Managerial Personnel
In terms of Section 149 of the Companies Act 2013 ("Act")the Members at the AGM held on 28th January 2015 appointed the followingIndependent Directors of the Company till 27th January 2020:
Ms. Hema Hattangady
In accordance with the requirements of the Act and the Articles ofAssociation of the Company Mr. R.R. Bhinge Director retires by rotation at the ensuingAGM and is eligible for re-appointment. Additional information and brief profile asstipulated under SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 (Listing Regulations) and Secretarial Standards - 2 on General Meetings with respectto Mr. Bhinge being a Director seeking re-appointment is annexed to the Notice of AGM.
On the recommendation of the Nominations HR & RemunerationCommittee the Board of Directors of the Company approved the appointment of Mr. RahulShah as an Additional Director effective from 21st July 2018 who holds theoffice till the ensuing AGM. His reappointment has been placed for approval of the Membersat the ensuing AGM scheduled on 24th July 2019.
Mr . S.Ramakrishnan resigned from the Directorship with effect from stJuly 2018 to facilitate restructuring of the21 Board as per the advice of The Tata PowerCompany Ltd. the Holding Company. The Board places on record its deep sense ofappreciation of the valuable contribution to the Company made by Mr. Ramakrishnan duringhis tenure as a Board member.
In terms of Section 203 of the Act the Board has designated thefollowing persons as Key Managerial Personnel of your Company:
Mr. P.J. Nath Managing Director & CEO
Mr. Uday Banerjee Chief Financial Officer
Mr. Girish Kirkinde Company Secretary & Head-Legal
During the year under review Nine Board Meetings were held. Forfurther details please refer Report on Corporate Governance.
The Company has received declarations from all the IndependentDirectors confirming that they meet the criteria of independence as prescribed under theAct and Listing Regulations.
The Company has adopted Governance Guidelines on Board Effectiveness.The said Guidelines covers aspects related to composition and role of the Board Chairmanand Directors Board diversity definition of independence Director's termretirement age and Committees of the Board. It also includes aspects relating tonomination appointment induction and development of Directors Director Remunerationsubsidiary oversight Code of Conduct Board Effectiveness Review and mandates of BoardCommittees.
7. Annual Evaluation of Board Performance and Performance of itsCommittees and Individual Directors.
As required under the Act and Listing Regulations the Board hascarried out formal annual evaluation of the performance of the Board its Committees andof individual directors.
The following process was adopted for Board Evaluation:
- F eedback was sought from each Director about his/her views on theperformance of the Board covering various criteria such as degree of fulfilment of keyresponsibilities Board structure and composition establishment and delineation ofresponsibilities to various Committees effectiveness of Board processes information andfunctioning Board culture and dynamics quality of relationship between the Board and theManagement and efficacy of communication with external stakeholders. The Nominations HRand Remuneration Committee (NRC) then discussed the above feedback received from all theDirectors.
- Based on the inputs received the Chairman of the NRC also made apresentation to the Independent Directors at their meeting summarizing the inputsreceived from the Directors about Board performance and of the Chairman. The performanceof the non-independent non-executive Directors and Board Chairman was also reviewed bythem.
- P ost the meeting of the Independent Directors their collectivefeedback on the performance of the Board (as a whole) was discussed by the Chairman of theNRC with the Chairman of the Board. It was also presented to the Board and a plan forimprovement was agreed upon.
- Every statutorily mandated Committee of the Board conducted aself-assessment of its performance and these assessments were presented to the Board forconsideration. Areas on which the Committees of the Board were assessed included degree offulfilment of key responsibilities adequacy of Committee composition and effectiveness ofmeetings. Feedback was provided to the Directors as appropriate. Significant highlightslearning and action points arising out of the evaluation were presented to the Board.
7.1 Committees of the Board
The Committees of the Board focus on certain specific areas and makeinformed decisions in line with the delegated authority. The following substantiveCommittees constituted by the Board function according to their respective roles anddefined scope:
Audit Committee of Directors
Nominations HR and Remuneration Committee (NRC)
Stakeholders Relationship Committee
Corporate Social Responsibility Committee
Executive Committee of the Board
Details of composition terms of reference and number of meetings heldfor respective Committees are given in the Report on Corporate Governance which forms partof the Annual Report.
The details of the familiarization programs for Independent Directorsare disclosed on the Company's website and the web link for the same is:https://www.nelco.in/pdf/Policies/programme-for-familiarisation-development-of-board-members-fy2018-19.pdfThe Board has laid down separate Codes of Conduct for Non-Executive Directors and SeniorManagement personnel of the Company and the same are posted on the Company's website.All Board Members and Senior Management personnel have affirmed compliance with the Codeof Conduct. The Managing Director & CEO has also confirmed and certified the same. Thecertification is reproduced at the end of the Report on Corporate Governance.
7.2 Remuneration Policy for the Directors Key Managerial Personnel andother Employees.
In terms of Section 178(3) of the Act and Part D of Schedule II ofListing Regulations the NRC is responsible for formulating the criteria for determiningqualification positive attributes and independence of a Director. The NRC is alsoresponsible for recommending to the Board a policy relating to the remuneration of theDirectors Key Managerial Personnel and other employees. In line with this requirementthe Board has adopted the Policy on Board Diversity which is reproduced in Annexure-Iforming part of this report and Remuneration Policy for Directors Key ManagerialPersonnel and other employees of the Company is available on the websites of the Companyat https://www.nelco.in/pdf/Policies/Remuneration%20Policy%20for%20Directors%20KMP%20and%20Other%20employees.pdf.
Silent Features of this policy are as under:-
The philosophy for remuneration of Directors Key Managerial Personnel("KMP") and all other employees of Nelco Ltd. ("company") is based onthe commitment of fostering a culture of leadership with trust. The remuneration policy isaligned to this philosophy.
Independent Directors ("ID") and non-independentnon-executive directors ("NED") may be paid sitting fees (for attending themeetings of the Board and of committees of which they may be members) and commissionwithin regulatory limits.
Overall remuneration should be reflective of size of the companycomplexity of the sector/ industry/ company's operations and the company'scapacity to pay the remuneration.
The NRC will recommend to the Board the quantum of commission for eachdirector based upon the outcome of the evaluation process which is driven by variousfactors including attendance and time spent in the Board and committee meetingsindividual contributions at the meetings and contributions made by directors other than inmeetings.
The extent of overall remuneration to Managing Director("MD")/ Executive Directors ("ED")/ KMP/ rest of the employees shouldbe sufficient to attract and retain talented and qualified individuals suitable for everyrole.
The remuneration mix for the MD/ EDs is as per the contract approved bythe shareholders.
In addition to the basic/ fixed salary the company provides to otherKMPs and employees with certain perquisites allowances and benefits to enable a certainlevel of lifestyle and to offer scope for savings and tax optimization where possible andalso performance linked bonus.
Remuneration is payable to Director for services rendered inprofessional capacity and which NRC is of the opinion that the director possessesrequisite qualification for the practice of the profession.
There is no change in the aforesaid policies during the year underreview
Except the Performance Linked Payment (PLP) which is a part of his Costto the Company (CTC) the Managing Director &CEO has neither received any commissionfrom the Company nor from its Holding or Subsidiary Company.
7.3 P articulars of Employees and Remuneration
The information required under Section 197(12) of the Act read withRule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided in Annexure - II (A) forming part of this Report.
The information required under Rule 5 (2) and (3) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in theAnnexure II (B) forming pat of this Report. In terms of first proviso to Section 136 ofthe Act the Report and Accounts are being sent to the Members excluding the aforesaidAnnexure II (B). Any Member interested in obtaining the same may write to the CompanySecretary at the Registered Office of the Company. None of the employees listed in thesaid Annexure II (B) is related to any Director of the Company.
8. Significant and material Orders passed by the Regulators orCourts or Tribunal
There were no significant and material orders passed by the Regulators/ Courts or Tribunal which would impact the going concern status of the Company and itsfuture operations. Further no penalties have been levied by Regulators during the yearunder review.
8.1 Sales Tax matters of Tatanet Services Ltd. (TNSL) Wholly OwnedSubsidiary
Maharashtra Sales Tax Department (Dept.) has issued orders against TNSLdemanding payment of MVAT on the entire satellite communication services provided by TNSLclaiming "The facility to use the transponders is a property is commercial in natureand goods and therefore transaction of lease of facility to use the transponders is adeemed sale and accordingly MVAT is applicable." The orders issued are for financialyear 2006-07 to 2010-11 and aggregate amount under dispute is र 38.36 Crores. TheCompany filed writ petition in Bombay High Court for the financial year 2008-09. The saidWrit Petition was disposed by the Bombay High Court and referred to Maharashtra Sales TaxTribunal (MSTT) to decide the above-mentioned matter.
MSTT in its order dated 29th April 2017 allowed the appealof TNSL and set aside the demand of the Dept. made for financial year 2008-09. Howeverthe Dept. has filed appeal in Bombay High Court against the order passed by MSTT for theyear 2008-09.
Since the facts of the above matter are similar for other financialyears viz. 2006-07 2007-08 2009-10 and 2010-11 the Joint Commissioner of Sales Tax(JCST) has passed order against the Company demanding payment of MVAT for these financialyears also. The Company has filed Appeals to MSTT against the said orders of JCST.
8.2 Income Tax matters of Nelco Ltd
Income Tax Department has reduced certain liabilities of र 1893Lakhs while computing long term Capital Gain on a business sold under slump sale forAssessment Year 2011-12 due to which a Tax demand of र 631 Lakhs has been raised onthe Company. The said liabilities are not directly related to the businesses sold and assuch the Company has gone in appeal against the demand. During the year Company hasreceived order from CIT(Appeals) rejecting claims of the Company and confirming taxdemand. Company is in process of filling appeal against order of the CIT(Appeals).
8.3 Corporate Governance
Pursuant to Listing Regulations and relevant provisions of the Act aManagement Discussion and Analysis Statement
Report on Corporate Governance and Auditors' Certificate areincluded in the Annual Report.
8.4 Vigil Mechanism
The Company believes in the conduct of the affairs of its constituentsin a fair and transparent manner by adopting highest standards of professionalismhonesty integrity and ethical behaviour. In line with the Tata Code of Conduct (TCOC)any actual or potential violation howsoever insignificant or perceived as such would bea matter of serious concern for the Company. The role of the employees in pointing outsuch violations of the TCOC cannot be undermined.
Pursuant to Section 177(9) of the Act a vigil mechanism has beenestablished for Directors and employees to report to the management the instances ofunethical behaviour actual or suspected fraud or violation of the Company's code ofconduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of theCompany to approach the Chief Ethics Counsellor (CEC) as well as the Chairman of the AuditCommittee of the Company.
9. Risks and Concerns
The Company is faced with risks of different types all of which needdifferent approaches for mitigation. Details of various risks faced by the Company areprovided in Management Discussion & Analysis.
9.1 Risk Management Framework and Internal Financial Controls
Risk Management framework: The Company and its Subsidiary have RiskManagement framework to inform the Audit Committee and Board members about risk assessmentand minimization procedures and periodical review to ensure that Executive Managementcontrols risks by means of properly designed framework.
The Company has also established a risk management policy based onwhich risks are identified and assessed across its businesses. The Risk ManagementCommittee which comprises of the CEO CFO Senior Lead Business Analytics and RiskManagement and key business and operations heads ensures that existing and future riskexposures of the Company are identified assessed quantified minimized managed andappropriately mitigated. The Company's framework of risk management process providesclear basis for informed decision making at all levels of the organization on an ongoingbasis having duly evaluated likely risks and their mitigation plans being controllableand within risk appetite of the Company. There are no elements of risk which in theopinion of the Board may threaten the existence of the Company.
Internal Financial Control and Systems: The Company has an internalcontrol system commensurate with its size scale nature and complexity of itsoperations. The Company has appointed independent Chartered Accountant firm as InternalAuditors who audits governance risks management and internal controls and processes. TheInternal Auditors present their findings to the Audit Committee. Testing of InternalFinancials Controls also form a part of internal audit schedule. The scope and authorityof internal audit is defined in Audit Committee Charter adopted by the Company.
As per the Audit Committee Charter adopted by the Board and as perprovisions of Section 177 of the Companies Act 2013 (the Act) one of the responsibilitiesof the Audit Committee is to review the effectiveness of the Company's Internalcontrol system including Internal Financial Controls. Internal controls have beendiscussed in detail in Management Discussion & Analysis in this report.
Process Robustness: The Company assesses the process maturityand robustness for its key functions on the following:
Process documentation and workflow
Process measures and controls (manual/system driven) includingmaker - checker mechanisms
Performance tracking for key measures/metrics
Initiatives taken for process improvements
The Company also carries out internal audits and process deep-divesthrough external agencies to establish and improve efficiency and effectiveness ofprocesses in various key functions. In addition the statutory auditors carry out an auditat quarterly intervals and these reports have not reported any adverse findings.
10.1 Corporate Social Responsibility
Your Company has formed a CSR committee comprising of the followingDirectors: Mr . R. R. Bhinge Chairman Mrs. Hema Hattangady and Mr . P. J. Nath
As the Company during the year under review has not earned net profitcalculated as defined in Section 198 of the Act. it is not mandatorily required to spendany amount on CSR activity. However as a good Corporate practice it has taken a projectwhich involve installing 15 VSATs in identified schools in some remote areas which willbe used for downloading educational content during off-peak hours at night. The Companyhas formulated the policy on CSR which is available on Company's websites:https://www.nelco.in/pdf/Policies/CSR%20Policy.pdf.
10.2 Safety Health and Environment:
Nelco places utmost importance to the Safety agenda. An office FireEvacuation Drill is regularly conducted covering all staff working at its Mahape office tocheck emergency preparedness. Existing safety policy system roles site safetyinspection and action planning statutory compliances & records counsel to SafetyCommittee & safety promotional activities were taken up with consultation ofOccupational Health Safety & Environment (OHSE) Management consultant. Office safetydrawing documentation was completed and training & awareness sessions were conductedperiodically. Inspection of Mahape office was conducted by OHS consultant and initialobservations were communicated for discussion with Safety Committee and action on gapsmonitored on periodic basis. The Occupation Health Safety and Environment Policy wasrevised and safety processes & procedures drafted. Safety standards are maintainedacross all office locations. During National Safety Week safety training awarenesssessions and promotion campaigns were conducted for Nelco employees contract staffsuppliers & customers. Free health check-up camp through local hospital regularhealth consultation through company doctor and annual health checkup through medicalservice provider were organised for employees. Proactive initiatives have been takentowards energy conservation and reduction of carbon footprint like conversion of officelighting at Mahape office from conventional to LED Air Conditioner Refrigerants from R22to R32 tree plantation etc.
11. Human Resources
As on 31st March 2019 the Company had employee strength of166. During the year under review 41 employees were recruited and 24 employees wereseparated.
V arious people related initiatives were undertaken by the Companyduring the year to enable organizational growth through people care and development whichinclude:
Employee Engagement: Higher employee engagement leads to higherbusiness productivity and Nelco is cognisant of the fact. It conducted the annual employeeengagement survey for all permanent employees. It utilises multiple platforms like VoicesEngagement Action Planning Open House Employee Connect HR Connect Manager connectSkip level meetings weekly review meetings like AHM (All Hands Meet) that encourage opencommunication amongst all employees and allow them to voice their opinion in the Company.
Reward & Recognition schemes like individual/ team quarterlyperformance awards HoD spot awards Nelco Innovista awards and peer recognition arevarious ways that the Company recognizes employee contributions.
Engagement activities are planned based on a calendar and implementedon monthly basis covering all locations. Employee recreation and team-building activitieslike sports festivals picnics and team outings are also planned across locations toensure employee engagement. As per Maternity Benefit Act 2017 creche facility has beencreated at Mahape premises to enable new mothers to manage office work as well as childcare as required by them.
Capability Development: Company focuses on capability building of bothfunctional managerial and behavioural skills. Innovation in working is encouraged throughcompetitions like Reimagine Nelco Tata Innovista and Tata Business Leadership Awardswhere employees showcase creative ideas/actions in process or technology. Training needsare primarily sourced through performance appraisals with respective managers and throughdynamic business requirements. Training programmes are facilitated by both internal andexternal trainers. . Focused group training was organised to address specific emergingbusiness needs like key account management & solutions selling. e-learning solutionwas implemented on anytime-anywhere basis to provide instant access to training content toemployees and increase training coverage. Effectiveness of training programmes aremonitored to ensure achievement of training objectives. Employees were also encouraged totake up relevant educational courses on self-learning basis.
Performance & Talent Management: Employee performance is monitoredthrough rigorous goal setting and audit quarterly performance dialogues and developingmanager capability on performance coaching. Continuous dialogue is encouraged betweenmanagers and their teams. Career discussions with high performers and new promotees wereorganised. Performance enablement programme was organised for employees whose performancedid not meet expectations. Performance coaching workshop for people managers wasorganised. Development Centre was conducted at TMTC Pune focusing on evaluation anddevelopment of all its senior leaders based on Tata leadership competencies.
Succession Planning: Successors and caretakers have been identified forcritical positions in the Company to ensure business continuity. Based on the outcomedecisions to hire capable person for specific positions have also been recommended.
The Company has an instituted Policy on Prevention of Sexual Harassmentwhich seeks to govern guidelines and grievance redressal procedures as required underSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.As per policy a Complaints Redressal Committee/ Internal Complaints Committee has beenformed at Nelco with inclusion of an external lady member. POSH theme training wasconducted for employees and allied resources. No complaints related to POSH have beenreceived in the current year.
12. Credit Rating
During the year CARE Ratings has reaffirmed ratings for long term andshort-term bank facilities of the Company to CARE A/Stable and CARE 1 respectively.
13. Loans Guarantees Securities and Investments (LGSI)
Details of LGSI covered under the provisions of Section 186 of the Act2013 are given in Annexure III forming part of this report.
|14. Foreign Exchange Earnings and Outgo. || ||(र in lakhs) |
|Particulars Standalone ||Year ended 31st March 2019 ||Year ended 31st March 2018 |
|Foreign Exchange Earnings ||44.31 ||215.39 |
|Foreign Exchange Outflow ||5367.24 ||2302.88 |
At the 74th Annual General Meeting (AGM) the Membersappointed Price Waterhouse Chartered Accountants LLP Chartered Accountants (ICAI FirmRegistration No. 012754N/N500016) as Statutory Auditors to hold the office for the periodof five years from the conclusion of 74th AGM till the conclusion of 79thAGM of the Company to be held in the year 2022 on such remuneration as may mutually agreedbetween the Board of Directors of the Company and the Auditors.
16. Auditors' Report
The Auditors Report does not contain any qualifications reservationsor adverse remarks. The consolidated financial statements of the Company have beenprepared in accordance with Indian Accounting Standard 110 Consolidated FinancialStatements Indian Accounting Standard 28 Accounting in Associates and Joint Ventures andother applicable Indian Accounting Standard prescribed under section 133 of the CompaniesAct 2013 read with Companies (Indian Accounting Standards) Rules 2015 and otherprovisions of the Companies Act 2013 as amended from time to time. The Notes to theAccounts referred to in the Auditors' report are self-explanatory and therefore donot call for any further clarification under section 134(3)(f) of the Act.
During the year under review neither the statutory auditors nor thesecretarial auditors has reported to the Audit committee under Section 143 (12) of theCompanies Act 2013 any instances of fraud committed against the Company by its officersor employees the details of which would need to be mentioned in the Board's report.
17. Maintenance of cost records
As specified by the Central Government under sub-section (1) of section148 of the Companies Act 2013 the Company has made and maintained cost accounts andrecords.
18. Secretarial Audit Report
M/s. Bhandari & Associates Practicing Company Secretaries wereappointed as Secretarial Auditors to conduct Secretarial Audit of records and documents ofthe Company for the year ended 31st March 2019. The Secretarial Audit Reportconfirms that the Company has generally complied with the provisions of the Act RulesRegulations and Guidelines etc. The Secretarial Audit Report is given in Annexure - IVforming part of this report. There are no remarks qualifications or reservations in theSecretarial Audit Report. The Company confirms compliance with the requirements ofSecretarial Standards 1 and 2.
19. Conservation of Energy and Technology Absorption
The information on conservation of energy and technology absorptionstipulated under Section 134 (3) (m) of the Act read with Rule 8 of The Companies(Accounts) Rules 2014 is given in as Annexure V forming part of this report.
20. Related Party Transactions
All related party transactions entered during the year under reviewwere on an arm's length basis and were in the ordinary course of business. There wereno other materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel and Body Corporate(s) which had a potentialconflict with the interest of the Company at large. Accordingly the disclosure of theseRelated Party Transactions as required under Section 134 (3) (h) of the Act in Form AOC 2is not applicable for the year under review. The Directors draw attention of the Membersto Note no. 38 to the Financial Statements (Standalone) which sets out related partydisclosures.
In line with the requirements of the Act and the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Company has formulated aPolicy on Related Party Transactions and the same is available on the Company'swebsite: https://www.nelco.in/pdf/Policies/Related%20Party%20Transaction%20Policy.pdfDisclosures of transactions of the listed entity with any person or entity belonging tothe promoter/promoter group which hold(s) 10% or more shareholding in the listed entityin the format prescribed in the relevant accounting standards for annual results.
The Company has not accepted any deposits from the public during theperiod under review.
22. Extract of Annual Return
P ursuant to Section 92 of the Act and Rule 12 of The Companies(Management and Administration) Rules 2014 the extract of Annual Return in Form MGT-9is given in Annexure-VI forming part of this report. The Annual Return in Form MGT-7 forthe year ended 31st March 2018 filed with ROC is uploaded on the Company'swebsite: https://www. nelco.in/pdf/disclosure-of-events/annual-return.pdf.
23. Directors' Responsibility Statement
Based on the framework of internal financial controls and compliancesystems established and maintained by the Company work performed by the internalstatutory cost auditors secretarial auditors and external consultants and the reviewsperformed by Management and the relevant Board Committees including the Audit Committeethe Board believes the Company's internal financial controls were adequate andeffective during the period under review. Accordingly pursuant to Section 134(5) of theCompanies Act 2013 the Board of Directors to the best of their knowledge and abilityconfirm that: a) in the preparation of the annual accounts for the period ended stMarch31 2019 the applicable accounting standards had been followed along with properexplanation relating to material departures; b) they have in the selection of theaccounting policies consulted the Statutory Auditors and have applied them consistentlyand made judgments and estimates that are reasonable and prudent to give a true and fairview of the Company for the period ended 31st March 2019 and of the profit ofthe Company for that period; c) they have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) they have prepared the accounts for theperiod under review on a going concern basis; e) they have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; f) they have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively.
On behalf of the Directors of the Company I would like to place onrecord our deep appreciation to our Shareholders Customers Business Partners VendorsBankers and Financial Institutions. The Directors are thankful to the Government of Indiaand the various Ministries and Regulatory Authorities. We appreciate and value thecontributions made by all our employees.
| ||On behalf of the Board of Directors |
| ||R.R. Bhinge |
| ||Chairman |
|Mumbai 27th April 2019. || |