TO THE MEMBERS OF NETWORK LIMITED
Your Directors have pleasure in presenting their 30th Annual Report ofthe Company together with the Audited Accounts of the Company for the Financial Year ended3Tst March 20T9.
The Financial Highlights of the Company for the financial year ended on31 March 20T9 as compared to the previous year are summarized below: -
| || ||(Rs in Lacs) |
|Particulars ||31st March 19 ||31st March 18 |
|Revenue from operations ||503.14 ||512.70 |
|Other Income ||0.99 ||0.98 |
|Total Expenditure ||545.89 ||582.12 |
|Profit / (Loss) before Tax & Exceptional Items ||(41.76) ||(68.44) |
|Exceptional Items ||- ||- |
|Profit / (Loss) after Tax & Exceptional Items ||(41.76) ||(68.44) |
|Other Comprehensive Income || ||(538.56) |
|Total Comprehensive Income for the period ||(41.76) ||(607.00) |
During the financial year under review the company has incurred a lossof Rs. 41.76 lac against the loss of Rs. 68.44 lac in previous year. The management ofyour company expects further improvement in the current year with the growing economicscenario and market conditions.
During the year under review there was no change in the nature ofbusiness of the Company. The Company thrust is on trading and investment in commoditiesforex and derivative products. This will be supplemented through more research andqualitative techniques for decision making.
In the financial year 2018-19 Indian economy witnessed some degree ofslowdown especially in the second half of the fiscal year. The full financial economygrowth was 7% as per government estimates. The year 2018-19 was marked by a lot ofdisruption and dislocations in the financial markets. Economic parameters were mixed forthe year with full year Index of Industrial Production at three year low of 3.6% (vs. 4.8%last year). Inflation (Consumer Price Index) has hovered between 2% to 3% for most part ofthe year with pushes and pulls from food and fuel and services in different directions.While the macro remains relatively stable for FY 2018-19 the micros showed distinct signof slowing albeit with some divergences. So while indicators like auto sales and consumerdurable growth slowed down sharply cement sales and steel production grew smartly. Forthe past five years the growth has averaged 7.2% which is largely the average growthsince the start of the new millennium. However within the overall Gross Domestic
Product (GDP) it's the manufacturing growth which has been the mostencouraging with full year growth expected to be around 7.3%. Agriculture remains aconcern area with full year growth expected to languish around 2.7% only. Investmentgrowth showed sign of pick up indicating pick up in the capex cycle. As far as investmentsflows are concerned Foreign Institutional Investors turned net buyers for the year forequity (+$ 1 billion) largely on account of primary market investments and ForeignPortfolio Investor inflows in the last quarter of the fiscal year and where the sellers inthe debt markets (- $ 7 billion). The Domestic Institutional Investors however pumped upin a sizeable commitment upwards of Rs. 70000 crore.
Amongst various large equity markets India was the best performingequity market (Nifty up 15%) followed by Brazil (up 12%) and US (up 7%) whereas SouthKorea (down 13%) Germany (down 5%) and Italy (down 5%) were amongst the worst performers.As far as Indian equity markets were concerned large cap indices fared much better thantheir mid- cap and small- cap counterparts (Nifty FY returns of 14.9% vs Nifty Mid-cap FY2018-19 returns of -2.7%). Indian bond yield however had a mixed year rising to nearly8.2% in the first half of the fiscal year and then cooling off to 7.5% in the second half.The Indian equity market is expanding in terms of listed companies and market capwidening the playing filed for brokerage firms. Sophisticated products segment is growingrapidly reflected in the sleep rise in growth of derivative trading. With the increasingretail penetration there is immense potential to tap the untapped market. Growingfinancial awareness is expected to increase the fraction of population participating inequity market.
Your Company is seeking great opportunities in its business segmentconsidering the expected economic development & growths initiatives taken by thegovernment.
INDUSTRY STRUCTURE AND DEVELOPMENT
In recent years due to higher inflation India's economy tilted moretowards consumption. As inflation expectations moderate and real interest rates turnpositive that balance will shift in favor of saving leading to a higher savings ratio forthe country. Capital market activity in FY 20T8- T9 remained subdued owing to sharpsell-off in broader markets liquidity issues disrupted financial markets electionuncertainty surge in oil prices etc. Fund raising activity took a backseat as financialmarkets were under pressure. One of the biggest challenges for the broking industry haslong been fall in share of high yielding cash segment volumes as against low yieldingderivative. Finalization of savings which has picked up pace since Demonetization isstill lower as compared to developed nations. With SIP book now at record high andincremental investments expected into equities by pension funds insurance companies andother long term institutional investors money flow into equity is likely to remain robustin the future. The future outlook for the Capital Markets is dependent upon key factorslike global (and domestic)
economic growth pick up buoyancy in the primary markets lack ofalternate investment opportunities and technology up-gradation. A broad basedmacroeconomic recovery will lead to improved corporate profits thus supporting higherstock prices and positive equity market sentiments. FIIs have begun their buying spreesince past few weeks which we expect to stay for a while considering improving India'smacro. This shall keep the capital market conditions buoyant for the forthcoming quarters.
The future prospectus for the Indian equity markets look extremelypromising in the current backdrop of events in the Global financial markets. The euphoriain other emerging markets is likely to settle down soon as earning have failed to catch upwith the spectacular rise in the stock prices.
GDP growth of India is set to be around 6-7% for FY 2019 and isexpected to improve higher with the stable and formidable government formation. Theinflation rate is under control now at less than 4% and RBI is now targeting growthoriented monetary policies with infusion of strong liquidity.
It is further said private consumption which has remained resilientis also expected to get a fillip from public spending in rural areas and an increase indisposable incomes of households due to tax benefits. Business expectations continue to beoptimistic.
With the European markets not performing as per expectations Indianequity markets are looking attractively valued. The management is confident of a strongyear ahead for the Indian equity markets. This will augur well for the performance of yourcompany which largely depends on the direction of the stock market.
OUTLOOK RISKS AND CONCERNS
Your Company has been making use of available opportunities in thecapital and the commodities markets for its operations keeping in view its businessobjectives.
The Indian economy is growing strongly and remains a bright spot in theglobal landscape. India's overall outlook remains positive although growth was slowtemporarily as a result of disruptions to consumption and business activity from therecent withdrawal of high-denomination banknotes from circulation. The country's economyhas recovered from effect of demonetization and GST. The nation's expansion will pick upas economic reforms accelerate. The government has made significant progress on importanteconomic reforms which will support strong and sustainable growth going forward.Therefore the company is optimistic about the recovery of Indian economy and the capitalmarket. India is relatively less impacted from global protectionist measures as domesticconsumption is around 63% ofGDP.
The capital market industry is mainly dependent on economic growth ofcountry and capital market is also further affected by number of issues arising out of
international policies of foreign government as well any change ininternational business environment. The industrial growth is very sensitive which isdependent on many factors which may be social financial economical or political and alsonatural climatic conditions in the country. However with the positive attitude of countrywhich can mitigate the avoidable risks. Geopolitical tensions raising crude oil pricesrising US bond yields scams in the banking sector are some of the affecting factors thatthe country witnessed during the year under review. The country faced the said concernswith positive measures by way of making amendments or introducing new laws that can assistto grow the economy. Foreign investors are very positive for India and trust its policieswhich are very much investor friendly. It is expected that the said efforts shall continueduring the coming years irrespective of the Government which is in power.
The nature of Company's business is susceptible to various kinds ofrisks. The Company encounters risks like Market Risk Credit Risk Technology RiskReputation Risk Regulatory & Compliance Risk and Operational Risks on daily businessoperations. For overcoming such risks Company adopts risk management techniques andsafeguards to ensure that major risks are properly assessed analyzed and appropriatemitigation tools are applied. These techniques remain dynamic and align with thecontinuing requirements and demands of the market.
Your directors do not recommend any dividend for the Financial Yearended 31st March 2019.
During the year under review there was no change in the Company'sissued subscribed and paid-up share capital. On March 31 2019 it stood at Rs.98296996 divided into 49148498 Equity Shares of Rs. 2 each.
The Company has not accepted any deposits from the public in terms ofSection 73 of the Companies Act 2013 during the year under review.
PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS UNDER SECTION 186 OF THECOMPANIES ACT 2013
The Company has not granted any loans secured or unsecured guaranteeto companies firm or other parties covered under section 186. Particulars of Investmentshas been disclosed in financial statement of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Ashok Sawhney Director and Mr. Avinash Chander Sharma Directorretire by rotation at the forthcoming Annual General Meeting and being eligible offerthemselves for reappointment. The Board recommends their reappointments at the ensuingAnnual General Meeting of the Company.
Brief resumes of the Directors who are proposed to be reappointed atthe forthcoming Annual General meeting as required as per SEBl (Listing Obligations andDisclosure Requirements) Regulations 2015 is provided in the notice convening the AnnualGeneral Meeting of the Gompany.
The company has received necessary declaration from each independentdirector under section 149(7) of the Companies Act 2013 that he/she meets the criteria ofindependence laid down in section 149(6) of the Companies Act 2013 and regulation 25 ofthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met 4 (Four) times in the FY2018-19. The details pertaining to the Board Meetings and attendance are provided in theCorporate Governance Report. The intervening gap between two Board Meetings was within theperiod prescribed under Companies Act 2013.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED U/S 134 (5) OF THECOMPANY ACT 2013
Pursuant to the requirements under Section 134(5) of the Companies Act2013 with respect to Directors' Responsibility Statement it is hereby confirmed:
a. that in the preparation of the Annual Accounts the applicableaccounting standards have been followed;
b. that the Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at March 312019 and of Profit and Loss Account of the Company for that period;
c. that the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d. that the Directors have prepared the Annual Accounts for theFinancial Year ended March 31 2019 on a going concern basis;
e. that the Directors have laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively; and
f. that the Directors have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
In terms of the provisions of the Companies Act 2013 and theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board
has carried out the evaluation of its own performance the Directorsindividually including the Chairman of the Board and that of its Committees. Theevaluation of the Independent Directors was carried out by the entire Board and that ofthe Chairman and Non-independent Directors were carried out by Independent Directors.
The Directors were satisfied with the evaluation results whichreflected the overall engagement of the Board and its Committees.
The process of evaluation is explained in the Corporate GovernanceReport.
COMMITTED OF BOARD
Currently the Board has three committees: the audit committeestakeholders' grievance committee and nomination and remuneration committee. The detailsof the committee's along with the meetings held during the year are covered in corporategovernance report.
AUDITORS & AUDITORS OBSERVATIONS Statutory Auditors
M/s. B.K Sood & Go. Chartered Accountants (Firm Registration No.000948N) the Statutory Auditors of the Company were appointed by the members at the 28thAnnual General Meeting of the Company for a term of initial term of 5 years i.e.from the conclusion of 28th Annual General Meeting till the conclusion of the33rd Annual General Meeting of the Company pursuant to section 139 of theCompanies Act 2013. They have confirmed that they are not disqualified from continuing asAuditors of the Company.
The Report given by M/s. B.K Sood & Go. Chartered Accountants(Firm Registration No. 000948N) Statutory Auditors on the financial statement of theCompany for the year 2018-19 is part of the Annual Report. There has been noqualification reservation or adverse remark or disclaimer in their Report.
Mr. Vikash Kumar Singh of V K Singh & Go. Practicing CompanySecretary was appointed to conduct the secretarial audit of the Company for the financialyear 2018-19 as required under Section 204 of the Companies Act 2013 and Rules madethereunder. The Secretarial Audit report for FY. 2018-19 in form MR-3 part of the AnnualReport as Annexure A of the Board' Report. The report does not contain anyqualification.
EXTRACTS OF ANNUAL RETURN
The Extracts of Annual Return is prepared in Form MGT-9 as per theprovisions of the Companies Act 2013 and Rule 12 of Companies (Management andAdministration) Rules 2014 and the same is enclosed as \ - B to this Report.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The board has adopted the policies and procedures for ensuring theorderly and efficient conduct of the business
including adherence to the company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial disclosures.
The Company does not have any subsidiary Company. PARTICULARS OFEMPLOYEES
During the year under review none of employees are covered under theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO
Your Company is not involved in any manufacturing or processingactivities and did not carry out any activity relating to Research & DevelopmentTechnology Absorption during the year under review. Hence particulars in this regard inaccordance with provisions of the Section 134(3) (m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 are not required.
There are no foreign exchange earnings or outgo during the currentfinancial period.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and company'soperations in future.
RELATED PARTY TRANSACTIONS
During the year ended March 31 2019 there were no materiallysignificant related party transactions which had potential conflict with the interests ofthe Company at large. The transactions with related parties has been disclosed in thefinancial statements of the Company.
In terms of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Board of Directors of theCompany have adopted a policy to determine Related Party Transactions.
VIGIL MACHANISM/WHISTLE BLOWER POLICY
The Board of Directors has adopted Whistle Blower Policy. The WhistleBlower Policy aims for conducting the affairs in a fair and transparent manner by adoptinghighest standards of professionalism honesty integrity and ethical behavior. Allpermanent employees of the Company are covered under the Whistle Blower Policy. Amechanism has been established for employees to report concerns about unethical behavioractual or suspected fraud or violation of Code of Conduct and Ethics. It also provides foradequate safeguards against the victimization of employees who avail of the mechanism andallows direct access to the Chairperson of the audit committee in exceptional cases.
CODE OF CONDUCT
The Company has a well defined policy which lays down procedures to befollowed by the employees for ethical professional conduct. The code of conduct has beenlaid down for all the Board Members and Senior Management of the Company. The Boardmembers and Senior Management personnel have affirmed compliance with the Company's codeof conduct for the year 2018-19. This code has been displayed on the Company's website.
HUMAN RESOURCE AND INDUSTRY RELATIONS
The Company recognizes the importance and contribution of its humanresources for its growth and development and is committed to the development of itspeople.
The Company has cordial relations with employees and staff. There areno industry relation problems during the year and company does not anticipate any materialproblems on this count in the current year.
Corporate Governance is an ethically driven business process that iscommitted to value aimed at enhancing an organization's brand and reputation. This isensured by ethical business decisions and conduction business with a firm commitment tovalue while meeting stakeholders' expectations. At Network it is imperative that ourcompany affairs are managed in a fair and transparent manner. This is vital to gain andretain the trust of our stakeholders.
In terms of the listing agreement with Stock Exchange we comply withthe corporate governance provisions. As a listed company necessary measures have beentaken to comply with the listing agreements with the stock exchange. Several aspects ofthe Act such as vigil mechanism and code of conduct have been incorporated into ourpolicies.
The annexed report on Corporate Governance along with a certificate ofcompliance from the practicing Company Secretary forms part of this report.
Your Directors acknowledge the support of the shareholders and alsowish to place on record their appreciation of employees for their commendable effortsteamwork and professionalism. The Directors also express their grateful thanks to theBanks Government Authorities Customers Suppliers Employees and other BusinessAssociates for their continued cooperation and patronage.
|For and ||on behalf of the Board of Directors |
|Sd/- ||Sd/- |
|ASHOK SAWHNEY ||AMAN SAWHNEY |
|DIRECTOR ||DIRECTOR & MANAGER |
|Date: 10.08.2019 || |
|Place: New Delhi || |