Your Directors have the pleasure in presenting the Thirty-Fifth Annual Report andCompany's Audited Financial Statements for the financial year ended March 31 2020. Thesynopsis of the Consolidated Profit and Loss Statement with respect to the continuingoperations is as follows:
(Rs in Crores)
|Particulars ||FY 2019-20 ||FY 2018-19 |
|Total income ||1162.10 ||704.60 |
|Total expenses ||820.36 ||776.23 |
|Earnings before Interest Depreciation and taxes ||341.74 ||(71.63) |
|Finance Costs ||119.79 ||105.46 |
|Depreciation and ||197.48 ||152.92 |
|Amortization || || |
|Profit/(Loss) before exceptional items and tax - from continuing operations ||24.47 ||(330.01) |
|Exceptional items ||- ||35.83 |
|Profit/(Loss) before tax - from continuing operations ||24.47 ||(294.18) |
|Taxation ||(85.21) ||9.67 |
|Profit/(Loss) after tax - from continuing operations ||109.68 ||(303.85) |
SCHEME OF ARRANGEMENT
The Board of Directors of the Company and IndusInd Media & Communications Limited(IMCL) at their respective Meetings held on August 27 2019 had approved the Scheme ofArrangement by which Media and Communications Undertaking' of IMCL demerged into theCompany pursuant to the provisions of Sections 230 to 232 of the Companies Act 2013("Act") and fixed October 01 2019 as the Appointed Date for the aforesaidScheme.
To achieve this your Company along with its subsidiary IndusInd Media &Communications Limited (IMCL) filed a Scheme of Arrangement with the Hon'ble NationalCompany Law Tribunal Mumbai Bench (Hon'ble NCLT) whereby the Cable TV and Headend In theSky (HITS) businesses of IMCL are demerged into the Company.
The Hon'ble National Company Law Tribunal approved the aforesaid Scheme of Arrangementon August 21 2020 and the Scheme came into effect from August 21 2020. The entirebusiness and whole of the Media and Communication undertaking of IMCL stand transferredand vested in the Company effective from October 01 2019 being the appointed date of thesaid Scheme.
The Company is now a significant Digital Services Provider focused on the Media &Entertainment business.
ISSUE OF EQUITY SHARES TO THE SHAREHOLDERS OF IMCL
Pursuant to Clause 4.1 of the Scheme of the Arrangement as a consideration of thetransfer and vesting of Media and Communications Undertaking of IMCL into the Company ithad issued and allotted new 3495655 equity shares of Rs 10 each on August 28 2020 inthe ratio of "10 (Ten) fully paid-up Equity Shares of Rs. 10 each of Company forevery 125 (One hundred and twenty-five) Equity Shares of Rs. 10 each held in IMCL onrecord date August 25 2020." The Issued subscribed and paid-up capital afterallotment of 3495655 Equity Shares are as under.
|SR Issued subscribed and No. paid-up capital ||(Amount in _) |
|Existing 20555503 || |
|i Equity shares of Rs. 10 each fully paid 3495655 Additional shares issued as ||205555030 |
|ii consideration under Scheme of Arrangement to the shareholders of IMCL ||34956550 |
|Total i.e. 24051158 Equity Shares of Rs. 10 each ||240511580 |
The Board of Directors approved the financial results at their meeting held onSeptember 4 2020 after giving the effect of the Scheme of the Arrangement by and betweenthe Company and IndusInd Media & Communication Limited (IMCL).
REVIEW OF FINANCIAL PERFORMANCE:
On a consolidated basis the total income for the financial year ended March 31 2020stood at Rs. 1162.10 Crores as against a total income of Rs. 704.60 Crores for thefinancial year ended March 31 2019 a growth of 65%. The growth is driven by an increaseboth in the subscriber base and the Average Rate per Unit (ARPU) of the Cable TV andbroadband businesses.
For the same period the earnings before interest depreciation and taxes increased toRs 341.74 Crores from a loss of Rs 71.63 Crores in the previous year. The Company earned aProfit after Tax from Continuing Operations of Rs 109.68 Crores as compared to a loss ofRs 303.85 Crores in the previous year.
FINANCIAL IMPACT OF DEMERGER
The following corporate actions have had a bearing onthe results of operations:
By virtue of a Scheme of Arrangement between the Company and its subsidiaryIndusInd Media & Communications Limited sanctioned by the National Company LawTribunal (NCLT) the Cable TV and Headend in the Sky business of IMCL have been demergedinto the Company with Appointed Date of October 1 2019.
Being a "Common Control" transaction under Indian AccountingStandards. (IND-AS) the figures for the previous full-year have also been restated sincethe earliest reporting date as per the relevant Accounting Standard is April 1 2018.
ONEOTT Intertainment Limited a Company engaged in providing broadband servicesbecame a subsidiary of the Company.
The Company discontinued its Treasury & Investment segment by disposing ofalmost all the assets which constituted this segment and retired all the loans againstthese assets.
Continuing your Company's unwavering philosophy of rewarding shareholders yourDirectors are pleased to recommend for approval of the Members a dividend of Rs. 5.00 perequity share (previous year Rs. 17.50 per equity share) i.e. 50% of the face value ofRs. 10/- each for the financial year ended March 31 2020.
STATE OF INDIAN ECONOMY
The financial year 2019-20 has been a year of significant ups and downs globally. Indiabeing a major global player has not been insulated from the waves of uncertainty that theglobal societies and economies have had to face the extra-ordinary situation caused by thepandemic further affected the global economies adversely including India. Governmentsacross the world have announced huge financial packages to help in reviving the economieswhich have seen a significant downslide due to the lockdown situation. CRISIL forecastsIndia's GDP growth to contract to 5% in fiscal 2021 sharply. According to CRISIL in thepast 69 years India has seen a recession only thrice in fiscals 1958 1966 and 1980. Thereason was the same each time a monsoon shock that hit agriculture then a sizeablepart of the economy. A pandemic has never been a cause for de-growth in the last manydecades to date.
The Company is in the business of distribution of TV signals both through Cable andSatellite and also providing broadband services through its subsidiary ONEOTTIntertainment Limited (OIL).
While the forecast for the economy in the short run is in the negative the TV Channelsdistribution sector itself shows a promise for growth due to the new work from the homeculture which has taken the route from the time national lockdown was imposed to containthe COVID outbreak in later March. This sharply increased TV viewing habits and almostdoubled broadband consumption helping your Company and OIL to earn more revenue.
TV penetration in India is yet to catch up with the developed world. The percentage ofTV viewing population in India is just 66% as compared to developed markets where itaverages at around 90%. There is therefore great scope for growth in the sector withthe semi-urban semi-rural and rural India emerging as the growth drivers. The Company iswell poised to reap the benefits of higher TV penetration in these areas from continuingoperations. The Pay TV industry is predicted to grow at a CAGR of 4.5 6% from 2019to 2025.
The New Tariff Order (NTO) issued by the Telecom Regulatory Authority of India (TRAI)has also given a fillip to the industry by ensuring a more equitable distribution ofrevenue between distribution platforms broadcasters and local cable operators. This willinvite more investment in this sector leading to further .growth.
The Company successfully implemented the New Tariff Order without in any way adverselyimpacting its prepaid collection mechanism which today stands at 99.5% of the totalcollections. The Company's subsidiary OIL is the 6th largest Internet Service Provider inthe country.
The Company continues to be one of the forerunners in many areas some of which are thefollowing:
Only Multi-System Operator to have over 99.50 % collections on prepaid
The only provider of services in the Cable TV industry via satellite through theHITS technology
Innovated compression technology enabling it to pack more channels per satellitetransponder
Present in over 1500 locations across the country
Delivering the largest number of channels via cable and satellite.
The sector saw some huge investments during the year with both strategic and financialinvestors making significant investments in the largest players in the sector. YourCompany believes that this is a positive development for all players in the sector as thesector has proved itself to be one which is poised for exponential growth.
The Company discontinued the entire Treasury & Investments business segment byliquidating almost the whole of the Treasury assets and paying off the loans against theseassets. The resultant loss has been disclosed as results of "DiscontinuedOperations" in the Profit & Loss Statement. The Company holds the balance sharesin IndusInd Bank Limited and Hinduja Leyland Finance Limited are disclosed in thefinancials as "Held for Sale" as the Company intends selling these assets duringthe current year.
NATURE OF BUSINESS
The Company discontinued its Treasury & Investments segment during the year and islaying lesser emphasis on the Real Estate business. The Company has repositioned itself asa Media & Entertainment Company by merging the Cable TV and Headend in the Skybusinesses of its subsidiary IndusInd Media & Communications Limited into itself.
FUTURE MEDIA PLANS
The Company is continuing to drive its unique managed services model - where thepotential market is over 69mn TV households and growing steadily. This is essentially thesubscriber base of independent regional or smaller Multi-System Operators who arelooking to prune their operational costs of connectivity whilst improvising the quality ofservices to their subscribers. NXTDIGITAL is also focused on leveraging its expansive TVsubscriber base for growing its broadband business.
The focus would be not only on cross-selling of broadband to TV subscribers - acrossdisparate geographies; but also up-selling of customized content packages and"bundling" of solutions. At the same time the Company is also poised to rollout innovative digital products and solutions that continue to deliver on the promise ofdelighting the customer first & always.
IMPACT OF COVID-19
SEBI vide it's Circular no. SEBI/HO/CFD/ CMD1/CIR/P/2020/84 dated May 20 2020regarding Advisory on disclosure of the material impact of COVID-19 pandemic on listedentities under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI LODR"). The Company had made necessary intimations to Stock Exchangesfrom time to time. In this regard your Directors would like to inform you that whilethere have been some delays in cash inflows on account of the lockdown situation howeverthe Company sees this more as a temporary phenomenon which is likely to get corrected withthe progressive lifting of the lockdowns across the country in due course.
SUBSIDIARIES/ASSOCIATES /JOINT VENTURE
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 ("theAct") read with Rule 5 of the Companies (Accounts) Rules 2014 a statementcontaining the salient features of the financial statement of the Company's subsidiariesis provided in Form AOC-1 annexed as Annexure "A" to this Report. TheCompany does not have any associate and joint venture Company during the period underreview. Pursuant to the provisions of Section 136 of the Act the audited financialstatements of the Company including Consolidated Financial Statements along with all therelevant documents and separate audited accounts in respect of subsidiaries are availableon the website of the Company at the weblink : www.nxtdigital.co.in These documents willalso be available for inspection on all working days except Saturday and Sunday and PublicHolidays at the Registered Office of the Company.
CODE OF CONDUCT
All Board members and Senior Management Personnel have affirmed compliance with theCode of Conduct for the financial year 2019-2020. A declaration to this effect as requiredunder Regulation 26(3) read with Schedule V(D) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") fromthe Managing Director of the Company is annexed as Annexure "B" to thisReport.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of Conservation of Energy Research and Development and TechnologyAbsorption pursuant to Section 134(3)(m) of the Act during the year under review and thedetails of Foreign Exchange Earnings and Outgo are as under:
i) Conservation of Energy:
The Company is not an energy-intensive unit; hence an alternate source of energy maynot be feasible. However regular efforts are made to conserve energy. The Companyevaluates the possibilities and various alternatives to reduce energy consumption.Further the use of low energy consuming LED lightings is being encouraged.
ii) Technology Absorption:
The Company is not engaged in manufacturing activities; therefore disclosures ontechnology absorption and conservation of energy etc. are not applicable.
iii) Foreign Exchange Earnings and Outgo:
Disclosure of foreign exchange earnings and outgo is given in "Notes to thefinancial statements" forming part of the Audited Annual Accounts the summary offoreign exchange earnings and outgo are mentioned below:
|Foreign Exchange ||Earning ||Outgo |
|2018-2019 ||NIL ||13619.94 Lakhs |
|2019-2020 ||NIL ||4869.58 Lakhs |
During the year under review your Company has complied with the Corporate Governancerequirements under SEBI Listing Regulations. A detailed report on Corporate Governance asrequired under Regulation 34 read with Schedule V of the SEBI Listing Regulations isannexed as Annexure "C" to this Report.
A certificate from the Secretarial Auditor of the Company certifying that the Companyhas complied with the conditions of Corporate Governance as required under Schedule V(E)of the SEBI Listing Regulations is annexed as Annexure "D" to thisReport.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34 read with Schedule V of the SEBI Listing Regulations aSeparate Management Discussion and Analysis Report covering a wide range of issuesrelating to industry trends Company Performance SWOT analysis Business Outlook etc. isannexed as Annexure "E" to this Report.
BUSINESS RESPONSIBILITY REPORT:
Pursuant to notification of Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 ("Listing Regulations") as perClause (f) of sub-regulation (2) of regulation 34 of Listing Regulations the annualReport shall contain a Business Responsibility Report (BSR). Your Company is listed atserial no 652 of BSE listed entity as on March 31 2020. BSR report is attached marked as Annexure"F" to this Report.
Your Company has not accepted any deposits from the public within the meaning ofChapter V of the Act and as such no amount of principal or interest was outstanding ason the balance sheet date.
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has in place adequate internal financial controls which commensurate withthe size scale and complexity of its operations. These internal financial controls ofthe Company encompass entity-level controls and processes for each area of operations ofthe Company including but not limited to Fixed Assets Investments ProcurementOperating Expenses Accounts Payables Revenue Accounts Receivables Payroll and HumanResources Management.
The Company has an Internal Audit function that identifies the critical audit areaswith specific reference to operations accounting and finance. The Internal Auditorreviews the adequacy of the internal controls and risks in such audit areas every quarter.The audit is based on the Internal Audit Plan which is reviewed and approved by the AuditCommittee. Based on the observations of the Internal Auditor corrective actions areundertaken by the process owners in their respective areas and thereby strengthening theinternal control.
The Internal Control System of your Company is also tested on a half-yearly basis by aspecialized external audit firm. In addition to such periodic audits the Company also hasin place a well-implemented risk management policy.
Your Company has complied with specific requirements as laid under Section 134(5)(e) ofthe Act which calls for establishment and implementation of the Internal FinancialControl framework that supports compliance with requirements of the Act in relation to theDirector's Responsibility Statement. The Audit Committee based on its evaluation hasconcluded that as on March 31 2020 your Company's internal financial controls wereadequate and operating effectively.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 are annexedas Annexure "G" to this Report and the same is available on the websiteof the Company at the web link: http://nxtdigital.co.in/investors/annual-reports/.
LOANS GUARANTEES AND INVESTMENTS
Details of loans given investments made guarantees are given and securities providedare given in Note nos. 4 15 and 42 of the Notes to the Standalone Financial Statements.
RELATED PARTY TRANSACTIONS
Proper disclosures as required under IND AS-24 have been made in Note no 33 of theNotes to the Standalone Financial Statements.
Since all the transactions/ contracts/ arrangements of nature as specified in Section188(1) of the Act entered by the Company during the year under review with the relatedparty(ies) were in the ordinary course of business and on an arm's length basis noparticulars in Form AOC-2 have been furnished as Section 188(1) of the Act is notapplicable.
During the year under review the Board of Directors adopted a revised Policy ondealing with Related Party Transactions and on the materiality of Related PartyTransactions in line with recent amendments in SEBI Listing Regulations and the CompaniesAct 2013. The revised Policy is available on the Company's website at the weblink: http://nxtdigital.co.in/contents/static/uploads/inv/corporate_policies/Revised_RPT_policy.pdf
DIRECTOR'S RESPONSIBILITY STATEMENT
Your Directors to the best of the knowledge and belief and according to theinformation explanations and representations obtained by them and after due inquirymake the following statements in terms of Sections 134(3)(c) and 134(5) of the Act that:
a) in the preparation of the annual accounts for the year ended March 31 2020 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same.
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent to give a true and fairview of the state of affairs of the Company as at March 31 2020 and of the profit ofcontinuing operation of the Company for the year ended on that date;
c) the Directors have taken proper and enough care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
d) the Directors have prepared the annual accounts on a going concern basis.
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors at its meeting held on April 29 2020 extended the terms ofappointment and payment of remuneration of Mr. Ashok Mansukhani as Managing Director andKey Managerial Personnel from April 29 2020 till the conclusion of the 35th AnnualGeneral Meeting for the year ending March 31 2020 subject to the approval ofshareholders. Necessary resolution for approval of shareholders towards the extension ofthe term of appointment and payment of remuneration of Mr. Ashok Mansukhani as ManagingDirector is incorporated in the Notice conveying 35th Annual General Meeting. The Board ofDirectors at its meeting held on August 1 2020 appointed Mr. Vynsley Fernandes as ChiefExecutive Officer and Key Managerial Personnel pursuant to Section 203 of the CompaniesAct 2013. The Board at its meeting held on September 4 2020 1) Appointed Mr. VynsleyFernandes as "Manager" with effect from conclusion of 35th AGM i.e. fromSeptember 30 2020 pursuant to Section 203 of the Companies Act 2013. 2) Appointed Mr.Amar Chintopanth (DIN:00048789) who is Chief Financial Officer as Whole Time Director fora period of three years with effect from September 4 2020 to September 3 2023.
Necessary resolutions for approval of shareholders towards the term of appointment andpayment of remuneration of Mr. Amar Chintopanth as Whole Time Director and Mr. VynsleyFernandes as Manager are incorporated in the Notice conveying 35th Annual General MeetingIn accordance with the provisions of Section 152(6) of the Act and in terms of theArticles of Association of the Company Mr. Sudhanshu Tripathi Director (DIN:06431686)will retire by rotation at the ensuing Annual General Meeting and being eligible offershimself for reappointment. The Board recommends his reappointment for the consideration ofthe Members of the Company at the 35th Annual General Meeting (AGM). A brief profile ofMr. Sudhanshu Tripathi forms part of the Notice convening the 35th Annual General Meeting.
As on the date of this Report Mr. Ashok Mansukhani Managing Director Mr. VynsleyFernandes Chief Executive Officer Mr. Amar Chintopanth Whole Time Director & ChiefFinancial Officer and Mr. Hasmukh Shah Company Secretary & Compliance Officer arethe Key Managerial Personnel of your Company in accordance with the provisions of Section2(51) read with Section 203 of the Act.
Mr. Ashok Mansukhani completes his term as Managing Director at the Conclusion of 35thAnnual General Meeting.
The Board places on record it's sincere appreciation to Mr Mansukhani for hiscontributions towards success of the Company during his long association. His dedicationand loyalty contribution to meaningful deliberations of Board wide and varied experiencein the field of Media and Taxation has immensely benefited to the Company and Group.
Your Company has received a declaration from all the Independent Directors confirmingthat they meet the criteria of independence laid down in Section 149(6) of the CompaniesAct 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations and names of all theIndependent Directors are included in the data bank of Independent Directors maintained byIndian Institute of corporate Affairs (IICA).in line with the requirement of CompaniesAmendment Act 2013 effective from December 1 2019. There has been no change in thecircumstances affecting their status as Independent Directors during the year underreview.
The present tenure of Ms. Bhumika Batra as an Independent Director had expired on March10 2020. Pursuant to the provisions of Section 149(6) of the Companies Act she iseligible for reappointment for the second term. Ms. Bhumika has consented forreappointment for the second term of five years. On the recommendation of the Nominationand Remuneration Committee at its meeting held on February 3 2020 the Board of Directorsat its meeting held on February 3 2020 subject to the approval of the shareholders haveapproved the reappointment of Ms. Bhumika Batra as an Independent Director for a secondterm of five years from March 11 2020 to March 10 2025. Necessary resolution forapproval of shareholders towards reappointment of Ms. Bhumika Batra as an IndependentDirector for a second term of five years is incorporated in the Notice conveying 35thAnnual General Meeting.
BOARD MEETINGS HELD DURING THE YEAR
During the year five (5) meetings of the Board of Directors were held. The details ofthe meetings are furnished in the Corporate Governance Report which forms part of thisReport.
COMMITTEE MEETINGS HELD DURING THE YEAR
The details of the Committee meetings are furnished in the Corporate Governance Reportwhich forms part of this Report.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND DIRECTORS
The Company had engaged the services of a specialized agency to undertake theevaluation process towards the performance of the Directors individually the Board as awhole and the Board Committees. The manner in which the Board has carried out evaluationin consultation with such a specialized agency has been explained in the CorporateGovernance Report which forms part of this Report.
COMPANY'S POLICY ON
DIRECTOR'S APPOINTMENT AND REMUNERATION
The Company's Policy on Director's appointment/ remuneration and other matters providedin Section 178(3) of the Act has been disclosed in the Corporate Governance Report whichforms part of this Report.
COMPOSITION OF AUDIT COMMITTEE
The details pertaining to the composition of the Audit Committee are included in theCorporate Governance Report which forms part of this Report.
At the 30th Annual General Meeting of the Company held on September 23 2015 M/s.Deloitte Haskins & Sells LLP Chartered Accountants (ICAI Firm Registration No.117366W/ W-100018) were appointed as Statutory Auditors of your Company for a term offive years i.e. from the conclusion of the 30th Annual General Meeting until theconclusion of 35th Annual General Meeting of the Company.
The terms of M/s Deloitte Haskins & Sells LLP Chartered Accountants as statutoryauditors will expire on the conclusion of the ensuing 35th Annual General Meeting.
The Board of Directors at its meeting held on July 31 2020 on the recommendation ofAudit Committee appointed M/s. Haribhakti & Co. LLP Chartered Accountants (FirmRegistration No. 103523W/W100048) as Statutory Auditors of the Company subject to theapproval of members for the first term of five years with effect from conclusion of 35thAnnual General Meeting till the conclusion of 40th Annual General Meeting in place of M/s.Deloitte Haskins & Sell LLP Chartered Accountants who will be completing its terms asStatutory Auditors of the Company pursuant to Section 139(2) of the Companies Act 2013on the conclusion of the 35th Annual General Meeting. The Company has receivedconfirmation from M/s. Haribhakti & Co. LLP Chartered Accountants (Firm RegistrationNo. 103523W/W100048) that they are not disqualified to act as the Statutory Auditors andare eligible to hold the office as Auditors of the Company. The Auditor's Report to theMembers on the Standalone and Consolidated Financial Statements of the Company for theyear ended March 31 2020 does not contain any qualifications reservations or adverseremarks.
In accordance with Section 148 of the Act and rules framed thereunder the Board ofDirectors on the recommendation of the Audit Committee has appointed M/s. ABK &Associates Cost Accountants (Firm Registration No. 000036) as Cost Auditors of theCompany for the financial year 2019-20 to audit the accounts relating to Dark Optic FiberLeasing for the financial year ended March 31 2020. Necessary resolution for ratificationof remuneration of the Cost Auditor for the financial year 2020-21 will be placed beforethe Members for ratification/approval.
The accounts and Cost records as specified under Section 148(1) of the Act are madeand maintained by the Company. The Cost Audit Report for the financial year 2019-20 issuedby M/s ABK & Associates Cost Auditor in respect of the various products prescribedunder Cost Audit Rules does not contain any qualifications reservations or adverseremarks.
Pursuant to the provisions of Section 204 of the Act and Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 Ms. Rupal Jhaveri a Company Secretaryin Whole-Time Practice (CP: 4225) was appointed to undertake Secretarial Audit for thefinancial year 2019-2020. The Secretarial 'Auditor's Report is annexed as Annexure"H" to this Report. The Secretarial Audit Report for the year under review doesnot contain any qualifications reservations or adverse remarks.
NO REPORTING OF FRAUDS BY AUDITOR:
During the year under review neither the Statutory Auditors nor the SecretarialAuditor has reported to the Audit Committee under section 143 (12) of the Companies Act2013 any instances of fraud committed against the Company by its officers or employeesthe details of which would need to be mentioned in the Board's Report.
CORPORATE SOCIAL RESPONSIBILITY
For the Financial Year 2019-20 your Company has further contributed Rs. 1.16 Crore toHinduja Foundation "Sustainable Rural Development Project" a Project of RuralDevelopment and Rural Education Programme in Jawahar Taluka Palghar DistrictMaharashtra. Hinduja Foundation committed to improving primary learning outcomes both inurban government schools and at the rural level. It works with partners to implement thefollowing programmes: Road to School Road to Livelihood and Saksham. These arebroad-based programmes that reach thousands of schools mainly through primary-levelinterventions that build learning and lifestyle skills. They are supported by a healthysport and nutrition support mechanism and they offer guidance to the 'child's communityand ecosystem. In Maharashtra's Jawahar Taluka under your Company we run"Sustainable Rural Development Project" a Project of Rural Development and RuralEducation Programme supported 3875 students from 14 schools over six years; anafter-school programme that covers 1542 children from 18 villages and 69 hamlets; andprofessional development and mentoring programmes that work with over 100 educators from14 schools.
Beyond these projects the Hinduja Foundation has undertaken long-term projects thatcall for 360-degree intervention and expertise across the Board. The major occupation inJawahar is agriculture; however the situation is challenging because of factors likesmall landholdings poor soil quality traditional agriculture practices single croppatterns and rain-fed subsistence agriculture. This has resulted in low yield andinadequate income. It was against this stark reality that our Jawahar project wasdesigned.
The CSR computation pursuant to the provisions of Section 135 of Act and the Companies(Corporate Social Responsibility Policy) Rules 2014 ("the Rules") for thefinancial year 2019-20 was as under:
|Particulars ||2018-19 ||2017-18 ||2016-17 |
|(a) Pro t/(Loss) before tax ||(7164.31) ||15833.43 ||12834.32 |
|(b) Dividend Income which is covered under and complying with the provisions of section135 of the Act: ||551.46 ||501.67 ||435.91 |
|Balance ||(7715.77) ||15331.76 ||12398.41 |
|(c) Less: Amounts for which credits not to be given ||0 ||0 ||0 |
|Pro ts of capital nature including profits from the sale of the undertaking or any of the undertakings of the Company or any part thereof; ||0 ||0 ||5087.15 |
|Balance ||(7715.77) ||15331.76 ||7311.26 |
|Add: Amounts for which shall not be deducted || || || |
|a) income-tax and super-tax payable by the Company under the Income-tax Act 1961 or any other tax on the ncome of the Company not falling under Clause s (d) and (e) of sub-section (4); ||0 ||0 ||0 |
|b) any compensation damages or payments made voluntarily otherwise than in virtue of liability such as is referred to in Clause (m) of sub-section (4); ||0 ||0 ||0 |
|c) loss of capital nature including loss on the sale of the undertaking or any of the undertakings of the Company or any part thereof not including any excess of the written-down value of any asset which is sold discarded demolished or de royed over its sale proceeds or its scrap value; ||0 ||0 ||0 |
|d) any change in carrying amount of an asset or of liability recognized in equity reserves including surplus in pro t and loss account on measurement of the asset or the liability at fair value. ||2531.53 ||0 ||0 |
|Net Profit ||(5184.24) ||15331.76 ||7311.26 |
|Average Pro t || || ||5819.59 |
|CSR - 2% of the average pro ts || || ||116.39 |
Your Company had considered loss (for the financial year 2018-19) while computing 2% ofaverage net profit to arrive at CSR amount for the FY 2019-20. The composition of the CSRCommittee and annual Report on CSR activities in terms of the requirements of Sections134(3)(o) and 135 of the Act read with the Rule 8 and 9 of the Companies (Corporate SocialResponsibility Policy) Rules 2014 is annexed as Annexure "I" to this Report.The CSR Policy is available on the website of the Company viz www.nxtdigital.co.in
WHISTLEBLOWER / VIGIL MECHANISM
During the year under review the Board of Directors had approved a revised policy onWhistle Blower / Vigil Mechanism and the same is uploaded on the website of the Companyat the web link: http://www.nxtdigital.co.inv/pdf/whistlerblower-policy-vigil-mechanism.pdf The mechanism enables the Directors and employees to report their genuineconcerns about unethical behavior actual or suspected fraud or violation of theCompany's code of conduct and assures to provide adequate safeguards against victimizationof the concerned Director or employee. The employees and other stakeholders have directaccess to the Chairperson of the Audit Committee for lodging concerns if any for review.
Your Company affirms that no Director/ employee has been denied access to theChairperson of the Audit Committee and that no complaints were received during the year.
RISK MANAGEMENT POLICY
The risk management policy of the Company lays down the risk strategy of the Companyand helps in determining the risk factor categorizing the various forms of risksaffecting the Company's strategic and financial goals and modes to manage such risks. Therisk identification and remedial steps if any to mitigate risks are periodicallyreviewed by the Company. In addition to reviewing the remedial steps the Company alsoassesses whether identified risks still exist or whether the Company is exposed to newrisks. The Audit Committee and Board are updated on how each of the identified risks ismonitored during the reporting period to ensure that there is no adverse impact on theCompany.
Further details on risk management are provided in the Management Discussion andAnalysis Section which form part of this Report.
COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARDS
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards (SS) issued by the Institute of Company Secretariesof India and that such systems are adequate and operating effectively. The Company hascomplied with SS-1 and SS-2.
ACUITE Ratings & Research Limited a credit rating agency vide its letter datedFebruary 3 2020 has reaffirmed the long term rating "ACUITE A+" (read asACUITE A Plus) on _100 Crores Buyers Credit and _220 Crores Term loan of the company.Instruments with this rating are considered to have a very strong degree of safetyregarding timely payment of financial obligations and carry the lowest credit risk. Therating outlook is "Stable".
Infomerics Valuation and Rating Private Limited ("IVR") a Credit RatingAgency have vided its letter dated June 22 2020 assigned rating "IVR A+" toyour Company in respect of its following facilities for _320 Crores.
The rating outlook is "Stable."
(_ in Crores)
|1 Long Term || || |
|Facility - Term Loan* ||195.00 ||IVR A+/ Stable outlook (IVR Single A Plus with stable outlook) |
|2 Proposed Long || || |
|Term Fund ||125.00 ||IVR A+/ Stable outlook (IVR Single A Plus with stable outlook) |
|Based Facility || || |
PREVENTION OF SEXUAL HARASSMENT
Your Company has zero-tolerance for sexual harassment at the workplace and have adoptedPolicy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace("PPRSH") in line with provisions of the Sexual Harassment of Women atWork-place (Prevention Prohibition and Redressal) Act 2013 and rules thereunder. AnInternal Committee (IC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent temporary trainees) are covered under this Policy.During the financial year under review no concerns have been raised regarding sexualharassment at the workplace.
INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 (the IEPF Rules) allunpaid or unclaimed dividends are required to be transferred by the Company to the IEPFestablished by the Government of India after the completion of seven years. Furtheraccording to the Rules the shares on which dividend has not been paid or claimed by theshareholders for seven consecutive years or more shall also be transferred to the Demataccount of the IEPF Authority. During the year the Company has transferred the unclaimedand unpaid dividends of Rs 325785/- (Three Lakhs Twenty Five Thousand Seven HundredEighty Five only) Further 289 equity shares on which dividends were unclaimed for sevenconsecutive years were transferred as per the requirements of the IEPF Rules. The detailsare provided in the Corporate Governance Report of this Annual Report under headingUnpaid/Unclaimed Dividend and are also available on our Company's website at the weblink: http://nxtdigital.co.in/investors/unclaimed-dividend/
COMMUNICATION AND PUBLIC RELATIONS
Your Company has continuously endeavored to increase awareness among its stakeholdersand in the marketplace about the Company's strategy new developments and financialperformance as per rules laid down by the Regulatory Authorities like SEBI etc.
EMPLOYEES PARTICULARS AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure "J" to this Report.
A statement containing particulars of top 10 employees and the employees drawingremuneration in excess of limits prescribed under Section 197 (12) of the Act read withRule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is provided in the Annexure forming part of this Report. In terms of provisoto Section 136(1) of the Act the Report and Accounts are being sent to the shareholdersexcluding the aforesaid Annexure. The said Statement is also open for inspection at theRegistered Office of the Company up to the date of the ensuing Annual General Meeting.Any member interested in obtaining a copy of the same may write to Company Secretary.
1) No significant or material orders were passed by any Regulator or Court or Tribunalwhich can have an impact on the going concern status and the Company's operations in thefuture.
2) There are no material changes and commitments that have occurred between the end ofthe financial year of the Company and the date of this Report which affects the financialposition of the Company.
3) The Managing Director of the Company does not receive any remuneration or commissionfrom any of its subsidiaries.
Your Board of Directors takes this opportunity to thank the Company's employeescustomers vendors business partners members and bankers for the faith reposed in theCompany and to thank various regulatory authorities and agencies for their support andlooks forward to their continued encouragement.
For and on behalf of the Board of Directors
Ashok P. Hinduja Chairman
Date: September 4 2020