The Board of Directors are pleased to present the 20th Annual Report on the businessand operations of the Company together with the audited standalone and consolidatedfinancial statements for the year ended March 31 2020.
RESULTS OF OPERATIONS FOR THE YEAR 2019-20
Summary of the operations of the Company on standalone basis and consolidated basis forthe financial year 2019-20 is as follows:
(In Rs Million)
|Particulars || |
| ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Revenue from operations ||2038.41 ||2295.20 ||5724.24 ||5938.64 |
|Earnings/(Loss) before other income depreciation and amortization finance charges Exceptional item and tax ||(14.64) ||(64.18) ||408.89 ||357.65 |
|Exceptional item ||36.71 ||12.70 ||(82.00) ||- |
|Profit/(Loss) before other income depreciation and amortization finance charges and tax ||(51.35) ||(76.88) ||490.89 ||357.65 |
|Profit/(Loss) before tax ||83.42 ||373.41 ||434.73 ||313.12 |
|Profit/(Loss) for the year ||(15.15) ||328.02 ||275.83 ||188.87 |
|Total Comprehensive Income for the year ||(10.35) ||337.21 ||422.10 ||62.09 |
|Equity Share Capital ||1056.96 ||1056.96 ||1056.96 ||1056.96 |
|Other Equity ||6022.91 ||6213.00 ||4843.32 ||4600.96 |
|Networth ||7079.87 ||7269.96 ||5900.28 ||5657.92 |
|Net Block ||112.10 ||142.18 ||341.81 ||426.15 |
|Net Current Assets ||1914.65 ||2571.69 ||2779.05 ||2713.86 |
|Cash and Cash Equivalents (including other bank balances and current and non-current investments) ||1847.78 ||2223.29 ||2744.86 ||2722.54 |
|Earnings/ (Loss) per share (Diluted) (In ?) ||(0.14) ||3.10 ||2.61 ||1.79 |
BUSINESS PERFORMANCE / FINANCIAL OVERVIEW Standalone Financials
During 2019-20 the Company recorded net revenue of Rs 2038.41 million as compared toRs 2295.20 million in 2018-19. The Profit after tax of the Company is Rs (15.15) millionin 2019-20 as compared to Rs 328.02 million in 2018-19. The diluted Earnings Per Share(EPS) is Rs (0.14) per share in 2019-20 as compared to Rs 3.10 per share in 2018-19.
During 2019-20 the Company recorded consolidated net revenue of Rs 5724.24 millionas compared to Rs 5938.64 million in 2018-19. The consolidated Profit after tax of theCompany for the year 2019-20 is Rs 275.83 million as compared to Rs 188.87 million in2018-19. The consolidated diluted Earnings Per Share (EPS) for the year 2019-20 is Rs 2.61as compared to Rs 1.79 per share in 2018-19.
Your directors are pleased to recommend the following dividend for the financial yearended March 312020 which is payable on obtaining the shareholders' approval in the 20thAnnual General Meeting scheduled on September 28 2020:
|Particulars of dividend ||Par value ||Percentage ||Dividend amount per equity share (?) ||Date of Recommendation ||Book Closure Date |
|Final Dividend ||10.00 ||15% ||1.50 ||June 22 2020 ||September 22 2020 to September 282020 (both days inclusive) |
The total dividend payout amount for the year inclusive of dividend distribution tax isestimated to be Rs 158.54 million.
Barring unforeseen circumstances the Board intends to maintain similar or betterlevels of dividend payout over the next few years. However the actual dividend payout ineach year will be subject to the investment requirements and any other strategicpriorities identified by the Company.
After providing for the dividend the Company proposes to retain Rs 3116.83 million inthe Statement of Profit and Loss. The Company is not proposing to transfer any amount toreserves from the profits of the financial year 2019-20.
As on March 31 2020 the Company had liquid assets including investments in fixeddeposits mutual funds and non-convertible debentures of Rs 2744.86 million.
CHANGES TO THE SHARE CAPITAL
There was no allotment of equity shares during the year under review. The issued andpaid-up share capital of the Company as on March 31 2020 stands at Rs 1056962020.
The Board of Directors at their meeting held on April 09 2020 have approved buy backof equity shares of the Company from the Open Market through the Stock Exchange Mechanismup to an aggregate amount of Rs 54.10 Crore which represents 7.778% and 9.999% of theaggregate of the total paid-up equity capital and free reserves (including securitiespremium) of the Company based on the audited standalone and consolidated financialstatements respectively of the Company for last financial year ended on March 31 2019(subject to a maximum of 19321429 equity shares) for a price not exceeding Rs 28/- pershare. A Public Announcement dated April 14 2020 for the said buyback was published inFinancial Express (All editions) Jansatta (All editions) and Hosadigantha (Bengaluruedition) while the same was also filed with SEBI NSE and BSE. The buyback offer opened onApril 24 2020 and is ongoing. As on June 22 2020 the Company has bought back andextinguished 2158982 equity shares and the revised paid up equity share
capital of the Company as on June 22 2020 stand reduced to '1035372200/- comprisingof 103537220 equity shares of '10/- each fully paid up.
SIGNIFICANT EVENTS: 2019-20
In FY19-20 we continued to expand and diversify into new products and channelsbuilding additional features and capabilities significantly on the digital ecosystem. Wecreated new relationships in the non-operator space across (Original EquipmentManufacturer's) OEM's and multiple wallet service providers. We also won significant newdeals across the world while also renewing most of our existing contracts which were duethis year. In addition to this we made an investment into a Canadian gaming serviceprovider which we believe will give us significant value addition as we expand ourportfolio across gaming services.
In tones we crossed 11 million installs and also upgraded to version 2.0 in multiplemarkets with a fresh user interface enhancing the user experience and extending newerfeatures like personalized recommendations to users. We also extended our customer base intones to cover over 80% of the GCC market. In India we added newer charging channels likewallets to overcome the challenges of insufficient balance in the operator billing model.
A major new growth avenue was services for kids which saw us launching in 2 countriesin Europe with a subscription based kids centric app. This will continue to grow in thecoming year as we are seeing good traction on this service. Driving and increasingengagement with users was key mantra and our contest product led the way in thisdirection. OEM for mobile handsets included our contest framework within their eco-systemsto ensure and increase consumer engagement. In addition to this we also enhanced thecapabilities of the platform to supported freemium and ad-supported revenue models.
In videos and editorials we revamped the entire portal for Telefonica Emocion and alsoincluded marque customers like Nubico and Tinder into the list of partners for whom weopened API's on our billing and subscriber lifecycle management platform so that theycould extend operator billing as a channel for charging their customers.
OnMobile collaborated with Samsung to build and manage its Contests ecosystem on theSamsung MyGalaxy App. With an objective to increase user interaction with the servicetime spent and to drive engagement OnMobile has integrated its contests platform toprovide an intuitive and rewarding experience to the MyGalaxy app users. The SamsungMyGalaxy app offers a unique all-in-one experience including videos music games newsand personalized offers and updates. The mobile contests platform by OnMobile offers awide range of interesting and contextual topics to challenge yourself and win withinstant gratifications fair winner selection and real prizes paramount for userengagement.
OnMobile partnered with Gionee owned by the Jaina Group to launch its DigitalEntertainment platform to provide an intuitive and rewarding experience to Gionee users toincrease engagement and generate incremental revenue. Gionee known for its new generationof mobile phones which redefines life
in every way has entered into an agreement with OnMobile to launch its portfolio ofproducts including Contests Games Themes Tones and Videos.
OnMobile integrated with PhonePe India's leading digital payments platform to launch agaming app on the PhonePe Switch platform. PhonePe Switch is a one-click entry point to aworld of apps on the PhonePe app. It allows customers to seamlessly switch between PhonePeand their favourite food grocery shopping and travel apps from within the PhonePe appitself. OnMobile launched its gaming service on this platform with an objective to driveengagement for PhonePe's users and also allowing end users an additional channel toconsume our products and services
Acquisitions / Investment
OnMobile did a significant investment into Rob0 a Canadian Software as a Service (SaaS)company which provides gaming service providers a deep insight into their user behavior.They use proprietary AI to understand the user interaction with games and demonstratewhere they tend to drop off. This allows games creators to improve the stickiness of theirgames. This helps in significantly increasing revenue engagement and retention across anykind of games.
INFORMATION ABOUT SUBSIDIARY/JOINT VENTURE/ ASSOCIATE COMPANIES
As on March 31 2020 the Company has thirty eight (38) subsidiary companies and one(1) associate company.
During the year 2019-20 Company incorporated a subsidiary OnMobile BangladeshTechnologies Private Limited in Bangladesh on April 10 2019.
A subsidiary of the Company in Mexico OnMobile Servicios Corporativos De Telefonia SADe CV was merged with another subsidiary of the Company in Mexico Servicio De TelefoniaOnMobile De CV with effect from December 18 2019.
The following subsidiaries / branch offices of OnMobile Global Limited were closedduring the year:
1. OnMobile Global Czech Republic S.R.O. (closed w.e.f. August 29 2019)
2. OnMobile Global Limited-India Sucursala Bucuresti - Romania branch (closed w.e.f.September 04 2019)
3. OnMobile Global Limited - UK Branch (closed w.e.f. January 02 2020)
In accordance with Section 129(3) of the Companies Act 2013 the Company has preparedconsolidated financial statements of the Company and all its subsidiary companies whichforms part of the Annual Report. A statement containing salient features of the financialstatements of the subsidiaries of the Company in Form AOC-1 is given in Annexure I.
In accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial statements has been placed on the website of the Company www.onmobile.com.Further as per fourth proviso of the said Section audited annual accounts of each of thesubsidiary companies have also been placed on the website of the Companywww.onmobile.com. These documents will also be available for inspection during businesshours at the registered office of the Company at Bengaluru India.
During the year under review a branch of the Company located in Nepal has been shiftedto a new address.
Similarly there has been a change in the registered office address of OnMobile USALLC OnMobile Live Inc. OnMobile Zambia Telecom Limited OnMobile Uganda LimitedOnMobile Brasil Sistemas De Valor Agregado Para Comunicacoes Moveis Ltda 2dayUK Limitedand Fonestarz Media Group Limited subsidiaries of the Company.
The new addresses can be seen under the Contact information section.
MATERIAL CHANGES FOR THE PERIOD BETWEEN END OF THE FINANCIAL YEAR AND THE DATE OF THEREPORT
There have been no material changes for the period between end of the financial year2019-20 and the date of this report affecting the financial position of the Company.
OnMobile has institutionalized CSI (Continual Service Improvement) process in order toprovide better turn around time ( TAT) to reduce risks and build operational efficiency.While doing this OnMobile has adopted to best practices such as ISO 27001 and ITILstandards. The following efforts have been jointly driven by operations delivery andengineering teams:
General Data Protection Regulation (GDPR)
The teams have implemented the various processes and technical controls to furtherenhance the compliance to GDPR requirements in Europe. These controls include AAAantivirus log review VAPT periodic audits across installations in EU region. All teammember involved in handling personal data for EU customers have provided awarenesstraining on the requirements.
Process excellence is an ongoing endeavor at OnMobile. Operations and delivery teamsadherer to ISO 27001:2013 standards for information security. As a continual improvementmeasure OnMobile has undergone and completed a surveillance audit by DNV during thesecond quarter of 2019 without any major findings.
Automation & Optimization
While continuing our efforts towards automation of repetitive tasks we have put inplace a team of expert focused towards automation opportunities. This continued effort hasresulted in operational efficiencies in terms of reduction of manual activities andaccuracy in deliverables. In addition we have worked towards realigning some of the teamsto enhance operational efficiency and decrease the TAT.
Risk Mitigation Efforts
The operations team along with the delivery has taken up multiple risk mitigationexercises to reduce the down time. This includes building system redundancies; tie up withAMC vendors for better TAT enhancing the monitoring capabilities and audits of criticalsystems. This has resulted in reduction in TAT for high severity incidents thus reducingthe business impacts.
OnMobile has 12 offices across the globe with a total of 120000 square feet of officespace. The offices are catalogued as leased office business center & virtual office.OnMobile headquarters - Electronic City phase 1 Bengaluru - is the largest facility with98000 square feet of office space. All OnMobile offices are well equipped with reliableinfrastructure & working atmosphere amid high level of security and safetyproficiency. Consistent and scheduled precautionary measures are in place to circumventdowntime and to ensure business continuity. We operate the facilities in a manner thatcomplies with the applicable local laws and regulations.
CORPORATE SOCIAL RESPONSIBILITY
OnMobile continue to support both Society to Aid the Hearing Impaired (SAHI) and VAANINGOs which work in the space of communication and enablement of hearing-impaired kids inHyderabad Telangana and remote parts of Karnataka. We continued to invest in employee andcommunity engagement through various activities like kids day / distribution of hearingaids etc. which saw high level of interaction and involvement from both the kids andemployees.
Our contribution towards cochlear implants post-surgical rehabilitationidentification of the needy distribution of hearing aids life skill trainings likeself-defense tailoring and computers were the key highlights this year.
The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Companies Act 2013. The CSR Committee charter and theCSR Policy of the Company are available in the website at the below link:
Particulars required to be disclosed pursuant to the Companies (Corporate SocialResponsibility Policy) Rules 2014 are given in Annexure VIII to the Boards' report.
RESEARCH AND DEVELOPMENT
The year 2019-20 was centered on innovating on our digital offerings from the previousyear primarily integrating the services with non-operator wallet and mobile marketingtools to improve the reach of our products and services. This allowed us to launchservices like digital entertainment platform for a leading wallet service provider inBangladesh. With additional innovations like ad funded and freemium models we were able toextend our products to many first time users in the market.
Another key addition to the platform was deep integration with analytics tools. Thisallowed us to get a deeper understanding of the user behavior improve engagement withcontextual notifications and enhance the user experience.
Ringback Tones (RBT)
PWA New digital store front
Progressive Web Apps are the websites which delivers an app- like experience to theusers. At their base they are a webpage but in their design they feel like an app. Theyembrace various aspects of modern web development in a mobile-first world. They are morereliable fast and responsive. PWAs offer an alternative approach improving an app'scross-platform performance across web and mobile. Compared to native RBT apps they use upmuch less storage space on a user's device. PWA users also have the option to save the RBTapp to their home screen without the hassle of a full download.
Mobile marketing tools
Mobile marketing is a multi-channel digital marketing strategy intended at reaching atarget audience on their smartphones tablets and/or other mobile devices via websitesSMS social media and apps.
SDK Library integration with other Mother Portals
SDK are light versions of the app which processes easily for everyone involved becauseeverything is pre-built. They do not adversely impact a mobile device's CPU battery ordata consumption. With an RBT SDK we have improved control over the elements of our userinterface that show up in other / operator self-care apps. SDKs are mostly all in onesolutions; they do not require integration with other components or significant designthat can slow down the development process.
Ringtone Integrations (combined with RBT)
The main objective of integrating ringtone is to capitalize on the SEO traffic that is10X of the RBT traffic. This will help in increasing organic leads and in future gettingthem converted as Paid users. Ringtone feature combined with RBT aids in additionalengagement and going beyond the digital capabilities of Tones.
Videos Editorials & Subscriptions
Revamped the Videos and Editorial service portal with a modern look and feel.Reorganized the categorization of services to address the current market needs. Integratedwith leading OTT partners in the European market to allow their services to be billed viaoperator billing systems.
Migrated the service portal to https to be in line with the regulatory requirements andsafe browsing standards with this move all services can now be SEO compliant and canbenefit from new technologies like PWA and AMP etc leading to higher visibility when auser does a search.
With a clear strategy to pivot to a digital centric offering in contests we worked onidentifying and developing the building blocks which are key to success in thiseco-system. Contests opened up a new revenue line with an ad-funded model in addition tothe standard subscription based service. To meet non-operator business requirements andexplore freemium models a new product construct was developed aligned with internationalad- service provider integration standards this includes support for banners native adsand pop-ups. With the content rich requirements in digital contest framework has beenaugmented with new formats such as image based carousel scratch card and otherinnovative formats
Capability to send push notifications to service engagement was introduced. Real timescoring and leader board was introduced. The service offering was also integrated withanalytics tools to understand the user behavior and insights.
In gaming our focus has been on designing and architecting a new Cloud Gamingplatform. This platform relies on running games on a cloud hosted infrastructure at itscore followed by encoding the gameplay into a video stream which is then relayed to usersusing a technology called WebRTC the same one that is used in Google Meet which enablesfast and reliable connection. In our development journey we have worked on someindustry-first capabilities with support from global leaders like Google and Amazon verycritical for delivering the cutting-edge mobile- first experience we have envisioned.
Billing Platform - The ONMOPAY Billing front-end combined with PRISM (BillingSubscription and Lifecycle Management Platform) was augmented to include capabilities tosupport digital marketing campaigns along with attribution fraud management and campaignAnalytics. In addition to this we also added backend integrations with major wallet's inAsia to enable customers to be able to purchase services and content via additionalchannels over and above operator wallets
Digital Entertainment Store - We created a platform to act as a
single destination for multiple content services to be hosted for operators and serviceproviders as a unified offering to their end user in the Asian markets. This platformextended capabilities to support onboarding multiple content partners and OTT brands whileproviding the consumer a simpler user experience. This platform also extended commonfeatures across multiple content service providers like Try and Buy Search and theability to consume the content from the home page itself.
MADE Streaming Platform - We included the service capability of streaming into ourplatform portfolio. This will help us migrate from third party streaming service providersto the inhouse developed platform which will aid in reducing the cost and provide fasterturnaround in feature requirements. The streaming service has also been integrated withleading CDN services providers to ensure that content can be delivered and efficiently andfaster to the end consumer.
IMPACT OF COVID-19 ON BUSINESS
Information regarding the impact of the Covid-19 pandemic on worldwide operations andfinancials of OnMobile is as follows:
OnMobile has witnessed an impact on its revenue in certain geographies due tonon-availability of recharges in the case of pre-paid mobile connections & reductionin marketing spend adversely impacting new customer acquisitions. These disruptions areexpected to have a marginal adverse impact on our Q1 FY20-21 revenue.
The Company has initiated several measures to mitigate this revenue impact and itsconsequential impact on profits. As a result of these measures impact on Q1 FY20-21profits is not expected to be material.
The Company does not plan to undertake any material employee reduction or salaryreduction in Q1. Most of the Company's offices were shut due to government mandatedlockdown restrictions but there has been no material impact on operations and customerservicing and all regular activity continued without interruption by implementingeffective work from home measures. All internal controls and financial reporting systemscontinue to be fully operational.
The Company has not faced any liquidity issues and there has been no material delay inreceiving collections from customers. The Company does not have any contract / agreementwhere non-fulfilment of the obligations of any party will have a significant impact on theCompany's business.
OnMobile will continue to provide further updates in case of any material changewitnessed in its operations / financials.
The Company is committed to maintain the highest standards of corporate governance. TheCompany meets the standards and guidelines set by the Securities and Exchange Board ofIndia on corporate governance and have implemented all the stipulations prescribed. Adetailed report on Corporate Governance as stipulated under Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 forms part ofthe Annual Report. Certificate(s) from the Auditors of the Company M/s. B S R & Co.LLP Chartered Accountants and Parameshwar G. Hegde of M/s. Hegde & Hegde CompanySecretaries confirming compliance of conditions of Corporate Governance as stipulatedunder the aforesaid Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 are annexed to the Corporate Governance Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In accordance with Part B of Schedule V of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 the ManagementDiscussion and Analysis Report is presented in a separate Section forming part of theAnnual Report.
BUSINESS RESPONSIBILITY REPORT
OnMobile is included in the list of top 1000 companies of National Stock Exchange ofIndia Limited (NSE) as per the market capitalization as on March 312020.
Accordingly the Company has prepared Business Responsibility Report in line with theformat suggested by Securities and Exchange Board of India vide Circular No. CIR/CFD/CMD/10/2015 dated November 04 2015 which is annexed to this Annual Report.
DIRECTORS AND KEY MANANGERIAL PERSONNEL Re-appointment
Pursuant to provisions of Sections 196 197 and 203 read with Schedule V and all otherapplicable provisions of the Companies Act 2013 and subject to the approval of theCentral Government Frangois-Charles Sirois was re- appointed as the 'Executive Chairman'of the Company at the 19th Annual General Meeting of the Company held on September 172019 for a period of Five (5) years w.e.f November 1 2019. An application has been madeto Central Government on October 25 2019 seeking approval for the appointment of Frangoisas Executive Chairman.
As per the provisions of Companies Act 2013 Francois-Charles Sirois retires byrotation as Director at the ensuing AGM and being eligible seeks re-appointment.
Pursuant to the provisions of Section 149 of Companies Act 2013 Sanjay Kapoor wasappointed as Independent Director
for a period of three years at the AGM 2017. Since his first tenure is gettingcompleted it is proposed to re-appoint him as Independent Director of the Company forfurther period of three years at the forthcoming AGM.
Chris Vital Arsenault resigned from the position of Independent Director of the Companyw.e.f. closing of business hours of April 29 2020.
Sanjay Baweja resigned from the position of Independent Director of the Company w.e.f.closing of business hours of May 29 2020.
Chief Financial Officer
Ganesh Murthy resigned from the position of Chief Financial Officer w.e.f. May 312020.
Sanjay Baweja was appointed as Chief Financial Officer of the Company w.e.f. June012020
AUDITORS AND AUDITORS' REPORT
In terms of provisions of Section 139 of the Companies Act 2013 and the rules madethereunder M/s. BSR & Co. LLP Chartered Accountants (Firm Registration No.101248W/W-100022) were appointed as Statutory Auditors of the Company by the shareholdersat the 17th AGM held on September 06 2017 to hold office until the conclusion of the 22ndAnnual General Meeting to be held in calendar year 2022. The Company has received acertificate form the auditors confirming that they are not disqualified from continuing asAuditors of the Company.
The requirement for ratification of appointment of auditors by the members at every AGMis done away with vide Ministry of Corporate Affairs notification dated May 07 2018.
The Board of Directors of the Company had appointed Parameshwar G Hegde of M/s. Hegde& Hegde Company Secretaries to conduct the Secretarial Audit pursuant to theprovisions of Section 204 of the Companies Act 2013 for the financial year ended March31 2020.
Secretarial Audit Report obtained pursuant to section 204 of the Companies Act 2013and Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 read with SEBI Circular No. CIR/CFD/CMD1/27/2019 dated February 08 2019 is appendedas Annexure X.
Further pursuant to above said SEBI circular listed entities shall additionally onan annual basis require a check by the Practicing Company Secretary on compliance of allapplicable SEBI Regulations and circulars/ guidelines issued thereunder consequent towhich the Practicing Company Secretary shall submit a report to the listed entity in themanner specified in this circular. The Company has obtained annual secretarial compliancereport from Parameshwar G Hegde of M/s. Hegde & Hegde Company Secretaries for thefinancial year ended march 31 2020 and same has been submitted to the stock exchangeswithin the stipulated time copy of which is appended to the Report on CorporateGovernance.
Comments on Auditors' Report
There are no qualifications reservations or adverse remarks or disclaimers made byStatutory Auditors of the Company in the Audit Report and by the Secretarial Auditor inthe Secretarial Audit Report for the financial year ended March 31 2020.
MCA Inspections/ Show Cause & Adjudication Notices/ Compounding Applications
Referring to the Inspection of Books of account and other records of the Company duringthe years 2015-16 and 2016-17 by the Ministry of Corporate Affairs the Company hasreceived the five show cause notices and one adjudication notice during FY 2018-19 foralleged violation of few sections of the Companies Act 1956 and the Companies Act 2013.
On Adjudication Notice:
The Company and officers in default appeared before the Registrar of CompaniesBengaluru (ROC) on the scheduled date February 18 2018. After the hearing the ROC videOrder No. ROCB/Sec 454(3)/ADJ/027860 dated March 15 2019 imposed an aggregate penalty ofINR 25000 on the Company and the officers in default. Company and the officers in defaulthad paid the compounding amounts and completed other necessary filing formalities. Detailsof the penalty and payment confirmations have been provided in extract of Annual Return inAnnexure VI.
On 5 Show Cause Notices:
Company submitted responses to ROC Bengaluru on all the 5 Show cause notices denyingthe alleged violations as not material/ very technical in nature and requested to drop theproceedings. However in case if the ROC would not be satisfied with Company'sexplanations to avoid prosecution proceedings in the economic offences court Company andofficers in default filed compounding applications with MCA.
Regional Director Hyderabad of MCA called for hearings on 28.08.2019 21.10.2019 and08.11.2019. The Legal counsel and the Company secretary represented the Company andofficers. After the hearings the Regional Director Hyderabad passed the compoundingorders imposing the penalties. Company and the officers in default had paid thecompounding amounts and completed other necessary filing formalities. Details of thepenalty and payment confirmations have been provided in extract of Annual Return inAnnexure VI.
As of now only one matter is pending before the Regional Director in the matter ofSection 121 of the Companies Act 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the directors to the best oftheir knowledge and belief confirm that:
i. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.
ii. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the
end of the financial year and of the profit and loss of the Company for that period.
iii. They have taken proper and sufficient 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.
iv. They have prepared the annual accounts on a going concern basis.
v. Internal financial controls have been laid down and they were adequate and operatingeffectively.
vi. Proper systems to ensure compliance with the provisions of all applicable laws havebeen devised and such systems were adequate and were operating effectively.
NUMBER OF MEETINGS OF THE BOARD
The Board met five times during the financial year 2019-20 viz. May 24 2019 August01 2019 September 17 2019 October 30 2019 and February 06 2020. The maximum intervalbetween any two meetings did not exceed 120 days.
COMMITTEES OF THE BOARD
As on March 312020 the Board had five Committees:
1. Audit Committee
2. Nomination and Compensation Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility Committee
5. Risk Management Committee
Details of all the Committees along with their charters composition and meetings heldduring the year are provided in the "Report on Corporate Governance" as part ofthis Annual Report.
The Company has received necessary declarations from each of the Independent Directorsof the Company under Section 149(7) of the Companies Act 2013 that the IndependentDirector meet the criteria of independence laid down in Section 149(6). The definition of'Independence' of Directors is derived from Regulation 16(b) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 ('Listing Regulations') and Section 149(6)of the Companies Act 2013. Further the Company has received declaration under Regulation25(8) of Listing Regulations from each Independent Director of the Company.
Based on the confirmation / disclosures received from the Directors and on evaluationof the relationships disclosed as on March 31 2020 the following non-executive Directorsare independent in terms of the aforesaid Listing Regulations and Section 149(6) of theCompanies Act 2013:
a) Rajiv Khaitan
b) Nancy Cruickshank
c) Sanjay Baweja#
d) Chris Arsenault*
e) Sanjay Kapoor
f) Gianluca D'Agostino
*Resigned from the Board w.e.f. April 29 2020.
#Resigned from the Board w.e.f. May 29 2020.
COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Nomination and Remuneration Policy of the Company on Directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a Director and other matters provided under sub-section (3) of Section178 is appended as Annexure II to this Report and is placed on the website of the Companyat the below link:
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The details in respect of internal financial control and their adequacy are included inthe Management Discussion and Analysis which is forming part of the Annual Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The details of the loans and guarantees given and the investments made pursuant toSection 186 of the Companies Act 2013 during the year under review are given below:
|Sl. No ||Name of the entity ||Relation ||Amount Rs (in Million) ||Particulars of loans guarantees and investments ||Purpose for which the loan guarantee and investment are proposed to be utilized |
|1 ||OnMobile Global Spain S.L.U. ||Subsidiary ||314.64 ||Loan Provided ||Working Capital of its subsidiary |
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION188(1)
The particulars of contracts or arrangements with related parties referred to inSection 188(1) as prescribed in Form AOC - 2 of the rules prescribed under Chapter IXrelating to Accounts of Companies under the Companies Act 2013 is appended in AnnexureIII to this report.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The Company being a service provider organization most of the information as requiredunder Section 134(3)(m) read with Companies (Accounts) Rules 2014 is not applicable.However the Company endeavors to effectively utilize and conserve energy by usingimproved technology in its infrastructure such as lighting and paper usage.
FOREIGN EXCHANGE EARNINGS AND OUTGO
(In Rs Million)
|Description || |
| ||March 312020 ||March 312019 |
|Foreign exchange earnings ||1094.63 ||1324.73 |
|Foreign exchange outgo ||392.81 ||639.05 |
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future. Detailsof pending litigations and tax matters are disclosed in the financial statements.
DIVIDEND DISTRIBUTION POLICY
As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the top 500 listed companies shall formulate a dividend distributionpolicy. Accordingly the policy was adopted by the Board vide resolution dated March 222017 to set out the parameters and circumstances that will be taken into account by theBoard in determining the distribution of dividend to its shareholders. The policy isenclosed as Annexure IV to the Board's report and is also available on the Company'swebsite at the below link:
RISK MANAGEMENT POLICY
The Board of Directors at their meeting held on October 30 2014 constituted a RiskManagement Committee. The Company has formulated a risk management policy to facilitatesetting up a framework for risk assessment and minimization procedures. A copy of the riskmanagement policy is appended in this report as Annexure V and is placed on the website ofthe Company at the below link:
The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on Meetings of the Board of Directors and General Meetings.
The Company has established a Whistle Blower Policy for Directors and employees toreport their genuine concern. The details of the same are explained in the Report onCorporate Governance.
DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARRASMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company is in compliance with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition & Redressal) Act 2013 and Rules made thereunder.Details of complaints during the year have been disclosed in the Report on CorporateGovernance.
INTERNAL COMPLAINTS COMMITTEE
The Company is in compliance with provisions relating to the constitution of InternalComplaints Committee (ICC) under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. The Company has in place an Anti-Sexual HarassmentPolicy in accordance with the said Act.
Internal Complaints Committee was constituted by the Company for redressal ofcomplaints for the specified workplace. The Committee comprises of the following:
Presiding Officer - Presiding Officer is a woman employee
Advisor - The committee also has an external member (woman) who is familiar withissues relating to sexual harassment
Committee Members -The committee comprises of 60% women and 40% men
Office of Internal Complaints Committee - The office is responsible for managingthe Committee's operations
EVALUATION OF PERFORMANCE OF BOARD/COMMITTEES/INDIVIDUAL DIRECTORS AND CHAIRPERSON
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annual evaluationof performance.
Nomination and Compensation Committee specified that (i) the Board Evaluation processfor FY 2019-20 should be carried out internally by the Board of Directors and (ii)recommended the criteria for evaluation at different levels in the form of Surveyquestionnaires in alignment with 'Guidance Note on Board Evaluation' issued by Securitiesand Exchange Board of India.
Survey questionnaires were circulated to all the Board members with set of questions toassess the performance under each of the following categories:
(i) The Board as a whole
(ii) Various Committees of the Board
(iii) Independent Directors and
(iv) Chairperson of the Board.
The Board reviewed and analyzed the responses to the questionnaire and accordinglycompleted the Board evaluation process for the financial year 2019-20
EXTRACT OF ANNUAL RETURN
As required pursuant to section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT-9 is enclosed as Annexure VI to this report.
PARTICULARS OF EMPLOYEES
The table containing the names and other particulars of employees in accordance withthe provisions of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is appendedas Annexure VII (A) to the Board's Report
A statement showing details of top ten employees in terms of remuneration everyemployee employed throughout the financial year and in receipt of remuneration of Rs 1.02crore or more per annum or employed for part of the year and in receipt of Rs 8.5 lakh ormore per month and employees posted outside India drawing more than Rs 60 lakh per annumunder Rule 5(2) and (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is enclosed as Annexure VII (B) to Board's Report.
The Company has not accepted deposits during the year under review falling within thepurview of Section 73 of the Companies Act 2013 and the Rules thereunder.
EMPLOYEE STOCK OPTION SCHEMES
Pursuant to the provisions of Section 62(1 )(b) read with Rule 12(9) of the Companies(Share Capital and Debentures) Rules 2014 the Company approved following Employee StockOption Schemes i.e. Employee Stock Option Plan-I 2003 Employee Stock Option Plan-II 2003Employee Stock Option Plan-III 2006 Employee Stock Option Plan-I 2007 Employee StockOption Plan-II 2007 Employee Stock Option Plan-I 2008 Employee Stock Option Plan-II2008 Employee Stock Option Plan-III 2008 Employee Stock Option Plan-IV 2008 EmployeeStock Option Plan-I 2010 Employee Stock Option Plan-II 2010 Employee Stock Option Plan I2011 Employee Stock Option Plan I 2012 and Employee Stock Option Plan I 2013 for grantingstock options to its employees.
All the schemes endeavor to provide incentives and retain employees who contribute tothe growth of the Company. A summary disclosure in compliance with Companies (ShareCapital and Debentures) Rules 2014 and Securities and Exchange Board of India (ShareBased Employee Benefits) Regulations 2014 forms part of this report as Annexure IX andthe complete details have been disclosed under Notes to the financial statements whichform part of the Annual Report. During the year under review there has been no variationin the terms of ESOP schemes and the disclosure on employee stock option schemes is placedon the website of the Company as a part of Annual report at the below link:
The Board of Directors takes this opportunity to express their appreciation to thecustomers shareholders investors vendors and bankers who have supported the Companyduring the year. The Directors place on record their appreciation to the OnMobilians atall levels for their contribution to the Company. The Directors would like to make aspecial mention of the support/co-operation extended by the various departments of theGovernment of India particularly the Special Economic Zone Central Board of DirectTaxes Central Board of Indirect Taxes and Customs the Ministry of Commerce and Industrythe Department of Telecommunications the Reserve Bank of India Ministry of CorporateAffairs Securities and Exchange Board of India BSE Limited National Stock Exchange ofIndia Ltd National Securities Depository Limited and Central Depository Services (India)Limited and look forward to their support in all future endeavors.
For and on behalf of the Board of Directors
| ||Fran^ois-Charles Sirois |
| ||Executive Chairman and CEO |
|Place: Montreal Canada || |
|Date: June 22 2020 || |