TO THE MEMBERS
The Directors of your Company take pleasure in presenting their 26th annualreport along with the audited financial statements for the financial year ended 31stMarch 2019. The consolidated performance of the Company and its subsidiaries has beenreferred to wherever required.
1. FINANCIAL RESULTS
|Particulars || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Revenue ||1852.68 ||1805.65 ||10768.14 ||9745.68 |
|Other income ||175.32 ||291.02 ||113.75 ||99.22 |
|(Loss)/Profit before depreciation exceptional items and tax ||(2328.59) ||1571.66 ||257.48 ||211.22 |
|Less: Depreciation for the year ||101.71 ||127.86 ||164.13 ||184.88 |
|(Loss)/Profit before tax ||(2430.30) ||1443.80 ||93.35 ||26.34 |
|Less: Provision for tax || || || || |
|a) Current tax ||321.10 ||483.10 ||321.10 ||483.10 |
|b) MAT Credit entitlement ||- ||(118.87) ||- ||(118.87) |
|c) Deferred tax ||17.86 ||(20.63) ||17.86 ||(20.63) |
|d) Adjustment of Income Tax of earlier year ||2.85 ||- ||2.88 ||13.57 |
|(Loss)/Profit for the year before Minority Interest ||(2772.11) ||1100.20 ||(248.49) ||(330.83) |
|Share in Loss attributable to Minority Interest ||- ||- ||16.88 ||8.56 |
|Profit/(Loss) for the year ||(2772.11) ||1100.20 ||(231.61) ||(322.27) |
|Earnings Per Share (Rs.) ||(15.03) ||4.88 ||(1.26) ||(1.43) |
2. REVIEW OF OPERATIONS
2.1 Review of Standalone Financial
In the financial year 2018-19 the Company achieved an Income from operations of'1852.68 lakhs as compared to '1805.65 lakhs in the previous year. The Company has madea provision towards diminution in the value of investment in its wholly owned subsidiariesto the extent of '3477.85 lakhs hence the loss after tax was '2772.11 lakhs for the yearending 31st March 2019 as compared to Profit of tax of '1100.20 lakhs in theprevious year.
2.2 Review of Consolidated Financial
In the financial year 2018-19 the Company achieved an Income from operations of'10768.14 lakhs as compared to '9745.68 lakhs in the previous year. Loss after tax was'248.49 lakhs for the year ending 31st March 2019 as compared to Loss aftertax of '330.83 lakhs in the previous year.
There were no material changes and commitments affecting the financial position of thecompany from the end of the financial year till the date of the Directors' Report.
The Company completed its second buy-back of 5600000 equity shares at a price of'120/- per equity share for an aggregate consideration of '672000000 (Rupees SixtySeven Crores Twenty Lakhs Only). The offer size of the buy-back was 19.68% of the fullypaid-up equity share capital and free reserves as per the standalone audited accounts ofthe Company as on 31st March 2018 and was within the statutory limits of 25%of the fully paid-up equity share capital and free reserves as per the last auditedaccounts of the Company. The buy-back process was completed and the shares wereextinguished on 10th July 2018. The Company's first buy-back was completed inFY 2017.
Your Directors have not recommended any Dividend for the year 2018-19.
5. SHARE CAPITAL
The Paid-up Equity Capital of the Company as on 31st March 2019 stood at'33900000/- consisting of 16950000 Equity Shares of '2/- each. During the financialyear ended 31st March 2019 the Company has completed the buyback of 5600000equity shares of '2/- each. Therefore the Paid-up Equity Share Capital decreased from'45100000/- to '33900000/-.
6. DEPOSITS FROM PUBLIC
The Company has neither invited nor accepted any deposits from the public during thefinancial year 2018-19. The Company does not intend to invite or accept any depositsduring financial year 2019-20 as such no amount on account of principal or interest ondeposit from public was outstanding as on the date of the balance sheet.
7. RISK MANAGEMENT
The Company has a Risk Management (RM) framework to identify evaluate Business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage. The riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting. The framework helps in identifying risk trendexposure and potential impact analysis at a Company level.
The Risk Management policy formulated by the Company has identified the key businessrisks and also the plans to mitigate the risks.
8. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Financial Control Systems commensurate with the sizescale and complexity of its operations. The Management evaluates the efficacy and adequacyof internal control system in the Company its compliance with operating systemsaccounting procedures and policies of the Company.
9. VIGIL MECHANISM
The Company has established a vigil mechanism for Directors and employees to reportgenuine concerns about unethical behavior actual or suspected fraud or violation of codeof conduct which provides for adequate safeguards against victimization of director(s)/employee(s) and also provides for direct access to the Chairman of the Audit committee inexceptional cases. The Audit Committee and the Board of Directors have approved theWhistle Blower Policy and the details are available on the website of the Company underthe weblinkhttps://smartlinkholdings.com/wp-content/uploads/2018/02/Whistle-Blower-Policy-Final-2019.pdf
10. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to Section 135 of the Companies Act 2013 (hereinafter referred to asthe Act') read with rules made thereunder your Company has constituted a CorporateSocial Responsibility Committee (CSR Committee). The constitution of the committee isgiven in the Corporate Governance Report. The Corporate Social Responsibility Committee(CSR Committee') has formulated and recommended to the Board a Corporate SocialResponsibility Policy (CSR Policy') indicating the activities to be undertaken bythe Company which has been approved by the Board. The CSR Policy is displayed on thewebsite of the Company athttps://smartlinkholdings.com/wp-content/uploads/2018/02/3.-Corporate-Social-Responsibility-Policy.pdf.The requisite details on CSR activities pursuant to Section 135 of the Act and as perAnnexure attached to the Companies (Corporate Social Responsibility Policy) Rules 2014are annexed as Annexure - H to this Report.
11. SUBSIDIARY COMPANIES
The Company has three subsidiary companies namely Digisol Systems Limited Synegra EMSLimited and Telesmart SCS Limited as on 31st March 2019.
Detailed information on the operations of subsidiaries of the Company is covered in theManagement Discussion and Analysis Report and financial position is given in Annexure I.
In accordance with Section 129(3) of the Act 2013 we have prepared financialstatements of the Company. Further a statement containing salient features of thefinancial statement of our subsidiaries in prescribed format AOC-1 is appended as Annexure- I to the Board Report. The statement also provides the details of performance andfinancial position of each subsidiaries.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including consolidated financial statements will be available on our websitewww.smartlinkholdings.com. The Company would provide the annual accounts of thesubsidiaries and the related detailed information to the shareholders of the Company onspecific request made to it in this regard by the shareholders.
The Company has formulated a Policy on Material Subsidiary as required under ListingRegulations and the policy is uploaded on the website of the Company athttps://smartlinkholdings.com/wp-content/uploads/2017/06/Smartlink-Subsidiary-Policy1.pdf
12. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Kamalaksha Naik Executive Chairman Mr. K. G. Prabhu Chief Financial Officer andMs. Urjita Damle Company Secretary have been designated as Key Managerial Personnel inaccordance with provisions of Section 203 of the Companies Act 2013. There was no changein Key Managerial Personnel during the year under review.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence prescribed under section 149(6) ofthe Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations (hereinafter to be referred as SEBI Listing Regulations). Therehas been no change in the circumstances affecting their status as independent directors ofthe Company.
Mr. K. R. Naik retires by rotation and being eligible offers himself forre-appointment. A resolution seeking shareholders' approval for his re-appointment formspart of the Notice.
Mr. Pankaj Baliga and Mr. K. M. Gaonkar were appointed as an independent director atthe twenty First Annual General Meeting (AGM) held on 26th July 2014 for aperiod of five year Based on the recommendation of the Nomination and RemunerationCommittee their re-appointment for a second term of five years is proposed at the ensuingAGM for the approval of the Members by way of a special resolution.
Ms. Arati Naik was appointed as Wholetime Director designated as Executive Directorw.e.f. 1st April 2019 subject to shareholder's approval. A resolution seekingshareholders' approval for her appointment forms a part of the Notice.
Board of Directors of the Company approved re-appointment of Mr. K. R. Naik for afurther period of five years w.e.f. 26th December 2019 subject to shareholder'sapproval. A resolution seeking shareholder's approval forms part of the notice.
The Company has devised a Policy for performance evaluation of the Board Committeesand other individual Directors (including Independent directors) which includes criteriafor performance evaluation of Non-Executive Directors and Executive Directors. Theevaluation process inter-alia considers attendance of the Directors at Board and Committeemeetings effective participation domain knowledge compliance with code of conductvision and strategy etc.
During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than sitting feescommission and reimbursement of expenses incurred by them for the purpose of attendingmeetings of the Board/Committee of the Company.
13. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard has carried out an annual performance evaluation of its own performance thedirectors individually as well as the evaluation of the working of its Audit Nomination& Remuneration and other Committees.
a. Observations of board evaluation carried out for the year - There were noobservations in the Board Evaluation carried for the year
b. Previous year's observations and actions taken - There were no observations of theBoard for the last financial year
c. Proposed actions based on current year observations - Not applicable
The manner in which the evaluation has been carried out has been given in the CorporateGovernance Report.
14. REMUNERATION POLICY
The Board has on recommendation of the Nomination & Remuneration Committee frameda policy for selection and appointment of Directors Senior Management and theirremuneration. The details of Remuneration Policy are stated in the Corporate GovernanceReport.
During the year 6 Board Meetings and 4 Audit Committee Meetings were convened and held.The details of the same are given in the Corporate Governance Report which is part of thisreport. The intervening gap between the Meetings was within the period prescribed underthe Act.
16. AUDIT COMMITTEE
The composition of the Audit Committee is in line with the provisions of Section 177 ofthe Act read with Regulation 18 of SEBI Listing Regulations. The Chairman of the AuditCommittee is an Independent Director. The details of the composition of the AuditCommittee are given in the Corporate Governance Report which is part of this report.During the year all the recommendation of the Audit Committee were accepted by the Board.
17. STAKEHOLDERS RELATIONSHIP COMMITTEE
The composition of the Stakeholders Relationship Committee (SRC) is in line with theSection 178 of the Act read with Regulation 20 of SEBI Listing Regulations.
18. NOMINATION AND REMUNERATION COMMITTEE
The composition of the Nomination and Remuneration Committee (NRC) is in line with theSection 178 of the Act read with Regulation 19 of SEBI Listing Regulations. The details ofmeetings and their attendance are included in the Corporate Governance Report.
19. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Board of Directors to the best of itsknowledge and ability hereby state and confirm that:
a) in the preparation of annual accounts the applicable accounting standards have beenfollowed and that no material departures have been made from the same.
b) appropriate accounting policies have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March2019 and the profit of the Company for that period.
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.
d) the annual accounts have been prepared on a going concern' basis.
e) proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.
f) that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
20. RELATED PARTY TRANSACTIONS
None of the transactions with related parties fall under the scope of Section 188(1) ofthe Act.
All Related Party Transactions are placed before the Board for approval. The Companyhas developed a Related Party Transactions Policy for the purpose of identification andmonitoring such transactions.
The information on transaction with related parties pursuant to Section 134(3)(h) ofthe Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 are given in Annexure- J in Form AOC-2 and the same form a part of this report.
21. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
22. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYIF ANY DURING THE PERIOD FROM 31st MARCH 2019 TO THE DATE OF THE REPORT
There was no material change/commitment which is mentioned below affecting thefinancial position of the Company during the period from the end of the financial year on31st March 2019 to the date of the Report.
23. EMPLOYEE STOCK OPTION SCHEME
The Company has not issued any ESOPS to its employees during the year.
24. REPORTING OF FRAUDS
There have been no instances of fraud reported by the Auditors under Section 143(12) ofthe Act and Rules framed there under either to the Company or to the Central Government.
25. AUDIT REPORTS AND AUDITORS
At the twenty-fifth AGM held on 7th August 2018 the Members approvedappointment of MSKA & Associates Chartered Accountants (firm registration number105047W) as Statutory Auditors of the Company to hold office for a period of five yearsfrom the conclusion of that AGM till the conclusion of the thirtieth AGM.
Auditor's report and secretarial audit report
The statutory auditor's report and the secretarial audit report do not contain anyqualifications reservations or adverse remarks or disclaimer. Secretarial audit reportis attached to this report.
26. PREVENTION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
As per provisions of Section 4 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 your Company has constituted anInternal Complaints Committee for redressal of complaints against sexual harassment andthere were no complaints received during the financial year.
27. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading incompliance with SEBI (Prohibition & Insider Trading) Regulation 2015 duly amended andapproved at its board meeting held on 1st February 2019 with a view toregulating trading in securities by the Directors and designated employees of the Company.
28. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the application provisions of the Companies Act 2013 read with IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 (the Rules') allunpaid and unclaimed dividend are required to be transferred to the IEPF established bythe Government of India after completion of seven years. Further according to the Rulesthe shares on which dividend has not been paid or claimed by shareholders for sevenconsecutive years or more shall be transferred to demat account of IEPF Authority.Accordingly the Company has transferred unclaimed and unpaid dividend of '967482/- toIEPF. Further 7595 shares were transferred as per requirements of IEPF Rules during theyear during FY 2019.
29. DISCLOSURE REQUIREMENTS
As per SEBI Listing Regulations Management Discussion and Analysis is annexed asAnnexure - A to the report. Secretarial Audit Report is annexed asAnnexure - B. A separate section on the corporate governance is annexed asAnnexure - C together with a certificate from Mr. Shivaram Bhat confirmingcompliance is annexed as Annexure - D. Declaration by the Executive Chairmanis annexed as Annexure - E. The Company has devised proper systems to ensurecompliance with the provisions of all applicable Secretarial Standard issued by Instituteof Company Secretaries of India and that such systems are adequate and operatingeffectively.
30. EXTRACT OF ANNUAL RETURN
As per the requirements of Section 92(3) of the Act and Rules framed thereunder theextract of the annual return for FY 2019 is given in Annexure F in theprescribed Form No. MGT-9 which is a part of this report.
31. STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
The information required under section 197 of the Act read with Rule 5(1)(i) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company and Directors is enclosed as Annexure - G to thisreport.
32. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO
The particulars regarding conservation of energy technology absorption are notapplicable.
a. Foreign Exchange Earnings and Outgo
Total foreign exchange earnings and outgo is stated in Note 24 forming part of theAccounts
33. PARTICULARS OF LOANS/ADVANCES/GUARANTEE/INVESTMENTS OUTSTANDING DURING THEFINANCIAL YEAR
Details of Loans Guarantee and Investment covered under the provision of Section 186of the Act read with the Companies (Meeting of Board and its Powers) Rules 2014 have beengiven in the financial statements.
Directors place on record their appreciation for the continuing support andco-operation from the customers vendors dealers distributors resellers bankersshareholders Goa Industrial Development Corporation State Industries Electricity andother Government departments.
The Directors also take this opportunity to thank the employees for their dedicatedservice throughout the year.
| ||For and on behalf of the Board || |
|Place : Mumbai ||K. R. Naik ||K. M. Gaonkar |
|Date :15th May 2019 ||Executive Chairman ||Director |
| ||DIN:00002013 ||DIN: 00002425 |