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Vertoz Advertising Ltd.

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Vertoz Advertising Ltd. (VERTOZ) - Director Report

Company director report

Dear Members of Vertoz Advertising Limited

Your Directors have pleasure in presenting this 7th Annual report on theaffairs of the Company together with the Audited Statement of Accounts for the year endedon 31st March 2018.

1. Financial Summary or Highlights:

(Rs. in Lakhs)

Standalone Figures Consolidated Figures
Particulars FY 2017-18 FY 2016-17 FY 2017-18 FY 2016-17
Gross Income 1582.79 1079.78 3746.89 2048.38
Profit/(Loss) Before Interest and Depreciation 370.39 299.48 860.75 525.39
(-) Finance Charges (32.41) (38.44) (50.97) (52.99)
Gross Profit/(Loss) 337.98 261.04 809.78 472.40
(-) Provision for Depreciation (89.53) (78.89) (136.65) (86.39)
Net Profit Before Tax 248.45 182.15 673.13 386.01
(-) Provision for Tax (75.97) (46.65) (107.92) (55.58)
(-) Deferred Tax 8.53 (24.51) 8.53 (24.51)
Net Profit After Tax 181.01 111.00 573.74 305.92
Balance of Profit/(Loss) brought forward 181.01 111.00 573.74 305.92
(-) Consolidation Revaluation Gain/(Loss) 0.00 0.00 0.00 0.00
Balance available for appropriation 181.01 111.00 573.74 305.92
(-) Proposed Dividend on Equity Shares 0.00 0.00 0.00 0.00
(-) Tax on proposed Dividend 0.00 0.00 0.00 0.00
(-) Transfer to General Reserve 0.00 0.00 0.00 0.00
Surplus/(Deficit) carried to Balance Sheet 181.01 111.00 573.74 305.92

2. Operations and affairs of the Company:

The Company has reported total standalone income of 1582.79/- Lakhs for the currentyear as compared to 1079.78/- Lakhs in the previous year. The Net Profit after tax forthe year under review amounted to 181.01/- Lakhs in the current year as compared to NetProfit after tax of 111/- Lakhs in the previous year.

The Company has reported total consolidated income of 3746.89/- Lakhs for the currentyear as compared to 2030.31/- Lakhs in the previous year. The Net Profit after tax forthe year under review amounted to 573.74/- Lakhs in the current year as compared to NetProfit after tax of 305.92/- Lakhs in the previous year.

3. Conversion of the Company:

During the year the Company has been converted from Private Limited Company to PublicLimited Company and necessary fresh certificate to that effect has been issued by theRegistrar of Companies Maharashtra at Mumbai dated 9th June 2017. Consequentto conversion of the Company the name of the Company Changes from Vertoz Media Limited toVertoz Advertising Limited.

4. Listing of Shares through Initial Public Offer:

Your Company made an Initial Public Offer 1584000 Equity shares of 10 each at premiumof 98/- per share. The IPO got overwhelming response from all the categories of investorsand was subscribed around 4.32 times. The Shares of the Company got listed on 24thNovember 2017 on the EMERGE SME platform of National Stock Exchange of India Limited.

We welcome all the new Shareholders to become a part of the growth story of the Companyin the future.

5. Reserves:

The Company has closing balance of 162246054 as Reserves and Surplus.

The Closing Balance of Reserve and Surplus is bifurcated as follows:

Particulars As at 31st March 2018
Surplus from Profit & Loss Account
Opening Balances 15728032
Add: Profit/(Loss) for the period 18101082
Less: Issue of Bonus Shares (20600000)
Securities Premium (n/off preliminary expenses) 149016940
Total Value in INR 162246054

6. Dividend:

Your Company does not recommend any dividend for financial year 2017-18.

7. Material changes between end of financial year and the date of the Board report:

• There have been no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and up till the date of the report.

• In view of long term plans towards expansion of business operations with organicand inorganic growth model the Company have taken the Shareholders approval for the loansand Investment by the Company upto 100 crores in terms of the provisions of Section 186 ofthe Companies Act 2013 at the Extra-ordinary General Meeting dated 28th April 2018.

• The Company also have taken the Shareholders approval for increase in theborrowing limits upto 100 crores at the Extra-ordinary General Meeting dated 28th April2018.

8. Change in nature of business if any:

There were no changes in the nature of business during financial year ending 31stMarch 2018.

9. Significant and material orders passed by the regulators or courts or tribunals:

During the year under review there has been no such significant and material orderspassed by the regulators or courts or tribunals impacting the going concern status andcompany's operations in future.

10. Information about Subsidiary/ JV/ Associate Company:

The brief details of legal structure of the Company and its subsidiary and step-downsubsidiary as follows:

Vertoz INC (US):

This subsidiary deals with Online Advertising Solutions and media inventory buying andselling across the world. This is fully operational profit-making unit situated atCalifornia USA having its one operational branch at New York USA and step-downsubsidiary holding 100% stake in it located at USA in the name of Adnet Holdings Inc.which is also operational in nature. The consolidated operation activities brief asfollows:

Financial Year Total Assets Total Revenue Share of Net Profit/(Loss) Net Cash Flows
(Rs.) (Rs.) (Rs.) (Rs.)
2016-17 78080284 143571715 2281181 (8220747)
2017-18 191781965 277064262 2751167 17223443

Vertoz Ltd (UK):

This subsidiary deals with Online Advertising Solutions and media inventory buying andselling across the world. This is fully operational profit-making unit situated at LondonUK having its one operational step-down subsidiary holding 100% stake in it located at UAEin the name of Vertoz Advertising FZ-LLC which is also operational in nature. Theconsolidated operation activities brief as follows:

Financial Year Total Assets Total Revenue Share of Net Profit/(Loss) Net Cash Flows
(Rs.) (Rs.) (Rs.) (Rs.)
2016-17 22586287 25318732 17211324 265504
2017-18 61724928 45665634 36522222 821862

During the year under review the Board of Directors have reviewed the affairs of thesubsidiaries. In accordance with Section 129(3) of the Companies Act 2013 your Companyhas prepared Consolidated Financial Statements of the Company and all its subsidiaries incompliance with the applicable accounting standards which forms part of this AnnualReport.

Pursuant to the provisions of sub section (3) of section 129 of the Act read with Rule5 of the Companies (Accounts) Rules 2014 the salient features of the financial statementof each of our subsidiaries are set out in the prescribed format AOC-1 which forms part ofthe Financial Statements section of this Annual Report.

During the year no Company had become subsidiary of the Company or ceased to be asubsidiary of the Company.

11. Extract of Annual Return:

The Extract of Annual Return as required under section 92(3) of the Companies Act 2013and Rule 12(1) of the Companies (Management and Administration) Rules 2014 in Form MGT-9is annexed herewith for your kind perusal and information (Annexure: 1). Further it willalso be uploaded on website of the Company at the link: -

12. Meetings of the Board of Directors and its Committees:

During the Financial Year 2017-18 the Company held 17 Board Meetings of the Board ofDirectors which is summarized below. The provisions of Companies Act 2013 were adhered towhile considering the time gap between two meetings.

Date of Meeting Board Strength No. of Directors Present
28.04.2017 2 2
29.05.2017 4 4
02.06.2017 4 3
11.06.2017 4 3
13.06.2017 4 3
16.06.2017 5 4
21.07.2017 5 4
29.07.2017 5 4
01.08.2017 5 4
11.08.2017 5 4
14.09.2017 5 5
25.09.2017 7 7
27.09.2017 7 7
24.10.2017 7 7
02.11.2017 7 7
21.11.2017 7 7
23.03.2018 7 7

During the Financial Year 2017-18 the Company held 2 Audit Committee Meetings of theMembers of the Audit Committee which is summarized below.

Date of Meeting Committee Strength No. of Members Present
21.11.2017 3 3
23.03.2018 3 3

During the Financial Year 2017-18 the Independent Directors have conducted their oneMeeting on 24th November 2017 in which all the three independent Directorswere present.

Further Members of the NRC (Nomination and Remuneration Committee) has conducted theirMeeting on 23rd March 2018 for financial year 2017-18 and recommended theboard to regularise ratify and appoint Mr. Rohit Keshavlal Vaghadia (DIN: - 07946771) asan Independent Director.

13. Board of Director and Key Managerial Personnel Details:

Name of Directors Members of No. of Shares Category cum & Key Managerial DIN/PANAudit Held as on 31st Designation Personnel Committee March 2018

Whole-Time Hirenkumar Rasiklal 00092739 Director Yes 2035912 Shah (Chairman)Whole-Time Ashish Rasiklal Shah 00092787 No 2035912 Director Rasiklal HathichandAdditional 00091585 No 59850 Shah Director Harshad Non-Executive 07849186 No 29926Uttamchand Shah Director Chairman of Harshal Ishwar Independent 07842251 Audit NIL PatelDirector Committee Rohit Keshavlal Independent 07946771 No NIL Vaghadia DirectorIndependent Nilam Samir Doshi 07848294 Yes NIL

Director Akshay Ashok Chief Financial BBCPS6255B No NIL Sonar Parolkar Officer CompanySecretary & Sumit R. Sharma COHPS0112N No NIL Compliance Officer Information onDirector:

In accordance with the provisions of the Articles of Association and Section 152 of theCompanies Act 2013 Mr. Harshad Uttamchand Shah Non-Executive Director of the Companyretires by rotation at the ensuing Annual General Meeting. He being eligible has offeredhimself for re-appointment as such and seeks re-appointment. The Board of Directorsrecommends his appointment on the Board decided to put the same at ensuing AGM forapproval from Members.

The relevant details as required under Regulation 36 (3) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (“SEBI Listing Regulations”) ofthe person seeking re-appointment as Director is also provided in the Notice convening the7th Annual General Meeting. None of the Director of the Company is serving as aWhole-time Director in any Listed Company and is holding position of Independent Directorin more than 3 Listed Company and none of the Director of the Company is holding positionas Independent Director in more than 7 Listed Company. None of the Directors of theCompany is disqualified for being appointed as Director as specified in Section 164 (2) ofthe Companies Act 2013.

Performance Evaluation:

In accordance with the provisions of Schedule IV of the Companies Act 2013 a separatemeeting of the Independent Directors was held properly without the attendance ofNon-Independent Directors and Members of the Management. The Committee has reviewed theperformance and effectiveness of the Board in this meeting as a whole for the FinancialYear 2017-18.

Details of Directors or Key Managerial Personnel who were appointed or have resignedduring the year:

Date of Name of the Category cum DIN/PAN Appointment Director/ KMP Designation &cessation

Ranjanben Rasiklal Additional Director Appointed on 00092766 Shah 29/05/2017 RasiklalHathichand Additional Director Appointed on 00091585 Shah 29/05/2017 Ranjanben RasiklalAdditional Director Resigned on 00092766 Shah 16/06/2017 Rasiklal Hathichand AdditionalDirector Resigned on 00091585 Shah 16/06/2017 Rasiklal Hathichand Appointed on 00091585Additional Director Shah 25/09/2017 Rohit Keshavlal Independent Appointed on 07946771Vaghadia Director 25/09/2017 Harshad Non-Executive Appointed on 07849186 Uttamchand ShahDirector 14/06/2017 Independent Appointed on Nilam Samir Doshi 07848294 Director14/06/2017 Independent Appointed on Harshal Ishwar Patel 07842251 Director 14/06/2017Akshay Ashok Sonar Appointed on BBCPS6255B Chief Financial(Parolkar) Officer 16/06/2017Appointed on Zill Pankaj Shah EZOPS6680B Company Secretary 16/06/2017 Resigned on ZillPankaj Shah EZOPS6680B Company Secretary 25/09/2017 Appointed on Sumit R. SharmaCOHPS0112N Company secretary& Compliance Officer 25/09/2017

14. Directors' Responsibility Statement:

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3) (c) of the Companies Act 2013:

a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the Company for that period;

c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

d) The directors had prepared the annual accounts on a going concern basis; and

e) Company being listed sub clause (e) of section 134(3) is applicable.

f) The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

g) The directors have laid down internal financial control system as per provisions ofthe Companies Act 2013.

15. Declaration by Independent Directors:

As per the provisions of the Companies Act 2013 all Independent Directors of theCompany were appointed for a term of five consecutive years not liable to retire byrotation. The Independent Directors have given the Certificate of Independence to theCompany stating that they meet the criteria of independence as mentioned under Section149(6) of the Companies Act 2013.

16. Auditors and Report thereon:

1. Statutory Auditors:

We inform you that our previous Statutory Auditor M/s. Nakrani & Co. CharteredAccountants has tendered their resignation on 9th March 2018 due to theirpersonnel obligation. Therefore we called an Extra-Ordinary General Meeting on 28thApril 2018 to appoint another Statutory Auditor for conducting the Audit for FinancialYear 2017-18 who is peered review firm as per the Regulation 33(1)(d) of SEBI (LODR)Regulations 2015.

In the EOGM held on Saturday 28th April 2018 Members have appointed M/s.Mittal & Associates Chartered Accountants Mumbai as Statutory Auditor of the Companyfor Financial Year 2017-18.

M/s. Mittal & Associates Chartered Accountants was appointed as Statutory Auditorsfor a period of 1 year in the Extra-Ordinary General Meeting held on 28thApril 2018. Their continuance of appointment and payment of remuneration are to beconfirmed and approved in the ensuing Annual General Meeting.

There are no qualifications or adverse remarks in the Auditors' Report which requireany clarification/ explanation. The Notes on financial statements are self-explanatory andneeds no further explanation.

2. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Alwyn Jay & Co. Company Secretaries in Practice to undertake theSecretarial Audit of the Company. The Report of the Secretarial Auditor for Financial Year

2017-18 is appended as “Annexure 4” to this Board's Report. The SecretarialAudit Report contains the observations which are as follows: -

(1) The Shareholders resolution filed with the Registrar for conversion of Company fromPrivate Limited to Public Limited does not contain specific resolution relating toadoption of new set of Articles of Association of the Company.

(2) The Shareholders resolution filed with the Registrar for change of name of Companyfrom Vertoz Media Limited to Vertoz Advertising Limited does not contain specificresolution relating to adoption of new set of Articles of Association of the Company.

The Board has considered and will take the necessary action to regularize the same atearliest with Registrar of Companies Maharashtra at Mumbai.

17. Loans Guarantees & Investments:

There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the said provision is notapplicable.

18. Related Party Transactions:

All Related Party Transactions entered during the year were in ordinary course ofbusiness and at arms' length basis. No material related party transactions i.e.transactions exceeding 10% of the annual consolidated turnover as per the last auditedstatements were entered during the year by your Company. Accordingly the disclosure ofRelated Party Transactions as required under section 134(3) (h) of the Companies Act 2013in Form AOC-2 is not applicable.

19. Conservation of energy technology absorption and foreign exchange outgo:

A. Conservation of Energy:

The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 in respect of conservation of energy have not been furnished considering thenature of activities undertaken by the company during the year under review.

B. Technology Absorption:

The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 in respect of technology absorption have not been furnished considering thenature of activities undertaken by the company during the year under review.

C. Foreign Exchange Earnings and Outgo:

The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.

Foreign Exchange Inflow 18022460
Foreign Exchange Outflow 881602

20. Risk Management:

The Company does not have any Risk Management Policy as the elements of riskthreatening the Company's existence are very minimal.

21. Corporate Social Responsibility:

The Company is not required to constitute a Corporate Social Responsibility Committeeas it does not fall within purview of Section 135(1) of the Companies Act 2013 and henceit is not required to formulate policy on corporate social responsibility.

22. Deposits:

The company has not accepted any deposits during the year.

23. Committees of the Board of Directors:

In order to strengthen its functioning the Board of Directors has constituted thefollowing Committees as per the requirement of Companies Act 2013:

1. Audit Committee

2. Nomination & Remuneration Committee

3. Stakeholders' Relationship Committee

24. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:

Your Company is an equal opportunity employer and is committed to ensuring that thework environment at all its locations is conducive to fair safe and harmonious relationsbetween employees. It strongly believes in upholding the dignity of all its employeesirrespective of their gender or seniority. Discrimination and harassment of any type arestrictly prohibited.

The Company has in place an appropriate Policy in accordance with the provisions of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013to prevent sexual harassment of its employees.

Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary andtrainees) are covered under this Policy. The Company ensures that no employee isdisadvantaged by way of gender discrimination.

During the year 2017-18 pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunder there wereNo Complaints registered.

25. General Information:

We would like to inform that company has Changed its name from Vertoz Media PrivateLimited to Vertoz Media Limited and EOGM conducted for the same was on 22ndMay 2017 then from Vertoz Media Limited to Vertoz Advertising Limited and EOGM conductedfor the same was on 14th Junes 2017 during the financial year 2017-18.

Further Company has issued Bonus Shares and also converted unsecured loans to Equityfor which details have been Provided in MGT-9 which forms part of the Directors report.

We are further glad to inform you that our Company got listed on “NSEEMERGE” SME Platform of the National Stock Exchange of India Limited on 24thday of November 2017.

Details Pertaining to remuneration as required under section 197(12) of the companiesAct 2013 read with rule 5(1) of the companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.

A) Percentage increase in Remuneration of Each Director Chief Financial Officer ChiefExecutive Officer and Company Secretary in the financial year 2017-18 and ratio ofremuneration of each Key Managerial Personnel (KMP) against the performance are as under:-

Name of Director/KMP and Designation Remuneration of Director/KMP for the Financial year 2017-18 (In ) Percentage Increase In Remuneration for the Financial Year 2017-18 Ratio of Remuneration of each Director to the Median Remuneration of Employees
Mr. Hirenkumar Rasiklal Shah (Whole-Time Director) 3600000/- 50.00% 15.23x
Mr. Ashish Rasiklal Shah (Whole-Time Director) 5227933/- *120.70% 22.12x
Mr. Akshay Ashok Sonar Parolkar (Chief Financial Officer) 1366698/- 39.69% N.A.
Mr. Sumit R. Sharma (Company Secretary) 195525/- NIL N.A.
Ms. Zill P. Shah (Ex-Company Secretary) 255707/- NIL N.A.

[* Remuneration paid in USD amounting to $ 78000 through Vertoz INC a subsidiary ofthe Company]

B) The Median remuneration of the Employee of the Company during the Financial Year was236374/-

C) There was an increase of 9.25% in Medial remuneration of the employee during thefinancial year 2017-18.

D) The consolidated number of permanent employee of the Company is 135 for the yearended March 31 2018.

E) Average percentage increase made in the salaries of employees other than themanagerial personnel in the last Financial Year 2017-18 was 26.57%.

F) It is affirmed that remuneration paid during the year ended March 31 2018 is as perthe Remuneration Policy of the Company.

26. Information about AOC-1 Management Discussion and Analysis Report and SecretarialAudit Report:

AOC-1 is attached as Annexure - 3 and management Discussion and Analysis Report hasbeen attached as Annexure - 2 as a part of Boards report.

27. Disclosures with respect to Demat suspense account/unclaimed suspense account:

The company has opened Demat suspense account/ unclaimed suspense account with KarvyComputer share Private Limited at the time of IPO. There are no shares unclaimed andtherefore the account was closed.

28. Acknowledgment:

The Company wishes to thank its investors banking community rating agencies and stockexchanges for their support. The Company would like to take this opportunity to expresssincere thanks to all its valued customers vendors agents and suppliers for theircontinued support and patronage. The Directors express their deep sense of appreciation toall the employees whose outstanding professionalism commitment and initiative has madethe organization's growth and success possible and continue to drive its progress.Finally the Board Directors wish to express their gratitude to the members for theirtrust and support.