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VXL Instruments Ltd.

BSE: 517399 Sector: Consumer
NSE: VXLINSTR ISIN Code: INE756A01019
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OPEN 9.98
CLOSE 9.98
VOLUME 100
52-Week high 11.28
52-Week low 7.60
P/E
Mkt Cap.(Rs cr) 13
Buy Price 0.00
Buy Qty 0.00
Sell Price 9.98
Sell Qty 770.00

VXL Instruments Ltd. (VXLINSTR) - Director Report

Company director report

Your Directors have pleasure in presenting the 32nd Annual Report and Audited FinancialStatements for the year ended 31st March 2018 together with the Independent Auditor'sReport.

1. FINANCIAL RESULTS

(Rs. in Lakhs)

Particulars 2017-18 2016-17
Net revenue from operations 4589 5027
Other income 28 7
Profit (Loss) before Depreciation (171) (292)
Depreciation 29 32
Profit (Loss) before Taxation (200) (324)
Profit (Loss) after Taxation (200) (324)

2. PERFORMANCE OF THE COMPANY:

The year gone by was a tough year for thin clients. Poor economic growth has resultedin reduction of export sales substantially. However domestic demand was encouraging.Overall lower sales affected the profitability.

FUTURE PROSPECTS

Thin client computing has helped many clients to solve the problem of how to deploy andmake available applications to a global workforce including remote workers. Today's thinclient technology promises improved reliability and manageability Increased demand in thedomestic market sustained economic expansion renewed confidence of customers in ourability to meet their requirements preference of the users to our software offering areexpected to push the demand for thin clients.

3. RESERVES:

In view of the losses the question of transferring any amount to Reserves does notarise.

4. SHARE CAPITAL:

There were no changes in the Share Capital of the Company during the financial year.

Disclosure regarding Issue of Equity Shares with Differential Voting Rights

During the financial year under review the Company has not issued Shares withDifferential Voting Rights.

Disclosure regarding issue of Employee Stock Options

The Company does not have any employee stock option scheme.

Disclosure regarding issue of Sweat Equity Shares

During the financial year under review the Company has not issued Sweat Equity Shares.

5. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THECOMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT:

There were no material changes and commitments which occurred between the end of thefinancial year and the Date of the Report which affect the financial position of theCompany.

However based on the recommendation of the Board approval of the Shareholders hasbeen sought by way of Postal Ballot to Sell Lease or otherwise dispose off theUndertakings of the Company limited to land buildings and attachments thereto located at‘House of Excellence' No. 17 Electronics City Hosur Road Bangalore - 560 100 andat Plot No. 20 Survey No.26 Veerasandra Industrial Area Bangalore - 560 100 KarnatakaIndia pursuant to the provisions of Section 180(1)(a) of the Companies Act 2013.

6. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

There are no material changes after 31st March 2018 till the signing of this Report.

7. CHANGE IN NATURE OF BUSINESS:

There were no changes in the nature of business during the year under review asprescribed in Rule 8(ii) of the Companies (Accounts) Rules 2014.

8. DIVIDEND:

Whilst your Directors understand the sentiments of the Investors the financials in theyear that has passed do not enable the board to recommend any dividend. The Board regretsits inability to recommend any dividend.

However the Directors will strive hard to bring the Company back to dividend trackbefore long and expected improved performance of the Company is hoped to facilitateconsideration of dividend in the days to come.

9. BOARD MEETINGS:

The Meetings of the Board are held at regular intervals with a time gap of not morethan 120 days between two consecutive Meetings. Additional Meetings of the Board ofDirectors are held when necessary. The Agenda of the Meeting is circulated to theDirectors in advance. Minutes of the Meetings of the Board of Directors are circulatedamongst the Members of the Board for their perusal.

The Board of Directors duly met 4 (Four) times from 1st April 2017 to 31st March 2018on 27th May 2017 10th August 2017 31st October 2017 and 31st January 2018.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the financial year under review there were no changes in the Directors and KeyManagerial Personnel of the Company However there were few changes post completion ofthe financial year till the date of this Report. The details of the same are mentioned asfollows: The Board at its Meeting held on 11th July 2018 appointed Mr. Rakesh ShridasDamani Mr. Pranav Vikas Makharia and Mr. Vivek Gupta as Additional Directors of theCompany who are categorized as Non-Executive and Independent Directors of the Company witheffect from 11th July 2018. The details of Mr. Rakesh Shridas Damani Mr. Pranav VikasMakharia and Mr. Vivek Gupta are furnished in the Explanatory Statement to the Notice ofthe Annual General Meeting pursuant to the provisions of Section 102 of the Companies Act2013. The Board recommends their appointment at the ensuing Annual General Meeting of theCompany.

Mr. Nandkumar Venkat Rao Maslekar (holding DIN: 00904842) and Mr. Prakash RaoHangarkatta (holding DIN: 00492187) resigned from the office of Independent Directors ofthe Company with effect from 11th July 2018 due to personal reasons. The Board places onrecord its appreciation of the invaluable contribution and guidance provided by theoutgoing Directors.

Mr. M. V. Shetty Whole Time Director retires by rotation as per the Companies Act2013 and being eligible offers himself for re-appointment.

Mr. Arunkumar Bhuwania (holding DIN: 00387445) resigned from the offices of Chairmanand Director of the Company with effect from 7th May 2018. The Board in its Meeting heldon 11th July 2018 appointed Mr. Arunkumar Bhuwania as an Additional Director of theCompany who is categorized as Non-Executive and Non-Independent Director of the Companywith effect from 11th July 2018. The details of Mr. Arunkumar Bhuwania are furnished inthe Explanatory Statement to the Notice of the Annual General Meeting pursuant to Section102 of the Companies Act 2013. The Board recommends his appointment.

As at the financial year ended 31st March 2018 Mr. Madireddy V. Nagaraj ManagingDirector Mr. M. V. Shetty Whole-time Director Mr. Mr. Narayana Bhat Chief FinancialOfficer Company Secretary and Compliance Officer are the Key Managerial Personnel of theCompany.

11. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).

12. COMPOSITION OF AUDIT COMMITTEE NOMINATION AND REMUNERATION COMMITTEE ANDSTAKEHOLDERS' RELATIONSHIP COMMITTEE:

Following are the composition of various Committees as on 31st March 2018:

i) Composition of Audit Committee:

a) Mr. N. V. Maslekar - Chairman
b) Mr. K. Prakash - Member
c) Mr. Prakash H Rao - Member
d) Mrs. Kumkum Bhuwania - Member

Notes:

1. Mr. N. V. Maslekar resigned w.e.f. 11th July 2018 and has been replacedby Mrs. Kumkum Bhuwania as the Chairman of the Committee with effect from that date.

2. Mr. Prakash H Rao resigned as Member of the Committee w.e.f. 11th July2018 and Mr. Rakesh Shridas Damani Mr. Pranav Vikas Makharia and Mr. Vivek Gupta wereappointed as Members of the Committee w.e.f. 11th July 2018.

ii) Nomination and Remuneration Committee:

a) Mr. N. V. Maslekar - Chairman
b) Mrs. Arun Kumar Bhuwania - Member
c) Mr. Prakash H Rao - Member
d) Mr. K Prakash - Member

Notes:

1. Mr. N. V. Maslekar resigned w.e.f. 11th July 2018 and has been replacedby Mr. Rakesh Damani as the Chairman of the Committee who was appointed w.e.f. 11thJuly 2018.

2. Mr. Prakash H Rao resigned as Member of the Committee w.e.f. 11th July2018 and Mr. Pranav Vikas Makharia and Mr. Vivek Gupta were appointed as Members of theCommittee w.e.f. 11th July 2018.

3. Mr. Arun Kumar Bhuwania resigned as member of Committee w.e.f. 7th May2018 and again appointed as member of the Committee w.e.f. 11th July 2018.

iii) Composition of Stakeholders' Relationship Committee:

a) Mr. K Prakash - Chairman
b) Mr. N V Maslekar - Member
c) Mr. Prakash H Rao - Member

Mr. N. V. Maslekar and Mr. Prakash H Rao resigned as Members of the Committee w.e.f. 11thJuly 2018 and Mr. Vivek Gupta Mr. Rakesh Damani and Mr. Pranav Vikas Makharia wereappointed as Members of the Committee w.e.f. 11th July 2018

13. RISK MANAGEMENT POLICY:

The Company has not yet formulated a Risk Management Policy and has in place amechanism to inform the Board Members about risk assessment and minimization proceduresand undertakes periodical review to ensure that executive management controls risk bymeans of a properly designed framework.

14. VIGIL MECHANISM/WHISTLE BLOWER POLICY:

The Company has established an effective Vigil Mechanism pursuant to the provisions ofSections 177(9) and (10) of the Companies Act 2013 and as per Regulation 4(2)(d)(iv) ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which isavailable on the website of the Company at url http://www.vxl.net/percheditor/resources/vxlwhistleblowerpolicy and there were no cases reportedduring the last period.

15. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY:

The Directors have laid down internal financial controls to be followed by the Companyand such policies and procedures adopted by the Company for ensuring the orderly andefficient conduct of its business including adherence to Company's policies safeguardingof its assets prevention and detection of frauds and errors accuracy and completeness ofthe accounting records and the timely preparation of reliable financial information.

16. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDEDBY THE COMPANY:

The Company has not given any loan or guarantee's covered under the provisions ofSection 186 of the Companies Act 2013.

17. DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 134(3)(c) of the Companies Act 2013 the Directors herebyconfirm that:

a) In the preparation of the Financial Statements the applicable Accounting Standardshad been 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 Financial Statements on a going concern basis;

e) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively and

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.

18. 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 inMGT-9 is attached as a part of this Annual Report as Annexure – I.

19. STATUTORY AUDITORS:

Messrs YCRJ & Associates Chartered Accountants (ICAI Firm Registration No.006927S) were appointed as the Statutory Auditors of the Company for a period of 5 (Five)years from the conclusion of the 31st Annual General Meeting up to the conclusion of the36th Annual General Meeting.

20. SECRETARIAL AUDIT REPORT:

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 Mr. J V Shivaprakash Bengaluru a Company Secretary in Practice toundertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor inthe form of MR-3 is annexed to this Report as Annexure - II.

Explanations by the Board on the comments of Statutory/Secretarial Auditors:

During the financial year under review there were no qualifications reservations oradverse remarks made by the Statutory Auditors/Secretarial Auditors in their respectiveReports.

21. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:

(A) Conservation of energy:

Steps taken / impact on conservation of energy The Company's operations are not power intensive. Nevertheless your Company has introduced various measures to conserve and minimize the use of energy wherever it is possible
(i) Steps taken by the company for utilizing alternate sources of energy including waste generated Nil
(ii) Capital investment on energy conservation equipment Not Applicable
Total energy consumption and energy consumption per unit of production as per Form A Not Applicable
(B) Technology absorption:
Efforts in brief made towards technology absorption adaptation and innovation Nil
Benefits derived as a result of the above efforts e.g. product improvement cost reduction product development import substitution etc. Not Applicable
In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) following information may be furnished: Nil
Technology imported Not Applicable
Year of Import Not Applicable
Has technology been fully absorbed Not Applicable
If not fully absorbed areas where this has not taken place reasons therefore and future plan of action Not Applicable
(C) Research and Development (R&D)
Specific areas in which R & D carried out by the company Research & Development Expenditure in respect of Development of Thin Client Embedded Operating Systems
Benefits derived as a result of the above R & D Not Applicable
Future plan of action Not Applicable
Expenditure on R & D
(a) Capital Rs. 25403441
(b) Recurring Nil
(c) Total Rs. 25403441
(d) Total R & D expenditure as a percentage of total turnover 5.54

(D) Foreign exchange earnings and Outgo

Activities relating to exports Not Applicable
Initiatives taken to increase exports Not Applicable
Development of new export markets for products and services Not Applicable
Export plans Not Applicable
Total Exchange used (Cash basis) As on 31st March 2018:
Rs.286002243/-
Total Foreign Exchange Earned (Accrual Basis) As on 31st March 2018:
Rs.249028229/-

22. DEPOSITS:

Your Company has not invited/accepted/renewed any deposits from public as defined underthe provisions of Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014and accordingly there were no deposits which were due for repayment on or before 31stMarch 2018.

23. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company continued to maintain high standards of internal control designed toprovide adequate assurance on the efficiency of operations and security of its assets. Theadequacy and effectiveness of the internal control across various activities as well ascompliance with laid-down systems and policies are comprehensively and frequentlymonitored by your Company's management at all levels of the organization. The AuditCommittee which meets atleast four times a year actively reviews internal controlsystems as well as financial disclosures with adequate participation inputs from theStatutory Internal and Corporate Secretarial Auditors.

24. MATERIAL ORDER PASSED BY ANY COURT OR REGULATOR OR TRIBUNALS IMPACTING GOINGCONCERN STATUS OF COMPANY:

No order was passed by any court or regulator or tribunal during the period underreview which impacts going concern status of the Company.

25. RELATED PARTY TRANSACTIONS (RPTs):

All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and the Board ofDirectors for their approval.

However a material related party transaction with Priya Limited which needs approvalfrom the Shareholders in terms of the applicable laws are being placed before Shareholdersfor due consideration and approval details of which are appended to the Notice of the32nd Annual General Meeting in the explanatory statement. The Policy on Related PartyTransactions as approved by the Board is uploaded on the Company's website. Web link forthe same is https://www.vxl.net/investors/disclosures. Particulars of Contracts orArrangements with Related parties referred to in Section 188(1) of the Companies Act 2013in Form AOC- 2 annexed to this Report as Annexure - III.

26. HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

Your Company recognizes the critical significance of competent and experiencedemployees. The team VXL Instruments continued to stand by the Company during tiring andtough times and your Board places its appreciation for these relentless efforts untiringdedication and sense of belongingness exhibited by the employees at all levels. YourCompany focuses on long term Human Resources planning aimed at managing change moreefficiently grooming internal talent for future roles and also driving efficiency withinthe Organization.

There were various cases pending in the Honourable High Court of Karnataka and In theCourt of Industrial Tribunal. This was mainly on account of the closure of the unitmanufacturing CRT Terminals which were phased out in the national and internationalmarket. The management is pleased to inform on 18.07.2018 settlement with 31 workmen wasreached (more than 50% of the workmen included in all the pending cases) and the samerecorded in the Honourable High Court and in the Industrial Tribunal. The payments to thesettled workmen is being done from the deposit placed with the Honourable High Court andthere is no cash outflow for the company. There are 28 workmen involved in various caseswho have not taken the settlement. Here also after taking into account the deposit andinterest thereon placed with the Honourable High Court the outflow would be negligibleif they were to be settled.

Industrial relations have been cordial and constructive which have helped your Companyto meet customer's demands.

27. DETAILS OF HOLDING COMPANY/SUBSIDIARIES/JV:

VXL Instruments Limited UK a Subsidiary Company was wound up by the Hon'ble High Courtof Justice Chancery Division Companies Court United Kingdom vide its Order dated 7thNovember 2016. Further to the Insolvency Proceedings under the Insolvency Act 1986 VXLInstruments Limited UK was dissolved on 11th March 2018.

28. ANNUAL 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 and theDirectors individually. The manner in which the evaluation has been carried out has beenexplained in the Corporate Governance Report.

29. CORPORATE SOCIAL RESPONSIBILITY:

Since the Company does not meet the criteria for the applicability of Section 135 ofthe Companies Act read with the Companies (Accounts) Rules 2015 the same is notapplicable.

30. NOMINATION AND REMUNERATION COMMITTEE POLICY:

On the recommendation of the Nomination and Remuneration Committee the Board hasframed a Policy for selection and appointment of Directors Senior Management and forother employees and their remuneration. The same has been disclosed on the website of theCompany.

31. RATIO OF REMUNERATION TO EACH DIRECTOR:

Pursuant to Section 197(12) of the Companies Act 2013 and Rule 5(1)(2)(3) of theCompanies (Appointment and Remuneration) Rules 2014 details/disclosures of Ratio ofRemuneration to each Director to the median employee's remuneration is annexed to thisreport as Annexure-IV.

32. LISTING WITH STOCK EXCHANGE:

The Company confirms that it has paid the Annual Listing fees for the financial year2018-19 to BSE Limited where the Company's Shares are listed.

33. CORPORATE GOVERNANCE AND SHAREHOLDERS' INFORMATION:

A separate Report on Corporate Governance in terms of Regulation 34 of SEBI (listingObligations and Disclosure Requirements) Regulations 2015 along with a Certificate from aPractising Company Secretary regarding compliance to the Conditions stipulated underChapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isattached to this report as Annexure V.

34. CAPITAL EXPENDITURE:

As on 31st March 2018 the gross tangible and intangible assets stood at Rs.215586092/- and the net tangible and intangible assets at Rs. 193018003/-.Additions during the financial year amounted to Rs. 2 6451658/-. The Company has notpurchased any assets under lease.

35. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of women at the workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this Policy.

The following is a summary of sexual harassment complaints received and disposed offduring the financial year 2017-18: No of complaints received: NIL

No of complaints disposed off: NIL

36. MANAGEMENT DISCUSSION AND ANALYSIS:

As requisite and appropriate Management Discussion and Analysis is covered under thisReport itself a separate note on the same is not being furnished.

37. ACKNOWLEDGEMENTS:

The Directors place on record their appreciation for valuable contribution made byemployees at all levels active support and encouragement received from the Government ofIndia Government of Maharashtra Company's Bankers Customers Principals BusinessAssociates and other Acquaintances.

Your Directors recognize the continued support extended by all the Shareholders andgratefully acknowledge with a firm belief that the support and trust will continue infuture also.

For and on behalf of the Board of Directors
Place: Bangalore Madireddy V. Nagaraj M. V. Shetty
Date: 31st July 2018 Managing Director Whole Time Director
DIN: 00515419 DIN: 00515711
Address: No.23 II Cross Address: No 317 5th Main
Vasanthnagar West 1st Block Koramangala
Bangalore-560 052 Bangalore-560 034