DIRECTORS REPORT Dear Members, Your Directors are pleased to present the Thirty Fourth Annual Report along with the audited Financial Statements of the Company for the year ended March 31, 2015. State of Company's Affairs During the year under review, your Company has made gross turnover of Rs. 1120.56 crores as against Rs. 1368.90 crores for the previous year. The Company has made a profit before tax of Rs. 3.44 crores as compared to loss of Rs. 59.97 crores in the previous year. The Company has reported a net profit after tax of Rs. 0.81 crores as against loss of Rs. 59.97 crores. As compared to the past few years, the financial year 2014-2015 was the year of transition for the Company. The Company believes in changing constantly to adapt to the changing taste of Indian consumer and the market scenario. The Company understands the Indian consumers' psychology in a better manner. The Board of Directors and the senior management of the Company always think out of the box and come up with innovative product proposition and marketing such as: I GENIUS: The Company has introduced Onida I genius (IOT based technology) "India's first wi-fi AC" which can be operated with smart phone to address the digitalized crowd. It is available in 0.8 ton, 1 ton and 1.5 ton with 2 star, 3 star and 5 star rating. BIG SCREEN BIG ENTERTAINMENT: To improve the top line of the Company, the Company has undertaken the campaign of "big screen big entertainment" in LED TV segment where the Company has focused and put its resources to sell 32 inch and above screen sized LED TV series. This initiative is a part of "FOCUS PRODUCT FOCUS MARKET STRATEGY", where the Company has capitalized the potential of its brands which has resulted in improving our profitability. SOCIAL MEDIA CAMPAIGN: In order to get into the consideration set of generation-Y, the Company has realigned its marketing strategy to connect digitally through social media marketing i.e. facebook, twitter and google. E-COMMERCE: The financial year 2014-2015 has witnessed E-commerce evolution in a much stronger and deeper levels. Rising internet and mobile phone penetration have changed the way doing in business. The Company understands the importance of e-commerce and wisely entered into a partnership with the leading players of e-commerce platform. Looking forward to the financial year 2015-2016, the Company will continue to innovate and come up with customer delight premium products with path breaking technology and affordable pricing to take its brands to the next level. Dividend and Transfer to General Reserves Considering the cash requirement for business growth and debt servicing, your Directors decided, not to propose dividend for the year ended March 31, 2015 and there is no appropriation of any amount to General Reserves during the year under review. Preferential Issue of Warrants The Board of Directors of the Company has approved issuance of a warrant upto the size of Rs. 32,50,00,000/- (Rupees Thirty Two Crores Fifty Lakhs only) on preferential basis, to Bennett Coleman & Co. Limited, a non-promoter company. The Board of Directors of the Company has further delegated authority to Committee of Directors to make any changes, modification in the terms and conditions of the Issue and the overall issue size and warrant Subscription amount and / or the number of warrant/s to be issued and the price of shares to be allotted on payment of total subscription amount of the warrant, subject to the approval of the members of the Company through postal ballot. The object of issue of warrant is to meet funding requirements towards brand building of the Company through advertising in the print and non-print medium/media. Consolidated Financial Statements In accordance with the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 amended from time to time and Accounting Standard (AS)-21, the consolidated financial statements is provided in the Annual Report. Subsidiary Company Your Company is having a subsidiary company i.e. Akasaka Electronics Limited. During the year under review, Akasaka Electronics Limited made revenues of Rs. 6.43 crores as compared to Rs. 13.66 crores in the previous year. Akasaka Electronics Limited has incurred a loss before tax of Rs. 5.42 crores as compared to loss of Rs. 2.52 crores in the previous year. The working of Akasaka Electronics Limited was impacted due to shut down of its business operation due to adverse financial condition, continual losses, increase in operational costs and hostile industrial relations. The annual accounts of the subsidiary company and the related detailed information are made available to the members of the Company and of the subsidiary company seeking such information. The annual accounts of the subsidiary company are also made available for inspection by any member at the registered office of the Company and of the subsidiary company. The Policy for determining material subsidiaries as approved may be accessed on the Company's website link at <http://www.omda>. com/policies. The copies of the audited financial statements of the subsidiary company can be sought by any member of the Company by making a written request addressed to the Company Secretary of the Company at the registered office of the Company. Board of Directors The Board of Directors of the Company comprises of the following Directors: (i) Mr. Gulu L. Mirchandani- Chairman & Managing Director (ii) Mr. Vijay J. Mansukhani- Managing Director (iii) Mr. Shyamsunder Dhoot- Whole-Time Director (iv) Mr. Rafique Malik- Independent Director (v) Mr. Carlton Pereira- Independent Director* (vi) Ms. Radhika Piramal- Independent Director** *Mr. Carlton Pereira was appointed as Additional Director and as an Independent Director at the meeting of the Board of Directors of the Company held on May 15, 2014. **Ms. Radhika Piramal was appointed as Additional Director and as an Independent Director at the meeting of the Board of Directors of the Company held on July 24, 2014. During the year under review, Mr. Rafique Malik, Mr. Carlton Pereira and Ms. Radhika Piramal were appointed as Independent Directors for five consecutive years, for a term upto September 2, 2019 by the members at the Annual General Meeting of the Company held on September 3, 2014. During the year under review, Mr. Ranjan Kapur and Mr. Vimal Bhandari, Independent Directors of the Company have resigned as Directors of the Company on April 28, 2014 and June 7, 2014 respectively due to their personal commitments. The Board places its appreciation for the guidance and advice rendered by them on the Board of Directors of the Company. The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 read with the Companies (Appointment and Qualification of the Directors) Rules, 2014 amended from time to time, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In accordance with the provisions of Section 152(6) of the Companies Act, 2013 read with the Companies (Appointment and Qualification of the Directors) Rules, 2014 amended from time to time, Mr. Gulu L. Mirchandani, Chairman & Managing Director, shall retire by rotation at the ensuing Annual General Meeting of the Company and is eligible for re-appointment. Mr. Vijay Mansukhani, Managing Director, was re-appointed by the Board of Directors of the Company in its Board meeting held on March 26, 2015 as Managing Director for a further period of three years with effect from April 1, 2015, subject to approval of the Members of the Company at the ensuing Annual General Meeting. The notice convening the Annual General Meeting includes the proposal for appointment/re-appointment of the Directors. Directors' Responsibility Statement In terms of Section 134(5) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 amended from time to time, your Directors state that: a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with the requirements set out under Schedule III of the Companies Act, 2013, have been followed along with proper explanation relating to material departures; b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date; c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the Directors have prepared the annual accounts on a 'going concern' basis; e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Corporate Governance Your Company believes in adopting best Corporate Governance practices. The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Statutory Auditors of the Company i.e. M/s S R B C & Co. LLP, Chartered Accountants, Mumbai confirming compliance with the conditions of Corporate Governance as stipulated under the clause 49 of the Listing Agreement is annexed to this Report. The declaration signed by the Chief Executive Officer of the Company regarding compliance of Code of Conduct for Board members and Senior Management personnel forms part of this Report. Management Discussion And Analysis A detailed review of operations, performance and future outlook of the Company and its business, as stipulated under clause 49 of the Listing Agreement, is presented in a separate section forming part of Annual Report under the head 'Management Discussion and Analysis'. Contracts And Arrangements With Related Parties All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract/arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of the related party transactions. The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board of Director of the Company may be accessed on the website of the Company at the link <http://www.onida.com/policies>. Your Directors draw attention of the members to Note 39 to the standalone financial statement which sets out related party transactions. Form No. AOC-2 as mentioned under the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith Annexure A. Corporate Social Responsibility As per Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, every company having net worth of Rs. 500 crores or more or turnover of Rs. 1000 crores or more or net profit of Rs. 5 crores or more during any financial year shall ensure that it spends, in every financial year, at least 2 (Two) percent of the average net profits made during three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. The aforesaid requirement will not be applicable to the Company for the financial year 2014-15 as the Company did not have profit during the three immediately preceding financial years. Risk Management During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy was reviewed and approved by the Committee constituted by the Board of Directors of the Company. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company has introduced several improvements to Integrated Enterprise Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. Internal Financial Controls The Company has in place adequate internal financial controls with reference to the financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. Extract Of Annual Return The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014 amended from time to time, are included in this Report as Annexure-B and forms an integral part of this Report. Board Evaluation Pursuant to the provision of the Companies Act, 2013 and clause 49 of the Listing Agreement, the Company has devised a policy for performance evaluation of Independent Directors, Board of Directors, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. A structured questionnaire was prepared after taking into consideration of the various aspects such as performance of specific duties, obligations, Board's functioning, composition of the Board and its Committees, culture and governance. The performance evaluation of the Chairman, Executive Director and Independent Directors was carried out by the entire Board of Directors of the Company excluding the director being evaluated. The Board of Directors expressed their satisfaction with the evaluation process. The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company. The following policies of the Company are annexed herewith marked as Annexure C-I and Annexure C-II: a) Policy on criteria for appointment & evaluation of executive directors and independent directors; and b) Policy on remuneration of directors, key managerial personnel and other senior management employees. Public Deposits During the year under review, the Company has neither invited nor accepted any public deposit within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 amended from time to time. AUDITORS AND AUDITORS' REPORT Statutory Auditors The members of the Company at the Annual General Meeting of the Company held on September 3, 2014, has appointed M/s. S R B C & Co. LLP., Chartered Accountants, as Statutory Auditors of the Company, to hold the office till the conclusion of the thirty seventh Annual General Meeting of the Company. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. S R B C & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the members of the Company. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. Cost Auditors Pursuant to amended rules dated December 31, 2014 issued by Ministry of Corporate Affairs (MCA) and in compliance with the Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 amended from time to time, the Board of Directors of the Company, on the recommendation of Audit Committee, has appointed Mr. Suresh D. Shenoy as the Cost Auditor of the Company for the financial year 2015-2016. Secretarial Auditors Ms. Ragini Chokshi of M/s. Ragini Chokshi & Co, Practicing Company Secretaries, was appointed to conduct the secretarial audit of the Company for the financial year 2014-2015, as required under Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Personnel) Rules, 2014 amended from time to time. The secretarial audit report for financial year ended March 31, 2015 is annexed herewith marked as Annexure-D to the this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Disclosures Corporate Social Responsibility (CSR)Committee The CSR Committee comprises Mr. Gulu L. Mirchandani, Chairman, Mr. Vijay J. Mansukhani and Mr. Rafique Malik as other members. Audit Committee The Audit Committee comprises Mr. Carlton Pereira, Chairman, Mr. Rafique Malik and Ms. Radhika Piramal as other members. Stakeholders Relationship Committee The Stakeholders Relationship Committee comprises of Mr. Rafique Malik, Chairman and Mr. Gulu L. Mirchandani and Mr. Vijay J. Mansukhani as other members. Nomination and Remuneration Committee The Nomination and Remuneration Committee comprises of Mr. Rafique Malik, Chairman and Mr. Carlton Pereira and Ms. Radhika Piramal as other members. Whistle Blower Policy / Vigil Mechanism In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behavior, the Company has adopted a vigil mechanism policy. The aim of the policy is to provide adequate safeguards against victimization of whistle blower who avails of the mechanism and also provide direct access to the Chairman of the Audit Committee, in appropriate or exceptional cases. Accordingly, 'Whistle Blower Policy' has been formulated with a view to provide a mechanism for the Directors and employees of the Company to approach the Chairman of the Audit Committee of the Company. The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It protects employees willing to raise a concern about serious irregularities within the Company. The policy also been posted on the website of Company i.e. www.onida.com Meeting of the Board The details of the number of meeting of the Board held during the financial year / tenure forms part of the Corporate Governance Report. Particulars of Loan given, Investment made, Guarantee given and Securities provided by the Company Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient under the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 amended from time to time, are provided in the standalone financial statement (Please refer to Note 9 and 10 to the standalone financial statement). Significant and Material order passed by the Regulatory or Courts There were no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operation. Listing fees The equity shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited. The Company has paid the applicable listing fees to the above Stock Exchanges till date. All the unclaimed shares are credited to a Demat Unclaimed Suspense Account and all the corporate benefits in terms of securities, accruing on these unclaimed shares shall be credited to such account. The Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares. Transfer of Unpaid and Unclaimed Dividend Pursuant to Section 205A(5) of the Companies Act, 1956, the dividend declared for the financial year 2005-2006 (Final) and 2006-2007 (Interim) which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 205C of the Companies Act, 1956. The shareholders who have not claimed dividend for the financial year 2007-2008, which is due for transfer to IEPF on expiry of seven years on July 31, 2015 are requested to write to the Registrar & Share Transfer Agent of the Company for claiming their unpaid/ unclaimed dividend. Particulars of Employees and related disclosures In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the disclosures pertaining to remuneration and other details as required is appended as Annexure E to the Board's report. A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, under Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for the inspection at the registered office of the Company. Having regard to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. Internal Control System The Company has adequate internal control system commensurate with its size and business. The Internal Auditors of the Company reviewed and confirmed that all the financial transactions of the Company are in line with the compliance of laws, policies and procedures and have been correctly recorded and reported. The Internal Audit is conducted on regular basis and the reports are submitted to the Audit Committee at their quarterly meetings. The Audit Committee actively reviews the adequacy and effectiveness of the internal control system and suggests improvements to strengthen the same. Research and Development The Company recognizes that a vigorously intelligent research initiative enables not only cost reduction through effective process improvement but also value-addition through sustained innovative and customized products in line with customer requirements. The Company is proud to have a team of dedicated engineers at the Onida Research and Development Centres in Mumbai and Shenzhen (China), who facilitate in making state-of-the-art technology products, satisfying customer expectations. This team conducts research in the areas of: > Embedded Software > Industrial Design > Mechanical Design > Electrical Circuit Design Conservation of Energy, Research and Development, Technological Absorption, Foreign Exchange Earnings and Outgo The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are set out in the Annexure-F and forms part of this Report. Environment The Company continues to strive to address matters related to environment through number of initiatives. The E-Waste resulting from end of life of electronic products and its rudimentary recycling leads to pollution resulting in environmental degradation. To address some of the concerns the Ministry of Environment and Forests has passed E-waste (Management & Handling) Rules, 2011. Based on Extended Producer Responsibility (EPR) principle the rules assign the responsibility to Producers for end of life management of toxic waste. The Company understands its EPR and has instituted necessary compliance mechanism and systems. The Company has established at manufacturing plants e-waste collection centers/points to process e-waste. The Company has also tied up with a professional e-waste management company to address the disposal challenge and has necessary certifications from certifying authority. General Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Companies Act, 2013. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 4. Neither the Managing Director nor the Whole-time Director of the Company receive any remuneration or commission from any of its subsidiaries. Your Directors further state that during the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Acknowledgement Your Directors take this opportunity to thank the customers, vendors, investors, members and bankers of the Company for their continued support during the year and also place on record their appreciation to the contribution made by the employees of the Company at all levels. Your Directors also thank the Government of India particularly the Income Tax Department, the Customs and Excise Departments, Ministry of Commerce, Ministry of Finance, Ministry of Corporate Affairs, the Reserve Bank of India, the State Governments and other government agencies for the support and look forward for the continued support from them in the future. On behalf of the Board of Directors Gulu L. Mirchandani Chairman and Managing Director Date : May 07, 2015 Place : Mumbai |