DIRECTOR'S REPORT To The Members, 1. Your Directors have pleasure in presenting their 22nd Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2015. 2. BRIEF DESCRIPTION OF THE COMPANY'S WORKING DURING THE YEAR/STATE OF COMPANY'S AFFAIR: During the year under review, the gross revenue of the Company increased to Rs. 563.71 Lakhs compared to Rs. 500.45 in the previous year. The Profit after tax for the year increased to Rs. 31.60 Lakhs compared to Rs. 8.55 Lakhs in the previous year. 3. CHANGE IN THE NATURE OF BUSINESS, IF ANY: Consolidation of Clients , rationalization of market segments & expansion of Sales force will be the Focused approach in Fiscal year 2015 - 2016 to achieve the targeted numbers. During the Fiscal year 2015 - 2016, The plan is to profitably balance out and integrate Top line growth with reasonable bottom lines : 4. FUTURE OUTLOOK: Renewed thrust with a larger Sales force to tap the growing market during Q 2, Q 3 & Q 4 will take up the Top line under stand alone to a level of Rs. 7 Crores, up from the previous year's Rs. 5.63 Cr, an estimated growth of around 24 % YoY. Aggressive Sales efforts on the domestic hosting business to boost the bottom lines, as the objective is to put the existing blade servers to optimal utilization. With a productive and efficient management of both I SP business & Domestic hosting, the Company is targeting a bottom line of Rs. 50 Lakhs by the end of March 2016. Standalone I n the I SP segment, There is immense competition in both the twin states of Telangana State & AP State. On one hand, Home grown and dominant localized State level A & B category ISPs are fighting for larger market shares with bigger brand presence & reach. On the other side, National TELCOs are also directly marketing all their Voice, Data & Video service offerings in the same markets. Margins are shrinking with incremental fixed costs. Fall in Internet Bandwith buying prices is getting negated with higher demand from end consumers from the point of view of both quality & quantity of bandwidth, which poses a challenge in optimizing usage of Internet bandwidth management. State Govts on both sides are exploring the possibility of providing Free WiFi in select Cities & principal towns. This may add to the existing fierce competition. Additionally, Giant New Players are expected to play havoc in the market with their aggressive combo offerings and marketing campaigns. Against the above backdrop, Nettlinx has strategically positioned itself in a niche market segment comprising of larger reliance on SMEs, Educational Institutions &Business broadband than relying on third party Cable Operators network as opposed to only the home broadband segment & whole sale bandwidth by most others .Under the circumstances ,Nettlinx will be able to overcome competition and scale over all the hurdles and achieve the desired and budgeted financial numbers. Consolidated: Nettlinx Realty With an objective of profitable diversification under the Nettlinx Holding Company, Nettlinx Realty Pvt Ltd has chalked out ambitious plans as the real estate sector is booming across the principal cities in India and is poised to grow rapidly in the next few years. As a first step towards achieving this objective, The Company, several years back, has acquired land at GachiBowli at Hyderabad. Several years back it has bought land at Nagpur identifying its potential and to take advantage of Nagpur becoming a major multi modal cargo hub and this land is very close to the SEZ. The Company has initiated the process of considering possible tieup with leading Companies to jointly leverage this land bank for possible conversion in to residential / commercial property development projects. The initial investments on these two lands got appreciated manifold owing to huge demand and land rates going up north. In Both these specific locations where the land is situated, exponential residential apartments are coming up from multiple developers. we should be able to monetize over a period of 2 - 3 years as we are going to ink development agreements with leading Companies. Nettlinx Aqua Culture Pvt Ltd In the current millennium, intensification of aquaculture is the need of the hour to meet the ever growing demand in the country & overseas markets. The Govt is focusing in meeting the domestic requirement and helping marine exports through aquaculture in the coming 10 years and aquaculture has a major role as well as responsibility to achieve this objective. Intensification of aquaculture necessitates system and species diversification, proper feed and feeding strategies, diseases monitoring and surveillance, application of modern biotechno-logical tools, maintenance of optimum soil and water health, efficient use of water resources and efficiently and productively relying on successful technologies and taking advantage of robust Logistic management systems . Its expected and proposed that all these action points and measures will culminate into better yield and maximizing profits for the Organization in the medium term. In view of this and atke part in the growth story for future, The Company has bought land at Gogullanka Village, H/o Guttinadevi, I Polavaram Mandal, East Godavari District, AP State. 5. SUBSIDIARIES: Company has Three wholly owned subsidiaries namely Nettlinx Inc., Nettlinx Realty Private Limited and Nettlinx Aquaculture Private Limited (formerly known as Nettlinx Channel Private Limited). There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). Further there has been no material change in the nature of business of the subsidiaries. 6. RESERVES: 7 4,83,10,111.00 is the reserves standing as at 31st March, 2015. 7. SHARE CAPITAL: During the year under review, there is no change in the Share Capital of the Company. The Authorised Share Capital of the company is Rs. 20,00,00,000 divided into 2,00,00,000 equity shares of Rs.10 (Rupees Ten Only) each. The Issued, Subscribed and Paid up Capital of the Company as on March 31, 2015 is Rs.11,46,33,120 divided into 1,14,63,312 equity shares of Rs.10 (Rupees Ten Only) each. 8. DIVIDEND: In view of inadequate profits, your Board could not recommend any dividend for the financial year 2014-2015. 9. DEPOSITS: The Company has neither accepted nor renewed any deposits during the year under review. As such no amount of principal or interest was outstanding on the date of the Balance Sheet. 10. DIRECTORS AND KEY MANAGERIAL PERSONNEL: DIRECTORS: a) I n accordance with the provisions of Companies Act, 2013, Sri. Chandra Sekhar Pogula, Executive Director of the Company would retire by rotation and, being eligible, offer himself for re-appointment. b) In view of new legislative changes, the shareholders have reappointed Sri K Kameswara Rao, Sri. J V Hanumantha Rao, Sri. M.Vijay Kumar and Sri. M. Appa Rao, non executive directors as Independent directors of the Company in the previous Annual General meeting in accordance with Section 149 of the Companies Act, 2013 and clause 49 of the listing agreement for a period of five years. c) Sri. Chandra Sekhar Pogula has been appointed as Whole-time Director & CEO for remaining tenure of his Appointment who shall be liable to retire by rotation. d) Mrs. Radhika Kundur was appointed as an Additional Director in the meeting of the Board of Directors held on 25th March, 2015 whose term expires at the ensuing Annual General Meeting of the company and for the appointment of whom the Company has received a notice in writing proposing his candidature for the office of the Director be and is hereby appointed as a Director of the Company whose period of office will be liable to determination by retirement of directors by rotation. e) Due to their preoccupations and personal reasons, Mr. Loka Narayan Reddy and Mr. Appa Rao Mukkamala have resigned from the Board with effect from 26th May, 2015. f) As required under Section 134 (3) (d) of the Companies Act, 2013, All independent directors have given declarations that they meet the criteria of independence as laid down under section 149 (6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. g) Other Disclosures: Board Evaluation Pursuant to Section 134 (3) (p) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Appointment & Remuneration Committees and Stakeholders Relationship Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. Meetings During the year Six Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. DETAILS OF KEY MANAGERIAL PERSONAL (KMP) During the period under review, Sri. Sanku Mahaganesh, Manager (Accounts and Finance) has been appointed as Chief Financial Officer of the Company w.e.f. 27th May, 2015. Mr. Emani Venkat Reddy has been appointed as Company Secretary of the company w.e.f.01st August, 2015. 11. PARTICULARS OF EMPLOYEES: Pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement of particulars of employees is annexed as Annexure-A to this report. 12. AUDITORS: M/s Deva & Co, Chartered Accountants, Hyderabad, were appointed as Statutory Auditors of the Company for a period of three (3) years from the conclusion of the 21st AGM to the conclusion of 24th AGM, subject to ratification by the members at every AGM. The statutory auditors have also confirmed their eligibility under section 139(1) of the Companies Act, 2013. Members are requested to ratify their appointment as Statutory Auditors and to authorize the Board to fix their remuneration. 13. AUDITORS' REPORT: The Auditors' Report does not contain any qualification. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments. 14. EXTRACT OF ANNUAL RETURN: As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in Form MGT 9 is given as Annexure- B to this report. 15. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is finalized and professional mandate is yet to be issued. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Chairperson & Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. 16. PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Conduct for Prevention of unfair Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. 17. VIGIL MECHANISM: In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.nettlinx.com 18. RISK MANAGEMENT POLICY : The Risk Management Policy in place in the company enables the company to proactively take care of the internal and external risks of the company and ensures smooth business operations. The company's risk management policy ensures that all its material risk exposures are properly covered, all compliance risks are covered and the company's business growth and financial stability are assured. Board of Directors decide the policies and ensure their implementation to ensure protection of company from any type of risks. 19.PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: All Related party transactions done by the company during the Financial Year were at Arm's Length and in ordinary course of business. All related party transactions were placed in the meetings of Audit committee and or the Board of Directors for Approvals. During the Financial year, your company has not entered into any material transaction with any of its related parties except with its subsidiaries / associates which might be deemed to have had a potential material conflict with the interest of the company. Disclosures on related party transactions have been made in the notes to the Financial Statements. To and monitor significant related party transactions, company has also framed a policy on the related party transactions and the same is available on the company's website www.nettlinx.com. As all the transactions with related parties are on arm's length basis and in the ordinary course of Business the particulars of contracts or arrangements with related parties under section 188 in form AOC_2 is not enclosed herewith. 20. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE: No significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and Company's operations in future. 21. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186: Particular of loans given, investment made, guarantees given and securities provided along with the purpose for which loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial Statement (Please refer to Note 10,16 and 29 to the standalone financial Statement). 22.CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS: The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are set out as Annexure-C and Annexure-D respectively together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. 23. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT: Pursuant to the provisions of Section 204 of the Companies Act, 201 3 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed Mr.Koaylakar Manoj Kumar as Secreterial Auditor who is a partner of M/s AGR & Associates, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit for the financial year 2015. The Secretarial Audit report is annexed herewith as "(Annexure E)" & "(Annexure E1)". The report is self-explanatory and do not call for any further comments. 24. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013: The Company Proposes to have in place an Anti Sexual Harassment Policy,during the year 2015-2016, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) will be covered under this policy. During the year Company has not received any complaint of harassment. 25.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: (A) Conservation Of Energy: The operations of the company involve low energy consumption. However adequate measures have been taken to conserve energy wherever practicable. (B)Technology absorption, adaptation and innovation: The company continues to use the latest technologies for improving the quality of its operations. Provision of state of the Art communication facilities to al software development centers and total technology solutions to its clients contribute to technology absorption and innovation. (C) Foreign exchange earnings and Outgo The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows is as follows: Foreign Exchange Inflows: Nil Foreign Exchange Outflows: Nil 27. CORPORATE SOCIAL RESPONSIBILITY (CSR): Since your company does not meet applicable requirements i.e. net worth of Rs.500 Crores or more, or Turnover of Rs.1000 Crore or more, or net profit of Rs.5 Crores or more during the Financial Year, in pursuance of section 135 of the Companies Act, 201 3 relating to corporate Social Responsibility, the company need not adopt any Corporate Social Responsibility (CSR) policy. 26. HEALTH AND SAFETY/ INDUSTRIAL RELATIONS: The company continues to accord high priority to health and safety of employees at manufacturing locations. During the year under review, the company conducted safety training programmes for increasing disaster preparedness and awareness among all employees at the plants. Training programmes and mock drills for safety awareness were also conducted for all employees at the plants. Safety Day was observed with safety competition programmes with aim to imbibe safety awareness among the employees at the plant. During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels. 27. DIRECTORS' RESPONSIBILITY STATEMENT: In pursuance of Section 134(5) of the Companies Act, 2013, your directors confirm: (a) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures. (b) That the directors had selected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the Company for that period. (c) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities. (d) That the directors had prepared the annual accounts on the going concern basis. (e) That the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. (f) That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 28. LISTING WITH STOCK EXCHANGES: The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to BSE where the Company's Shares are listed. 30. ACKNOWLEDGEMENTS: Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels, to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation of business constituents, banks and other financial institutions and shareholders, of the Company for their continued support. By the order of the Board of Directors for Nettlinx Limited Sd/- (Dr. Manohar Loka Reddy) Chairman DIN: 00140229 Place: Hyderabad Date :07/08/2015 |