DIRECTOR'S REPORT TO THE MEMBERS OF N2N TECHNOLOGIES LIMITED Your Directors have pleasure to present 30th Annual Report and Audited Annual Accounts of your company for the year ended on 31st March 2015. PERFORMANCE REVIEW & FUTURE OUTLOOK: During the current year, your Company has booked total income of Rs.14.18 Lakhs and Loss after tax of Rs.7.76 Lakhs on standalone basis. The source of income is on account of interest received on Investment/advances. SUBSIDIARY: Your Company has its strategic & Material subsidiary as DSR Infotech Limited (DSR). DSR has recently converted itself into Public limited company and earlier in march entered into a share purchase agreement with Idhasoft limited shareholders for taking control of Idhasoft Ltd by purchasing about 77% stake in such company. During the period under review the subsidiary has purchased 37.08% shares in Idhasoft Ltd. The acquisition once completed, will give DSR a full control on Idhasoft & its subsidiaries operating in USA. Idhasoft group as a whole have rich experience in ERP system implementation as well as software development. The performance of DSR for the financial year 2014-2015 is as follows: The total income of the DSR for the year ended March 31, 2015 stood at Rs. 214.50 Lakhs and loss after tax stood at Rs.6.59 Lakhs as compared to a loss after tax of Rs.13.18 Lakhs during the previous year. Your Directors are expecting further growth in near future on consolidated basis and are confident that the policies, strategies adopted by your company will yield better returns. DIVIDEND & RESERVES: In view of the inadequate profits, your Directors do not recommend payment of Dividend for the current financial year. The entire profit after tax will be adjusted against loss carried forward to the balance sheet from previous years. SHARE CAPITAL: As at March 31, 2015, Your companies total paid up share capital stood at Rs.4,40,80,660/- divided into 44,08,066 fully paid up equity shares of Rs.10/- each. During the year under review, the Company has not issued any shares with or without differential voting rights. Also company has neither issued employee stock options nor sweats equity shares and does not have any scheme to fund its employees to purchase the shares of the Company. As on 31st March, 2015, Mr. Rahul Shah, Promoter director of the Company holds 31.27% shares of the Company. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF THE BALANCE SHEET AND THE DATE OF REPORT There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of the report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO A. Conservation of Energy and Technology Absorption: The Company has no particulars to report regarding conservation of energy, technology absorption as required under Section 134(3)(m) of the Companies Act, 2013 read with Rules there under. CORPORATE SOCIAL RESPONSIBILITY (CSR) Your company is committed to improve quality of lives of people in the community its serves through long term stakeholder value creation, with special focus on skills development. The Company does not have to mandatorily constitute a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The company fully understands its role in society and is committed for sustainable & inclusive growth of people & the environment around its business. BOARD AND DIRECTORS EVALUATION AND CRITERIA FOR EVALUATION During the year, the Board has carried out an annual evaluation of its own performance & performance of the Directors. Your Company has constituted Nomination and Remuneration Committee, which as per the provisions of Companies Act 2013 has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Directors. The criteria for Board Evaluation inter alia include degree of fulfillment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning. Criteria for evaluation of individual Directors include aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings. In addition, the Chairman was also evaluated on key aspects of his role, including setting the strategic agenda of the Board, encouraging active engagement by all Board members and motivating and providing guidance to the Management. Criteria for evaluation of the Committees of the Board include degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings. The procedure followed for the performance evaluation of the Board, Committees and Directors is detailed in the Directors' Report. CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF DIRECTORS: The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Companies Act 2013. Independence: In accordance with the above criteria, a Director will be considered as an 'Independent Director' if he/ she meet with the criteria for 'Independent Director' as laid down in the Act. Qualifications: A transparent Board nomination process is in place that encourages diversity of thought, experience, knowledge, perspective, age and gender. It is also ensured that the Board has an appropriate blend of functional and industry expertise. While recommending the appointment of a Director, the Nomination and Remuneration Committee considers the manner in which the function and domain expertise of the individual will contribute to the overall skill-domain mix of the Board. Positive Attributes: In addition to the duties as prescribed under the Act, the Directors on the Board of the Company are also expected to demonstrate high standards of ethical behavior, strong interpersonal and communication skills and soundness of judgment. Independent Directors are also expected to abide by the 'Code for Independent Directors' as outlined in Schedule IV to the Act. REMUNERATION POLICY The Company has adopted a Policy for remuneration of Directors, Key Managerial Personnel and other employees, which is aligned to its overall Human resource philosophy. The key factors considered in formulating the Policy are as under: (a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully; (b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and (c) remuneration to Directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. The key principles governing the Company's Remuneration Policy are as follows: Remuneration for independent Directors and non-independent non-executive Directors: • Independent Directors ('ID') and non-independent non-executive Directors ('NED') may be paid sitting fees for attending the Meetings of the Board and of Committees of which they may be members, and commission within regulatory limits, as recommended by the Nomination and Remuneration Committee ('NRC') and approved by the Board. • Overall remuneration should be reasonable and sufficient to attract, retain and motivate Directors aligned to the requirements of the Company, taking into consideration the challenges faced by the Company and its future growth imperatives. Remuneration paid should be reflective of the size of the Company, complexity of the sector/ industry/ Company's operations and the Company's capacity to pay the remuneration and be consistent with recognized best practices. • The aggregate commission payable to all the NEDs and IDs will be recommended by the NRC to the Board based on Company performance, profits, return to investors, shareholder value creation and any other significant qualitative parameters as may be decided by the Board. The NRC will recommend to the Board the quantum of commission for each Director based upon the outcome of the evaluation process which is driven by various factors including attendance and time spent in the Board and Committee Meetings, individual contributions at the meetings and contributions made by Directors other than in meetings. • The remuneration payable to Directors shall be inclusive of any remuneration payable for services rendered in any other capacity, unless the services rendered are of a professional nature and the NRC is of the opinion that the Director possesses requisite qualification for the practice of the profession. Policy on Remuneration for Managing Director ('MD') / Executive Directors ('ED') / Key Managerial Personnel ('KMP')/ rest of the Employees: • The extent of overall remuneration should be sufficient to attract and retain talented and qualified individuals suitable for every role. Hence remuneration should be market competitive, driven by the role played by the individual, reflective of the size of the Company, complexity of the sector/ industry/ Company's operations and the Company's capacity to pay, consistent with recognized best practices and aligned to any regulatory requirements. Basic/ fixed salary is provided to all employees to ensure that there is a steady income in line with their skills and experience. • In addition, the Company provides employees with certain perquisites, allowances and benefits to enable a certain level of lifestyle and to offer scope for savings. The Company also provides all employees with a social security net subject to limits, by covering medical expenses and hospitalization through re-imbursements or insurance cover and accidental death and dismemberment through personal accident insurance. The Company provides retirement benefits as applicable. • In addition to the basic/ fixed salary, benefits, perquisites and allowances as provided above, the Company provides MD/ EDs such remuneration by way of commission, calculated with reference to the net profits of the Company in a particular financial year, as may be determined by the Board, subject to the overall ceilings stipulated in Section 197 of the Companies Act, 2013. The specific amount payable to the MD/ EDs would be based on performance as evaluated by the NRC and approved by the Board. • The Company provides the rest of the employees a performance linked bonus. The performance linked bonus would be driven by the outcome of the performance appraisal process and the performance of the Company. Presently, no Directors or KMP of the Company is drawing any remuneration from the company DIRECTORS' RESPONSIBILITY STATEMENT The directors report that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures. ii) 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 at the end of the financial year and of the profit and loss account of the company for that period. iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. iv) The Directors have prepared the annual accounts on a going concern basis. v) 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 and vi) 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. DECLARATION ON INDEPENDENT DIRECTORS All the Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the Rules made there under and are independent of the management. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES Your company has one subsidiary namely 'DSR Infotech Limited'. Currently DSR is carrying its activities in offering services for Software designs/development, staffing, web content management etc. Idhasoft Limited is an Associate Company. CONSOLIDATED FINANCIAL STATEMENT In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates, your company's Consolidated Financial Statements duly audited by the Statutory Auditors, are presented in this Annual Report along with Form AOC-1. POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE The Company has zero tolerance for sexual harassment and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Company has not received any complaint of sexual harassment during the financial year 2014-15. VIGIL MECHANISM/ WHISTLE BLOWER POLICY The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. AUDITORS (1) Statutory Auditors: M/s. DMKH & Co., Chartered Accountants, Mumbai, are the statutory auditors of the Company and hold office till the conclusion of the ensuing Annual General Meeting (AGM). They have furnished a certificate, confirming that if re-appointed, the re-appointment will be in accordance with Section 139 read with Section 141 of the Act. Pursuant to the provisions of the Act and the Rules made there under, it is proposed to appoint them as the statutory auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the 32nd AGM, subject to ratification of their appointment at the AGM to be held in 2016. Members are requested to consider the re-appointment of M/s. DMKH & Co., Chartered Accountants, Mumbai and authorize the Board of Directors to fix their remuneration. (2) Secretarial Auditors: Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. Hardik Savla & Co, a Company Secretary in Practice to undertake the Secretarial Audit of the Company for the year ended 31st March, 2015. The Secretarial Audit Report is annexed to this report. LISTING ON STOCK EXCHANGES The Equity Shares of your Company are listed only with BSE Limited. The listing fees for the financial year 2015-2016 have not been paid. CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Clause 49 of the Listing Agreement does not apply to the Company in Accordance with SEBI circular CIR/CFD/POLICYCELL/7/2014 dated 15-09-2014. Therefore no separate section on Management's Discussion and Analysis, Corporate governance is annexed. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT UNDER SECTION 186 During the year, the Company has not given any loan or guarantee, or provided security, or has made any investment which would be required to be reported under section 186 of the companies Act 2013. The closing balances of investments which would be covered under Section 186 of the Companies Act, 2013, are disclosed in the Schedule of Non-Current Investments/Loans given in the Financial Statements. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013 The contracts or arrangements as covered u/s188 of the Companies Act 2013, is entered into by the Company with Related Parties have been done at arm's length and are in the ordinary course of business and are immaterial in nature. Hence, no particulars are being provided in Form AOC-2 as mandated pursuant to the provisions of Section 134 of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014. THE EXTRACT OF ANNUAL RETURN Extracts of Annual return in form MGT-9 as per Section 134 (3) (a) of the Companies Act, 2013 read with Rule 8 of Companies Act (Accounts) Rules 2014 and Rule 12 of Companies (Management & Administration) Rules, 2014 is annexed hereto and forms part of this report. MANAGERIAL REMUNERATION / PARTICULARS OF EMPLOYEES Your company has not paid any managerial remuneration during the period under review, therefore no Disclosures in the Board Report as required under Rule 5 of Companies (Appointment & Remuneration) Rules, 2014 is provided and further your Company also has not employed any person at a remuneration in excess of the limit set out in the said Rules. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) : At the Annual General Meeting of the Company held on September 25, 2014, the Members had approved the appointment of Mr. Rajesh Shah, Mr. Haren Parekh & Mr. Jayesh Desai as an Independent Director for a term of five years as per the provisions of Companies Act 2013, however during the year all of them have resigned from their positions on Board & its committees with effect from 29th Jan 2015, 20th Feb 2015 & 13th April 2015 respectively. To fill the said vacancies Board appointed Mr.Murtuza Ali Soomar & Mr.I Raghunath as an Additional Director (Independent) on February 20th, 2015. Further Board appointed Mrs. Maya Chandra as an Additional Director-Women (Independent) on April 13th, 2015. All the newly appointed directors are liable to vacate their office on the date of the AGM. Your board recommends their appointment for a term of five years as an Independent director of the company as required under the Companies' act 2013. Accordingly resolutions have been incorporated in the Notice for members approval in the ensuing AGM. The company still hasn't appointed or designated any key managerial personnel as per the requirements of section 203 of the Companies Act 2013. In accordance with the provisions of Section 152 of the Act and in terms of Articles of Association of the Company, Mr. Rahul Shah retires and is eligible for re-appointment. BOARD AND COMMITTEE MEETINGS Five Board Meetings were convened and held during the year i.e. on May 30, 2014, August 14, 2014, November 17, 2014, February 20, 2015 & 18th March 2015. The Board re-constituted an Audit Committee with Mr. Murtaza Ali Somaar as Chairman and Mrs. Maya Chandra, Mr. I Raghunath as Members. Also the Stakeholders relationship committee & Remuneration Committee is re-constituted with Mr. I Raghunath as Chairman and Mrs. Maya Chandra, Mr. Murtuza ali Sommar as Members. There have not been any instances when recommendations of the Audit Committee were not accepted by the Board. The intervening gap between the Meetings was within the period prescribed under the Act. DETAILS OF DEPOSITS WHICH ARE NOT IN COMPLIANCE WITH THE REQUIREMENTS OF CHAPTER V OF THE COMPANIES ACT, 2013: Your Company has not accepted any fixed deposits covered under chapter V of the Companies Act, 2013 and, as such, no amount of principal or interest was outstanding on the date of Balance Sheet. INTERNAL CONTROLS SYSTEMS AND ADEQUACY The Company's internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company's policies, identifying areas of improvement, evaluating the reliability of Financial Statements, ensuring compliances with applicable laws and regulations and safeguarding of assets from unauthorized use. The Audit Committee along with Management oversees results of the internal audit and reviews implementation on a regular basis. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation for the whole hearted and sincere cooperation the Company has received from its bankers and various Government agencies. Your Directors also wish to thank all the employees for their co-operation. By Order of the Board of Directors For N2N Technologies Limited Rahul Shah Director Maya Chandra Director Place: New Delhi Date: Sept 3, 2015 |