DIRECTORS' REPORT To, The Members, Your Directors have pleasure in presenting the 30th Annual Report together with the Audited Accounts and Auditors' Report of your company for the Financial Year ended on 31st March, 2015. 2. Results of operations: (a) Standalone Results: The gross turnover for the year under review was Rs. 3272.05 lacs as compared to Rs. 3327.13 lacs for the last year resulting a marginal decline of 0.98% over last year. The operating EBIDTA was Rs. 184.15 lacs as compared to Rs. 193.77 during the last financial year. The marginal decline was primarily caused due to the deferment of the digitization programme of cable TV by the Government of India. (b) Consolidated Results: The consolidated turnover and consolidated EBIDTA was Rs. 3298.22 and Rs. 188.03 respectively as compared to Rs. 3327.18 and Rs. 180.69 for the last year. In accordance with the Accounting Standards AS-21, on Consolidated Financial Statements, read with Accounting Standard AS-23 on Accounting for Investment in Associates and AS-27 on Financial Reporting on Investment in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report. 3. Dividend: Keeping in view of the funds requirement, especially for digital and set top boxes business, your Board of Directors are of the view that the current year's profits be ploughed back into the operations and hence do not recommend any dividend payment for the financial year ended 31st March, 2015. However, the Board of Directors of your company is quite confident to deliver growth and enhance shareholders' value in the coming years. 4. Corporate Review: Your company has two business divisions. The division-wise performance of the company is as follows: (i) CATV Division: This division sells CATV equipment to cable TV operators and multi system operators (MSOs). During the year under review, this division supplied, installed and commissioned digital head-end systems to various cable operators across the country and was able create its pan-India presence for digital headend and digital products especially for phase 3 & 4 markets which are the prime markets for your company. The company was expecting to do much better in the financial year under review in this division but due to deferment of digitalization it has fallen short in the overall revenue that was projected for this financial year. However, during the year under review, this division recorded a growth of 18.02% over the last year. (ii) Hotel Systems Division: This division primarily addresses the hospitality sector, providing solutions in cable TV and IPTV. This division witnessed tough challenges during the year under review. The twin challenges it faced were from market perspective and from the regulatory regime. Tourism is a significant industry in India and has a cascading effect on the hospitality sector. During FY 2014-15, the hotel occupancy rates were around 54% and the average room rate decreased over the previous year by about 3 - 4% due to supply pressure and general slowdown. Due to this the hotels were not interested to invest in upgrading their networks. The Telecom Regulatory Authority of India (TRAI) announced a new tariff order in the month of July-2015 and as per this order, commercial establishments, which do not specifically charge its guest on account of providing TV programming and offer them as part of amenities, are to be treated like ordinary subscribers. The TRAI further clarified that the commercial subscribers have to obtain television services only from the distribution platform operators (DTH, MSO, HITS and IPTV operators). As a result most of the hotels, which used to have their own cable TV headends, opted for availing services directly from distribution platform operators. Due to these adverse conditions this division of your company suffered heavily. The revenue of this division witnessed a sharp decline of 27.48% over the last financial year. 1. Projects and Expansion Plans: In order to provide a complete range of products to cable television operators and MSOs your company has started manufacturing world-class digital headend products in its existing factory at Dehra Dun. The products are manufactured under the know-how provided by its joint venture company Catvision Unitron Pvt. Ltd. To create state-of-the art manufacturing and testing facility for digital products at its existing plant, your company invested Rs. 70.00 Lacs on test and manufacturing equipments. Digitalization of cable TV has created a huge demand for set top boxes. To address this demand your company has plans to start in-house manufacturing of STBs. Toward this end your company has already entered into an agreement with a design house which will provide the technology as per requirement. Gradually the company will establish its own design house. The own-manufactured STB will be launched in the market in the first quarter of 2015-16. 6. Joint Venture Companies: Your company and Unitron Group NV of Belgium entered into a joint venture agreement pursuant to which two joint venture companies, 'Catvision Unitron Pvt. Ltd.' in India and UNICAT Limited in the Middle East (UAE), has been set up. These joint venture companies are developing the new generation technologies for CATV products. Pursuant to the provisions of Section 123(93) of the Companies Act, 2013, a statement containing salient features of the financial statements of the company's joint ventures in Form AOC-1 is attached to the financial statements of the company. Pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statement of the company, consolidated financial statement along with the relevant documents are available on the website of the company. 7. Certification and Recognitions: Quality of products and services is vital to any business. Your company strives to achieve excellence in quality by instituting high standards, periodic checks and reviews as we believe that right and efficient processes can only help us in delivering consistently against all odds. Your company's Quality Management System (QMS) is aligned and focused with the long term objectives of the company. The QMS of the company has been reassessed this year as per the requirement of ISO 9001:2008 by the certification agency who conducted a renewal audit. Post audit, the certification agency declared that the QMS of the company continues to conform to international standard and recommended for renewal of the ISO Certificate. The renewed certificate is valid up to 1st July, 2016. Your Company is also accredited with ISO 14001-2004 and this accreditation is valid till19th November, 2015 8. Fixed Deposits: During the year your company has accepted unsecured Deposits only from shareholders of the Company under Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposits) Rule, 2014. Your company got the Fixed Deposit Scheme rated from India Ratings & Research Private Limited. The Fixed Deposit circular is valid up to the date of the ensuing AGM or within six months from the close of the financial year, whichever is earlier. No amount of principal or interest was outstanding as per the previous Act. The details of the deposit accepted by company are given in the notes to the financial statements. 9. 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 defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board and to the 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. The compliance team in the Legal and Secretarial department ensures, amongst others, that there are adequate systems and processes in the company commensurate with the size and operations to monitor and ensure compliance with size and operations to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. The Human Resources department carries out similar exercise for ensuring compliance with all relevant legislation. . 10. Directors' & Key Managerial Personnel: Appointments: In terms of the Section 149 of the Companies Act, 2013, the Members at their meeting held on 30th September, 2014 had appointed Dr. Sunil Anand, Mr. Raman Rajiv Misra and Mr. Jagdish Prasad as Independent Directors of the company for a period of five years and all have given declaration 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. Mrs. Hina Abbas was appointed as an Additional Director with effect from 12th February, 2015 and holds the office till the forthcoming Annual General Meeting and is proposed to be appointed as Executive Director of the company for a period of three years with retrospective effect from 12th February, 2015. A notice has been received from a shareholder to appoint Mrs. Hina Abbas as a Director, along with the requisite deposit amount. In terms of the Articles of the company, Mr. Syed Athar Abbas, Director of the company, retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment as director. Brief resume of the directors seeking re-appointment together with the nature of their expertise in the specific functional areas, name of the companies in which they hold directorship, as required in Clause 49 of the Listing Agreement, are given in the accompanying Notice convening the ensuing Annual General Meeting of the company. Pursuant to the provisions of Section 203 of the Companies Act. 2013, which came into effect from 1st April, 2014, the appointments of Mr. Syed Athar Abbas, Managing Director, Mr. Vinod Rawat, Chief Financial Officer and Ms. Rency George as Company Secretary as the Key Managerial Personnnel of the Company were formalized. 11. Board Effectiveness: (i) Board Evaluation: Pursuant to the provisions 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, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. (ii) 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. 12. Directors' Responsibilities Statement: Pursuant to the provisions contained in Section 134 (5) of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management and after enquiry, confirm: a. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation and that no material departure has been made from the same; b. that 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 of the company for the year under review; c. that 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. that the Directors have prepared the annual accounts for the financial year ended 31st March, 2015 on a 'going concern' basis; e. that the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and f. that 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. 13. Related Party Transactions: All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. 14. Subsidiary Companies: The Company does not have any subsidiary. 15. Code of Conduct: The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The company believes in "Zero Tolerance" against bribery, corruption and unethical dealings/ behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "code of business conduct" which forms an Appendix to the Code. The Code has been posted on the Company's website www.catvisionindia.com The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard. 16. Prevention of Insider Trading: The company has adopted a Code of Conduct for Prevention of 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 the Directors and the designated employees have confirmed compliance with the Code. 17. Auditor's Report & Secretarial Audit Report: The observation made in the Auditors' Report read together with relevant notes thereon are self explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. As required under section 204 (1) of the Companies Act, 2013 the company has obtained secretarial audit report and in accordance with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Rule 9 the Secretarial Audit Report is annexed to the Board's Report as "Annexure B" and is self-explanatory and, therefore, does not call for any further comments. 18. Auditors: (i) Statutory Auditors: M/s Gaur & Associates, Chartered Accountants, auditors of the company were appointed Statutory Auditors of your company from the conclusion of the previous Annual General Meeting for a term of three years i.e. until the conclusion of the thirty second Annual General Meeting. They have confirmed the eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. In term of Section 139 of Companies Act, 2013, the company shall place the matter relating to such appointment ratification by members at every Annual General Meeting. So, the Auditor will be appointed every year by the shareholders. Thus, an appropriate resolution seeking your approval to the said re-appointment is appearing in the Notice convening the Annual General Meeting of the company. (ii) Secretarial Auditors: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of your company have recommended the appointment of Pramod Kothari & Co., a practicing firm of Company Secretaries holding Practicing No. 11532, as its Secretarial Auditor to conduct the Secretarial audit of your company for the financial year ending 31st March, 2016. The Report of the Secretarial Audit carried out is annexed herewith as "Annexure B". The Board at its meeting held on 30th May, 2015 has re-appointed Pramod Kothari & Co., a practicing firm of Company Secretaries, as Secretarial Auditor for conducting Secretarial Audit of the Company for financial year 2015-16. (iii) Cost Auditor: Pursuant to Section 148(2) of the Companies Act, 2013 read with Companies ( Cost Records and Audit), Amendment Rules, 2014, your company is not required to get its Cost Audit only records are required to be maintained. 19. Business Risk Management: The company's vigorous risk management framework identifies and evaluates business risks and opportunities. The company recognizes that these risks need to be managed and mitigated to protect its shareholders and other stakeholders, to achieve its business objectives and enable sustainable growth. The risk framework is aimed at effectively mitigating the company's various business and operational risks, through strategic actions. Risk management is embedded in our critical business activities, functions and processes. The risks are reviewed for the change in the nature and extent of the major risks identified since the last assessment. It also provides control measures for risks and future action plans. Pursuant to the requirement of Clause 49 of the Listing Agreement, the company has constituted a subcommittee of Directors to oversee Enterprise Risk Management Framework to ensure execution of decided strategies with focus on action and monitoring risks arising out of unintended consequences of decisions or actions and related to performance, operations, compliance, incidents, processes, systems and transactions are managed appropriately. The company believes that the overall risk exposure of present and future risks remains within risk capacity. 20. Management Discussion and Analysis: Information of the operation and financial performance, among others, is given in the Management Discussion and Analysis report which is annexed to this Report and has been prepared in accordance with Clause 49 of the Listing Agreement. 21. Corporate Governance: Your company is committed to Corporate Governance as stipulated under Clause 49 of the Listing Agreement. Your company believes that great companies are built on the foundation of good governance practices. The Board of Directors of your company lays strong emphasis on transparency, accountability and integrity. As required under Clause 49 of the Listing Agreement, report of Corporate Governance, together with Auditors' Certificate on compliance of the conditions of Corporate Governance, along with the Management Discussion and Analysis report and CEO/CFO Certificate on discharge of finance function are attached as Annexure to this report. 22. Depository System: Trading in Equity Shares of your company in the dematerialized form is compulsory for all shareholders with effect from 25th September 2000 in terms of the notification issued by the Securities and Exchange Board of India (SEBI). The Equity Shares of the company are available for dematerialization with the National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL) under ISIN No. INE 660B01011. Currently 68.79% of the Equity Shares of the company are in the demat form. 23. Statutory Disclosures: (i) Particulars of Loans, Guarantees or investments: The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013. (ii) Vigil Mechanism / Whistle Blower Policy: The company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the company is committed to the high standards of Corporate Governance and stakeholder responsibility. The company has a Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. (iii) Meetings A calendar of Meetings is prepared and circulated in advance to the Directors. During the year five 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. (iv) Extract of Annual Return: The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure C". (v) Details of Significant and Material Orders passed by the Regulators or Courts or Tribunal impacting the going concern status and Company's operations in future: There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the company and its, future operations. (vi) Disclosure under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013: The company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013. An internal complaints Committee has been set up to redress complaints received regarding sexual harassment. All the employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints pertaining to sexual harassment were received in the financial year 2014-15. (vii)Particulars of Employees and Related Disclosures: The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the company during business hours on working days of the company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance. 24. Acknowledgement and Appreciation: Your Directors place on record their appreciation of the continued support extended during the year by the company's clients, business associates, suppliers, bankers , government authorities and international business associates without which Catvision could not have achieved the desired results. Your Directors are also grateful to all the shareholders and members of the company for their faith, trust and confidence reposed on the management of the company. Your Directors wish to convey their sincere appreciation to all the employees including the workmen, for their sustained efforts, dedication and hard work they put in the company, and are confident that they will continue to contribute their best towards achieving still better performance in the future. For and on behalf of the Board of Directors S. A. Abbas Managing Director (DIN: 00770259) Dr. Sunil Anand Independent Director (DIN: 00770353) Date : 30th May, 2015 Place : Noida-U.P |