DIRECTORS' REPORT Dear Members, 1. Your directors have pleasure in presenting the 26th Annual Report on the business of your Company together with the Audited Statements of Accounts for the financial year ended 31st March, 2016. 2. TRANSFER TO RESERVES: The Company did not transfer any amount to the General Reserve for the Financial Year ended March 31, 2016. 3. COMPANY PERFORMANCE: Your Company posted good financial results with a net profit of Rs. 59.35 Lakhs during the year under review. The Company maintained the turnover as that of the last year turnover with a minor difference of 100 odd Lakhs. The Company is looking forward to increase its profits in the coming financial years with the support of all the stakeholders of the Company besides contributing to the society as a good corporate citizen. 4. SHARE CAPITAL: The paid up equity share capital of the Company as on 31st March, 2016, is Rs. 4,05,50,930/-. During the year under review, the Company has not issued shares with differential voting rights, sweat equity shares or Employee Stock Options. 5. DEMAT SUSPENSE ACCOUNT: The Company does not have any demat suspense account or unclaimed suspense account since there are no shares which are required to be transferred to such accounts. 6. DIVIDEND: Your Directors recommended a dividend of Rs. 1.00/-i.e. 10% per equity share of Rs.10/- each for the financial year 2015-2016. The dividend payout is subject to the approval of the members at the ensuing Annual General Meeting. The Dividend will be paid to members whose names appear in the register of members as on l8th June, 2016 and in respect of shares held in dematerialized form, it will be paid to the members whose names are furnished by NSDL and CDSL as beneficial owners as on that date. 7. DIRECTORS: The tenure of Dr. A. Vidyasagar, Managing Director of the Company, expired on 31st March 2016. Taking in to consideration of his rich experience and contribution to the Company, and pursuant to the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company, subject to the approval of the members at the ensuing AGM, passed a resolution on 13th February, 2016, approving the reappointment of Dr. A. Vidyasagar as Managing Director of the Company for a further period of three years with effect from 01st April, 2016 to 31st March, 2019. In accordance with the provisions of section 152 of Companies Act, 2013, Smt. Abburi Sarada, Director of the Company retires by rotation and being eligible, has offered herself for re-appointment. The Board of Directors has appointed Shri Eluru Bala Venkata Ramana Gupta and Shri Myneni Narayana Rao, as Additional directors of the Company who holds office until the ensuing Annual General Meeting. The Board, based on the recommendation of Nomination and Remuneration Committee considered the appointment of Mr. Eluru Bala Venkata Ramana Gupta and Mr. Myneni Narayana Rao, as the Independent Directors subject to approval of shareholders at the ensuing AGM. 8. BOARD INDEPENDENCE: The company has received necessary declaration from each independent director under 149(7) of the Companies Act, 2013, that he/she meets the criteria of Independence laid down under Section 149 (6) of the Companies Act, 2013. 9. NUMBER OF MEETINGS OF THE BOARD: The Board met four times during the financial year 20152-16 viz., on, 29th April, 2015, 29th July, 2015, 13th November, 2015, and on l3th February, 2016. The maximum interval between any two meetings did not exceed 120 days. 10. STATUTORY AUDITORS: At the Annual General Meeting (AGM) held on September 25, 2014, M/s. Ramanatham & Rao, Chartered Accountants, were appointed as Statutory Auditor of the Company to hold office from the conclusion of that AGM till the conclusion of the 29th AGM (subject to ratification of the appointment by the members at every AGM held after that AGM) at such remuneration as may be decided by the Board of Directors. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditor shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Ramanatham & Rao, Chartered Accountants, as statutory auditors of the Company, is hereby placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. 11. AUDITORS' REPORT: There are no qualifications, reservations or adverse remarks made by M/s. Ramanatham & Rao., Chartered Accountants, Statutory Auditors in their report for the Financial Year ended 31st March, 2016. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company under sub-section (12) of section 143 of the Companies Act, 2013, during the year under review. 12. INTERNAL AUDITORS: The Board of Directors based on the recommendation of the Audit Committee has re-appointed M/s. Ramesh & Co., Chartered Accountants, Hyderabad, as the Internal Auditors of your Company. The Internal Auditors are submitting their reports on quarterly basis. 13. SECRETARIAL AUDITORS: M/s. P. S. Rao & Associates, Practicing Company Secretaries, were appointed to conduct the Secretarial Audit of the Company for the financial year 2015-16, as required under Section 204 of the Companies Act, 2013 and Rule 9 there-under. The secretarial audit report for FY 2015-16 forms part of this Report as Annexure- I. 14. SECRETARIAL AUDIT REPORT: There are no qualifications, reservations or adverse remarks made by M/s. P. S. Rao & Associates, Practicing Company Secretaries in their report for the Financial Year ended 31st March, 2016. 15. RISK MANAGEMENT POLICY: The Company has developed and implementing a risk management policy which includes the identification therein of elements of risk, which in the opinion of the board may threaten the existence of the Company. 16. CORPORATE SOCIAL RESPONSIBILITY (CSR): As per the provisions of the Companies Act, 2013, companies having net worth of Rs. 500 Crores or more, or turnover of Rs. 1000 Crores or more or net profit of Rs. 5 Crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) Committee of the Board of Directors comprising three or more directors, at least one of whom should be an independent director and such company shall spend at least 2% of the average net profits of the company's three immediately preceding financial years. Though your Company does not fall in the aforementioned criteria and though it does not have any mandatory obligation, it has spent Rs. 5,34,903/- towards CSR activities in the financial year 2015-16. The Company as part of its Corporate Social Responsibility (CSR) initiative adopted ZPH School with a strength of 2000 students at Chandrampalem, Madhurawada, Visakhapatnam. It had remodeled the school with various basic facilities and amenities. A report on CSR Activities as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is enclosed herewith as Annexure - II. The Company has adopted Corporate Social Responsibility Policy containing the activities to be undertaken by the Company as part of its CSR programs. The CSR Policy is disclosed on the website of the Company www.avantel.in . Composition of Corporate Social Responsibility Committee: Smt. A Sarada Shri N Naveen Shri Y Kishore Shri B V K Durga Prasad Chairperson Member Member Member 17. COMPOSITION OF AUDIT COMMITTEE: The Audit Committee of the Company comprises the following Members Shri N. Naveen - Chairman Shri Y. Kishore Member Shri Raghu Prasad Pidikiti - Member Shri E.B.V. Ramana Gupta - Member All the recommendations made by the Audit Committee of the Company have been considered and accepted by the Board of Directors of the Company. 18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE OUTGO: Information required under section 134(3) (m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed herewith as Annexure- III. 19. FORMAL ANNUAL EVALUATION OF PERFORMANCE OF THE MEMBERS OF THE BOARD AND COMMITTEES: One of the key functions of the Board is to monitor and review the board evaluation framework. The Board works with the nomination and remuneration committee to lay down the evaluation criteria for the performance of executive / non-executive / independent directors through a peer-evaluation excluding the director being evaluated through a Board effectiveness survey. The questionnaire of the survey is a key part of the process of reviewing the functioning and effectiveness of the Board and for identifying possible paths for improvement. Each Board member is requested to evaluate the effectiveness of the Board dynamics and relationships, information flow, decision- making of the directors, relationship to stakeholders, company performance, company strategy, and the effectiveness of the whole Board and its various committees on a scale of one to five. Feedback on each director is encouraged to be provided as part of the survey. Independent directors have three key roles -governance, control and guidance. Some of the performance indicators based on which the independent directors are evaluated include: • Ability to contribute by introducing international best practices to address top-management issues • Active participation in long-term strategic planning. • Commitment to the fulfillment of a director's obligations and fiduciary responsibilities; these include participation in Board and committee meetings. 20. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS: The Company has in place an Internal Control System, commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. 21. SUBSIDIARIES: The Company has no subsidiaries as on 31st March, 2016. 22. NOMINATION AND REMUNERATION POLICY: A committee of the Board named as "Nomination and Remuneration Committee" has been constituted to comply with the provisions of section 178 of Companies Act, 2013 and to recommend a policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters and to frame proper systems for identification, appointment of Directors & KMPs, Payment of Remuneration to them and Evaluation of their performance and to recommend the same to the Board from time to time. The policy is also posted in the investors section of the company's website. 23. FIXED DEPOSITS: Your Company has not accepted any fixed deposits and as such no principal or interest was outstanding as on the date of the Balance sheet. 24. PARTICULARS OF LOANS, GUARANTEES, OR INVESTMENTS: Details of the Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013, if any, are given in the notes to the financial statements pertaining to the year under review. Policy on Sexual Harassment: The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the financial year ended 31st December, 2015, the Company has not received any Complaints pertaining to Sexual Harassment. 25. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors' confirm that: i) In preparation of annual accounts for the financial year ended 31st March, 2016, 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 true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2016 and of the profit and loss of the Company for the year; iii) The Directors have taken proper and sufficient care for their maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) The Directors had 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. 26. VIGIL MECHANISM: The Company has a Whistle Blower Policy framed to deal with instance of fraud and mismanagement, if any in the Company. The details of the Policy are posted on the website of the Company www.avantel.in on the following link <http://www.avantel.in/inversteinfo.php> 27. RELATED PARTY TRANSACTIONS: Related party transactions entered during the financial year under review are disclosed in Note No. 2.36 of the Financial Statements of the Company for the financial year ended 31st March, 2016. These transactions entered were at an arm's length basis and in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Form AOC-2, containing the note on the aforesaid related party transactions is enclosed herewith as Annexure - IV. The Policy on the Related Party Transactions as approved by the Board is uploaded on the website of the Company. 28. EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure - V. 29. STATE OF AFFAIRS OF THE COMPANY: The State of Affairs of the Company is presented as part of Management Discussion and Analysis Report forming part of this Report. 30. MANAGEMENT DISCUSSION AND ANALYSIS: Pursuant to Regulation 34 (2) (e) of SEBI (LODR) Regulations, 2015, a report on Management Discussion & Analysis is herewith annexed as Annexure-VI. 31. CORPORATE GOVERNANCE REPORT: Since the paid up capital of the Company is less than Rs. 10 Crores and the networth of the Company is less than Rs. 25 Crores, the provisions of Regulations 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27 and clauses (b) to (i) of sub-regulation 2 of Regulation 46 and para C, D & E of Schedule V of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, are not applicable to the Company. 32. PARTICULARS OF EMPLOYEES: The information required pursuant to Section 197 (12) read with Rule 5 (l) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company is herewith annexed as Annexure- VII. In terms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company does not have any employee who is employed throughout the financial year and in receipt of remuneration of Rs. 60 Lakhs or more, or employees who are employed for part of the year and in receipt of Rs. 5 Lakhs or more per month. The Company does not have any employee who is employed throughout financial year or part thereof, who was in receipt of remuneration in financial year under review which in aggregate, or as the case may be, at a rate which in the aggregate is in excess of that drawn by the Managing Director or Whole time director and holds by himself or along with his spouse and dependent children not less than 2% of the equity shares of the Company. 33. HUMAN RESOURCES: Your Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind the Company's vision. Your Company appreciates the spirit of its dedicated employees. 34. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS: 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. 35. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY: There have been no material changes and commitments, affecting the financial position of the Company which occurred during between the end of the financial year to which the financial statements relate and the date of this report. 36. ACKNOWLEDGMENT AND APPRECIATION: Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business associates for their consistent support and encouragement to the Company. Your Directors gratefully acknowledge the ongoing co-operation and support provided by the Central and State Governments, Stock Exchanges, SEBI, RBI and other Regulatory Bodies. For and on behalf of the Board of Directors For Avantel Limited Sd/- Dr. A Vidyasagar Chairman & Managing Director Place : Hyderabad Date : 11.05.2016 |