AFFLUENCE

BOARD REPORT

To the Members,

Your Directors have pleasure in submitting their Fifteenth Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2016

1. FINANCIAL RESULTS

The Company’s financial performance both Consolidated and Standalone for the year under review along with previous year’s figures are given hereunder:

                                                                                                                                    In INR Millions

2. REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

Your Directors wish to present the details of Business operations done during the year under review:

The Company’s business comprises of three segments viz matchmaking services, marriage services and related sale of products and other services.

The Company has earned a total income of Rs. 2,537.26 million for the period ended March 31, 2016 as against Rs. 2,406.63 Million in the previous year ended March 31, 2015. The Company has earned a profit before exceptional items of Rs. 42.11 million as against Rs. 163.51 million. However, the Company has incurred a loss of Rs. 231.03 million as against Rs. 44.34 million. The loss is on account of legal cost incurred for defending the Company, founder and investors in a case pending with Superior Court of New Jersey along with diminution in the value of investments in wholly owned subsidiary companies. The amount is an exceptional item and not routine in nature. The Company has entered in to settlement agreement with the plaintiff in US litigation in order to avoid the delays, legal expenses and risks inherent in litigation. Since the cause of action of this litigation and settlement lies in the USA, the Company’s wholly owned subsidiary Consim Info USA Inc, has taken the primary responsibility for payment of the settlement amounts to the tune of USD 8 Million. The Company has extended a corporate guarantee on behalf of the subsidiary Company with the approval of Reserve Bank of India, to ensure its subsidiary honours the settlement payments. Accordingly the litigation has been concluded. The Company has also decided to reduce the operations of the Subsidiary Companies namely Tambulya Online Marketplace Private Limited and Matchify Services Private Limited, discontinue the operations of Community Matrimony Private Limited and will not make any further investments in the Subsidiary Companies. The Company is expected to make profits in the future on account of the above steps.

The Company believes that in order to sustain future growth and development, it will employ the strategy to expand the user base, continue investments in mobile platform and continue to expand into marriage services and to further strengthen the brands.

3. DIVIDEND

No Dividend was declared for the current financial year due to loss incurred by the Company.

4. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

The provisions of Section 125(2) of the Companies Act, 2013 do not apply as there was no dividend declared and paid last year.

5. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE ENDS OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company occurred between the ends of the financial year to which this financial statements relate on the date of this report 

6. SIGNIFICANT EVENTS

The company has consolidated its shares from the face value of Rs.3 to Rs.5 on 05th August, 2015.

It has filed Draft Red Herring Prospectus before the Securities Exchange Board of India on 19th August, 2015 during the year and received approval from Securities Exchange Board of India in December 2015.

The long pending litigation in United States has concluded pursuant to settlement agreement entered into with the Plaintiff for an amount of USD 8 Million along with other defendants. Detailed information is available in the notes to financial statements.

7. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The provisions of Section 134(m) of the Companies Act, 2013 do not apply to our Company. The total Foreign Exchange Inflow was Rs.310.11 Million and Outflow was Rs. 240.49 Million during the year under review.

8. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provisions of Companies Act, 2013 and rules made thereunder relating to Corporate Social Responsibility is not applicable to the Company.

9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The particulars of Loans, guarantees or investments made under Section 186 is furnished below

10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

The particulars of Contracts or Arrangements made with related parties made pursuant to Section 188 is furnished in Annexure 1 and is attached to this report.

11. PARTICULARS OF EMPLOYEES & REMUNERATION

The Ministry of Corporate Affairs, New Delhi vide notification dated June 30, 2016 has amended Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Accordingly the information required under 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not provided since no employees of the Company receive remuneration of Rs. 8,50,000 per month or 1,02,00,000 in a year on aggregate.

12. SECRETARIAL AUDIT

The provisions of the secretarial audit under Section 204 is applicable to the Company. Accordingly the Secretarial Auditor was appointed to carry out the audit. The Audit report is attached as Annexure 2

13. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There are no qualifications, reservations, adverse remarks or disclaimers made by the Statutory Auditors and the Practising Company Secretary.

14. COMPANY’S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The Company’s Policy relating to appointment of Directors, payment of Managerial remuneration, Directors’ qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure 3 and is attached to this report

15. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The details of financial performance of Subsidiary/ Joint Venture/Associate Company is furnished in Annexure 4 and attached to this report.

16. DEPOSITS

The Company has neither accepted nor renewed any deposits during the year under review.

17. BOARD OF DIRECTORS

During the year under review, Mr. Avneet Kochar was appointed as Additional Directors w.e.f 16/04/2015 and he had been confirmed as Director w.e.f 30/09/2015 at the Annual General Meeting held during the year. Mr. Vishal V Gupta who was appointed as Additional Director was confirmed as Nominee Director of the Company w.e.f 30/09/2015.

Mr. Nikhil Nirvan Khattau retires at this Annual General Meeting and being eligible offer himself for re-election.

18. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

The Company had 12 Board meetings during the financial year under review which includes a meeting of the Independent Directors held on 30/03/2016.

19. DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

20. STATUTORY AUDITORS

M/s.S.R.Batliboi and Associates LLP, Chartered Accountants, Chennai were appointed as Statutory Auditors for a period of 5 years in the Annual General Meeting held on 30th September 2014. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting. The Company has received a certificate from the above 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.

21. RISK MANAGEMENT

The Company has devised and implemented a mechanism for risk management. Accordingly, a Risk and Governance Committee is constituted to work towards creating a Risk Register, identifying internal and external risks and implementing risk mitigation steps. The Committee will, on a periodical basis, provide status updates to the Board of Directors of the Company.

22. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND PROVIDING VIGIL MECHANISM

The Audit Committee consists of the following members
a. Mr. Milind S Sarwate
b. Mr. George Zacharias
c. Mr. C K Ranganathan

d. Mr. Nikhil N Khattau

The above composition of the Audit Committee consists of independent Directors viz., Mr. Milind S Sarwate, Mr. George Zacharias, Mr. C K Ranganathan who form the majority.

The provisions of Rule 7 of Companies (Meetings of the Board and its Powers) Rules, 2013 regarding Establishment of Vigil Mechanism is applicable to the Company. Accordingly the Company has formulated a policy on vigil mechanism and whistle blower.

22. SHARES

a. BUY BACK OF SECURITIES

The Company has not bought back any of its securities during the year under review.

b. SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year under review.

c. BONUS SHARES

The Company has not issued any Bonus Shares during the year under review.

d. EMPLOYEES STOCK OPTION PLAN

The Company has adopted the Employee Stock Option Scheme (A) 2010 to reward its employees for their past association and performance. The scheme was amended and renamed as Employee Stock Option Scheme 2014 (“ESOP Scheme”). Under the provisions of the ESOP Scheme, the Company intend to grant up to 1,785,186 employee stock options exercisable into 1,785,186 equity shares of face value ` 3 each to eligible employees of the Company and eligible employees of our Subsidiaries and associates, subject to applicable laws. Pursuant to adjustments to the number of options and exercise price on account of the consolidation of our share capital on August 5, 2015, these employee stock options, upon vesting and exercise, will enable the employees to receive up to1,071,112  Equity Shares of Rs. 5 each.

The following are the details of the Employees Stock Option Scheme 2014

(a) Options granted* as on 31st March 2016: 491217 (excluding 116528 options granted under ESOS 2010)

(b) Options vested*: 104072 (excluding 116528 options vested under ESOS 2010)

(c) Options exercised; NIL (excluding 116528 options exercised under ESOS 2010)

(d) the total number of shares arising as a result of exercise of option; NIL

(e) options lapsed*: 54932

(f) the exercise price: (Rs. 58.65 for 42068 options, Rs. 33.14 for 74460 options) Rs. 103 for 433617* options and Rs.350 for 57,600 options (The price was adjusted for consolidation of shares made during the year)

(g) variation of terms of options: Price and number of options were adjusted on consolidation of shares from Rs.3 to Rs.5, made during the year

(h) money realized by exercise of options: NIL (excluding 116528 options exercised under ESOS 2010 for Rs. 4934893/-)

(i) total number of options in force*: 436284

(j) employee wise details of options granted ;-

(i) key managerial personnel;

    Nil

(ii) any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year.

(iii) identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant;

NIL

* The number of options has been adjusted on account of consolidation of shares from face value of Rs.3/- to Rs.5/-.

23. PREVENTION OF SEXUAL HARASSMENT POLICY

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace.

During the financial year 2015-16, the Company has received 1 complaint on sexual harassment. The complaint was disposed of after following due process of law. There are no complaints pending as on March 31, 2016.

 24. ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure 5 and is attached to this Report.

25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS

No significant and material orders were passed by the regulators, courts or tribunals impacting the going concern status and future operation of the Company.

26. INTERNAL CONTROLS AND SYSTESM

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 well defined in the organisation. The Company has appointed an external agency as internal auditors to take care of internal audit function.

It monitors and evaluates the efficacy and adequacy of internal control systems of the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of Internal Auditors, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions suggested are presented to the Audit Committee of the Board.

Internal financial controls means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

27. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement:—

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they 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 loss of the company for that period;

(c) they 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;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

28. ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Sd/-                                                        Sd/-

C K RANGANATHAN                          MURUGAVEL JANAKIRAMAN

CHAIRMAN                                              MANAGING DIRECTOR

Date: July 21, 2016
Place: Chennai

Your Directors wish to present the details of Business operations done during the year under review: The Company’s business comprises of three segments viz matchmaking services, marriage services and related sale of products and other services. The Company has earned a total income of Rs. 2,537.26 million for the period ended March 31, 2016 as against Rs. 2,406.63 Million in the previous year ended March 31, 2015. The Company has earned a profit before exceptional items of Rs. 42.11 million as against Rs. 163.51 million. However, the Company has incurred a loss of Rs. 231.03 million as against Rs. 44.34 million. The loss is on account of legal cost incurred for defending the Company, founder and investors in a case pending with Superior Court of New Jersey along with diminution in the value of investments in wholly owned subsidiary companies. The amount is an exceptional item and not routine in nature. The Company has entered in to settlement agreement with the plaintiff in US litigation in order to avoid the delays, legal expenses and risks inherent in litigation. Since the cause of action of this litigation and settlement lies in the USA, the Company’s wholly owned subsidiary Consim Info USA Inc, has taken the primary responsibility for payment of the settlement amounts to the tune of USD 8 Million. The Company has extended a corporate guarantee on behalf of the subsidiary Company with the approval of Reserve Bank of India, to ensure its subsidiary honours the settlement payments. Accordingly the litigation has been concluded. The Company has also decided to reduce the operations of the Subsidiary Companies namely Tambulya Online Marketplace Private Limited and Matchify Services Private Limited, discontinue the operations of Community Matrimony Private Limited and will not make any further investments in the Subsidiary Companies. The Company is expected to make profits in the future on account of the above steps. The Company believes that in order to sustain future growth and development, it will employ the strategy to expand the user base, continue investments in mobile platform and continue to expand into marriage services and to further strengthen the brands.

The provisions of Section 134(m) of the Companies Act, 2013 do not apply to our Company

The provisions of Section 134(m) of the Companies Act, 2013 do not apply to our Company

The total Foreign Exchange Inflow was Rs.310.11 Million and Outflow was Rs. 240.49 Million during the year under review.

27. DIRECTORS RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement:— (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) they 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 loss of the company for that period; (c) they 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; (d) they have prepared the annual accounts on a going concern basis; (e) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

d. EMPLOYEES STOCK OPTION PLAN

The Company has adopted the Employee Stock Option Scheme (A) 2010 to reward its employees for their past association and performance. The scheme was amended and renamed as Employee Stock Option Scheme 2014 (“ESOP Scheme”). Under the provisions of the ESOP Scheme, the Company intend to grant up to 1,785,186 employee stock options exercisable into 1,785,186 equity shares of face value ` 3 each to eligible employees of the Company and eligible employees of our Subsidiaries and associates, subject to applicable laws. Pursuant to adjustments to the number of options and exercise price on account of the consolidation of our share capital on August 5, 2015, these employee stock options, upon vesting and exercise, will enable the employees to receive up to1,071,112  Equity Shares of Rs. 5 each.

The following are the details of the Employees Stock Option Scheme 2014

(a) Options granted* as on 31st March 2016: 491217 (excluding 116528 options granted under ESOS 2010)

(b) Options vested*: 104072 (excluding 116528 options vested under ESOS 2010)

(c) Options exercised; NIL (excluding 116528 options exercised under ESOS 2010)

(d) the total number of shares arising as a result of exercise of option; NIL

(e) options lapsed*: 54932

(f) the exercise price: (Rs. 58.65 for 42068 options, Rs. 33.14 for 74460 options) Rs. 103 for 433617* options and Rs.350 for 57,600 options (The price was adjusted for consolidation of shares made during the year)

(g) variation of terms of options: Price and number of options were adjusted on consolidation of shares from Rs.3 to Rs.5, made during the year

(h) money realized by exercise of options: NIL (excluding 116528 options exercised under ESOS 2010 for Rs. 4934893/-)

(i) total number of options in force*: 436284

(j) employee wise details of options granted ;-

(i) key managerial personnel;

    Nil

(ii) any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year.

(iii) identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant;

NIL

* The number of options has been adjusted on account of consolidation of shares from face value of Rs.3/- to Rs.5/-.