We are pleased to present the Twenty First Annual Report of IntraSoft Technologies Limited ("the Company") together with the Audited Financial Statements for the financial year ended 31 March 2016.
Financial Statements & Results
Consolidated Financial Results:
The consolidated performance during the year ended 31 March 2016 as compared to the previous financial year, is summarized below:
Amount ( Rs. in Lakhs)
|Profit before Interest, Depreciation and Exceptional Income||1,302.36||907.12|
|Less: Finance Cost||237.05||76.00|
|Profit before Tax and Exceptional Income||905.76||684.53|
|Profit before Tax||4,346.88||684.53|
|Less : Provision for Income Tax||196.20||88.44|
|Profit after Tax||4,150.68||596.09|
The performance of the Company and its subsidiaries during the financial year 2015-16 was remarkable. Our total consolidated income for the financial year under review is Rs. 72,147.77 Lakhs as compared to Rs. 34,743.36 Lakhs in the previous financial year, registering a growth of 108%. The consolidated net profit for the financial year under review is Rs. 4,150.68 Lakhs as compared to Rs. 596.09 Lakhs in the previous financial year. 123Stores, the online e-commerce business, is the major revenue generator for the group and witnessed tremendous growth and improvement in all the parameters. 123Stores was ranked as the 262nd largest Online Retailer in USA, a gain of 130 ranks from 392nd last year, as per Internet Retailers Top 500 Guide. This is the third consecutive year that 123Stores has featured in this prestigious list of online retailers. The Company was also ranked the 11th fastest growing online retailer. The Company was also nominated as a finalist for the E-Retailer Growth Award as "A web site that has been ranked in the Internet Retailer Top 1,000 for at least two years and which achieved the highest growth rate in the current year".
The E-Commerce revenue grew by 117% from Rs. 32,264 Lakhs in FY 2014-15 to Rs. 69,907 Lakhs in FY 2015-16.
The number of Orders grew tremendously over the year from 7,72,981 to 19,69,233, a growth of 155%. The quarter wise number of orders shipped during the year were as follows:
Our proprietary technology platform allows us to scale order volumes with minimal human intervention, enabling cost savings as we grow volumes. This helped us to achieve record sales of over $4.4 million from Thanksgiving Day to Cyber Monday, a 122% increase over last year. Thanksgiving sales were up 144%, Black Friday sales were up 124%, Cyber Monday broke all records with the highest sales in a single day with 120% up Y-o-Y. We sold more than 85,000 units during the 5 day period, as compared to approx. 32,000 units in the same period last year registering a growth of 160% Y-o-Y.
During the year 123Stores tied up with a new marketplace Jet.com and added a number of new suppliers and products to our offering. It is now selling more than 5,00,000 unique products from more than 1600 suppliers on its website and partnered marketplaces.
123Greetings.com continued to see increased Mobile Application usage Y-o-Y with Rs. 15.14 Lakhs cards sent during FY 2015-16 against Rs. 9.59 Lakhs during FY 2014-15. Mobile application downloads reached Rs. 10.43 Lakhs as on 31 March 2016.
On Standalone basis, total income of the Company recorded at Rs. 3,289.05 Lakhs in FY 2015-16 against Rs. 3,515.10 Lakhs in FY 2014-15. EBITDA (before exceptional items) is recorded at Rs. 952.24 Lakhs in FY 2015-16 against Rs. 776.48 Lakhs in FY 2014-15. PBT is recorded at Rs. 4,059.44 Lakhs against Rs. 579.50 Lakhs in FY 2014-15. The net profit for the financial year under review is Rs. 3,973.96 Lakhs as compared to Rs. 501.47 Lakhs of the previous financial year.
During the year, the Company sold all the shares held by Intrasoft Beneficiary Trust, whose sole beneficiary is the Company, resulting in a Net Gain after expenses of Rs. 6,076 Lakhs. The funds raised were used for expansion and growth activities related to the E-Commerce business. The Company completed the review of the software assets that have been under development for some time. These software assets were related to different features of the E-commerce business that were yet to be launched. Management decided to write off these software assets under development amounting to Rs. 2,635 Lakhs as these software resources would not be contributing to future revenues. Hence net gain from Exceptional Income is Rs. 3,441 Lakhs.
There was no change in nature of the business of the Company, during the year under review.
Performance of Subsidiaries, Associates and Joint Venture Companies
The Company has three wholly owned subsidiaries as on 31 March 2016 viz. 123Greetings.com, Inc (USA), Intrasoft Ventures Pte. Ltd (Singapore) & One Two Three Greetings (India) Private Limited (India). One step-down subsidiary named as 123Stores, Inc (USA) is a wholly owned subsidiary of Intrasoft Ventures Pte. Ltd (Singapore). During the year a step-down subsidiary was formed named as 123Stores E Commerce Private Limited, which is a wholly owned subsidiary of 123Stores, Inc., to increase focus on the E-Commerce business by consolidating all operations related to E-Commerce under 123Stores, Inc. and thus to further increase financial and operational efficiencies.
The performance and financial position of each of the subsidiaries for the year ended 31 March 2016 is attached and marked as Annexure I (Form AOC-1) and forms part of this Report.
Appropriations a. Dividend
Considering the robust growth in the business and the liquidity position, your Directors are pleased to recommend a final dividend of Rs. 2/- (20%) (Previous year Rs. 2/- per equity share) per equity share of face value of Rs. 10/- for the financial year 2015-16. The total dividend appropriation for the financial year amounts to Rs. 3,54,61,402/- including dividend distribution tax of Rs. 59,98,046/- (Previous year Rs. 3,54,07,900/- including dividend distribution tax of Rs. 59,44,544/-).
b. Transfer to Reserves
The Board of Directors has not recommended transfer of any amount of profit to reserves during the year under review. Hence, the entire amount of profit for the year under review has been carried forward to the Profit and Loss account.
Revision of Financial Statements
There was no requirement of revising the financial statements of the Company for the year under review.
The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposits) Rules, 2014 during the year under review. Hence, the requirement of furnishing the details of deposits which are not in compliance with the Chapter V of the Act is not applicable.
Disclosures under Section 134(3)(i) of the Companies Act, 2013
Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Companys financial position have occurred between the end of the financial year of the Company and date of this report.
Disclosure of Internal Financial Controls
The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.
Disclosure of Orders passed by Regulators or Courts or Tribunal
Your Directors would like to inform that no orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and on the Companys operations in future.
Particular of Contracts or Arrangement with Related Parties
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and at arms length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered as material in accordance with the policy of the Company on related party transactions. The Policy on related party transactions as approved by the Board may be accessed on the Companys website www.itlindia.com.
Your Directors draw attention of the members to Note no. 34 of Standalone financial statements which sets out disclosures on related parties and transactions entered into with them during the financial year under review.
Particulars of Loans, Guarantees, Investments and Securities
Full particulars of loans given, investments made, guarantees given and securities provided along with the purposes for which the loans or guarantees or securities are proposed to be utilized by the recipient(s) thereof are provided in Note nos. 14 and 15 of standalone financial statements.
During the year under review, the Company has not issued any shares and hence, disclosures under Section 43(a)(ii), Section 54(1)(d) and Section 62(1)(b) of the Companies Act, 2013 read with relevant rules are not required to be furnished. The Company does not have a scheme of ESOP and hence disclosures pursuant to Section 67(3) of the Companies Act, 2013 are also not required to be furnished.
Matters Related to Directors and Key Managerial Personnel:
a. Board of Directors & Key Managerial Personnel
There was no change in Directorship of the Company during the year under review.
Mr. Rakesh Dhanuka, Company Secretary resigned with effect from 10th May, 2016 and Mr. Pranvesh Tripathi was appointed as the Company Secretary and Key Managerial Personnel of the Company on the same date.
In accordance with the provisions of the Act, none of the Independent Directors is liable to retire by rotation. Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Arvind Kajaria, Managing Director of the Company shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for reappointment. The Board recommends his appointment.
b. Declaration by Independent Directors
The Independent Directors of the Company have given a declaration confirming that they continue to meet with the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
There has been no change in the circumstances which may affect their status as Independent director during the year.
c. Companys Policy on Directors appointment and remuneration
The Board has as per the recommendation of the Nomination and Remuneration Committee, framed a policy on selection and appointment of Directors and Senior Management and their remuneration. The details of said policy are given in the Corporate Governance Report which forms part of this Annual Report.
Disclosures Related to Board, Committees and Policies:
a. Board Meetings
The Board of Directors met 6 (six) times during the financial year 2015-16 in accordance with the provisions of the Companies Act, 2013 and rules made thereunder.
Detailed information on the Board Meetings is provided in the Corporate Governance Report which forms part of this Annual Report.
b. Directors Responsibility Statement
In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31 March 2016, the Board of Directors hereby confirms that:
i. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
ii. such accounting policies have been selected and applied consistently and the Directors 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 as at 31 March 2016 and of the profit of the Company for that year;
iii. proper and sufficient care was taken 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 annual accounts of the Company have been prepared on a going concern basis;
v. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
vi. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
c. Committees of the Board
There are four Committees of the Board of Directors of the Company viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. Detailed information on all the Committees is provided in the Corporate Governance Report alongwith the details of extract from Nomination and Remuneration Policy of the Company regarding deciding upon remuneration of Executive Directors, Key Managerial Personnel and other senior employees of the Company is also provided in the Corporate Governance Report which forms part of this Annual Report. Various policies framed by the Committees / Board pursuant to the applicable provisions of the Companies Act, 2013 and Listing Agreement (upto 30th November, 2015) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2016 (w.e.f. 1 December 2015) are available on the Companys Website www.itlindia.com.
Policies a. Vigil Mechanism Policy for the Directors and Employees
The Board of Directors of the Company have pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed a "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.
The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee.
The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.
b. Risk Management Policy
The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Companys businesses and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews.
Annual Evaluation of Directors, Committee and Board
The Board of Directors has carried out annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements as prescribed in the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulations, 2015 ("SEBI Listing Regulations").
A statement indicating the manner for evaluation of performance of the Board and its committee, individual Directors is stated in the Corporate Governance Report forming part of this Annual Report.
Internal Control Systems
Adequate internal control systems commensurate with the nature of the Companys business and size and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and are adequately protected.
Payment of Remuneration / Commission to Directors from Holding or Subsidiary Companies
None of the managerial personnel i.e. Managing Director and Whole-time Directors of the Company are in receipt of remuneration/commission from the Subsidiary Companies of the Company.
Auditors and Reports
The matters related to Auditors and their Reports for the year ended 31 March 2016 are as under:-
a. Observations of Statutory Auditors on Accounts for the Year ended 31 March 2016:
There are no observations made by the Statutory Auditors in their report for the financial year ended 31 March 2016 read with the explanatory notes therein.
b. Secretarial Audit Report:
Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates the Company to obtain a Secretarial Audit Report in the Form MR-3 from a Practicing Company Secretary. M/s. Rathi and Associates, Company Secretaries had been appointed as Secretarial Auditors to issue Secretarial Audit Report for the financial year 2015-16.
Secretarial Audit Report issued by M/s. Rathi and Associates, Company Secretaries, in Form MR-3 for the financial year 2015-16 forms part of this report. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.
c. Appointment of Auditors:
The shareholders of the Company approved the appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as Statutory Auditors in casual vacancy by passing a resolution through Postal Ballot on 29 December 2015, consequent to the resignation of M/s. K. N. Gutgutia & Co. as Statutory Auditors to hold office up to the date of ensuing Annual General Meeting. As per the recommendation of the Audit Committee, the Board recommends appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company for the period of five years commencing from the conclusion of the 21st Annual General Meeting till the 26th Annual General Meeting.
The said Auditors have furnished to the Company certificate under Section 139 of the Act to the effect that their appointment, if made, shall be in accordance with the prescribed conditions and that they are eligible to hold the office of Auditors of the Company and also their consent to hold the office of the Auditors of the Company.
Necessary resolution for the appointment of the said Auditors is included in the Notice of AGM for seeking your approval.
d. Fraud Reporting:
During the year under review, there were no instances of material or serious fraud falling under Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014, by officers or employees reported by the Statutory Auditors of the Company during the course of the audit.
Extract of Annual Return
Pursuant to the provisions of Section 134(3) (a) of the Companies Act, 2013, Extract of Annual Return, in the prescribed format, for the financial year ended 31 March 2016 is attached as Annexure II which forms part of this Report.
Conservation of Energy, Technology
Absorption and Foreign Exchange Earnings and Outgo
The particulars as required under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure III which forms part of this Report.
Annual Report on Corporate Social Responsibility
Pursuant to Section 135 and Companies (Corporate Social Responsibility Policy) Rules, 2014 of the Companies Act, 2013, Annual Report on CSR for the FY 2015-16 is attached to this report as Annexure IV.
Particulars of Employees as per Section 197 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014
The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is attached to this report as Annexure V. The details as per Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company will be provided upon request.
Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has taken sufficient measures and adopted a policy in terms of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules thereunder. During the year under review, no complaints in relation to such harassment at workplace have been reported.
Managements Discussion and Analysis
A detailed review of the operations, performance and future outlook of the Company and its business is given in the Managements Discussion and Analysis which is attached and forms part of this Report.
The Company is committed to uphold the values of transparency, integrity, accountability and ethical corporate citizenship across all its business activities. This commitment lays down the foundation of its governance practices which focus on creating sustainable value for the stakeholders.
The Company has laid down Code of Conduct to which the board and senior management have affirmed compliance. The Code is displayed on the official website of the Company at www.itlindia.com.
The Company has complied with the provisions of Corporate Governance requirements, as stipulated under Regulation 27 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section on Corporate Governance forming part of this Annual Report and the certificate from a Practicing Company Secretary confirming the compliance of Corporate Governance requirements is attached with the Corporate Governance Report.
Acknowledgements and Appreciation
Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company.
|For and on behalf of the Board|
|Place: Kolkata||Arvind Kajaria||Sharad Kajaria|
|Date: 27-05-2016||Managing Director||Whole-time Director|
|(DIN: 00106901)||(DIN: 00108036)|
A-502, Prathamesh, Raghuvanshi Mills Ltd. Compound,
Senapati Bapat Marg, Lower Parel (W),
Mumbai 400 013 Tel: 022 2491 2123 Fax: 022 2490 3123
Email: email@example.com Website: www.itlindia.com
[Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014]
PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES
(Amount in Rs.)
|1 Name of the subsidiary/Joint Venture/Associate Companies||123 Greetings. com, Inc.||Intrasoft Ventures Pte. Ltd. (Standalone)||One Two Three Greetings (India) Private Limited||123Stores, Inc. * (Consolidated)|
|2 Reporting period for the subsidiary concerned, if different from the holding companys reporting period||Same as Holding Company||Same as Holding Company||Same as Holding Company||Same as Holding Company|
|3 Reporting currency and Exchange rate as on the last date of the relevant Financial Year in the case of foreign subsidiaries.||USD, 1 USD = Rs. 66.25||SGD, 1 SGD = Rs. 49.11||Rs.||USD, 1 USD = Rs. 66.25|
|4 Share capital||66,25,000||6,87,54,000||2,00,00,000||6,62,50,000|
|5 Reserves and Surplus||74,18,874||982||10,45,452||2,21,02,126|
|6 Total Assets||3,16,44,445||10,49,24,448||3,06,75,129||1,01,10,61,456|
|7 Total Liabilities||1,76,00,571||3,61,69,466||96,29,677||92,27,09,330|
|10 Profit before taxation||7,35,396||51,815||(23,937)||2,96,91,720|
|11 Provision for taxation||1,67,814||78,430||46,544||1,07,27,648|
|12 Profit after taxation||5,67,582||(26,615)||(70,481)||1,89,64,072|
|13 Proposed Dividend||-||-||-||-|
|14 % of shareholding||100||100||100||100|
* 123Stores, Inc. is a Wholly Owned Subsidiary of Intrasoft Ventures Pte. Ltd. The Consolidated Performance consists of 123Stores, Inc. and its wholly owned subsidiary 123Stores E Commerce Private Limited.
1. There is no Company which is an Associate or Joint Venture of the Company. 2. There is no subsidiary of the Company which is yet to commence operations.