Aksh Optifibre Ltd Directors Report.

Dear Shareholders,

The Directors of your company are pleased to present the 32nd Annual Report together with the Audited Financial Statement of accounts for the Financial Year ended March 31, 2019.

The highlights of the performance of subsidiary companies and their contribution to the overall performance of the Company for the financial year are appended herewith.

FINANCIAL RESULT

The financial performance of the Company, for the financial year ended March 31, 2019 is summarized below:

(र In Lakhs)
Particulars F.Y. ended 2018-19 F.Y. ended 2017-18
Revenue from Operations 52,872.84 58,939.15
Other Income 742.32 446.56
Profit before Interest, Depreciation, Amortization, Exceptional Items & Tax 9,577.10 7,441.54
Depreciation/ Amortization Expenses/Impairment 2,446.39 2,119.38
Profit before Interest, Amortization, Exceptional Items & Tax 7,130.71 5,322.16
Finance Cost 2,837.89 1,792.25
Profit before Exceptional items & Tax 4,292.82 3,529.91
Exceptional Income/(Expenses) 363.43 (50.11)
Profit before Tax 4,656.25 3,479.80
Income Tax 1,363.04 1,043.38
Deferred Tax (Including MAT utilisation) 479.62 158.42
Adjustment of tax relating to earlier periods - (2.71)
Profit after Tax (1) 2,813.59 2,280.71
Total Comprehensive Income (2) (6.71) 1.82
Total (1+2) 2,806.88 2,282.53
Balance profit brought forward from previous year 5,760.14 3,477.61
Less: Transfer to Reserves - -
Less: Dividend paid on Equity Shares 488.09 -
Less: Dividend Distribution Tax 100.33
Surplus carried to Balance sheet 7,978.60 5,760.14

OPERATIONAL HIGHLIGHTS

Financial year 2018-19 closed with revenue of Rs 52,872.84 lakhs, EBIDTA of Rs. 9,577.10 lakhs and PAT of Rs 2,813.59 lakhs. The manufacturing business earned revenues of Rs. 47,516.98 lakhs.

The detailed analysis of Companys operations and segment wise performance is covered under Management Discussion & Analysis Report.

DIVIDEND

The directors are unable to recommend any dividend in view of the capacity expansions that took place in the recent past. With regards to that Management holds the view that with the gamut of the increased capacity, the company also require enhanced working capital to support its expanded operations.

FUTURE OUTLOOK

Optical Fibre/Optical Fibre Cable/FRP Rod

Telecommunication is anticipated to present promising growth prospects due to growing adoption of the technology in communication and data transmission services. Fiber optics is enabling high-speed data transfer services in both small and long-range communications. Furthermore, increasing cloud-based applications, audio-video services, and Video-on-Demand (VoD) services will stimulate the demand.

We expect major carriers in China, the US, and other countries to launch commercial 5G networks from 2020. It can be projected that Chinese carriers mobile-network capex to rise significantly from 2018 to 2023, with above a 14% CAGR. Therefore we see 5G-related capex as a percentage of total mobile network capex rising significantly over this period. Telecom infrastructure companies including Optical Fibre players and their supply chains should benefit first, followed by endpoint device-related companies and over-the-top application players.

Services Division: 1 STOP AKSH

Governments around the world are pushing hard to deploy information and technology in their operations. For the purpose of making the reach of the Government efficient, vast and responsive, e-Governance is breaking all the stereotypes. India is progressing in the field of e-Governance. From making use of Information and Communications Technology (ICT) for elections, census, computerizing all the government offices, to digital lockers, e-kranthi portals and e-seva kendras, the new India has paved its way in the world of e-Governance.

Talking about the scope of e-governance in the country, G2C is the most basic pillar of e-governance. In this domain for the purpose of promoting good governance, advanced public utility services can be introduced & improved. e-Citizenship, e-Transportation, e-Health, e-Education, e-Taxation are much more, are some prime attractions under this segment.

A dedicated and much-insightful G2G relationship is meant for a better communication and exchange of sensitive information between the Central and the State Government. In this segment, e-Administration, e-Police, e-Courts are some of the attractions. Also, the government is trying to provide land record copies which is further making the land resource process simpler & transparent. Also, election commission of India is also bringing reforms for the purpose of advancing electoral rolls and keeping them updated on a regular basis for good governance.

Given the current high level of political commitment, India is likely to soon emerge as a leader in E-Governance. In spite of encountering many demographic challenges, India has successfully implemented e-governance projects. Effective promotion schemes by the Indian government will also be a boosting factor to provide quality services to their citizens which means there is huge potential for the development of e-governance in various sectors. As per a recent study, 81% citizens report reduction in corruption, 95% find cost of e-governance affordable and 78% favors fast delivery of services. Therefore it can be assumed that e-Governance is the key to the Good Governance for rapidly developing economy like India to minimize corruption, provide efficient, effective and quality services to its citizens.

Expansion

The Company had initiated setting-up Optical Fibre (OF) manufacturing facility in Jebel Ali Free Tarde Zone (JAFZA), UAE with capacity of 4 (Four) Million fibre Km Per annum. The plant is expected to get operational within the current financial year.

SUBSIDIARY COMPANIES

As on March 31, 2019, Company has One Indian Wholly Owned Subsidiary namely Aksh Composites Private Limited and three Overseas Wholly Owned Subsidiaries namely AOL-FZE, incorporated in SAIF Zone, Sharjah (U.A.E) (Material Subsidiary), AOL Technologies FZE, incorporated in Jafza, UAE and Aksh Technologies (Mauritius) Limited, incorporated in Mauritius.

The Company also has one Step Down Subsidiary namely AOL Composites (Jiangsu) Co. Ltd, incorporated in China (Subsidiary of AOL-FZE, UAE).

A report on highlights of performance and their contribution to the overall performance of the Company as per Companies Act, 2013 is provided in the prescribed format Form AOC-1 is annexed herewith as Annexure -I. The policy for determining material subsidiaries as approved may be accessed on the companys website at the link: http://www.akshoptifibre.com/corporate-governance.php.

LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to Financial Statements.

RELATED PARTY TRANSACTIONS

All contracts / arrangements / transactions entered into by the Company during the financial year with related party(s) were in ordinary course of business and on arms length basis. During the year, the Company did not enter into any contracts / arrangements / transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related policy transactions.

The policy on dealing with related party transactions as approved by the Board may be accessed on the companys website at the link: http://www.akshoptifibre.com/corporate-governance.php

All Related Party Transactions entered during the year were on arms length basis. No material Related Party Transactions (transaction(s) exceeding ten percent of the annual consolidated turnover of the Company as per last audited financial statements), were entered during the year by the Company and considering wholly owned subsidiaries are exempt for the purpose of Section 188(1) of the Act. Accordingly, disclosure of Related Party Transactions as required under section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable. However, all the transaction entered by the company with related parties are provided under Note No. 34C of the financial statement of the Company.

DIRECTORS

As on March 31, 2019, the Board of your Company consisted of 6 Directors, consisting of 1 Promoter-Chairman, 1 Managing Director, 3 Independent Directors (including 1 Woman Director) and 1 Non-Executive Non Independent Director.

MEETINGS OF THE DIRECTORS

The Company had 4 (Four) Board Meetings during the financial year under review, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act 2013.

APPOINTMENTS / RESIGNATIONS FROM THE BOARD / KMPS

1. During the year 2018-19, Mr. Satyendra Gupta, Deputy Managing Director (DIN: 00035141) was appointed as Managing Director of the Company w.e.f February 12, 2019 for a period of 3 years till February 11, 2022, subject to the approval of the Shareholders in the ensuing Annual General Meeting.

2. After the closure of financial year 2018-19 Mr. Amrit Nath, Independent Director (DIN: 00431866) has resigned from the directorship of the Company w.e.f. July 22,2019 in view of the order passed by SEBI on June 28, 2019 in the matter of the GDR issue completed by the Company in the year 2010. Mr. Amrit Nath further confirmed that there is no other material reason for his resignation.

3. Dr. Kailash S. Choudhari, Director (DIN: 00023824) is due for retirement at the forthcoming AGM and has offered himself for reappointment.

There were no other appointments/ resignations of Directors/KMP.

DECLARATION FROM INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming:

1. that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of Companies Act, 2013 and Regulation 16 (1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and any amendment thereof.

2. that they have complied with the Code of Conduct for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT

There are no material changes occurred between the end of financial year and the date of Directors Report.

PERFORMANCE EVALUATION OF THE BOARD

The Company has devised a policy for performance evaluation of Independent Directors, Chairman, Board, Board Committees and other individual Directors which include the criteria for performance evaluation of the Non-Executive Directors and Executive Directors.

Based on the policy for performance evaluation of Independent Directors, the Board, Board Committees and other individual Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors.

The statement indicating the manner, in which, formal annual evaluation of the Directors, the Board and Board level Committees was carried out, are given in detail in the report on Corporate Governance, which forms part of this Annual Report. The Nomination & remuneration policy may be accessed on the Companys website at the link: http://www.akshoptifibre.com/corporate-governance.php

CORPORATE GOVERNANCE

The Report on Corporate Governance along with the Certificate from the Pracitising Company Secretary certifying the compliance of Corporate Governance enumerated in Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included in this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

The Report on Management Discussion and Analysis has been attached and forms part of the Annual report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has constituted Corporate Social Responsibility Committee as per Section 135 of the Companies Act, 2013 read with the Companies

(Corporate Social Responsibility Policy) Rules, 2014. The Company has Corporate Social Responsibility Policy (CSR Policy) elaborating the activities to be undertaken by the company in furtherance and due discharge of its corporate social responsibility.

Importance of tree plantation has been stressed upon time and again. The need for tree plantation has become even greater these days because of the growing pollution in the environment. The only way to fight it is by planting more trees.

Aksh Optifibre Limited, with the continued cooperation & active support of BMA & member industries & various social organizations has so far planted 110,500 plants under ‘Clean & Green drive in Bhiwadi Industrial Area from year 2014-2019. This drive inspired by the vision of Dr. Kailash S. Choudhari-Chairman, Aksh Optifibre Limited, was initiated in year 2014. This dream was shared by BMA and vehemently supported by its member industries, many social institutions like Lions Club, Rotary Club, Rotary Shakti, Indian Medical Association, many Govt. & Private Schools & social activists. Objective of the drive was to touch the figure of 100,000 trees in five years in Bhiwadi to neutralize the impact of industrial pollution and finally this year Company has crossed the target. In order to improve the ecological balance in ‘Bhiwadi Industrial Area, Aksh continued its plantation drive ‘Upvan. Aksh planted more than 22,693 saplings during the financial year 2018-19.

Under Muskaan which is a program to support Government Schools situated nearby Bhiwadi Industrial Area. The main objective under this drive is to bring a smile on childrens face. The drive aims to continuously improve the basic infrastructure of the Govt. Schools especially for girl child and those who are not able to join school due to lack of basic amenities like toilet, drinking water facility, and hygienic environment.

Working for women empowerment under its CSR initiatives, ‘Aksh in association with Singer India, Rotary Club of Bhiwadi and USCKM School is running a Skill Development Center at UCSKM School, Bhiwadi. This Skill Development Center is providing three months certificate course and six months diploma course in stitching & tailoring to promote women entrepreneurship. Presently 70 students are undergoing six months diploma course in stitching & tailoring and 79 students have been awarded diploma certificate till date.

Under Aksh CSR initiative “ShikshaHamaraSwabhiman”, the Company with continuous & dedicated aim of improving basic infrastructure of its adopted Govt. Senior Secondary School, Reengus, Govt. Girls Senior Secondary School, Reengus, Govt. Upper Primary School, Parsarampura and Govt. Senior Secondary School, Sargoth, have taken initiatives since 2015 which includes roof-repairs, plasters, electricity fitting, colour painting, constructions of tin shed for morning prayer assembly, floor construction, construction of Boundary Wall and other repairing work, educational painting and other painting work, Plantation, installation of windows and doors, fan, establishment of Smart Classes in school classroom, RO and chilled water facility for students etc.

The statutory disclosures and an Annual Report on CSR activities is annexed herewith marked as Annexure -II.

The CSR policy may be accessed on the Companys website at the link: http://www.akshoptifibre.com/corporate-governance.php

EMPLOYEE REMUNERATION

(A) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of your Company. None of the employees listed in the Annexure are related to any Director of the Company.

(B) The ratio of the remuneration of each director to the median employees remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, are forming part of this report as

Annexure -III.

RISK MANAGEMENT

A robust governance structure has been developed across the Organisation. The developed Risk Management framework identifies and assesses strategic, operational, financial and compliance risks and monitors the -effectiveness and efficiency of risk mitigation and control measures. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continual basis.

The responsibility of tracking and monitoring the key risks of the division periodically and implementing suitable mitigation plans proactively is with the senior executives of various functional units. These risk owners are expected to avoid any undue deviations or adverse events and ultimately help in creating value for the business.

During the year, Company undertook multiple initiatives to strengthen, widen and deepen the scope and coverage of the risk framework across the Company.

CREDIT RATING

Aksh was rated BBB- by ICRA Limited (outlook Stable) during the financial year 2017-18. There has been no change in ratings during the current financial year 2018-19.

After the closure of financial year, improved Credit Rating was accepted on April 27, 2019 from CARE and Aksh was rated as BBB (Outlook Stable). Further on May 27, 2019, CARE issued revised Credit Rating and rated Aksh as D. The reason for decline in rating was ongoing delays in debt servicing along with ongoing devolvement of Letter of Credit. The delays were on account of stressed liquidity position primarily due to delayed realization from government customers leading to cash flow mismatches.

CONSOLIDATED FINANCIAL STATEMENTS

As provided in the Accounting Standard issued by the Institute of Chartered Accountants of India (ICAI) on consolidated financial statements, the consolidated financial statements are attached which form part of the Annual Report.

STATUTORY AUDITORS

At the Annual General Meeting held on December 26, 2017, pursuant to the provision of the Companies Act and rules made thereunder, M/s BGG & Associates, Chartered Accountants, New Delhi (FRN: 016874N) were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 35th Annual General Meeting.

The observation of Auditors and their report read with the relevant Notes to Accounts are self-explanatory and therefore do not require further explanation.

COST AUDITORS

The Company had appointed M/s Sanjay Gupta & Associates, Cost Auditors of the Company for the Financial Year 2018-19 and further re-appointed for the Financial Year 2019-20.

COST AUDIT COMPLIANCE

Pursuant to Sec. 148 of the Companies Act, 2013 read with Companies (Cost Audit) Rules 2014 including any statutory modifications thereof, the cost audit report for financial year ended March 31, 2019 would be filed with the Central Government within the prescribed time.

SECRETARIAL AUDITORS

The Company had appointed M/s Himanshu Sharma & Associates, Company Secretaries, to conduct the Secretarial Audit for the Financial Year 2018-19. The Secretarial Audit Report for the financial year ended March 31, 2019 is annexed herewith marked as Annexure - IV to this Report. Further, the Company had re-appointed M/s Himanshu Sharma & Associates, Company Secretaries, to conduct the Secretarial Audit for the financial year 2019-20.

INTERNAL AUDITORS

The Company had appointed M/s S C Kwatra & Associates, as Internal Auditors of the Company for the Financial Year 2018-19 and further reappointed for the Financial Year 2019-20.

SECRETARIAL STANDARD OF ICSI

The Company is in compliance with all the mandatory Secretarial Standards issued by The Institute of Company Secretaries of India.

RECOGNITION

The Companys manufacturing facilities continue to remain certified by independent and reputed external agencies as being compliant as well as aligned with the National and International standards for The Telecom Quality Management System, Environmental Management System, Complaint Handling Management System and Occupational Health & Safety Management System, i.e. TL 9000:2016, ISO 9001:2015, ISO 14001:2015, ISO 10002:2014 and ISO 45001:2018 respectively.

INDUSTRIAL RELATIONS

Industrial relations remained cordial throughout the year. Your Directors recognizes and appreciates the sincerity, hard work, loyalty, dedicated efforts and contribution of all the employees during the year. The Company continues to accord a very high priority to both industrial safety and environmental protection and these are ongoing process at the locations of Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings & outgo as required to be disclosed under the Act, are provided in Annexure V to this report.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed herewith as Annexure- VI to this Report.

LISTING

The Equity Shares of the Company continue to be listed at BSE Ltd and The National Stock Exchange Ltd. The Listing Fee has been paid to both of the stock exchanges.

MATERIAL ORDERS

During the year under review, no significant and material orders have been passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

However, after the closure of the financial year Company has received an Order No. WTM/AB/EFD-1/DRA-1/11/2019-20 dated June 28, 2019 passed by Whole Time Member of Securities and Exchange Board of India, Pursuant to the said SEBI Order:

1. The Company and Dr. Kailash S. Choudhari are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities including units of mutual funds, directly or indirectly, or being associated with the securities market in any manner, for a period of five years from the date of the order.

2. The other Noticees i.e. Mr. P.F. Sundesha, Mr. B.R. Rakhecha, Mr. Narendra Kumbhat and Mr. Arun Sood are prohibited from buying, selling or otherwise dealing in securities including units of mutual funds, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of six months from the date of the order.

The Company and Directors have filed an appeal in Honble Securities Appellate Tribunal, Mumbai for challenging the above said order.

Disclosures under the Companies Act, 2013, Rules thereunder and Secretarial Standards

i. Your Company has not accepted any deposits covered under chapter V of the Companies Act, 2013;

ii. Your Company has not issued equity shares with differential voting rights, dividend or otherwise;

iii. Your Company has not issued shares (including sweat equity shares) to employees of the company under the ESOS scheme or otherwise;

iv. During the year, the Statutory auditors, the secretarial auditors and cost auditors have not reported any fraud under Section 143(12) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014.

v. During the previous Financial Year, the Company had passed the special resolution for issuance of warrants convertible into equity shares on Preferential basis to the Promoters of the Company, however, the same was not subscribed within the time frame prescribed under the law.

vi There are no qualification in the Reports provided by the Auditors for the financial year ended March 31, 2019.

vii. The following information is given in the Corporate Governance Report forming part of this Report:

i) The performance evaluation of the Board, the Committees of the Board, Chairperson and the individual Directors;

ii) The Composition of Audit Committee; and

iii) The details of establishment of Vigil Mechanism.

Pursuant to the provisions of Sexual Harassment of Women in workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has duly constituted the Internal Complaints Committee and Your Directors further state that during the year under review there were no complaints/cases filed/pending pursuant to the said Act.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134 (5) of the Companies Act, 2013:

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

(b) the directors had 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 of the company for that period;

(c) the directors had 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) the directors had prepared the annual accounts on a going concern basis; and

(e) 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.

(f) 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.

ACKNOWLEDGEMENT

Your Directors take this opportunity to place on record their appreciation to the contribution made by the employees towards overall growth of the company.

Your Directors would also like to express a profound sense of appreciation and gratitude to all the stakeholders for the patronage and for the commitment shown in supporting the company in its continued robust performance on all fronts.

We look forward to your continued support and co-operation as we move forward to our new journey, while assuring our continued commitment to maintain healthy and fruitful relationship.

for Aksh Optifibre Limited
Dr. Kailash S. Choudhari
Date: August 8, 2019 Chairman
Place: New Delhi DIN: 00023824