Black Box Ltd Directors Report.

The Directors of your Company hereby present the Thirty Fifth (35th) Annual Report alongwith the Audited Financial Statements (Consolidated and Standalone) of the Company for the Financial Year ("FY") ended March 31, 2021.

FINANCIAL RESULTS

The summary of the Companys financial performance, both on a consolidated and standalone basis, for FY2021 as compared to FY2020 is given below:

Rs. in Crores, unless otherwise stated

Particulars Standalone Consolidated
Year ended March 31, 2021 Year ended March 31, 2020 Year ended March 31, 2021 Year ended March 31, 2020
Restated
Revenue from Operations 249.54 309.35 4,674.02 4,993.92
Other Income 8.47 6.26 11.13 7.41
Total Income 258.01 315.61 4,685.15 5,001.32
Profit/(Loss) before finance cost, depreciation, exceptional items and tax 20.54 24.33 362.85 335.82
Less: Interest and finance charges (Net) 17.01 18.50 97.91 131.72
Less : Depreciation 5.39 7.46 95.56 91.69
Profit/(Loss) before tax & exceptional items (1.86) (1.63) 169.38 112.41
Less: Loss on fair value of financial liability - - (41.70) (36.95)
Less: Amortisation of debt issuance cost - - - (23.39)
Less: Exceptional item - - (31.69) (125.05)
Profit/(Loss) before tax (1.86) (1.63) 95.98 (72.98)
(Add)/Less : Tax - - 17.90 6.98
Profit/(Loss) after tax (1.86) (1.63) 78.09 (79.96)
Add/(Less): Other Comprehensive Income 0.32 (0.51) 115.50 (106.70)
Total Comprehensive Income for the year (1.54) (2.14) 193.59 (186.66)
Earnings/(Loss) Per Share of Rs. 10/- each after exceptional items:
Basic: (in Rs.) 0.62 (0.55) 26.05 26.89
Diluted: (in Rs.) (0.62)# (0.55)# 24.49 26.89#

 

# The effect of 424,705 and 619,262 potential equity shares outstanding as at March 31, 2021 and March 31, 2020, respectively, is anti-dilutive and thus these shares are not considered in determining diluted earnings / (loss) per share.

FINANCIAL PERFORMANCE

The Company has recorded a gross turnover of Rs. 4,674.02 Crores for FY21 as against Rs. 4,993.92 Crores in FY20 on consolidated basis, reflecting a reduction of 6.4% over previous year. This reduction was mainly attributed to adverse impact on economic conditions of the world economy and impact on demand due to COVID-19 pandemic. On standalone basis, the gross turnover was Rs. 249.54 Crores as against Rs. 309.35 Crores for the period ended March 31, 2020 reflecting a reduction of 19.3% over previous year. The muted performance on standalone basis was due to various reasons including slowdown in Indian economy and adverse market conditions coupled with COVID-19 condition during the year ended March 31, 2021.

On consolidated basis, the Company has recorded a net profit before exceptional item of Rs. 151.48 Crores for FY21 as compared to Rs. 105.43 Crores for FY20 despite of lower revenues. This increase in net profits is primarily due to impact of various cost transformation initiatives such as improvement in operational efficiencies, ratio-centric organisation and optimization of overheads including leased facilities. The Company was able to swiftly respond to adjust the costs in line with lower revenues due to COVID-19. The Company continues its focus on all the financial metrics together with better liquidity management and profitability growth initiatives.

The Company recorded a net loss of Rs. 1.86 Crores for FY21 as against net loss of Rs. 1.63 Crores for FY20 on standalone basis.

The spread of COVID-19, a pandemic caused by the novel Coronavirus, is having an unprecedented impact on global economy and way of doing business. Majority of the countries across the world had announced a series of lock-down measures starting in January 2020 which have been extended from time to time. With the change in global circumstances, governments have issued directives which indicate calibrated and gradual or complete withdrawal of lockdown and partial or complete resumption of economic activity depending on the severity of the disruption caused in respective countries. However, the extent to which the COVID-19 pandemic, including the "second wave" that has significantly increased the number of cases in certain countries, impact the consolidated financial statements, will depend on future developments, which are highly uncertain, including among other things, any new information concerning the severity of the COVID-19 pandemic and action to contain its spread or mitigate its impact. The Group has considered the possible effects on the carrying amounts of trade receivables, inventories, property, plant and equipment, intangible assets, tax assets (including deferred tax assets), investments and other financial assets and continues to monitor changes in economic conditions. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Group, as at the date of approval of these consolidated financial results, has used internal and external sources of information and based on current estimates, expects that the carrying amount of these assets will be recovered. The eventual outcome of the impact of the pandemic may be different from those estimated as on the date of approval of these financial statements.

NATURE OF BUSINESS AND STATE OF AFFAIRS OF THE COMPANY

During the year under review, there have been no changes in the nature of business of the Company. The information on the affairs of the Company has been covered under the Management Discussion & Analysis forming part of this Report.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the Financial Year to which these financial statements relate and the date of this Report.

SHARE CAPITAL

The Authorized Share Capital of the Company is Rs. 1,45,00,00,000/- (Rupees One Hundred and Forty Five Crores Only) divided into 4,50,00,000 Equity Shares of Rs. 10/- (Rupees Ten only) each, 50,00,000 Cumulative/Non-Cumulative Redeemable Preference Shares and 50,00,000 Convertible Preference Shares of Rs. 100/- (Rupees Hundred only) each respectively or any other denomination as may be approved by the Board. The Authorised Capital has remained unchanged during the year under review.

The paid-up capital of the Company at the beginning of the FY20 consisted of paid-up equity capital of Rs. 29,74,46,490/- (Rupees Twenty Nine Crore Seventy Four Lakh Forty Six Thousand Four Hundred and Ninety only) divided into 2,97,44,649 Equity Shares of Rs. 10/- (Rupees Ten only) each.

a) ESOP ALLOTMENT

During the year under review, the Company issued & allotted 1,85,530 Equity Shares of Rs. 10/- (Rupees Ten only) each to ESOP holders pursuant to exercise of Employee Stock Options ("ESOP options") duly vested in them, in accordance with the applicable terms of "AGC Networks Employee Stock Option Scheme 2015".

b) PREFERENTIAL ALLOTMENT

On January 8, 2021, the Company issued and allotted 33,33,334 Convertible Warrants ("Warrants") to Promoter shareholders on Preferential basis, at a price of Rs. 675/- (Rupees Six Hundred & Seventy Five only) per Warrant with a right to the Warrant holders to apply for and be allotted 1 (One) Equity Share of the face value of Rs. 10/- (Rupees Ten only) each of the Company at a Premium of Rs. 665/- (Rupees Six Hundred & Sixty Five only) per share, for each Warrant, within a period of 18 (Eighteen) months from the date of allotment of the Warrants.

On March 02, 2021 and March 20, 2021 the Company allotted 16,34,828 and 9,63,823 Equity Shares of Rs. 10/- (Rupees Ten only) each respectively on conversion of equal no. of Warrants.

Accordingly, as on March 31, 2021, the Paid-up Equity Share Capital of the Company increased by Rs. 2,78,41,810/- (Rupees Two Crore Seventy Eight Lakh Forty One Thousand Eight Hundred and Ten only) to Rs. 32,52,88,300/- (Rupees Thirty Two Crores Fifty Two Lakh Eighty Eight Thousand and Three Hundred only) divided into 3,25,28,830 Equity shares of Rs. 10/- (Rupees Ten only) each.

The Company has not made any issue of Sweat Equity Shares or Equity Shares with Differential Voting Rights during the year under review.

DIVIDEND

With a view to conserve resources for future growth, your Directors have not recommended any dividend for the Financial Year ended March 31, 2021.

Pursuant to Regulation 43A of SEBI LODR Regulations, 2015, the Company has formulated a Dividend Distribution Policy effective from April 02, 2021. The said policy is accessible on the Companys website athttps://www.agcnetworks. com/in/wp-content/uploads/2021/02/AGC-Div-Policy.pdf.

TRANSFER TO RESERVE

With a view to facilitate the growth of the Companys business over the coming years, the Board of Directors have recommended that the entire profits generated in the current Financial Year should be transferred to the reserves of the Company.

HUMAN RESOURCE MANAGEMENT AND HR INITIATIVE

Nurturing a sustainable performance culture in an organisation is essential to remain competitive in an ever-changing world. The COVID-19 had called for rapid crises responses and emphasises on keeping the workforce engaged, productive and resilient. While the world was focussing on the pandemic, AGC was channelling all its energy and efforts to acquire more brands under its feathers. During this year, the integration of Fujisoft in UAE and Pyrios in Australia & New Zealand was concluded to strengthen our global network hence being culturally diverse and building a more inclusive work environment.

Various HR interventions were driven to serve as an important roadmap to guide the workforce re-integration into the new normal. HR Systems and People Processes were streamlined to ensure they contribute to the achievement of organisational goals and the development of organisational culture. With a more dispersed workforce, it become all the more crucial to present a single platform all the processes which will be managed and optimized to its best capacity globally. The objective was also to draw data-driven insights, which will be important to maintain oversight of employees performance, engagement and well-being.

In Talent Acquisition, people diversity was the cornerstone for our success. In FY2021, the Company has hired around 500 employees in upcoming technology quadrants across the globe. The focus has been to build internal talent pool in business priorities technologies such as Application Development, Uni_ed Communications, Cyber Security, Sales, SAP, etc.

In the attempt to enhance organisation productivity and building a learning culture that contributes to overall development. The training landscape consists of Avaya Interaction Centre, WFH CC Solutions with Cisco and Genesys, Cloud Computing Overview & Fundamentals, Conversational BoT- Avaya imparted round the clock. A shift from a fixed to liquid workforce and increased remote working has created pressing need for innovative learning strategies which gives employees access to content anywhere and anytime. In todays scenarios reskilling plays a key role in helping close talent gaps while keeping employees engaged to their jobs. Employees extensively were engaged with trainings & certifications this year to keep them relevant in the market and business requirements.

Talent Management & Employee Engagement– Employee branding, enhancing employees experience and connectivity have taken on whole new meanings this year. Communication is key to managing uncertainty and formulating action. It also keep workforce engaged and motivated in order to enable them to remain productive. Diverse Engagement programs are scheduled round the year towards building & sustaining a superior employee connect and a high level of engagement in the organization. Companys robust Reward and Recognition Program focuses on building a healthy competitive environment and a rich performance driven culture throughout the Organisation.

MANAGEMENTS DISCUSSION AND ANALYSIS

Managements Discussion and Analysis for the year under review, in terms of the provisions of Regulation 34 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("LODR Regulation"), is set out as a separate section, forming an integral part of this Annual Report.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls for ensuring orderly and efficient conduct of its business including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information with reference to financial statements.

During the year under review, these internal controls have been subject to audit. For details with regard to reportable material weaknesses in the said controls, if any, please refer the Statutory Auditors Report forming part of this Annual Report.

PUBLIC DEPOSITS

The Company has not accepted any fixed deposits, including from the public and as such, no amount of principal or interest was outstanding as on the date of the Balance Sheet.

SUBSIDIARIES/HOLDING COMPANY

During the year under review, the following changes took place in Subsidiaries and Holding Company of the Company:

Holding Company(s)

During the year, Essar Telecom Limited ("ETL"), Promoter of the Company, was issued 22,64,281 Equity Shares pursuant to conversion of Warrants thereby increasing its shareholding to 1,63,46,336 Equity Shares, constituting 50.25% stake in the total paid-up Equity Share capital of the Company as on March 31, 2021. Further, ETL had 2,35,719 convertible Warrants pending to be converted into Equity Shares resulting in 49.85% stake in the total diluted paid-up share capital of the Company as on March 31, 2021.

During the year, Onir Metallics Limited ("OML"), a Promoter Group entity, was issued 3,34,370 Equity Shares of the Company pursuant to conversion of Warrants thereby increasing its shareholding to 68,07,267 Equity Shares, constituting 20.93% stake in the total paid-up share capital of the Company as on March 31, 2021. Further, OML had 4,98,964 convertible Warrants pending to be converted into Equity Shares resulting in 21.97% stake in the total diluted paid-up share capital of the Company as on March 31, 2021.

Thus, as on March 31, 2021, ETL and OML collectively hold 2,31,53,603 Equity Shares of the Company, constituting 71.18% Promoter shareholding in the Company. Essar Global Fund Limited remains the ultimate Holding Company of the Company.

DISSOLUTION/WINDING-UP/DIVESTMENT/MERGERS

1) 100% of Investment in RevealCX LLC, Step-Down Subsidiary of the Company was divested to a third party on August 31, 2020.

2) CBS Technologies Corp., Step-Down Subsidiary of the Company was dissolved on September 10, 2020.

3) AGC Networks New Zealand Limited, Step-Down Subsidiary of the Company was wound-up w.e.f. October 30, 2020.

4) ACS Communications, Inc., Step-Down Subsidiary of the Company merged with and into Norstan Communications, Inc. w.e.f. March 31, 2021.

ACQUISITION(S)

Black Box Holdings Limited, Step-Down Subsidiary of the Company, has acquired 86% of outstanding shares of Z Services HQ DMCC form Z Services Holding Ltd., a BVI business company incorporated in the British Virgin Islands for a total consideration of approx. US$3.44 million.

INCORPORATION(S)

COPC Holdings Inc., Step-Down Subsidiary of the Company incorporated Service Journey Strategies Inc. on January 20, 2021.

As on March 31, 2021, the following are the subsidiaries/step-down subsidiaries of the Company:

Name of the Entity Registration Geos Nature of Relationship
1. AGC Networks Pte. Limited Singapore Subsidiary Company
2. AGC Networks LLC USA Step-Down Subsidiary Company
3. AGC Networks Philippines, Inc. Philippines Step-Down Subsidiary Company
4. AGC Networks & Cyber Solutions Limited Kenya Step-Down Subsidiary Company
5. AGC Networks LLC Dubai Step-Down Subsidiary Company
6. AGC Networks LLC Abu Dhabi Step-Down Subsidiary Company
7. AGCN Solutions Pte. Limited Singapore Step-Down Subsidiary Company
8. Black Box Corporation USA Step-Down Subsidiary Company
9. ACS Dataline, LP USA Step-Down Subsidiary Company
10. ACS Investors, LLC USA Step-Down Subsidiary Company
11. BB Technologies, Inc. USA Step-Down Subsidiary Company
12. BBOX Holdings Mexico LLC USA Step-Down Subsidiary Company
13. BBOX Holdings Puebla LLC USA Step-Down Subsidiary Company
14. Black Box A/S Denmark Step-Down Subsidiary Company
15. Black Box Canada Corporation Canada Step-Down Subsidiary Company
16. Black Box Chile S.A. Chile Step-Down Subsidiary Company
17. Black Box Comunicaciones, S.A. Spain Step-Down Subsidiary Company
18. Black Box Corporation of Pennsylvania USA Step-Down Subsidiary Company
19. Black Box de Mexico, S. de R.L. de C.V. Mexico Step-Down Subsidiary Company
20. Black Box Deutschland GmbH Germany Step-Down Subsidiary Company
21. Black Box do Brasil Industria e Comercio Ltda. Brazil Step-Down Subsidiary Company
22. Black Box E-Commerce (Shanghai) Co., Ltd. China Step-Down Subsidiary Company
23. Black Box Finland OY Finland Step-Down Subsidiary Company
24. Black Box France France Step-Down Subsidiary Company
25. Black Box Gmbh Austria Step-Down Subsidiary Company
26. Black Box Holdings Ltd. Cayman Islands Step-Down Subsidiary Company
27. Black Box International B.V. Netherlands Step-Down Subsidiary Company
28. Black Box International Holdings B.V. Netherlands Step-Down Subsidiary Company
29. Black Box Network Services (Dublin) Limited Ireland Step-Down Subsidiary Company
30. Black Box Network Services (UK) Limited England Step-Down Subsidiary Company
31. Black Box Network Services AB Sweden Step-Down Subsidiary Company
32. Black Box Network Services AG Switzerland Step-Down Subsidiary Company
33. Black Box Network Services Australia Pty Ltd Australia Step-Down Subsidiary Company
34. Black Box Network Services Co., Ltd. Japan Step-Down Subsidiary Company
35. Black Box Network Services Corporation Taiwan Step-Down Subsidiary Company
36. Black Box Network Services, Inc. – Government Solutions USA Step-Down Subsidiary Company
37. Black Box Network Services India Private Limited India Step-Down Subsidiary Company
38. Black Box Network Services Korea Limited Korea Step-Down Subsidiary Company
39. Black Box Network Services New Zealand Limited New Zealand Step-Down Subsidiary Company
40. Black Box Network Services NV Belgium Step-Down Subsidiary Company
41. Black Box Network Services S.r.l. Italy Step-Down Subsidiary Company
42. Black Box Network Services SDN. BHD. Malaysia Step-Down Subsidiary Company
43. Black Box Network Services Singapore Pte Ltd Singapore Step-Down Subsidiary Company
44. Black Box Norge AS Norway Step-Down Subsidiary Company
45. Black Box P.R. Corp. Puerto Rico Step-Down Subsidiary Company
46. Black Box Services Company USA Step-Down Subsidiary Company
47. Black Box Software Development Services Limited Ireland Step-Down Subsidiary Company
48. Delaney Telecom, Inc. USA Step-Down Subsidiary Company
49. Norstan Canada, Ltd. / Norstan Canada, Lte Canada Step-Down Subsidiary Company
50. Norstan Communications, Inc. USA Step-Down Subsidiary Company
51. Nu-Vision Technologies, LLC USA Step-Down Subsidiary Company
52. Black-Box Network Services Philippines, Inc. Philippines Step-Down Subsidiary Company
53. Black Box Technologies Australia Pty Limited Australia Step-Down Subsidiary Company
54. COPC Holdings Inc. USA Step-Down Subsidiary Company
55. COPC Inc. USA Step-Down Subsidiary Company
56. COPC International Inc. USA Step-Down Subsidiary Company
57. COPC Asia Pacific Inc. USA Step-Down Subsidiary Company
58. COPC International Holdings LLC USA Step-Down Subsidiary Company
59. COPC India Private Limited India Step-Down Subsidiary Company
60. COPC Consultants (Beijing) Co. Limited China Step-Down Subsidiary Company
61. Fuji Soft Technology LLC Abu Dhabi Step-Down Subsidiary Company
62. Fujisoft Security Solutions LLC Dubai Step-Down Subsidiary Company
63. Pyrios Limited New Zealand Step-Down Subsidiary Company
64. Pyrios Pty Limited Australia Step-Down Subsidiary Company
65. BBX Inc. USA Step-Down Subsidiary Company
66. BBX Main Inc. USA Step-Down Subsidiary Company
67. Black Box Network Services Hong Kong Limited Hong Kong Step-Down Subsidiary Company
68. Black Box Technologies LLC Dubai Step-Down Subsidiary Company
69. Service Journey Strategies Inc. USA Step-Down Subsidiary Company
70. Servicios Black Box S.A. de C.V. Mexico Step-Down Subsidiary Company

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

The particulars of loan(s) given, investment(s) made, guarantee(s) given and/or securities provided by the Company along with the purpose for which such amount of loan, guarantee or security is proposed to be utilized by the recipient, has been provided in the notes to financial statements.

STATUTORY AUDITORS AND THEIR REPORT

M/s. Walker Chandiok & Co LLP, Chartered Accountants (ICAI Registration No. 001076N/N00013) have been reappointed as the Statutory Auditors of the Company, vide resolution passed by Shareholders at the 33rd Annual General Meeting (AGM) of the Company and hold this office for a period of Five (5) year commencing from conclusion of the 33rd AGM till the conclusion of 38th AGM of the Company.

Statutory Auditors Report

The Statutory Auditors Report on the financial statements of the Company (standalone & consolidated) for the Financial Year ended March 31, 2021, has been annexed to the financial statements contained in this Annual Report. The Statutory Auditors have expressed their Emphasis of Matter (EOM) on the standalone & consolidated financial statements of the Company in the said report. Further, the said EOM alongwith the managements response on the same is given below:

A. Standalone Audit Report:

Emphasis of Matters – Impact of COVID-19 and compliances with laws and regulations

"As stated in point no. 4 of the Auditors report on Standalone Financial Statement of the Company which describes the impact of COVID-19 pandemic on the Companys operations and accompanying standalone Financial Statements as at reporting date. In view of the uncertainties in the economic environment due to the outbreak of COVID-19 pandemic, the impact on the operations of the Company is significantly dependent on the future developments as they evolve."

"As stated in point no. 5 of the Auditors report on Standalone Financial Statement of the Company which describes the delay in remittance of import payments and repatriation of proceeds of export of goods and services, aggregating to Rs. 2.10 Crores andRs. 4.56 Crores, respectively, outstanding as at 31 March 2021 beyond the timelines stipulated under the Foreign Exchange Management Act, 1999, as amended from time to time. The management has filed necessary applications with the appropriate authority for extension of time period and condonation of such delays. The management is of the view that the Fine / penalties, if any, that may be levied, are currently unascertainable but not expected to be material and accordingly, no adjustments have been made to the accompanying standalone financial statements in respect of the fines / penalties that may be levied on account of such delays."

Managements views on the above:

Response to point no. 4 of the Auditors report on Standalone Financial Statement of the Company

COVID-19 pandemic has impacted most economies and businesses globally, including India. The nation-wide lockdown in first half of FY2021 substantially impacted economic activity. The easing of lockdown measures subsequently led to gradual improvement in economic activity and progress towards normalcy. However, the extent to which the COVID-19 pandemic, including the current "second wave" that has significantly increased the number of cases in India, impact the standalone financial results, will depend on future developments, which are highly uncertain, including among other things, any new information concerning the severity of the COVID-19 pandemic and action to contain its spread or mitigate its impact. The Company has considered the possible effects on the carrying amounts of trade receivables, inventories, property, plant and equipment, other intangible assets, tax assets, investments and other financial assets and continues to monitor changes in economic conditions. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Company, as at the date of approval of these standalone financial results, has used internal and external sources of information and based on current estimates, expects that the carrying amount of these assets will be recovered. The eventual outcome of the impact of the pandemic may be different from those estimated as on the date of approval of these standalone financial statement

Response to point no. 5 of the Auditors report on Standalone Financial Statement of the Company

The outstanding balance of trade payables and other financial assets as appearing in the balance sheet as at March 31, 2021 includes amount payable aggregating to Rs. 2.10 Crores and amount receivable aggregating to Rs. 4.56 Crores, respectively, to / from the companies situated outside India. These balances are pending for settlement and have resulted in delay in remittance / collection beyond the timeline stipulated under the Foreign Exchange Management Act, 1999. The Company has filed necessary application with AD Category – I bank ("AD Bank") for extension of time limit on payables aggregating to Rs. 1.16 Crores during the Financial Year and on payables aggregating to Rs. 0.94 Crores subsequent to March 31, 2021. Similarly, the Company has filed application with AD Bank for extension of time limit for the aforementioned receivables aggregating to Rs. 4.56 Crores subsequent to March 31, 2021. For all the cases, approval is pending from AD Bank.

Pending conclusion of the aforesaid matter, the amount of penalty, if any, that may be levied, is not ascertainable but not expected to be material and accordingly, the accompanying standalone financial results do not include any adjustments that may arise due to such delays.

B. Consolidated Audit report

Emphasis of Matters – Impact of COVID-19, Non-compliance with laws and regulations and restatements made in comparative financial statement

"As stated in point no. 4 of the Auditors report on Consolidated Financial Statement of the Company which describes the impact of COVID-19 pandemic on the Groups operations and on accompanying Consolidated Financial Statements as at reporting date. In view of the uncertainties in the economic environment due to the outbreak of COVID-19 pandemic, the impact on the operations of the Group is significantly dependent on the future developments as they evolve."

"As stated in point no. 5 of the Auditors report on Consolidated Financial Statement of the Company which describes the delay in remittance of import payments and repatriation of proceeds of export of goods and services, aggregating toRs. 7.41 Crores andRs. 4.80 Crores, respectively by the Holding Company, outstanding as at 31 March 2021, beyond the timelines stipulated under the Foreign Exchange Management Act, 1999, as amended from time to time. The Holding Companys management has filed necessary applications with the appropriate authority for extension of time period and condonation of such delays. The management is of the view that the Fine / penalties, if any, that may be levied, are currently unascertainable but not expected to be material and accordingly, no adjustments have been made to the accompanying Financial Statements in respect of the fines / penalties that may be levied on account of such delays."

Managements views on the above: Impact of COVID-19

The spread of COVID-19, a pandemic caused by the novel Coronavirus, is having an unprecedented impact on global economy and way of doing business. Majority of the countries across the world had announced a series of lock-down measures starting in January 2020 which have been extended from time to time. With the change in global circumstances, governments have issued directives which indicate calibrated and gradual or complete withdrawal of lockdown and partial or complete resumption of economic activity depending on the severity of the disruption caused in respective countries. However, the extent to which the COVID-19 pandemic, including the "second wave" that has significantly increased the number of cases in certain countries, impact the consolidated financial results, will depend on future developments, which are highly uncertain, including among other things, any new information concerning the severity of the COVID-19 pandemic and action to contain its spread or mitigate its impact. The Group has considered the possible effects on the carrying amounts of trade receivables, inventories, property, plant and equipment, intangible assets, tax assets (including deferred tax assets), investments and other financial assets and continues to monitor changes in economic conditions. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic, the Group, as at the date of approval of these consolidated financial results, has used internal and external sources of information and based on current estimates, expects that the carrying amount of these assets will be recovered. The eventual outcome of the impact of the pandemic may be different from those estimated as on the date of approval of these consolidated financial statement.

Impact of Non-compliance of laws and regulations

The outstanding balance of trade payables, trade receivables and other financial assets as appearing in the balance sheet as at March 31, 2021 includes amount payable aggregating to Rs. 7.41 Crores and amount receivable aggregating to Rs. 0.24 Crores and Rs. 4.56 Crores, respectively, from / to the companies situated outside India. These balances are pending for settlement and have resulted in delay in remittance / collection beyond the timeline stipulated under the Foreign Exchange Management Act, 1999. Further, the Holding Company has filed application with AD Category – I bank (‘AD Bank) for extension of time limit for the above-mentioned payables during the year aggregating to Rs. 4.61 Crores and subsequent to 31 March 2021 aggregating to Rs. 2.80 Crores. Similarly, the Holding Company has filed application with AD Bank for extension of time limit for the above-mentioned receivables subsequent to 31 March 2021 aggregating to Rs. 4.80 Crores. For these cases, approval is pending from AD Bank.

Pending conclusion of the aforesaid matter, the amount of penalty, if any, that may be levied, is not ascertainable but not expected to be material and accordingly, the accompanying consolidated financial statement do not include any adjustments that may arise due to such delays.

SECRETARIAL AUDITORS AND THEIR REPORT

Pursuant to Section 204(1) of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit of the Company was carried out by Dr. S. K. Jain, Practicing Company Secretary (FCS No. 1473) & Proprietor of M/s. S. K. Jain & Co., (Secretarial Auditor) for the FY 2020-21. The Report given by the Secretarial Auditor is annexed as Annexure - I and forms an integral part of this Boards Report.

Secretarial Auditors qualification remark:

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above and there are no material non-compliances that have come to our knowledge except the following:

 

The Company was required to appoint one Independent Woman Director on its Board of Directors w.e.f. 1st April, 2020 as per Regulation 17(1) of SEBI (LODR) Regulations, 2015. The Company has, however appointed Ms. Neha Nagpal (DIN: 08842400) as an Additional Independent Women Director with effect from 10th September, 2020. The Company has paid Fine to NSE whereas BSE has waived the Fine based on the written reasons provided by the Company for delay in compliance.

Managements views on the above:

The requirement to appoint Woman Independent Director was applicable w.e.f. April 1, 2020 as the Company was falling in the category of the top 1000 Listed Companies by market Capitalisation on NSE as on April 01, 2020. Prior to April 1, 2020 the Company was not falling in the category of top 1000 Listed Companies. Hence, the Company became aware of the requirement only after March 31, 2020. However, due to the sudden outbreak of COVID-19 pandemic, the entire nation went into the lockdown situation and this affected our well planned process of identifying and appointing the candidate as Woman Independent Director within the stipulated timeline. As soon as the situation evolved and things started being normal, the Company swiftly resumed its efforts to fulfill this requirement and compliance was ensured w.e.f September 10, 2020.

REPORTING OF FRAUDS BY THE AUDITORS

During the year under review, neither the Statutory Auditor nor the Secretarial Auditor has reported to the Audit Committee or Board, pursuant to the provisions of Section 143(12) of the Act, any fraud committed against the Company by its employees or officers.

COST RECORDS AND COST AUDIT

The maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act, are not applicable for the business and activities carried out by the Company.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several benchmark corporate governance practices as prevalent globally. The Corporate Governance Report, as stipulated under the SEBI LODR Regulations, forms an integral part of this Annual Report. Further, in accordance with the applicable provisions of Schedule V of the said Regulations, a compliance certificate issued by M/s. S. K. Jain & Co. LLP, Practicing Company Secretaries (ICSI Certificate of Practice No. 3076), confirming that the Company has complied with the conditions of corporate governance is annexed herewith and marked as Annexure II.

NUMBER OF BOARD MEETINGS

During the FY2021, Six (6) Board meetings were held. Further detail on the same is available in the Corporate Governance Report which forms part of this Annual Report.

The Company has complied with the requirements prescribed under the Secretarial Standards on Meetings of the Board of Directors (SS–1) and General Meetings (SS–2) read with the MCA Circulars granting exemptions in view of the COVID-19 pandemic.

EMPLOYEES STOCK OPTION SCHEME

Pursuant to the shareholders approval dated April 21, 2015, the Nomination and Remuneration Committee of the Board of Directors of the Company granted stock options as per the terms of ESOP Scheme 2015 (approved by the shareholders at their meeting held on April 21, 2015), to the employees and executive directors of the Company as well as its subsidiaries. The following table shows detailed information with regards to the same:

Total options granting eligibility of the Company (A) 14,23,323
Total options granted as on 31.3.2020 (B) 14,95,913
Total options lapsed as on 31.3.2020 (C) 8,69,651
Options available for grant as on 31.3.2020 (D) = (A-B+C) 7,97,061
Options granted during the FY2020-21 (E) 63,000
Options lapsed/cancelled during the FY2020-21 (F) 72,027
Options available for grant as on 31.3.2021 (H) = (D-E+F) 8,06,088

Disclosures on ESOP Scheme of the Company for the FY21, pursuant to Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014:

Particulars FY2021
1 Total No. of Shares covered by ESOP Scheme approved by the Shareholders 14,23,323
2 Options Granted 63,000
3 Options Vested NIL
4 Options Exercised 1,85,530
5 The total no. of shares arising as a result of options 1,85,530
6 Options Lapsed 72,027
7 Pricing Formula 10% discount on last closing price
8 Variation of terms of Options/Exercise Price
9 Money realized by exercise of Options Rs. 1,27,60,350
10 Total No. of Options in force 4,24,705

Employee wise details of options granted to:

Category Number of options granted
Senior Managerial Personnel
Deepak Kumar Bansal (Director & CFO) 63,000
Employee receiving grant of options in any one year of option amounting to 5% or more of options granted during the year NIL
Identified employees who were granted options during any one year equal to or exceeding 1% of the issued capital of the company at the time of grant NIL

Diluted Earnings per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20: Kindly refer note no. 28 forming part of notes to accounts.

Where the company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options: Kindly refer note no. 30 forming part of notes to accounts.

The details pursuant to the SEBI ESOP Regulations have been placed on the website of the Company and web link of the same is https://www.agcnetworks.com/in/wp-content/uploads/2021/02/ESOP-statement_31-03-2021.pdf.

TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND/SHARES TO IEPF

The dividends which remained unpaid/unclaimed for a period of more than seven consecutive years, have been transferred on due dates by the Company to the Investor Education and Protection Fund ("IEPF") established by the Central Government.

Pursuant to the applicable provisions of Section 124 of the Act and the applicable provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the Rules"), the Company is required to transfer all amounts of dividend that has remained unpaid or unclaimed for a period of seven years, from its unpaid dividend account to the IEPF Fund. Further, according to the applicable provisions of the said section read with the rules made thereunder, the Company is also required to transfer the corresponding shares with respect to the dividend, which has not been paid or claimed for seven consecutive years or more to the demat account of the IEPF Authority.

Accordingly, the Company has transferred unpaid/unclaimed dividends alongwith the corresponding shares to IEPF Fund within the time limits prescribed under the said section and rules. The details of the shares already transferred and the shares which are due for transfer have been uploaded on the website of the Company and can be accessed at https://www.agcnetworks.com/in/investors/investors-update/?termid=113.

In accordance with the applicable provisions of the LODR Regulations, it is disclosed that there were no shares lying in the demat suspense account/unclaimed suspense account of the Company at the beginning of FY2021, during FY2021 as well as at the at the end of the FY2021.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

All Directors of the Company, including the Independent Directors, are provided with necessary documents/brochures, reports and internal policies to facilitate their familiarization with the procedures and practices followed by the Company. Further, periodic presentations are made at the meetings of the Board of Directors and its various Committees, on business and performance updates of the Company, global business environment, business strategy and risks involved. Quarterly updates, new amendments, circulars and notifications issued by the regulatory authorities including ROC, RBI and SEBI which mandates further compliances for the Company and landmark judicial pronouncements encompassing important laws are regularly circulated to the Directors.

Further, at the time of appointment of any Independent Director the Company issues a formal letter of appointment outlining his/her role, function, duties and responsibilities alongwith Code of Conduct to be adhered by the Directors. The Familiarization Policy for Independent Directors is accessible on the website of the Comany at https://www. agcnetworks.com/in/wp-content/uploads/2021/02/Familiarization-Policy-of-Independent-Directors.pdf.

VIGIL MECHANISM

The Vigil Mechanism of the Company in terms of the LODR Regulations, has been established through the Whistle Blower Policy/Policy on Vigil Mechanism of the Company. Protected disclosures can be made by a Whistle Blower through an e-mail or a letter to the Chief Ethics Officer or to the Chairman of the Audit Committee. The Policy on Vigil Mechanism/Whistle Blower Policy may be accessed on the Companys website at the link https://www.agcnetworks. com/in/wp-content/uploads/2016/10/Whistle-Blower-Policy.pdf.

PERFORMANCE EVALUATION

In terms of the requirement of the Companies Act, 2013 and LODR Regulations, annual performance evaluation of the Board, the Chairman of the Board, Independent and Non-Independent Directors and various Committees of the Board for the FY2021, was undertaken by the Company.

The evaluation was carried out through questionnaire based rating assessment mechanism where the evaluators were requested to give rating for each criteria set for evaluating the performance of the Director or the Committee of which, the performance was being evaluated. The board evaluation process was focused around how to make the Board more effective as a collective body in the context of the business and the external environment in which the Company functions. From time to time during the year, the Board was appraised of the business issues and the related opportunities and risks. The Board discussed various aspects of the functioning of the Board and its Committees such as structure, composition, meetings, functions and interaction with management.

Additionally, during the evaluation process, the Board also focused on the contribution being made by the Board as a whole as well as through Committees. The overall assessment of the Board was that it was functioning as a cohesive body including the Committees of the Board that were functioning effectively.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2021 is available on the Companys website on https://www.agcnetworks.com/in/investors/.

DIRECTORS AND KEY MANAGERIAL PERSONNEL ("KMP")

Section 152 of the Act provides that unless the Articles of Association provide for the retirement of all directors at every AGM, not less than two-third of the total number of directors of a public company (excluding the independent directors) shall be persons whose period of office is liable to determination by retirement of directors by rotation. Accordingly, Mr. Naresh Kothari, Non- Executive Director of the Company shall retire by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

During the year, following changes took place in the Board of Directors and Key Managerial Personnel ("KMP") of the Company:

Name Event Designation Date of event
Ms. Neha Nagpal Appointment Independent Additional Director September 10, 2020
Mr. Anshuman Ruia Appointment Non-Executive Additional Director September 10, 2020
Ms. Neha Nagpal Change in Designation Independent Director November 18, 2020
Mr. Anshuman Ruia Change in Designation Non-Executive Director November 18, 2020

As on March 31, 2021, the Company had following KMPs:

Mr. Sanjeev Verma, Whole-Time Director

Mrs. Mahua Mukherjee, Executive Director

Mr. Deepak Kumar Bansal, Executive Director & Chief Financial Officer

Mr. Aditya Goswami, Company Secretary & Compliance Officer

The shareholders of the Company at the 34th AGM had appointed Mr. Anshuman Ruia (DIN: 00008501) as a Non- Executive Director of the Company. The Board at its meeting held on September 20, 2021 has approved to change the designation of Mr. Anshuman Ruia from Non-Executive Director to Executive Director who shall be liable to retire by rotation. The appointment of Mr. Anshuman Ruia as Executive Director is subject to approval of the Central Government pursuant to Schedule V of the Companies Act, 2013 and subject to approval of the shareholders at the ensuing AGM of the Company.

The Company has received declarations from all the Independent Directors on its Board, confirming that he/she meets all the criteria of independence laid down under Section 149(6) of the Act and Regulation 16(1)(b) of LODR Regulations and that he/she is not aware of any circumstance/situation, which exists or may be reasonably anticipated, that could impair/impact his/her ability to discharge the duties of an Independent Director with objective independent judgment and without any external influence. These declarations and confirmations of the Independent Directors were duly noted by the Board of Directors after due assessment. Consequently, the Board is of the opinion that all Independent Directors of the Company fulfil the criteria of independence specified under the Act & SEBI LODR Regulations and are independent from the management of the Company.

Further, in the opinion of the Board of Directors, all Independent Directors of the Company hold highest standards of integrity and possess requisite expertise & experience enabling them to fulfil their duties as Independent Directors.

For detailed composition of Board of Directors and various Committees, kindly refer the Corporate Governance Report forming part of the Annual Report.

The Nomination and Remuneration Committee of the Company has devised a policy for performance evaluation of Directors, Board and Senior Management which includes the criterias for performance evaluation as well as the remuneration policy for the Directors, Senior Management and Employee of the Company. These policies are annexed to this report as Annexure III and Annexure IV respectively and are also accessible on the Companys website at the link https://www.agcnetworks.com/in/wp-content/uploads/2016/10/Code-of-Conduct-Directors-Senior-Management. pdf and https://www.agcnetworks.com/in/wp-content/uploads/2016/10/Remuneration-Policy.pdf respectively.

COMMITTEES OF THE BOARD

The details relating to various Committees constituted by the Board of Directors of the Company are mentioned in the ‘Corporate Governance Report, which forms a part of the Annual Report.

CODE OF CONDUCT FOR DIRECTORS & SENIOR MANAGEMENT

Pursuant to the provisions of Regulation 17(5) of the LODR Regulations, a Code of Conduct for the Directors & Senior Management of the Company has been formulated & approved by the Board of Directors. Further, in accordance with the provisions of Regulation 26(3), all Directors & members of Senior Management of the Company have affirmed compliance with the said Code of Conduct during the FY2021.

The said Code of Conduct is accessible on the Companys website at the link https://www.agcnetworks.com/in/wp-content/uploads/2016/10/Code-of-Conduct-Directors-Senior-Management.pdf.

Further, pursuant to the provisions of Regulation 34(3) readwith Schedule V Part D of the LODR Regulations, Mr. Sanjeev Verma, Whole-Time Director, has issued a declaration stating that all the Directors and members of Senior Management of the Company have complied with the Code of Conduct of the Company during the FY2021. The said declaration has been disclosed in the Corporate Governance Report forming part of the Annual Report.

PERSONNEL

The Board places on record its appreciation for the hard work and dedicated efforts put in by all the employees. The relations between the management and employees continue to remain cordial on all fronts.

The statement of particulars of appointment and remuneration of managerial personnel and employees of the Company as required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this Report as Annexure V.

Having regard to the provisions of the second proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

POLICY ON PREVENTION OF GENDER HARASSMENT AT WORKPLACE AND INTERNAL COMPLAINTS COMMITTEE ("ICC")

The Company has in place a policy for prevention, prohibition and redressal of gender harassment at workplace. Appropriate reporting mechanisms are in place for ensuring protection against gender harassment and the right to work with dignity.

Further, in accordance with the applicable provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had constituted an Internal Complaints Committee ("ICC") to consider and resolve sexual harassment complaints raised by the employees of the Company. The constitution of the ICC is in accordance with the applicable provisions of the said Act.

During the year under review, no complaints were received from any of the employee(s) of the Company.

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

(i) Part A pertaining to conservation of energy is not applicable to the Company.

(ii) Part B pertaining to particulars relating to technology absorption is as per Annexure VI to this report.

(iii) Part C pertaining to foreign exchange earnings and outgoings is as mentioned below:

Rs. in Crores

Expenditure in foreign currency (accrual basis) FY2021 FY2020
Service charges 9.63 13.37
Travelling and conveyance 0.54 1.09
Expenses reimbursement paid 0.63 0.90
Other items 0.54 0.36
Total 11.34 15.72

Rs. in Crores

Earnings in foreign currency (accrual basis) FY2021 FY2020
Sale of goods and services 23.94 27.44
(Including sale from overseas branch and to Export Oriented Units)
Commission income 0.78 0.75
Expenses reimbursement received 21.31 21.46
Total 46.03 49.65

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy is accessible on the Companys website at the link https://www. agcnetworks.com/in/wp-content/uploads/2021/02/Corporate-Social-Responsibility-policy.pdf.

The Report on CSR activities is annexed herewith marked as Annexure VII.

RISK MANAGEMENT POLICY

The Company has a comprehensive Risk Management Policy in place which clearly indicates all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks that have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy is accessible on the Companys website at https://www.agcnetworks.com/in/wp-content/uploads/2021/02/Risk-Management-Policy.pdf. In terms of Regulation 21 (5) of SEBI (LODR) Regulations, 2015, the provisions of constituting Risk Management Committee became applicable to the Company w.e.f. April 1, 2021. Accordingly, the Board has constituted Risk Management Committee w.e.f. April 1, 2021.

CONTRACTS AND ARRANGEMENTS 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 on an arms length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the Companys policy of on materiality of related party transactions. Most of these are purchase/sales transactions and maintenance services transactions which are of the duration of 3 months to 12 months. Your Directors draw attention of the members to Note no. 36 (Consolidated) and Note No. 32 (Standalone) to the financial statement which sets out related party disclosures.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is accessible on the Companys website at the link https://www.agcnetworks.com/in/wp-content/ uploads/2021/05/Related-Party-Transaction-Policy-Revised.pdf.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors state that: a. in the preparation of the annual accounts for the year ended March 31, 2021, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; b. the Directors have selected such accounting policies and applied them consistently and made judgements 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 on March 31, 2021 and of the profit/(loss) of the Company for the Financial Year ended on the said date; c. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the Directors have prepared the annual accounts on a ‘going concern basis; e. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company; work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee; the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY2021.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR ALONGWITH THEIR STATUS AS AT MARCH 31, 2021

There are no proceedings initiated/pending against the Company under the Insolvency and Bankruptcy Code, 2016 which materially impact the business of the Company.

ACKNOWLEDGEMENTS

The Board is thankful to the Shareholders, Bankers and Customers of the Company for their continued support. It also takes this opportunity to express gratitude to its various suppliers and its partners for their continued co-operation, support and assistance. Above all, the Board expresses its appreciation to each and every employee for his / her contribution, dedication and sense of commitment to the Companys objectives.

For and on behalf of the Board of Directors
Sanjeev Verma Mahua Mukherjee
Whole-Time Director Executive Director
DIN: 06871685 DIN: 08107320
Texas, USA Mumbai
September 20, 2021 September 20, 2021