DigiSpice Technologies Ltd Directors Report.

Dear Shareholders,

Your Directors have pleasure in presenting the Thirty Second Annual Report together with the Audited Financial Statements of the Company for the financial year ended on 31st March, 2020.

FINANCIAL RESULTS

The consolidated and standalone financial performance of the Company for the financial year ended 31st March, 2020 is summarized below:-

(Amount in Rs. Lakhs)

PARTICULARS

For the Financial year ended 31.03.2020

For the Financial Year ended 31.03.2019

consolidated Standalone Consolidated Standalone
Total revenue from continuing operations 41,884.39 13,197.18 39,505.04 17,226.37
Earnings before finance costs, tax, depreciation & amortization and exceptional items from continuing operation 1,858.70 (108.67) 3,379.73 1,128.82
Share of (profit)/loss of associates and a joint venture (88.87) - (116.55) -
Depreciation and amortization expense 2,061.67 918.30 1,797.07 894.13
Finance costs 422.81 249.27 262.15 186.08
Exceptional items (4,619.30) (6,786.69) 0.09 170.82
profit/(Loss) before tax from continuing operations (5,333.95) (8,062.93) 1,204.05 219.43
Tax expenses
Current Income Tax 532.20 189.35 1,128.34 235.90
Income Tax adjustment for earlier years (net) 143.10 - 5.68 (53.25)
Deferred tax charge/ (credit) (477.57) (373.36) (847.26) (760.11)
profit/(Loss) for the year from continuing operation (5,531.68) (7,878.92) 917.29 796.89
Profit/(Loss) for the Year from discontinued operation (39.34) - (9.15) -
Total Profit/ (Loss) for the year (5,571.02) (7,878.92) 908.14 796.89
Other comprehensive income for the year 3.42 (27.80) 83.33 (3.39)
Total comprehensive income for the year (5,567.60) (7,906.72) 991.47 793.50
Share of Minority in profits / (losses) (608.07) - 308.12 -
profit / (Loss) for the year attributable to equity shareholders (4,959.53) (7,906.72) 683.35 793.50

PERFORMANCE REViEW AND STATE OF THE COMPANY AFFAiRS

The Company is engaged in the business of digital transformation of private & public enterprises and Governments. While building a strong ecosystem over the last two decades, the Company has emerged as a technology solutions and communications platform provider globally. The Company, through its direct and step down subsidiaries, is operating in India and South Asia and Africa.

The Company through its wholly owned subsidiary "Spice Money Limited" is engaged in providing Digital Financial Services (Fintech Business).

The Company, at the consolidated level achieved a total income of Rs. 41,884.39 lakhs for the year ended 31st March, 2020 as against Rs. 39,505.04 lakhs for the previous year ended 31st March, 2019. The loss after tax at the consolidated level for the year ended on 31st March, 2020 is Rs. 5,531.68 lakhs as against profit of Rs. 917.29 lakhs in the previous year ended 31st March, 2019.

The current year loss includes exceptional items of Rs. 4,619.30 lakhs as one time charges which comprises of:

a) Rs. 182.34 lakhs for settlement of old liabilities pertaining to central excise and service tax matter under Sabka Vishwas Legacy Dispute Resolution Scheme, 2019, and

b) The Company and its subsidiaries reviewed the entire portfolio of its receivables and its investments and, on a conservative basis, have made a provision of Rs 4,447.61 lakhs, including Rs 3,607.79 lakhs of receivable due from a customer under a long term contract the payment of which was linked to certain milestones and fund raise of the customer, impairment of Rs. 1,333.23 lakhs of investment (net of FCTR income of Rs 24.66 lakhs) and derecongnition of loan liability of Rs. 1,343.88 lakhs (net of FCTR loss of Rs. 24.85 lakhs) during the year. Since this provision has mainly arisen due to inordinate delays, business uncertainties and stress over cash-flows of our customers accelerated by the spread of Covid-19 pandemic all over the word, this has been shown as Exceptional item.

The Company, at the standalone level, has earned a total income of Rs. 13,197.18 lakhs for the year ended 31st March, 2020 (Previous year Rs. 17,226.37 lakhs). The Company has incurred a loss of Rs. 7,878.92 lakhs for the year ended 31st March, 2020 as against a profit of Rs. 796.89 lakhs in the previous year ended 31st March, 2019.

The current year loss includes exceptional item of Rs. 6,786.69 lakhs as one time charges which comprises of:

a) Rs. 182.34 lakhs for settlement of old liabilities pertaining to central excise and service tax matter under Sabka Vishwas Legacy Dispute Resolution Scheme, 2019,

b) Impairment provision of Rs 5,000.64 lakhs related to Investments in S Global Services Pte. Ltd (Rs 5,000 lakhs) and S Mobility (HK) Limited (Rs. 0.64 lakhs) being the difference in carrying amount and recoverable value, and

c) Provision of Rs 1,603.71 lakhs out of which Rs 690.09 lakhs relate to other receivables and Rs. 913.62 lakhs for receivables and loans from subsidiary companies. Since this provision has mainly arisen due to inordinate delays, business uncertainties and stress over cash-flows of our customers/subsidiaries accelerated by the spread of Covid-19 pandemic all over the world, this has been shown as Exceptional item.

IMPACT OF COViD-19 VIRUS PANDEMIC ON THE COMPANY

The outbreak of Coronavirus (COVID-19) pandemic globally and in India has caused significant disruption and slowdown of economic activities. There have been delays in collection from customers and possible delinquencies in receivables from customers due to the impact of Covid. Keeping the employees safety at the top, the Company has put in place the Policy of work from home in March, 2020 even before the announcement of lock down by the Government of India to prevent the spread of the pandemic. Further, consequent to the relaxations granted by the Governments, the Company has put in place the mandatory protocols and Standard Operating Procedures (SOPs) for all its employees such as submission of Self Declaration Forms,Thermal Screening, Sanitization, Maintaining social distancing among others as per the Guidelines stipulated by the Ministry of Home Affairs of the Government of India and applicable State Guidelines.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company, as of March 31, 2020 has 23 subsidiaries and 3 associates (including one associate of its subsidiary company). The performance highlights of the direct/material subsidiaries are given below:

(a) Spice money Ltd. (formerly Spice Digital Limited)

Spice Money is a part of the Fintech industry and is solving the problems of payments, making banking easy for all, servicing to those areas and people where the basic banking infrastructure is not accessible or difficult to access. Fintech industry is helping the financial inclusion for the people of Rural and Semi-urban India, riding on the India payment Stack "JAM" Jan Dhan Accounts, Aadhaar and Mobile (technology and infrastructure) developed by the Government.

In its endeavour to participate in the financial inclusion and serving the underserved journey, Spice Money is providing various Banking and Non-Banking Services through various licenses and Banking correspondents arrangement with the banks. The company is enabling these services through a technology platform which is being used by the CSP i.e. Customer Service Points appointed by the company to provide the services to the end customer.

It achieved consolidated revenue of Rs. 25,543 lakhs for the year ended 31st March, 2020 (31st March, 2019 : Rs. 14,373 lakhs). It reported a consolidated profit of Rs. 401 lakhs vis-a-vis loss of Rs. 433 lakhs in the previous year ended 31st March, 2019.

(b) S Global Services Pte. Ltd. (Formerly SGiC Pte. Ltd.)

This company is incorporated in Singapore and is in the business of Value Added Services and Digital Technology & Solutions and has a global presence, operating through its subsidiaries, both direct & step down subsidiaries.

It achieved consolidated revenue of Rs. 4,510.67 lakhs for the year ended 31st March, 2020 (31st March, 2019 : Rs. 9,673.11 lakhs). The Consolidated loss after Tax for the year ended 31st March, 2020 is Rs. 3,748.10 lakhs (31st March, 2019 : profit of Rs.1,280.85 lakhs).

The current year loss includes exceptional items of Rs. 3,563.30 lakhs pertaining to provision made on trade receivables, out of which provision of Rs. 3,607.79 lakhs is due from a customer under a long term contract, the payment of which was linked to certain milestones and fund raise of the customer.

(c) spice Digital Bangladesh Limited

This company is incorporated in Bangladesh and is in the business of Value Added Services and Digital Technology & Solutions. It achieved revenue of Rs. 88.34 lakhs for the year ended 31st March, 2020 (31st March, 2019 : Rs. 299.34 lakhs). Loss after Tax for the year ended 31st March, 2020 is Rs 139.11 lakhs (31st March, 2019 : Profit of Rs. 49.09 lakhs).

(d) Digispice Nepal Limited

This company is incorporated in Nepal and is in the business of Value Added Services and Digital Technology & Solutions. It achieved revenue of Rs. 169.02 lakhs for the year ended 31st March, 2020. Profit after Tax for the year ended 31st March, 2020 is Rs. 5.42 lakhs.

(e) spice VAs (Africa) pte. Limited

Spice VAS Group is in the business of providing of Digital Services ("VAS") in Africa and Indonesia. Currently, the operations of Spice VAS covers countries like Ghana, Kenya, Indonesia, Zambia, Nigeria, and Singapore.

It achieved consolidated revenue of Rs. 4,101.90 lakhs for the year ended 31st March, 2020 (31st March, 2019: Rs. 9,373.56 lakhs). The consolidated loss after Tax for the year ended 31st March, 2020 is Rs. 3,135.57 lakhs (31st March, 2019: profit of Rs. 1,637.91 lakhs).

The detailed performance and financial position of each of the subsidiaries and associate companies are given in Form AOC-1 attached to the Consolidated Financial Statements for the year ended 31st March, 2020 and forms an integral part of the Annual Report.

transfer of amount to reserves

The Company has not transferred any amount to the Reserve during the Financial Year ended 31st March, 2020.

DIVIDEND

In view of losses during the year under review, your directors do not recommend any dividend to the shareholders.

TRANSFER OF UNCLAIMED DIVIDEND AND SHARES To INVESTOR EDUCATION AND PROTECTIIN FUND

In terms of Section 124 of the Companies Act, 2013, dividend which remains unpaid/unclaimed for a period of seven years from the date of its transfer to the unpaid dividend account is required to be transferred to the Investor Education and Protection Fund (IEPF) established by the Government of India. Accordingly, the Company has transferred the unpaid/unclaimed dividend, pertaining to the dividend of financial year 2011-12, amounting to approx. Rs. 15.31 lakhs to the IEPF Account. The unclaimed/unpaid dividend relating to the financial year 2012-13 and financial year 2013-14 is due for transfer to the IEPF Account in the month of March, 2021 and December, 2020, respectively.

Further, pursuant to the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended from time to time, all shares in respect of which dividend has not been claimed by the shareholders for seven consecutive years or more are liable to be transferred to the IEPF established by the Central Government. Accordingly, during the year, the Company has transferred 95,367 equity shares of Rs. 3/- each, to the IEPF for the unpaid/unclaimed dividend pertaining to the financial year 2011-12. The details of the shares transferred to IEPF are available on the website of the Company.

Once the aforesaid unclaimed dividend/ shares are transferred to IEPF, the concerned shareholders can claim both the unclaimed dividend as well as the shares transferred to IEPF from the IEPF Authority by making an application in the prescribed Form and manner under the applicable Rules.

LISTING OF SECURITIES

The Equity Shares of the Company are presently listed on BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Annual Listing Fee for the financial year 2020-21 has been paid to both the Stock Exchanges.

HOLDING COMPANY

As on 31st March, 2020, Spice Connect Private Limited, the holding company, holds 74.35% of the issued share capital of the Company.

SUBSIDIARY COMPANIES, JOINT VENTURES OR ASSOCIATE COMPANIES

During the year, Spice VAS (Africa) Pte. Limited (SVA), a step-down subsidiary of the Company, has divested its entire equity stake of 100% in its wholly-owned subsidiary, SVA (Mauritius) Private Limited (SVAM). Consequently, SVAM has ceased to be a subsidiary of SVA and step-down subsidiary of the Company. After closure of the Financial Year, SVA, has divested its entire 49% stake in its associate, Ziiki Media SA (Pty) Limited (Ziiki). Consequently, Ziiki has ceased to be an associate of SVA.

Pursuant to Section 129 (3) of the Companies Act, 2013 and Indian Accounting Standard - 110 issued by The Institute of Chartered Accountants of India, Consolidated Financial Statement presented by the Company include the Financial Statements of its Subsidiaries and Associate Companies.

Upon receipt of request, the Annual Accounts of the Subsidiary Companies and the related information will be made available to the members of the Company. In view of the Work from home Policy of the Company due to Covid-19 pandemic, these documents will not be available for physical inspection. The Financial Statements of Subsidiary Companies will be uploaded on the website of the Company www.digispice.com.

auditors and auditors report

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with rules made there under, M/s. Singhi & Co., Chartered Accountants (Firm Registration No. 302049E), were appointed as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of the thirtieth Annual General Meeting till the conclusion of thirty fifth Annual General Meeting of the Company to be held in the year 2023.

The Auditors Reports for the financial year 2019-20 do not contain any qualification or reservation or adverse remark. The Notes on Financial Statement referred to in the Auditors Report are self-explanatory and do not call for any further comments.

During the year, no incidence of fraud as defined under Section 143(12) of the Companies Act, 2013, which is required to be disclosed under Section 134(3) (ca) of the Companies Act, 2013, has been reported by the Auditors to the Board of directors of the Company.

CASH FLOW STATEMENT

In conformity with the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Cash Flow Statement for the year ended on 31st March, 2020 as prepared under the provisions of Indian Accounting Standard - 7 as notified under Section 133 of the Companies Act, 2013 is attached as a part of the Financial Statement of the Company.

NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the financial year ended on 31st March, 2020, Six (6) meetings of the Board of Directors were held on 21st May, 2019, 14th June, 2019, 30th July, 2019, 26th September, 2019, 8th November, 2019 and 4th February, 2020. The details of number of meetings of the Board and its various committees attended by the directors are given in Corporate Governance Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year, Mr. Dilip Modi (DIN: 00029062) who was Executive Chairman of the Company till 30th September, 2019, has been appointed as Non-Executive Director and designated as Non-Executive Chairman of the Company w.e.f. 1st October, 2019. Mr. Modi retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.

Mr. Mayank Jain (DIN: 00251609), on the recommendation of the Nomination and Remuneration Committee, was appointed as an Additional Director in the category of Non-Executive Independent Director of the Company w.e.f. 1st October, 2019. Mr. Mayank Jain holds office upto the date of the ensuing Annual General Meeting of the Company and is eligible for appointment as an independent 0 director. The resolution for his appointment as an Independent Director of the Company for a period of 5 years w.e.f. 1st October, 2019 is being placed for approval of the members.

Subsequent to the end of financial year, on the recommendation of the Nomination and Remuneration Committee of the Company,

Mr. Rohit Ahuja (DIN: 00065417) is appointed as an Additional Director in the category of Executive Director w.e.f. 5th May, 2020 and holds office up to the date of ensuing Annual General Meeting of the Company. He has been appointed as an Executive Director of the Company w.e.f. 5th May, 2020 for a period of three years. The resolution for his appointment as an Executive Director of the Company for a period of 3 years w.e.f. 5th May, 2020 is being placed for approval of the members.

Mr. Suman Ghose Hazra (DIN: 00012223), Independent Director of the Company, on the recommendation of the Nomination and Remuneration Committee, has been re-appointed as an Independent Director of the Company for the second term of 5 consecutive years w.e.f. 7th May, 2020 subject to the approval of the shareholders. The resolution for his re-appointment as an Independent Director of the Company for the second term of 5 consecutive years w.e.f. 7th May, 2020 is being placed for approval of the members.

Ms. Preeti Das (DIN: 05271289), Chief Executive Officer of the Company, on the recommendation of the Nomination and Remuneration Committee of the Company, was appointed as an Additional Director in the category of Executive Director w.e.f. 1st October, 2019 and designated as ED and CEO of the Company. However, subsequent to the financial year end, Ms. Preeti Das has stepped-down from the Board of the Company and also resigned from the post of Chief Executive Officer of the Company from the close of business hours of 4th May, 2020. The Board of Directors places on record its sincere appreciation for guidance provided by her during her tenure as Executive Director and Chief Executive Officer of the Company.

As required under Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the relevant provisions of the Companies Act, 2013 and the Secretarial Standard on General Meetings, a brief resume, details of experience and other Directorships/ Committee memberships/ Chairmanships held by the Directors in other Companies etc., whose appointment/ re-appointment is due in the forthcoming Annual General Meeting (AGM) of the Company, forms part of the Notice convening the 32nd AGM.

Pursuant to the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has obtained a certificate from a company secretary in practice that none of the directors on the board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority and forms a part of this annual report.

In view of the Internal Restructuring within the organisation, Mr. Rajneesh Arora, Chief Financial Officer of the Company was moved to head Strategy & Alliance of the Company and Mr. Deepak Mehta, VP-Finance and Accounts of the Company was appointed as Chief Financial Officer of the Company w.e.f. 4th February, 2020. However, subsequent to the end of financial year, Mr. Deepak Mehta, resigned as Chief Financial Officer of the Company w.e.f. 30th May, 2020. The Board of Directors, on the recommendation of Nomination and Remuneration Committee, has appointed Mr. Ravindra Kumar Sarawagi as Chief Financial Officer of the Company w.e.f. 26th June, 2020.

As per the provisions of Companies Act, 2013, Mr. Rohit Ahuja, Executive Director, Mr. Ravindra Kumar Sarawagi, Chief Financial Officer and Mr. M. R. Bothra, Company Secretary are the Key Managerial Personnel of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 as well as Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

As required under Regulation 25 of the Listing Regulations, the Independent Directors have also confirmed that they meet the criteria of independence and are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board is of the opinion that the independent directors have the necessary experience, expertise and integrity and are independent of the Management of the Company.

INDEPENDENT DIRECTORS DATABANK REGISTRATION

Pursuant to the provisions of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, all the Independent Directors of the Company have been empanelled with the Independent Directors Databank as maintained by the Indian Institute of Corporate Affairs.

MEETING OF INDEPENDENT DIRECTORS

The Ministry of Corporate Affairs (MCA) vide its General Circular No. 11 dated 24th March, 2020 has provided certain exemption/ relief from the provisions of the Companies Act, 2013 inter alia providing that for the financial year 2019-20, if the independent directors of a company have not been able to hold such a meeting, the same shall not be viewed as a violation. However, as a good corporate governance practice the Independent Directors decided to have a separate meeting and met on 9th October, 2020, without the presence of Non-Independent Directors and the members of management and discussed, inter-alia, the performance of Non - Independent Directors and the Board as a whole and the performance of the Chairman of the Company after taking into consideration the views of Executive and Non-Executive Directors. The Independent Directors gave their detailed feedback on the Board evaluation and performance of the directors evaluated by them and made suggestions for further improvement. The same was communicated to the concerned directors and the Board.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

In terms of Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company familirises its directors about their roles and responsibilities at the time of their appointment through a formal letter of appointment. Presentations are regularly made at the meetings of the Board and its various Committees on the relevant subjects. All efforts are made to keep Independent Directors aware of major developments taking place in the industry, business the Company operates in and relevant changes in the law governing the subject matter. The detail of familiarization programme as required under Listing Regulations is available at https://www.digispice.com/Familiarization programme 2020.pdf.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:

(i) in the preparation of annual accounts for the financial year ended 31st March, 2020, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the State of Affairs of the Company as at 31st March, 2020 and of the profit of the Company for the period ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts on a going concern basis;
(v) the Directors have laid down proper internal financial controls to be followed by the Company and such internal financial control are adequate and were operating effectively; and
(vi) the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

MANAGEMENT DiSCUSSiON AND ANALYSiS REPORT

As required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis (MDA) Report forms an integral part of this Report.

CORPORATE GOVERNANCE REPORT

A separate report on Corporate Governance is enclosed as a part of this Annual Report. The Company has appointed M/s. Sanjay Grover & Associates, Practising Company Secretaries, to conduct the Corporate Governance Audit of the Company. A Certificate from them regarding compliance with Corporate Governance conditions as stipulated under the relevant provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the Report on Corporate Governance.

SECRETARIAL AUDIT

As required under Section 204(1) of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has appointed M/s. Sanjay Grover & Associates, Practising Company Secretaries, to conduct the Secretarial Audit for the financial year 2019-20. The Secretarial Audit Report received from them forms part of this Annual Report. The Secretarial Audit Report does not contain any qualification, reservation and adverse remark.

Pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, every listed company shall annex with its annual report the Secretarial Audit Report of its material subsidiaries incorporated in India. In compliance with the said requirement, the Secretarial Audit Report of Spice Money Limited (formerly Spice Digital Limited), a material subsidiary of the Company, for the financial year 2019-20 is annexed herewith and forms part of the Annual Report.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE • FINANCIAL STATEMENTS

The Company has in place an established internal financial control system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. Self-certification exercise is also conducted by which senior management certifies effectiveness of the internal control system of the Company. Findings of the Internal Audit Report are reviewed by the top management and by the Audit Committee invariably and proper follow up actions are ensured wherever required. c

In view of the Work from home Policy of the Company, a few changes have been made in the internal financial control system, primarily in relation to physical evidencing of documents and remote access working for various functions. However, at overall level, the ongoing operations of internal financial control system are substantially unaffected by Covid-19 pandemic.

The Company has designed and implemented Risk And Control Matrix (RACMs) including therein the process wise controls. It appointed an external agency to evaluate the prevalent internal control and risk management system. The Audit Committee ensures that the Company maintains effective risk management and internal control systems and processes. It provides its feedback and recommendation on the relevant matters to the Board.

The Statutory Auditors and Internal Auditors also evaluate the system of Internal Controls of the Company and report to the Audit Committee. Appropriate steps are taken to bridge the gaps observed by them. The Auditors have reported that the present systems and processes of internal controls are adequate and commensurate with the size of the Company and nature of its business.

INTERNAL AUDITORS

The Board, on the recommendation of Audit Committee, in its meeting held on 26th June, 2020 has re-appointed M/s. GSA & Associates, Chartered Accountants, to act as Internal Auditors of the Company for the Financial Year 2020-21. The Internal Auditors directly report to the Audit Committee.

AUDIT COMMITTEE

In compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has a duly constituted Audit Committee. The Audit Committee comprises of the following Directors:

1. Mr. Suman Ghose Hazra - Chairman
2. Dr. (Ms.) Rashmi Aggarwal - Member
3. Mr. Subramanian Murali

-

Member

The details of the terms of reference, meetings held during the year, attendance of directors at such meetings etc. are provided in Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The Board had constituted a Corporate Social Responsibility (CSR) Committee and on the recommendation of CSR Committee the Board approved the CSR Policy. The CSR Committee has also been entrusted with the responsibility of monitoring the implementation of the framework of the CSR Policy, recommending to the Board the amount of expenditure to be incurred on CSR activities and ensuring that the implementation of the projects and programs is in compliance with the CSR Policy of the Company.

The Corporate Social Responsibility Committee comprises of the following members:

1. Mr. Dilip Modi Chairman
2. Mr. Subramanian Murali Member
3. Mr. Suman Ghose Hazra Member

During the year, the CSR Committee met once i.e. on 29th July, 2019. All three members attended the meeting.

The Annual Report on the CSR activities is attached herewith as Annexure - 1.

BOARD FINANCE COMMITTEE

The Board had constituted a Board Finance Committee and entrusted the said Committee with the functions to approve the borrowings, making of loans, creation of charge on the assets of the Company etc. The said Committee is also authorised to open, close and make changes in signatories for the operation of the bank accounts. The said Committee consists of Mr. Dilip Modi as Chairman and Mr. Subramanian Murali, Non-Executive Director and Mr. Suman Ghose Hazra, Independent Director, as members. During the year, the said Committee met three times on 2nd May, 2019, 16th October, 2019 and 9th March, 2020 and all the members of the Committee were present in the meetings, except in one meeting, which was not attended by Mr. Dilip Modi.

EXTRACT OF THE ANNUAL RETURN

In compliance with Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return in Form MGT-9 is attached (Annexure - 2) as a part of this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The details of Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013 are provided in the Notes forming part of the financial statements.

MAINTENANCE OF COST RECORDS

The Company is not required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

PUBLIC DEPOSITS

During the year under review, the Company has neither accepted nor renewed any deposits in terms of Chapter V of the Companies Act, 2013.

PARTICULAR OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year, the Company has entered into various transactions with related parties. All related party transactions are undertaken in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations.

All related party transactions are placed before the Audit Committee for its approval. The quarterly disclosures of transactions with related parties are made to the Audit Committee for its review. As required under the Companies Act, 2013 and the provisions of Listing Regulations, the Audit Committee has granted Omnibus approval for related party transactions which are repetitive in nature and fall within the criteria laid down for the purpose.

During the year the Board, has, on the recommendation of the Audit Committee, amended the Policy on Related Party Transactions to include therein the various changes/modifications as notified by the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018.

The ‘Policy on Related Party Transactions dealing with such transactions and ‘Policy on Material Subsidiaries as recommended by the Audit Committee and approved by the Board of Directors are uploaded on the website of the Company viz. www.digispice.com.

All related party transactions entered during the financial year were in the ordinary course of business. There were no material related party transactions entered by the Company with Directors, KMPs or other persons which may have a potential conflict with the interest of the Company.

Since all the related party transactions entered into by the Company during the financial year were at arms length basis and in the ordinary course of business and there was no material related party transaction (i.e. a transaction exceeding 10% of the annual consolidated turnover as per the last audited financial statements), no detail is required to be given in Form AOC-2.

In pursuance to the Comprehensive Scheme of Arrangement, the DTS Business of Spice Money Limited (SML) (formerly known as Spice Digital Limited), a wholly owned subsidiary of the Company, has been demerged into the Company and the transactions done by SML in relation to this business are the transactions done on behalf of the Company and, therefore, back to back transactions for transitional period have not been considered for reporting purpose here.

The details of the transactions with related parties are provided in Note 36 of standalone financial statements and Note 41 of the consolidated financial statements. 9

vigil mechanism

The Company, as required under Section 177 of the Companies Act, 2013, Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SEBI (Prohibition of Insider Trading) Regulations, 2015 has established "Vigil Mechanism / Whistle Blower Policy" for Directors and Employees of the Company.

This Policy has been established with a view to provide a tool to directors and employees of the Company to report to the management genuine concerns including unethical behavior, actual or suspected fraud or violation of the Code of Conduct of the Company. This Policy outlines the procedures for reporting, handling, investigating and deciding on the course of action to be taken in case inappropriate conduct is noticed or suspected.

This Policy also provides for adequate safeguards against victimization of director(s)/employee(s) who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.The Audit Committee is authorized to oversee the Vigil Mechanism/ Whistle Blower Policy in the Company. The Company has not received any reference under the said policy during the year. c

The Whistle Blower Policy is available on the Companys website at the link https://www.digispice.com/Vigil Mechanism Whistle Blower Policy.pdf.

RISK MANAGEMENT POLICY

The Company is not mandatorily required to constitute a Risk Management Committee.The Board of Directors, on the recommendation of Audit Committee, had adopted a Risk Management Policy for the Company to lay down the procedure to inform the Board members about the risk assessment and minimization. As a good practice, the Company regularly reviews the existing risk management system and major risks associated with different businesses of the Company. The Audit Committee oversees the Risk Management function and reviews the prevailing risk management framework in the Company periodically. The Board of Directors of the Company, on the recommendation of the Audit Committee, takes appropriate measures, reviews the major risks associated with the Company and takes all requisite measures to minimize them.

REMUNERATION POLICY

The Board of Directors, on the recommendation of the Nomination and Remuneration Committee of the Company, had framed a Policy for Nomination and Appointment of Directors. As required under Section 178 of the Companies Act, 2013 read with the Rules made thereunder and the Listing Regulations, the Nomination and Remuneration Committee also recommended to the Board a Remuneration Policy for remuneration, including ESOP, to Directors, Key Managerial Personnel and Senior Management Personnel and other employees of the Company, which was duly approved by the Board. The Board on the recommendation of the Committee appoints the Senior Management Personnel from time to time.

The Remuneration Policy of the Company is available at https://www.digispice.com/Rem Policy.pdf.

EMPLOYEES STOCK OPTIONS

During the year, all the ESOPs granted by the Nomination and Remuneration Committee in its meetings held on September 18, 2018 and February 5, 2019, held by the employees on the date of vesting have been vested in favour of respective employees. No further ESOP has been granted to any employee during the financial year. None of the employees have exercised any vested ESOP till date.

The Certificate from the Auditors of the Company stating that the ESOP Scheme has been implemented in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 (the "SBEB Regulations") and the resolutions passed by the members, would be available at the Annual General Meeting for inspection by members.

During the year, there has been no change in the SML Employee Stock Option Plan - 2018 of the Company. The applicable disclosures as stipulated under the SBEB Regulations as on March 31,2020 with regard to the SML Employee Stock Option Plan - 2018 of the Company are available on the website of the Company at https://www.digispice.com/ESOP disclosure 2020.pdf.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to applicable provisions of the Companies Act, 2013, as amended from time to time, the Nomination and Remuneration Committee (NRC) has specified the manner for effective evaluation of performance of Board, its Committees and individual Directors and decided that it will be done by the Board itself internally. The Board of Directors has carried out evaluation of performance of each of them. The Committee reviews its implementation and ensures the compliances thereof. As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the NRC, has also formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors. The Committee has selected certain additional criteria for evaluation of the Board, Committees and Directors.

A structured questionnaire including the new criteria has been prepared, covering various aspects of the functioning of the Board and its Committees, such as, adequacy of the constitution and composition of the Board and its Committees, discharge of roles and responsibilities by the Board and its Committees, succession plan for Board Members and Senior Management, frequency of the meetings, regulatory compliances and Corporate Governance, etc. Similarly, for evaluation of individual directors performance including for independent directors, the questionnaire covers various aspects like his/ her attendance at the meetings of Board and its Committees, contribution in Board and Committee meetings, execution and performance of specific duties, obligations, regulatory compliances and governance, adequate and timely disclosures, etc. The said questionnaires are reviewed by the NRC.

Board members had submitted their response on a scale of 1 (outstanding) to 5 (poor) for evaluating the entire Board, Committees of the Board and of their peer Board members, including Chairman of the Board.

The Board of Directors has carried out evaluation of every Directors performance including the Executive Director. The performance evaluation of the Independent Directors have been done by the entire Board, excluding the Director being evaluated on the basis of performance and fulfilment of the independence criteria as specified under the Companies Act, 2013 and the Listing Regulations.

POLICY ON PREVENTION OF SEXUAL HARASSMENT

As required under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013 (POSH Act), the Company has a Policy on Prevention of Sexual Harassment of Women at Workplace and matters connected therewith. The Company has complied with the provisions relating to the constitution of Internal Committee.

No case of Sexual Harassment was filed or registered during the year under the POSH Act. Further, the Company ensures that there is a healthy and safe environment for every women employee at the workplace and made the necessary policies for safe and secure environment.

ORDERS PASSED BY THE REGULATORS OR COURTS, IF ANY

No significant and material orders were passed by the Regulators, Courts or Tribunals impacting the going concern status and Companys operations in future.

conservation of energy, technology absorption and foreign exchange earnings and

OUTGO

Pursuant to provisions of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 the details of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are attached (Annexure- 3) which forms part of this report.

particulars of employees

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) thereof for the time being in force, the details of remuneration etc. of Directors, Key Managerial Personnel and employees covered under the said Rules is attached (Annexure- 4) which forms part of this report.

compliance WITH secretarial STANDARDS

The Company has complied with the provisions of Secretarial Standard - 1 (Secretarial Standard on meetings of Board of Directors) and Secretarial Standard - 2 (Secretarial Standard on General Meetings) issued by the Institute of Company Secretaries of India.

acknowledgements * *

Yours Directors would like to express their grateful appreciation for assistance and cooperation received from the Banks, Government Authorities, Customers,Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff and Workers of the Company at all levels.

For and on behalf of the Board of Directors of
DiGiSpicE Technologies Limited
(Formerly Spice Mobility Limited)
Date: 13th November, 2020 Dilip Modi
place: Noida chairman