HOV Services Ltd Directors Report

The Board of Directors present the 36^th Annual Report of HOV Services Limited (the "Company" or "HOVS") along with audited Financial Statements for the financial year ended March 31, 2024.

FINANCIAL RESULTS AND OPERATIONS:

(Rs. in Lakhs)

	Consolidated		Standalone
Particulars	Year Ended		Year Ended
	Mar 31,2024	Mar 31,2023	Mar 31,2024	Mar 31,2023
Income
Revenue from operations	1,612.36	1,205.51	1,612.36	1,205.51
Other income	172.39	381.41	172.39	194.44
Total Income	1,784.75	1,586.92	1,784.75	1,399.95
Expenses
Employee Benefits Expense	1,193.45	815.90	1,193.45	815.90
Finance Costs	12.87	15.95	12.87	15.95
Depreciation and Amortisation Expense	63.08	60.48	63.08	60.48
Other Expenses	149.72	149.48	149.53	149.48
Total Expenses	1,419.12	1,041.81	1,418.93	1,041.81
Profit before exceptional items from continuing opeartions	365.63	545.11	365.82	358.14
Exceptional items: Reversal of provision	-	-	207.00	-
Profit/(Loss) after exceptional items from continuing opeartions	365.63	545.11	572.82	358.14
Tax Expense :
Current Tax	(98.79)	(99.80)	(98.79)	(99.80)
Deferred Tax	(1.99)	3.01	(1.99)	3.01
Profit/(Loss) after tax for the period from continuing opeartions	264.85	448.32	472.04	261.35
Discontinued Operations
Profit/(Loss) from discontinued operations before tax	3.77	8.62	-	-
Tax expense of discontinued operations	-	(0.01)	-	-
Profit/(Loss) after tax from continuing & discontinued operations	268.62	456.93	472.04	261.35
Other Comprehensive Income / (Loss)
Items that will not be reclassified subsequently to Profit or loss :
Remeasurement of net defined benefit plans	(15.50)	(4.32)	(15.50)	(4.32)
Changes in fair value of FVOCI equity instruments	(228.61)	(1,262.48)	-	-
Tax impact of Items that will not be reclassified subsequently to Profit or loss	4.30	1.20	4.30	1.20
Total Other Comprehensive Income / (Loss)	(239.81)	(1,265.60)	(11.20)	(3.12)
Total Comprehensive Income / (Loss) For The Period	28.81	(808.67)	460.84	258.23

1. Results of Operations

For the financial year ended March 31, 2024 as follows: - Consolidated Financial Performance:

• Consolidated total Income for the current year was Rs. 1784.75 Lakhs.

• Profit from continuing operations was Rs. 264.85 Lakhs.

• Profit from discontinued operations was Rs. 3.77 Lakhs.

• Profit from continuing & discontinued operations was Rs. 268.62 Lakhs.

• Total Comprehensive Income/(Loss) for the current year was Rs. (239.81) Lakhs.

• The basic and diluted Earnings Per Share (EPS) for the current year from :

Continued Operations was Rs. 2.10

Discontinued Operations was Rs. 0.03 Continued and Discontinued Operations was Rs. 2.13

Standalone Financial Performance:

• Total Income for the current year was Rs. 1784.75 Lakhs.

• "Exceptional items" in standalone financial results represents reversal of provision made towards receivable from a subsidiary on repayment being made by the said subsidiary was 207 Lakhs during the current year.

• Net Profit for the current year was Rs. 472.04 Lakhs.

• Total Comprehensive Income/(Loss) for the current year was Rs. 460.84 Lakhs.

• The basic and diluted Earnings Per Share (EPS) for the current year from :

Before exceptional item was 2.10 After exceptional item was 3.75

2. Appropriations

(i) Dividend:

The Board of Directors to conserve available resources to pursue strategic growth opportunities for the growth of business requirements of the Company, their inability to recommend any dividend for the financial year 2023-24.

(ii) Transfer to Reserve:

No amount was transferred to Reserve during the financial year ended on March 31, 2024.

3. Subsidiary Companies

The Company has below subsidiaries as on March 31, 2024: -

i) HOVS LLC incorporated in Delaware under the laws of Unites States of America;

ii) HOV Environment LLC incorporated in Nevada State under the laws of United States of America;

iii) HOVS Holdings Limited incorporated under the Companies Ordinance of Hong Kong; and

iv) HOV Environment Solutions Private Limited incorporated in Maharashtra under Indian Company Laws.

The report on Companys subsidiaries (in Form AOC-1), are forming part of this Annual Report, which includes financial information of all the subsidiaries of the Company.

4. Policy on Material Subsidiaries

The Company had adopted the policy for determining material subsidiary pursuant to the SEBI (Listing Obligation and Disclosure Requirements) (Amendment) Regulations, 2018. The said policy has been displayed on the website of the Company at https://hovsltd.com/policies-other-disclosures/

The Companys wholly owned subsidiary HOVS LLC is a material subsidiary in accordance with the thresholds laid down under the SEBI Listing Regulations 2015 as amended from time to time.

5. Investment

The Company through its wholly owned subsidiary HOVS LLC holds 285,606 Series B1 Preferred Stock of Exela Technologies, Inc., NASDAQ listed, with cumulative dividends @ 6.00% per annum.

6. ADR/GDR

The shareholders in their Annual General Meeting dated July 21, 2007 granted approval for proposed 15,000,000 of ADR/GDR issue. However, so far none of the underlying equity shares were issued by the Company.

7. Share Capital of the Company

The paid up share capital of the Company as on March 31, 2024 has 12,594,972 equity shares of Rs. 10/- each aggregating to Rs. 125,949,720/-.

8. Employee Stock Option Plan (ESOP)

The Company in year 2007 instituted "HOVS Stock Option Plan 2007" for its employees and for employees of its subsidiary companies as detailed below:

Plan	Shareholders Approval Date	No. of Options for employees of the Company	No. of Options for erstwhile employees of subsidiary companies	Total
"HOVS Stock Option Plan 2007"	July 21, 2007	400,000	700,000	1,100,000

There are no employees of subsidiaries eligible for ESOP during the reporting year. The information to be disclosed as per SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is provided herewith as "ANNEXURE- A" to this report.

9. Conservation of Energy, Technology Absorption and Foreign Exchange

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 13 (3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is provided herewith as "ANNEXURE- B" to this report.

10. Human Resources

The Company follows the philosophy to maintain cordial relations with all its employees and value its human resources and takes utmost care of its employees deployed. It encourages all employees to strike a perfect work life balance.

The Company adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal Act, 2013) and the Rules made thereunder for prevention and redressal of complaints of sexual harassment at workplace. During the year there was no complaint received to the Committee constituted under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

11. Particular of Employees and Related Disclosures

The Company has no employees who received remuneration in excess of limits prescribed Under Section 197 of the Companies Act, 2013 read with the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014. Disclosure as per Section 197 (12) of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided herewith as "ANNEXURE- C" to this report.

12. Directors Responsibility Statement

The Directors Responsibility Statement in terms of Section 134(5) of the Companies Act, 2013 is provided herewith as "ANNEXURE- D" to this report.

13. Financial Summary and Highlights

The Companys current financial summary and highlights are presented under the Management Discussion and Analysis Report part of the Annual Report.

14. Meetings of the Board

During the financial year 4 (Four) Board Meetings were held. The details of meetings of Board of Directors are provided in the Report on Corporate Governance that forms a part of this Annual Report. The maximum interval between any two meetings did not exceed 120 days as prescribed under the Companies Act, 2013 and as per relaxation provided from time to time during the year by the regulators. Other provisions related to Board and its Committees are stated in the Corporate Governance Report forming part of this Annual Report.

15. Directors and Key Managerial Personnel

Mr. Parvinder S Chadha, Executive Director being liable to retire by rotation at the 36^th Annual General Meeting. Mr. Chadha has confirmed his eligibility and willingness for re-appointment.

Mr. Harjit Singh Anand, Independent Director was re-appointment by the shareholders in their 35^th Annual General Meeting held on July 28, 2023, as an Independent Director for his 2^nd term of five years from September 10, 2023 to September 9, 2028.

Key Managerial Personnel: - In accordance with the provisions of Section 203 of the Act, Mr. Parvinder S Chadha, Whole-time Director; Mr. Vikram Negi, Whole-time Director; Mr. Sunil Rajadhyaksha, Whole-time Director; Mr. Nilesh Bafna, Chief Financial Officer; and Mr. Bhuvanesh Sharma, Company Secretary are the Key Managerial Personnel of the Company. There were no changes in Company Secretary and Chief Financial Officer of the Company during the year.

16. Declarations from Independent Directors

The independent directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

17. Meeting of Independent Directors

The meeting of Independent Directors was held on January 25, 2024 to review the performance of the Board as a whole, its committees, non-independent directors, independent directors and the Chairman of the Company and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The independent directors expressed satisfaction on the quality, quantity and timeliness of flow of information between the management and the Board.

18. Familiarisation Programme

The Board members are provided with necessary documents/ brochures, reports and internal policies to enable them to familiarise with the Companys procedures and practices. The management of the Company, as and when required keeps updating to the entire Board including Independent Directors on the Companys operations and were also briefed regularly and or quarterly basis the changes in applicable statutes and regulations.

During the year the familiarisation program was arranged by the Company on January 25, 2024 for Independent Directors. The details of the familiarisation program was disclosed under Investor Relations section of the Companys website www.hovsltd.com.

19. Internal Financial Controls

The Management of the Company has established adequate procedures for ensuring the internal financial controls and the same are in place with reference to financial statements. The internal control system is reviewed by the Audit Committee with the Management and tested by Internal Auditors of the Company and no reportable material weaknesses in the design or operation were observed.

20. Related Party Transactions

All transaction entered into by the Company with Related Parties are at arms length and are in the ordinary course of business and are intended to further your Companys interest. The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are provided herewith as "ANNEXURE- E" to this report. The disclosure of Related Party Transactions as per Ind AS 24 with related parties have been provided in Notes to the Standalone & Consolidated Financial Statements respectively, forming part of this Annual Report.

The policy on Related Party Transactions as updated by the Board keeping in view of SEBI (Listing Obligations and Disclosure) Regulations, 2015, has been displayed on the Companys website at:_https://hovsltd.com/docs/ Policies/2022/HOVS%20RPTs%20Policy-April%202022.pdf

21. Corporate Governance Report

The report on Corporate Governance is annexed as the part of the Directors report.

22. Management Discussion and Analysis

Management Discussion and Analysis Report for the year under review, as stipulated under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented as a separate section forming part of the Directors report.

23. Code of Conduct for Board and Senior Management

The Company has adopted Code of Conduct for the Directors and Senior Management and is available on the Companys website http://hovsltd.com/code_of_conduct.html. All Directors and Senior Management personnel have affirmed their compliance with the said Code. A declaration signed by the Whole-time Director to this effect is annexed as part of the Directors Report.

24. Auditors and Auditors Report Statutory Auditors:

M/s Lodha & Co., Chartered Accountants were appointed as Statutory Auditors for a period of 5 years, in 34^th Annual General Meeting held on July 20, 2022, till the conclusion of the 39^th AGM to be held in year 2027.

The Statutory Auditors firm, in January 2024 was converted from erstwhile firm "LODHA & CO." into Limited Liability Partnership (LLP) by the name "Lodha & Co LLP". Hence, post the above change, Lodha & Co LLP shall continue to function as Statutory Auditors for the remaining period of the tenure of appointment of Lodha & Co as Statutory Auditors.

The Statutory Auditors Report for FY 2023-24 does not contain any qualification, reservation or adverse remark. The Statutory Auditors of the Company have given their Unmodified Opinion(s) on the Audited Standalone Financial Results for the 4^th Quarter and Year ended March 31, 2024 and on the Audited Consolidated Financial Results of the Company for financial Year ended March 31, 2024.

Secretarial Audit Report:

M/s. J B Bhave & Co., Practicing Company Secretaries, Pune were appointed to conduct secretarial audit for the year and the Secretarial Audit Report for FY 2023-24. The report does not contain any qualification, reservation or adverse remark. The Secretarial Auditors Report is annexed herewith as "ANNEXURE- F" to this report.

During the year under review, there were no instances of frauds committed in the Company by its officers or employees, which requires reporting by the Statutory Auditors and the Secretarial Auditor.

Annual Secretarial Compliance Report:

Pursuant to requirements of Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 the Secretarial Auditors of the Company were engaged to issue the Annual Secretarial Compliance Report for year ended March 31, 2024.

No Disqualification certificate from the Company Secretary in Practice:

None of the directors of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the SEBI Board/MCA or any such statutory authority. The Company has complied with the requirement in terms of Schedule V Part C of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, of taking a certificate to that effect from the Secretarial Auditor of the Company.

25. Extract of Annual Return

As per the requirements of Section 92(3) of the Act and Rules framed thereunder, the Annual Return of the Company as on March 31, 2024 is available on the Companys website and can be accessed at https://hovsltd.com/wp- content/uploads/2024/06/AR-2023-24.pdf

26. Board Evaluation

The Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations") stipulate the evaluation of the performance of the Board, its Committees, Individual Directors and the Chairperson. The performance evaluation has been carried out on directors individually, working of the Committees and Boards performance. The manner of evaluation is explained in the Corporate Governance Report. Independent Directors met separately to evaluate the Non-Independent Directors and Chairman of the Board. The performance evaluation of Board, its Committees, Independent Directors, Non-independent directors and including Chairman of the Board was carried out during the year considering parameters as set by the members of the Board.

The evaluation of the Board and its Committees was carried out through a structured evaluation process covering various aspects of the Boards functioning and having well defined Committees and each Committee having cooperative working environment with the Board.

The evaluation of Chairperson was carried out by independent directors on criteria of leadership, promotes participation among all members and ability to manage conflicting situations positively.

The evaluation of the independent directors by all board members was carried out based on the criteria of efforts undertaken by them, brings independent view point in discussion and awareness of their roles and responsibilities.

27. Policy on directors and senior management appointment and remuneration

The Board has framed a policy for selection and appointment of Directors, senior management and their remuneration. The nomination and remuneration policy is provided herewith as "Annexure-G" to this report. The said policy is also available on the Companys website http://www.hovsltd.com/docs/Policies/2019/ Nomination%20&%20Remuneration%20Policy.pdf

28. Risk Management

The Board of Directors of the Company overview the implementation and monitor the risk management for the Company with Audit Committee having additional oversight in the area of financial risks and controls. The major risks identified by the businesses and function are addressed through mitigating actions on a continuing basis. The details of risk management have been covered in the Management Discussion and Analysis and Notes to the Financial Statements, which forms part of this report.

29. Committees of the Board

The Board of Directors have constituted the

i) Audit Committee;

ii) Nomination and Remuneration Committee; &

iii) Stakeholders Relationship Committee. The details pertaining to all the committees of the Board are disclosed in section of the Corporate Governance Report which is part of this Board Report.

30. Particulars of Loans, Advances and Investments

The particulars as required pursuant to Section 186 (4) of the Companies Act, 2013, read with Companies (Meetings of Board and its Powers) Rules, 2014 and pursuant to Regulation 34(3) and Schedule V Part A of SEBI LODR, 2015, are mentioned in the Notes to Account to the Financial Statements of the Annual Report. The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, if any have been disclosed in the financial statements.

31. Secretarial Standards

The proper systems are in place to ensure compliance with applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

32. Whistle Blower Policy

The Company has adopted a Vigil Mechanism/Whistle Blower Policy, in order to establish a mechanism for directors and employees to report genuine concerns or grievances about unethical behaviour, actual or suspected frauds or violation of the Companys Code of Conduct.

The Policy provides for commitment to the highest possible standards of ethical, moral and legal business conduct and its commitment to open communication. The Policy provides for a mechanism to report such concerns to the Audit Committee through specified channels. This mechanism provides safeguards against victimisation of employees, who report under the said mechanism.

During the year under review, the Company has not received any complaints under the said mechanism. The Whistle Blower Policy of the Company has been displayed on the Companys website.

33. Reconciliation of Share Capital Audit

In accordance with the Securities & Exchange Board of India (SEBI), quarterly audit of the Companys share capital is being carried out by an independent external auditor with a view to reconcile the total share capital admitted with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and held in physical form, with the issued and listed capital. The Auditors Certificate in regard to the same is submitted to BSE Limited and National Stock Exchange of India Limited and is also placed before Stakeholders Relationship Committee and the Board of Directors of the Company. The details of the share capital are provided in part of Corporate Governance Report.

34. General

a) The statement relating to risk management policy and identification of risk elements are covered under Management Discussion Analysis Report as annexed with this Report.

b) There are no adverse material changes or commitments occurred after March 31, 2024 which may affect the financial position of the Company or may require disclosure.

c) On following points no reporting or disclosure is required as there were no transactions on these items during the financial year under review:

(i) There were no loans, guarantees and investments made;

(ii) Details relating to deposits covered under Chapter V of the Companies Act, 2013;

(iii) No significant and material orders passed by the regulators or courts or tribunals which impacted the going concern status and operation of the Company;

(iv) Issue of equity shares with differential rights as to dividend, voting or otherwise;

(v) Issue of sweat equity shares; and

(vi) None of the whole-time directors of the Company received any remuneration or commission from the subsidiaries of the Company.

35. Acknowledgement

Your Directors would like to place on record their sincere appreciation for co-operation and support received from the Government of India, Government of Maharashtra, Reserve Bank of India, Registrar of Companies, Pune, other local governmental bodies, NASSCOM, the National Stock Exchange, the Bombay Stock Exchange, Bankers of the Company and Shareholders during the financial year.

Your Directors also like to place on record their appreciation for the commitment and contribution made by all executives, officers, workers and staff of the Company for their hard work, co-operation and support.

Your Directors takes this opportunity to express its deep gratitude for the continued co-operation and support received from its each valued shareholders.

For and on behalf of the Board of Directors

Parvinder S Chadha

Chairman & Executive Director

(DIN:00018468)

Date: May 28, 2024