Moschip Technologies Ltd Directors Report.
Your Directors take immense pleasure in presenting the 20th Annual Report on the business and operations of your company along with the Audited Standalone & Consolidated Financial Statements for the year ended 31st March 2019. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
Your Directors are pleased to inform you that the Amalgamation of First Pass Semiconductors Private Limited (First Pass) and GigaCom Semiconductor Private Limited (GigaCom)with your Company on the appointed date i.e.1st April, 2018 was approved by the Amaravati bench of National Company Law Tribunal (NCLT) on 03rd December, 2019 and the Hyderabad bench of National Company Law Tribunal (NCLT) on 05th December, 2019. Accordingly, First Pass and GigaCom are amalgamated with MosChip, effective from 1st April, 2018, being the appointed date.
The merger is expected to result in creation of a combined entity and synergy in the business besides achieving economies of scale. Combining the functions and the operations of all the companies is expected to result in better performance with the benefits in the form of better utilization of managerial, technical and the financial resources, thereby enhancing the value of stakeholders. The amalgamation is expected to result in Operational rationalization, Cost reduction, better administration and organizational efficiency.
1. Summary of Financial Results
|(Rs. In Lakhs)|
|Year ended 31 March 2019||Year ended 31 March 2018|
|Income from operations||7,475.87||5,869.07||6,017.24||4555.86|
|Loss before Interest, Depreciation and Tax||(1,443.00)||(1171.27)||(507.18)||(452.80)|
|Less: Finance Cost||478.60||463.09||533.20||529.55|
|Less: Depreciation & Amortization||869.84||640.73||219.64||209.83|
|Loss before tax||(2,791.44)||(2,275.09)||(1,260.02)||(1,192.18)|
|Less: Provision for tax||96.16||-||3.48||-|
|Loss after tax||(2,887.60)||(2,275.09)||(1,263.50)||(1,192.18)|
|Net Loss for the year||(2,887.60)||(2,275.09)||(1,263.50)||(1,192.18)|
2. Performance Review
Your Company, MosChip Technologies Limited (formerly MosChip Semiconductor Technology Limited (MosChip India) is a fabless model semiconductor and Internet of Things/Everything (IoT/E) focused company. It specializes in product design and development services ranging from Chip Design to Systems Development. It works with Defense Labs as well as globally acclaimed chip design companies in the areas of Chip (SOC) design and development for Aerospace, Defence, Consumer and Industrial applications and IoT/E Products and Services across various industries.
During the year the name of your Company has changed to "MosChip Technologies Limited" from MosChip Semiconductor Technology Limited.
On consolidated basis, the income from operations grew to Rs. 7,475.87 lakhs from Rs. 6,017.24 lakhs registering a growth of 24.24% year on year. The increased growth during the current year is primarily from Semiconductor business due to acquisitions. The loss before Interest, Depreciation and Tax stood at Rs. (1,443.00) lakhs while that of previous year stood at Rs. (507.18) lakhs. The Consolidated results however showed a Net Loss for the year at Rs. 2,887.60 lakhs as against a Net loss of Rs. 1,263.50 lakhs in the previous year. The increase in loss is due to new hires done at the leadership level, this will get rationalized over coming periods.
On a standalone basis, income from operations for the year stood at Rs. 5,869.07 lakhs as against Rs. 4,555.86 lakhs for the preceding year. Standalone Net Loss for the FY 2018-19 was Rs. 2,275.09 lakhs as against Net Loss of Rs.1,192.18 lakhs for the FY 2017-18.
The Performance review of the Company and its subsidiaries for the year is detailed in Annexure - A under Management Discussion & Analysis annexed hereto pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,
3. Subsidiaries, Joint Ventures and Associate Companies
During the financial year, your company has acquired 2 subsidiary Companies namely MosChip Institute of Silicon Systems Private Limited (formerly known as Institute of Silicon Systems Private Limited) and GigaCom Semiconductor, LLC. MosChip Global Pte Limited, the Singapore subsidiary of your company was wound up. As on 31st March, 2019, the Company has 4 direct subsidiaries, namely;
01) MosChip Technologies, USA (formerly known as MosChip Semiconductor Technology, USA).
02) Maven Systems Private Limited
03) MosChip Institute of Silicon Systems Private Limited.
04) GigaCom Semiconductors, LLC.
There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013. There has been no material change in the nature of the business of the subsidiaries.
During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is enclosed as Annexure B of the Boards Report.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiary, are available on the website of the Company.
4. Dividend & Transfers to Reserves
In view of the losses your directors have not recommended any dividend for the year under review. As a result, there is no appropriation of any amount to the reserves of the Company during the year under review.
During the period under review, no amount was required to be transferred to the Investor Education and Protection Fund.
5. Extension of time for holding of AGM
In order to present consolidated position of the companys financials post amalgamation of First Pass, GigaCom and MosChip, the Company had sought extension of time for holding the 20th Annual General meeting (AGM) and the Registrar of companies (ROC), Hyderabad have granted extension of time of 3 months to hold the said Annual General Meeting.
6. Share Capital
(a) Increase in Paid-up Share Capital
During the year under review, your Company issued and allotted Equity Shares as follows:
I. On 17.04.2018, 60,74,240 Equity Shares were allotted pursuant to conversion of Equal Number of warrants on preferential basis at a price of Rs. 21.80 .
ii. On 28.07.2018, 4,00,000 Equity Shares were allotted on preferential basis at a price of Rs. 45.
iii. On 18.10.2018, 67,00,000 Equity Shares were allotted (Swap Shares) on preferential basis at a price of Rs.33.36.
iv. On 26.10.2018, 2,76,500 Equity Shares were allotted at a price of Rs. 5.98, on exercise of ESOP scheme.
v. On 11.12.2018, 22,22,222 Equity Shares were allotted pursuant to conversion of Equal Number of warrants on preferential basis at a price of Rs. 45.
Consequent to the above, the subscribed and paid-up equity share capital of your Company as on March 31, 2019 stood at Rs.29,44,99,554 /- comprising of 14,72,49,777 Equity Shares of Rs. 02 /- each.
(b) Increase in Authorised Share Capital
In view of the scheme of arrangement/amalgamation of First Pass Semiconductors Private Limited and GigaCom Semiconductor Private Limited with MosChip, the authorized share capital of your company now comprises of Rs.56,54,10,000 (Rupees Fifty Six Crore Fifty Four Lakhs Ten Thousand Only) divided into 28,27,05,000 (Twenty Eight Crores Twenty Seven Lakhs and Five Thousand Only) equity shares of Rs.2/- (Two Only).
(c) Buy Back of Securities
The Company has not bought back any of its securities during the year under review.
(d) Sweat Equity
The Company has not issued any Sweat Equity Shares during the year under review.
(e) Bonus Shares
The Company has not issued any bonus shares during the year under review.
(f) Dematerialization of Shares
98.05% of the companys paid up Equity Share Capital is in dematerialized form as on 31st March, 2019 and balance 1.95% is in physical form. The Companys Registrars are Karvy FinTech Pvt. Ltd., Karvy Selenium, Tower B, Plot No. 31 & 32, Financial District, Gachibowli, Hyderabad, Telangana- 500 032.
7. Major events occurring after the balance sheet date
(a) Material changes and commitments if any affecting the financial position of the Company occurred between the end of the financial year to which this Financial Statements relate and the date of the report.
There have been no material changes and commitments, affecting the financial position of the Company which occurred during the period between the end of the financial year to which the financial statements relate and the date of this report excepting that the.
The name of MosChip Technologies, USA the wholly owned subsidiary Company has changed from MosChip Semiconductor Technology, USA.
Gigacom Semiconductor Inc, the wholly owned subsidiary Company has merged with MosChip Technologies, USA the wholly owned subsidiary Company.
The Amalgamation of First Pass Semiconductors Private Limited (FPS) and GigaCom Semiconductor Private Limited (GigaCom) with MosChip Technologies Limited (MosChip) has been approved by the Honble NCLT, Amaravathi bench in its order dated 03rd December, 2019 and the Honble NCLT, Hyderabad bench in its order dated 05th December, 2019. As per the NCLT order the appointed date for Scheme of Amalgamation is 01st April, 2018. Accordingly, the financials of FPS and GigaCom are included in financials of MosChip w.e.f 01st April, 2018.
(b) Change in the Nature of Business:
There is no change in the nature of business of the Company.
(C) Details of significant and material orders passed by the regulators/ courts/ tribunals impacting the going concern status and the Companys operations in future
There are no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operations.
8. Directors and Key Managerial Personnel
(a) Inductions, Changes & Cessations in Directorships
Mr. Seetha Ramam Voleti (DIN: 07332440), resigned from the position of Non-Executive Director on 27.04.2018.The Board in its Meeting dated 27.04.2018, placed on record its appreciation for the Services, assistance and guidance provided by Mr. Seetha Ramam Voleti.
On recommendation of the Nomination and Remuneration Committee, the Board has appointed Mr. Singa Rao Gottipati (DIN: 07730448) as an Executive Director and Manager of the Company with effect from 27.04.2018. This appointment was approved by the shareholders through postal ballot results declared on 05th June, 2018. On 23rd July, 2018 Mr. Singa Rao Gottipati has resigned from the positions of Executive Director and Manager of your company. The Board placed on record its appreciation for the Services, assistance and guidance provided by Mr. Singa Rao Gottipati
On recommendation of the Nomination and Remuneration Committee, the Board has appointed Mr. K. Pradeep Chandra (DIN: 05345536) as an Additional Director in Independent Category with effect from 27.04.2018 and his appointment was regularized in 19th AGM held on 29.09.2018.
Mr. Damodar Rao Gummadapu (DIN: 07027779) resigned from the position of CEO of the Company on 27.04.2018 and the Board has appointed him as an Additional Director in Non-Executive Category with effect from 27.04.2018. His appointment was regularized in 19th AGM held on 29.09.2018.
On recommendation of the Nomination and Remuneration Committee, the Board has appointed Mr. D. G. Prasad (DIN: 00160408) as an Additional Director in Independent Category with effect from 28.05.2018 and his appointment was regularized in 19th AGM held on 29.09.2018.
Mr. Raja Praturi (DIN: 01819707), resigned from the position of Independent Director on 13th August, 2018 and re-designated as Non-Executive Director of the Company and his appointment was regularized in 19th AGM held on 29.09.2018.
On recommendation of the Nomination and Remuneration Committee, the Board has appointed Mr. Venkata Sudhakar Simhadri (DIN: 01883241) as Managing Director of the Company with effect from 26.10.2018. This appointment was approved by the shareholders through postal ballot results declared on 17th January, 2019.
On recommendation of the Nominations and Remuneration Committee, the Board has appointed Ms. Madhurika Nalluri Venkat (DIN: 07147974) as Additional Directors in the Independent Category with effect from 13.08.2019.
Mr. Camillo Martino (DIN: 07785530), resigned from the position of Independent Director on 27.05.2019.The Board in its Meeting dated 27.05.2019 placed on record its appreciation for the Services, assistance and guidance provided by Mr. Camillo Martino.
Ms. Poornima Shenoy (DIN: 02270175), resigned from the position of Independent Director on 22.05.2019.The Board in its Meeting dated 27.05.2019 placed on record its appreciation for the Services, assistance and guidance provided by Ms. Poornima Shenoy.
Approval of members by way of ordinary resolution is required for regularization of appointment of Mrs. Madhurika Nalluri Venkatat the ensuing Annual General Meeting scheduled to be held on 30 December, 2019.
Directors retire by rotation:
Pursuant to the requirements of the Companies Act, 2013 and Articles of Association of the Company Mr. Raja Praturi, Non-Executive Director retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.
(b) Key Managerial Personnel
Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company as on 01.04.2018 were
|Mr. Damodar Rao Gummadapu||Chief Executive Officer.|
|Mr. Suresh Bachalakura||Company Secretary|
Changes in the key managerial personnel during the year are as below:
On 27.04.2018, Mr. Damodar Rao Gummadapu resigned from the position of Chief Executive Officer. On recommendation of the Nominations and Remuneration Committee, the Board has appointed Mr. Venkata Sudhakar Simhadri as Chief Executive Officer of the Company w.e.f. 24.07.2018.On recommendation of the Nominations and Remuneration Committee, the Board has appointed Mr. Jayaram Susarla as Chief Financial Officer of the Company with effect from 28.05.2018.
Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company as on March 31, 2019 are:
|Mr. Venkata Sudhakar Simhadri||- Chief Executive Officer|
|Mr. Jayaram Susarla||- Chief Financial Officer|
|Mr. Suresh Bachalakura||- Company Secretary|
(c) Independent Directors
It may be recalled that the Members
(i) At the Eighteenth Annual General Meeting held on 29.09.2017 re-appointed Mr. Prasad Gajjala and Ms. Poornima Shenoy as Independent Directors of the Company for a further period of 5 years. And Mr. Camillo Martino was appointed as an Independent Director of the Company to hold office for a period of 5 years.
(ii) At the Nineteenth Annual General Meeting held on 29.09.2018 appointed Mr. K. Pradeep Chandra and Mr. D. G. Prasad as Independent Directors for a period of 05 years.
As detailed earlier, Mrs. Madhurika Nalluri Venkat was appointed as an Additional Director in the category of Independent and possess appropriate balance of skills, expertise and knowledge and is qualified for appointment as Independent Director.
Independent Directors Declaration:
All Independent Directors have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015 and there has been no change in the circumstances which may affect their status as an independent director during the year.
(d) Familiarization programme for Independent Directors
At the time of appointment, the Company conducts familiarization programmes for an Independent Director through meetings with key officials of the Company. During these meetings, presentations are made on the roles and responsibilities, duties and obligations of the Director, Companys business, Companys strategy, financial reporting, governance and compliances and other related matters.
(e) Board evaluation
The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 ("SEBI Listing Regulations").
The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.
The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.
The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.
In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.
(f) Audit Committee
The Composition of the Audit Committee is provided in the Corporate Governance Report forming part of this report. All the recommendations made by the Audit Committee were accepted by the Board.
(g) Nomination and Remuneration Committee:
Details pertaining to composition of the Nomination and Remuneration Committee are included in the Report on Corporate Governance.
The Companys Nomination and Remuneration Policy was prepared in conformity with the requirements of the provisions of Section 178(3) of the Act.
The Policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) for payment of remuneration to Directors and policy containing guiding principles for payment of remuneration to Senior Management, Key Managerial Personnel and other employees including Non-executive Directors has been uploaded on the website of the Company athttps://moschip.com/wp-content/uploads/2017/07/Nominatio-remuneration - Policy. pdf.
Remuneration ratio of the Directors / Key Managerial Personnel (KMP) / Employees:
The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as Annexure C to this report.
(h) ESOP plans
During the year under report the company has Six schemes in operation as mentioned below, for granting stock options to the employees and directors of the company and its wholly owned subsidiary in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014.
(a) MosChip Stock Option Plan 2005(MI)
(b) MosChip Stock Option Plan 2005(WOS)
(c) MosChip Stock Option Plan 2008
(d) MosChip Stock Option Plan 2008(ALR)
(e) MosChip Stock Option Plan 2008(Director)
(f) MosChip Stock Option Plan 2018
The Company has closed the following three schemes during the year
(a) MosChip Stock Option Plan 2001
(b) MosChip Stock Option Plan 2002
(c) MosChip Stock Option Plan 2004
The Company granted 42,98,000 Options during the financial year to certain eligible employees and Managing Director-cum-CEO of the Company, other than Independent Directors. Disclosures with respect to Stock Options, as required under Rule 12 (9) of Companies (Share Capital and Debentures) Rules, 2014 and Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are annexed herewith as Annexure D to this report.
(i) Number of meetings of the Board
8 meetings of the Board were held during the year 2018-2019. Details of these meetings as well as the meetings of its Committees have been given in the Corporate Governance Report, which forms part of the Annual Report.
9. Corporate Social Responsibility (CSR) Initiatives:
Section 135 of the Companies Act, 2013 provides the threshold limit for applicability of the CSR to a Company i.e. (a) Networth of the Company to be Rs.500 crore or more; or (b) turnover of the company to be Rs.1,000 crore or more; or (c) net profit of the company to be Rs.5 crore or more. As the Company does not fall under any of the threshold limits given above, the provisions of Section 135 are not applicable to the Company.
10. Internal control systems and their adequacy:
The Company has adequate internal control system consistent with the nature of business and size of its operations, to effectively provide safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statues, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. The Company has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis.
The Company has an external audit firm to perform internal audit function to monitor and assess the adequacy and effectiveness of the Internal Controls and System across all key processes. Deviations, if any, are reviewed quarterly and due compliance is ensured. Summary of Significant Audit Observations along with recommendations and its implementation is reviewed by the Audit Committee and reported to the Board.
11. Vigil Mechanism / Whistle Blower Policy
In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism / Whistle Blower Policy in line with listing regulations for directors and employees to report genuine concerns has been established. The Vigil Mechanism / Whistle Blower Policy has been uploaded on the website of the Company at https://moschip.com/investor-relations/policies-documents/WhistleBlowerPolicy-document.pdf
12. Public Deposits
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
13. Statutory Auditors and Auditors Report
M/s. S. T. Mohite & Co., Chartered Accountants (Firm Registration No. 011410S) were appointed as the Statutory Auditors of the Company to hold office from the conclusion of the 18th Annual General Meeting (AGM) held on September 29, 2017 until the conclusion of the fifth consecutive AGM of the Company to be held in the year 2022.
The requirement to place the matter relating to appointment of Auditors for ratification by members at every Annual General Meeting is done away with vide Notification dated May 7, 2018 issued by the Ministry of Corporate Affairs, New Delhi. Accordingly, no resolution is proposed for ratification of appointment of Auditors, who were appointed in the Annual General Meeting held on September 29, 2017.
The Notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.
The Report of the Statutory Auditors for the year ended 31stMarch, 2019 forming part of the Annual Report does not contain any qualification, reservation, observation, adverse remark or disclaimer. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review.
Further, in compliance with the RBI requirements the Company has obtained Statutory Auditors Report in relation to downstream investments.
14. Internal Audit:
As per the provisions of Section 138 of the Act and the rules made there under, the Board of Directors had appointed M/s Gokhale & Co, Chartered Accountants, Hyderabad (FRN No: 000942S), as Internal Auditor to conduct the internal audit of the Company for the Financial Year 2018-19.
Further, on the recommendation of audit committee, the Board of Directors of the Company has approved the re- appointment of aforesaid audit rm as internal auditors for the Financial Year 2019-20.
15. Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. BSS & Associates, Company Secretaries for conducting Secretarial Audit of the Company for the financial year 2018-2019. The Secretarial Audit Report is annexed herewith as Annexure E. The Secretarial Audit report does not contain any qualifications, reservation or adverse remark.
16. Cost Records and Audit
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.
17. Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo
Information required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is included in Annexure - F.
18. Related Party Transactions:
Related party transactions that were entered during the financial year were on an arms length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and before the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which are of a foreseeable and repetitive nature. The particulars of contracts or arrangements with related parties referred to in section 188(1) and applicable rules of the Companies Act, 2013 in Form AOC-2 is provided as Annexure - G to this Annual Report.
The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013, the Rules thereunder and the Listing Regulations. This Policy was considered and approved by the Board has been uploaded on the website of the Company at https://moschip.com/investor-relations/policies-documents/PolicyOnRelatedPartyTransactions-document.pdf
19. Extract of Annual Return:
As required by Section 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of the Annual Return in Form MGT-9 is provided as Annexure - H to this Annual Report.
20. Particulars of Loans, Guarantees or Investments
Pursuant to Section 186 of Companies Act, 2013 and Schedule V of the Listing Regulations, disclosure on particulars relating to Loans, Advances, Guarantees and Investments are provided as part of the financial statements.
21. Directors Responsibility Statement
Pursuant to Section 134(5) the Companies Act, 2013 and based upon representations from the Management, the Board, to the best of its knowledge and belief, states that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared annual accounts on a going concern basis; and
e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;
f) the directors had devised proper systems to ensure compliance by the Company with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory, and secretarial auditors and external consultants, including the 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 the financial year 2018-2019.
22. Corporate Governance and Shareholders Information
The Company is committed to good corporate governance in line with the provisions of SEBI (LODR) Regulations, 2015 and Provisions, Rules and Regulations of the Companies Act, 2013. The Company is in compliance with the provisions on corporate governance specified in the Listing Agreement with BSE. A certificate of compliance from Mr. Somepalli Srikanth, a Practicing Company Secretary and the report on Corporate Governance form part of this Directors Report as Annexure I.
23. Companys Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace
Your Company is committed to provide work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment. The Company is also committed to promoting a work environment that is conducive to the professional growth of its employees and encourages equality of opportunity and will not tolerate any form of sexual harassment and to take all necessary steps to ensure that its employees are not subjected to any form of harassment.
Thus, in order to create a safe and conducive work environment the Company has in place a policy for prevention of sexual harassment in accordance with the requirements of the Sexual Harassment of women at workplace(prevention, Prohibition, & Redressal) Act, 2013. Further, the Company has complied with provisions relating to constitution of Internal Complaints Committee under Sexual Harassment of women at workplace (Prevention ,Prohibition, & Redressal) Act, 2013. The Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, trainees, temporary) are covered under this policy. The Company did not receive any complaint during the period under review.
24. Insider Trading
In compliance with the provisions of SEBI (Prohibition of Insider Trading) Regulation 2015 and to preserve the confidentiality and prevent misuse of unpublished price sensitive information, the Company has adopted a code of conduct to Regulate, Monitor and Report Trading by Insiders (Insider Trading Code) and code of Practices and Procedures for Fair Disclosure of unpublished Price Sensitive Information (Code of Fair Disclosure).
The Insider Trading Code is intended to prevent misuse of unpublished price sensitive information by insiders and connected persons and ensure that the Directors and specified persons of the Company and their dependents shall not derive any benefit or assist others to derive any benefit from access to and possession of price sensitive information about the Company which is not in the public domain, that is to say, insider information.
The code of Fair Disclosure ensures that the affairs of the Company are managed in a fair, transparent and ethical manner keeping in view the need and interest of all the Stakeholders.
Annexures forming part of this report
A Management Discussion & Analysis
B Form AOC 1 (Report on Subsidiary companies)
C Remuneration related disclosures per Section 197
D Statement on outstanding ESOP Plans
E Secretarial Audit Report
F Energy Conservation Particulars
G Form AOC 2 (Related Party disclosures)
H Form MGT 9 (extract of Annual Return)
I Report on Corporate Governance
Your Directors wish to express their grateful appreciation for the valuable support and co-operation received from bankers, business associates, lenders, financial institutions, shareholders, various departments of the Government of India, as well as the State Governments and all our other stakeholders.
The Directors acknowledge and would like to place on record the commitment and dedication on the part of the employees of your Company for their continued efforts in achieving good results.
|For and on behalf of the Board of Directors|
|Place: Hyderabad||K. Pradeep Chandra|
|Date: 05 December, 2019||Chairman|