Zicom Electronic Security Systems Ltd Directors Report.

To the Members,

Your Directors presents their Twenty Fifth Annual Report, together with the Audited Accounts of the Company for the Financial Year ended

March 31, 2019.

FINANCIAL HIGHLIGHTS: ( Rs. lakhs)

Particulars March 31, 2019 March 31, 2018 March 31, 2019 March 31, 2018
Consolidated Consolidated Standalone Standalone
Income from Operations 8,794 26,588 883 3,802
EBIDTA (24,744) (22,356) (6,349) (15,207)
Interest (4,832) (6,216) (58) (1,047)
Depreciation (3,431) (3,707) (51) (61)
Impairment - - - -
Exceptional Items 6,039 (1,733) 6,039 (20,368)
Profit / (Loss) Before Tax & Minority Interest (26,969) (34,012) (419) (36,683)
Minority Interest 1,262 708 - -
Other Comprehensive Income Adjustment Taxes 4 50 2 46
Current year (145) (131) - -
Taxes of earlier years - - - -
Deferred 464 (79) 254 (105)
Net Profit / (Loss) After Tax (25,384) (33,464) (163) (36,742)

OPERATIONAL PERFORMANCE

During the year under review, the income from operations on a consolidated basis was Rs. 8,794 lakhs as against Rs. 26,588 lakhs in the previous year. The consolidated loss of EBIDTA was Rs. 24,744 lakhs against loss of Rs. 22,356 lakhs in the previous year. The consolidated loss before tax was Rs. 26,969 lakhs against previous year loss of Rs. 34,012 lakhs. After providing for the minority interest of Rs. 1,262 lakhs (previous year Rs. 708 lakhs); the loss after tax was Rs. 25,384 lakhs as against loss of Rs. 33,464 lakhs in the previous year.

The Consolidated Financial Statements (CFS) includes the financial statements of Zicom Electronic Security Systems Limited (“the Company”) and its subsidiary companies, namely,

a) Zicom SaaS Private Limited (“Zicom SaaS”);

b) Unisafe Fire Protection Specialists Singapore Pte. Ltd. (“Unisafe Singapore”) and its subsidiaries, viz. Unisafe Fire Protection Specialists LLC, Dubai (“Unisafe Dubai”) and its subsidiaries; and Phoenix International WLL, Qatar (“Phoenix Qatar”);

c) Unisafe Fire Protection Specialists India Private Limited (“Unisafe India”); and

d) Zicom Security Projects Pte. Ltd., Singapore (“Zicom Singapore”)

The reduction in the revenue on consolidated basis is mainly caused by suspension of work at two Middle East subsidiaries due to slow-down in Middle East economy over the last 3-4 years.

On a standalone basis, the income from operations for the year under review was Rs. 883 lakhs (Rs. 3,802 lakhs in the previous year). In view of Exceptional Items of Rs. 6,039 lakhs; the Company had standalone loss of Rs. 163 lakhs (previous year loss of Rs. 36,742 lakhs) after provision of tax of Rs. 254 lakhs (previous year Rs. (105) lakhs).

The reduction in the standalone income from operations for the year under review as compared to previous year is due to complete slow-down of trading business caused by increase in competition and consequent reduction in margins.

Further, during the year under review, the Company has written-off amounts on account of non-recovery of dues from distributors and channel partners; advance to suppliers and decrease in the value of stock caused by obsolescence.

TRANSFER TO RESERVES

No amount is proposed to be transferred to the reserves during the

financial year ended March 31, 2019.

BUSINESS DEVELOPMENTS AND PROSPECTS

The Company is undergoing difficult phase due to constraint of resources at Group level. During the year under review, the Company mainly focused on deleveraging of books by divestment of assets, both in India and Middle East. As the economic situation the Middle East is subdued and not likely to improve in near future, the Company is considering to sell the stake to strategic investor. Also, due to lack of resources for investment in Zicom SaaS venture, the Company is too looking for financial investor to take business forward by resolving debt of India businesses. However, due to expectation mismatch of present valuation of business and unwillingness of the Lenders to proactively settle the loans, causing delay in revival of the Group.

Once the Company succeeds in settling its Lenders, it can bounce back on the strength of brand equity, market reach and technology potency.

Zicom SaaS, a wholly owned subsidiary, is battling strongly to preserve the pride of Zicom Group. Zicom SaaS is offering new services and products on its technology platform using its Command Station. Although market for security services is growing rapidly due to constraint of up-front investment Zicom SaaS is maintaining its current position.

Our two wholly-owned subsidiaries in Singapore, viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) and Zicom Security Projects Pte. Ltd. (Zicom Singapore) continues to hold our investments in Unisafe Dubai and Phoenix Qatar.

DIVIDEND

Keeping in view the affected performance of the Company and loss incurred during the year under review and also with a view to conserve resources to meet the business requirements, your Directors expresses their inability to recommend any dividend on equity shares for the financial year 2018-19.

SUBSIDIARIES AND CONSOLIDATED FINANCIAL STATEMENTS

As on March 31, 2019, your Company had the following subsidiaries:

1. Zicom SaaS Private Limited (wholly owned subsidiary);

2. Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore (wholly-owned subsidiary);

3. Unisafe Fire Protection Specialists LLC, Dubai (step-down subsidiary);

4. Phoenix International WLL, Qatar (step-down subsidiary);

5. Unisafe Fire Protection Specialists India Private Limited (wholly-owned subsidiary); and

6. Zicom Security Projects Pte. Ltd., Singapore (wholly-owned subsidiary)

A statement containing salient features of the financial statement of subsidiaries for 2018-19 as required under Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules 2014 and amendment thereunder is provided in Annexure A hereto in prescribed Form AOC-1. In respect of foreign subsidiary companies, figures in rupees are converted from applicable foreign currency at appropriate exchange rate as on year end date. The Policy on Material Subsidiary as approved may be accessed on the Companys website at the link: http://zicom.com/img/pdf/ZESSL-Policy_on_Material_ Subsidiary.pdf.

The details of key subsidiaries are discussed under Management Discussion and Analysis and highlights of their workings are given below:

Zicom SaaS Private Limited

During the year under review, Zicom SaaS posted Total Income of Rs. 4,196 lakhs (previous year Rs. 4,560 lakhs) and Net Loss after Tax of Rs. 202 lakhs (previous year Net Loss after Tax Rs. 394 lakhs) for the financial year ended March 31, 2019.

Unisafe Fire Protection Specialists LLC, Dubai

On account of weakening of crude prices and consequential slowdown of economy in entire Middle East, performance of Unisafe Dubai has suffered a set-back. For the financial year ended March 31, 2019, Unisafe Dubai has posted Total Income of Rs. 3,670 lakhs (as compared to Rs. 14,911 lakhs in the previous year) and a Net Loss after Tax of Rs. 20,052 lakhs (as compared to Net Loss after Tax of Rs. 9,844 lakhs in the previous year).

Phoenix International WLL, Qatar

For the financial year ended March 31, 2019, Phoenix Qatar, posted Total Income of Rs. 88 lakhs (as compared to Rs. 4,527 lakhs in the previous year) and a Net Loss after Tax of Rs. 5,191 lakhs (as compared to Net Loss after Tax of Rs. 4,325 lakhs in the previous year). Due to business challenges caused by embargo on Qatar by UAE and Kingdom of Saudi Arabia, the Company has temporarily suspended its operations in Phoenix Qatar and hence no revenue has been reported by the said subsidiary.

Unisafe Fire Protection Specialists India Private Limited

During the financial year ended March 31, 2019, Unisafe India has shown Rs. Nil Total Income (previous year Rs. 0.75 lakhs) and a Net Loss after Tax of Rs. 129 lakhs (previous year Net Loss after Tax Rs. 317 lakhs).

Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore and Zicom Security Projects Pte. Ltd., Singapore

Both these companies are Companys wholly-owned subsidiaries in Singapore, incorporated with a view to internationally align and consolidate present and future investments of the Group. The Group overseas investment in fire business falls under the umbrella of Unisafe Singapore acting as a holding company for all such ventures, whereas Zicom Singapore, aimed as a holding company for Group investment in international electronic security business.

As per Section 134 of the Companies Act, 2013, your Company has provided the audited Consolidated Financial Statements for the year ended on March 31, 2019; together with Auditors Report thereon forming part of this Annual Report, which includes financial information of all the subsidiaries. These documents will also be available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. Pursuant to the provisions of the Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 and amendment thereof, a statement containing salient features of the financial statements of Companys subsidiaries for financial year 2018-19 (in Form AOC-1) is appended as Annexure A hereto. Your Company has placed the audited annual accounts and related information of subsidiary companies on its website and same will be made available to the Members upon request.

CHANGES IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Board of Directors:

During the year under review, on March 08, 2019, the Board of Directors, on the recommendation of the Nomination and Remuneration Committee, through Circular Resolution, appointed Mr. Dhaval Mehta (DIN: 07501194) as an Additional Director of the Company, effective that date, in the capacity of an Independent Director under Section 161 of the Companies Act, 2013 to hold office till the date of the ensuing Annual General Meeting. Mr. Mehtas appointment shall be subject to the approval of Members at the forthcoming Annual General Meeting.

During the year under review, there was change in designation of Mr. Anil Khanna from Additional Independent Director to Independent Director w.e.f. September 24, 2018.

During the year under review, the following ceased to be Directors of the Company:

1. Mr. Prabhakar Dalal (DIN: 00544948) ceased to be an Independent Director of the Company w.e.f. August 31, 2018;

2. Mrs. Sharada Sundaram (DIN: 07067040) ceased to be a Nominee Director of the Company w.e.f. September 27, 2018; and

3. Mr. Mukul Desai (DIN: 00015126) ceased to be an Independent Director of the Company w.e.f. December 11, 2018.

Further, subsequent to the year end, Ms. Tanvi Joshi (DIN: 07703593) ceased to be a Non-Executive Director of the Company w.e.f. August 14, 2019.

The Board of Directors places on record its sincere appreciation for the support and contribution made by aforementioned Directors during their tenure as Directors of the Company.

In accordance with provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Manohar Bidaye (DIN: 00010699) is the Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment.

Additional information on Directors recommended for appointment / re-appointment, as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 th (“Listing Regulations”), is provided in the Notice convening 25 Annual General Meeting of the Company accompanying this Report.

The Company has received declarations from all Independent Directors confirming that they meet the criteria of independence as prescribed under provisions of the Companies Act, 2013, Rules made thereunder and the Listing Regulations.

Your Directors recommend the above appointment / re-appointment for your approval.

Key Managerial Personnel:

During the year under review, Mr. Nitin Deshpande resigned from the office of Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. May 28, 2018. Mr. Madan Kumar Chetlur was appointed as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. May 29, 2018.

On February 11, 2019, Mr. Madan Kumar Chetlur resigned from the office of Chief Financial Officer and Key Managerial Personnel of the Company. Mr. Ayalin Nadar was appointed as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. February 12, 2019.

At the end of the year under review, the Company had following persons as Key Managerial Personnel pursuant to the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Name of Key Managerial Personnel Designation
Mr. Pramoud Rao Managing Director
Mr. Ayalin Nadar Chief Financial Officer
Ms. Kunjan Trivedi Company Secretary

BOARD EVALUATION

In accordance with the requirements of the Companies Act, 2013 and Listing Regulations, the Board evaluation process was carried out. The Board / Nomination and Remuneration Committee of Directors have laid down the criteria for evaluation of the performance of the Board, its Committees and individual Director (including Independent Directors). A structured questionnaire prepared covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committee, Board procedures, development, etc. was circulated to Directors for the purpose of evaluation.

The Board and Nomination and Remuneration Committee of Directors reviewed the performance of the individual Directors on the basis of set criterias.

The Independent Directors, at its separate meeting, carried out performance evaluation of the Chairman, Managing Director and Non-Independent Directors of the Company. The same was discussed in the subsequent Board meeting, at which performance of the Board, its Committees and individual Directors was also discussed.

REMUNERATION AND NOMINATION POLICY

The Board of Directors has framed a Policy which lays down the framework in relation to remuneration to Directors, Key Managerial Personnel and Senior Management of the Company. This Policy also lays down criteria for selection and appointment of Board Member. The Nomination and Remuneration Policy can be accessed on the Companys website at the link: http://zicom.com/img/pdf/Nomination_and_Remuneration_Poli cy.pdf. The Nomination and Remuneration Policy sets the criteria for selection of candidates eligible to be appointed in the senior management and other employees of the Company and also member on the Board of Directors and the Executive Directors of the Company. The Policy sets out the guiding principles for recommending to the Board the remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company.

There has been no change in the Policy during the year under review, except for its alignment with the amendment made in this regard in the Companies Act, 2013 and the Listing Regulations.

AUDITORS AND THEIR REPORT

M/s. S M M P & Associates, Chartered Accountants, was appointed as Statutory Auditors of the Company, for a term of 5 (five) consecutive years, at the Annual General Meeting held on September 21, 2017. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

Auditors Report:

Statutory Auditors observations in Audit Report on Standalone and Consolidated Financials and Directors explanation thereto In respect of observations in Standalone Audit Report regarding the following:

Non-provisioning of interest on bank loans and reversal of Borrowing from Banks The Banks have classified the Company as Non Performing Assets (NPA) as per Reserve Bank of India circular on assets classification. As a result, the Company, during the year under review, has not provided for interest amounting to Rs. 2,794.23 lakhs on outstanding Bank loans. The Company is in advanced stage of negotiation / closure with its Lenders for One Time Settlement (OTS) of its entire dues. Therefore in the opinion of the Management, liability as reflected in the financial statement is sufficient to meet proposed OTS.

In respect of observation in Consolidated Audit Report regarding the following:

Non-provisioning of interest on bank loans and reversal of Borrowing from Banks - The Company and its Indian Subsidiary, during the year under review, has not provided for interest amounting to Rs. 2,794.23 lakhs and Rs. 1,154.92 lakhs, respectively, on its outstanding loans from Banks. Further, the Company has also reversed outstanding dues from Banks amounting to Rs. 6,038.86 lakhs as the Company is in advanced stage of negotiation / closure with the Companys and its subsidiary Lenders for One Time Settlement (OTS) of their entire dues. Therefore in the opinion of the Management, liability as reflected in the financial statements is sufficient to meet proposed OTS.

In respect of common observation in Standalone and Consolidated

Audit Reports regarding the following:

1. Non-provisioning of Goodwill despite of no economic benefit During the year under review, the Company continues to show Goodwill amounting to Rs. 909 lakhs in its Books which was on account of acquisition of a then subsidiary of the Company in 2010. Although there is no much future economic benefits expected from the said Goodwill, the Company is still exploring use of Brands acquired under said Goodwill for economic benefits of the Company.

2. Companys inability to continue as a Going Concern

Although the accumulated losses of the Company have reached to aggregate of Rs. 36,800 lakhs resulting in erosion of its Net Worth, the Company is still actively exploring for strategic / financial investor(s) with its business infrastructure and with unbroken brand reputation; hence the accounts have been prepared on going concern basis.

Further, with regard to emphasis of matter in the Standalone and Consolidated Auditors Report, your Directors wish to state that the said emphasis of matter read with Notes of Standalone and Consolidated Financial Statements is self-explanatory and does not require any further explanation. Your Directors would like to add that the said matter will not have any material adverse effect on the functioning of the Company.

COST AUDITORS

For the year under review, the provisions of Section 148 of Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 relating to maintenance of cost records does not apply to your Company, as it does not fall under any class of the companies specified by the Central Government.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules thereunder, the Company has appointed Ganesh Narayan & Co, Company Secretaries in Practice (CP No. 2238) to conduct Secretarial Audit of the Company for the financial year 2018-19. The Secretarial Audit Report for the financial year ended March 31, 2019 is annexed herewith as Annexure B (as Form MR-3) to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013, based on the representations received from the operating management, your Directors hereby state that -

a) in preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made 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 March 31, 2019 and of the loss of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws that such systems are adequate and operating effectively.

REPORTING OF FRAUDS

During the year under review, no instances of fraud, under Section 143(12) of the Companies Act, 2013 and Rules framed thereunder, were reported by the Statutory Auditors either to the Company or to the Central Government.

MEETINGS OF THE BOARD

Four meetings of the Board of Directors were held during the year under review. For further details, please refer Section II (F) Other provisions related to Board and Committees of the Corporate Governance Report forming part of this Report.

COMMITTEES OF THE BOARD

The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Regulations are given under Section III Board Committees of the Corporate Governance Report forming part of this Report.

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

Particulars of loans given, investments made, guarantees given and securities provided are given in the standalone financial statements. Further, following are the purposes for which the loans or guarantees or securities are proposed to be utilized by the recipient:

Name of Recipient Entity Relation Purpose for which the loans, guarantees and securities are proposed to be utilized
Unisafe Fire Protection Specialists LLC, Dubai Subsidiary Business Purpose
Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore Subsidiary Business Purpose
Zicom Security Projects Pte. Ltd., Singapore Subsidiary Cash Management
Phoenix International WLL, Qatar Subsidiary Business Purpose
Zicom SaaS Pvt. Ltd., India Subsidiary Business Purpose
Unisafe Fire Protection Specialists India Pvt. Ltd., India Subsidiary Business Purpose

RELATED PARTY TRANSACTIONS

All transactions entered with related parties during the year 2018-19 were on arms length basis and in the ordinary course of business and that the provision of Section 188(1) of the Companies Act, 2013 are not attracted. Hence the particulars to be disclosed in this regards in Form AOC-2 is Nil. Further, during the year under review, there were no material related party transactions.

The Audit Committee and the Board of Directors have approved the Related Party Transaction Policy, which has been prepared in consonance with provisions of Regulation 23 of the Listing Regulations and Companies Act, 2013. The same has been uploaded on the Companys website at the link: http://zicom.com/img/pdf/ZESSL-Related_Party_Transaction_ Policy.pdf.

All Related Party Transactions are being placed before the Audit Committee for approval. Omnibus approvals are also obtained for transactions which are of repetitive nature. Such transactions are placed before the Audit Committee and Board (as required) for periodical review and approval.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to Section 177(9) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations, the Company has formulated Vigil Mechanism / Whistle Blower Policy for Directors and employees to report to the management about the unethical behavior, fraud or violation of Companys Code of Conduct. The mechanism provides for adequate safeguards against victimization of employees and Directors who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in exceptional cases. The said Committee oversees implementation of the Whistle Blower Policy of the Company. The said Policy as approved may be accessed on the Companys website at the link: http://zicom.com/img/pdf/ZESSL-WhistleBlowerPolicy.pdf.

MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company as on March 31, 2019 and the date of this Report.

RISK MANAGEMENT

The Company already has in place the system to inform the Board about the risk assessment and minimization procedure. The risk management system identifies and assesses various risks associated with the Company and its business and finds out and suggests measures to mitigate them. This also includes mechanisms for their proper and timely monitoring and reporting. In this regard, the Company has framed policy to identify and evaluate business risks, and to mitigate them. The Policy defines the risk management approach at various levels including documentation and reporting. The Policy helps in identifying risks trend, exposure and potential impact analysis at Company level and also separately for each business division of the Company. The risk management system is periodically evaluated by the Audit Committee / Board in the light of changing business scenario. Accordingly, new risks are identified, and modified mechanism & procedure for risk assessment and minimization are adopted to ensure that executive management controls risk by means of properly defined framework. Progress in this regard is periodically reported to Audit Committee / Board for their review and corrective actions, required if any. This is a continuous process which enables the Company to keep its risk management system updated and robust in view of fast changing economic and business scenario affecting the Company.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return of the Company as on the financial year ended on March 31, 2019, in Form MGT-9, as required under Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, is appended herewith as Annexure C to this Report.

CORPORATE GOVERNANCE

A separate section on Corporate Governance, together with a certificate from your Companys Auditors confirming compliance of the conditions of Corporate Governance as stipulated under Listing Regulations is appended herewith as Annexure E forming part of this Report.

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

Pursuant to the provisions of Section 134(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relevant information are given hereunder:

A. Conservation of Energy

The Companys operations include selling, distributing, marketing and installing of electronic security systems, gadgets and equipments and monitoring them; and as can be observed such operations do not involve much use of energy. However, your Company makes every possible effort to conserve energy at all levels of its operations.

(i) The steps taken or impact on conservation of energy:

At offices and workplaces, creating awareness among employees, contractual workers and customers about modes and means of energy saving through utilization of energy saving systems, devices and equipments; and inculcating a habit in them to strive for conservation and saving of energy. The above has helped the Company in keeping its energy cost under control.

(ii) The steps taken by the Company for utilizing alternate sources of energy:

As the operations of your Company does not involve much use of energy, the possibility of using alternate source of energy as a measure of conservation of energy in its operations are minimal.

(iii) The capital investment on energy conservation equipments:

No material capital investment on energy conservation equipments has been made during the year by your Company.

B. Technology Absorption

As your Company has not imported any technology, the required information to be provided in this regard is Nil. Your Company is continuously working on improving its indigenous products and software. Your Company continuously strives to provide electronic security systems, gadgets and equipments based on latest technology. Further, the details of expenditure incurred on the research and development are Nil.

C. Foreign Exchange Earnings and Outgo and Export Market Developments

Your Company has not earned any amount in foreign currency (previous year Rs. Nil) and has spent Rs. 1 lakh (previous year Rs. 709 lakhs) in foreign exchange during the year under review. The details of the same are available at Note 28.10 being Notes forming part of the Financial Statements.

PARTICULARS OF EMPLOYEES

The disclosure required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure D to this Report.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and amendment thereof, during the year under review, there was no employee under the employment of your Company, who was in receipt of remuneration of Rs. 102 lakhs or more per annum, if employed for the entire year, or a remuneration of Rs. 8.50 lakhs or more per month, if employed during any part of the said year. Hence, the information required to be furnished in this regard is Nil.

At present the Company does not have any Employee Stock Option Plan / Scheme nor does it have any live stock options pending to be exercised.

HUMAN RESOURCES

The Human Resource (HR) is truly a strategic business partner in the growth of your Company. Our HR philosophy is developed around the fundamental of creating value through our most valued resource “Zi-Champ” to drive profitable growth and make Zicom a preferred choice of employer. HR has developed and maintained friendly, transparent and professional work culture woven into the fabric of the companys environment with strong business ethics.

HR has time and again used innovation in hiring talent in Zicom. HR has hired the best fresh enthusiastic and well proven experienced talent from the industry at competent compensation & benefits. It has created benchmark in the Electronic Security Industry by hiring the fresh engineering graduates through Pool Campus from Tier II and III cities like Kanpur (Uttar Pradesh), Hooghly (near Kolkata), Ratnagiri (Maharashtra), Bhopal (Madhya Pradesh).

During the year under review, the Head Human Resources was honored with “Top 100 HR Minds in India” from world HRD congress. It started rewards and recognition for employees by appreciating their achievements to motivate employees in their deliverables.

As on March 31, 2019 the total number of, direct and indirect, employees were standing at 27.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

For the year under review, the provisions of Section 135 of Companies Act, 2013 read with the relevant Rules relating to Corporate Social Responsibility does not apply to your Company, as it does not fall under any of the criteria specified under them.

INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

Your Company follows current best practices in internal audit and risk management system. Internal Audit System monitors the adequacy and effectiveness of the internal control as per the policy and procedures framed and also under the supervision and guidance of the Audit Committee. It is supported by the enterprise resource planning platform for all business process.

All transactions are properly authorized, recorded and presented to the Management. Your Company observes all the accounting standards prescribed for proper maintenance of books of accounts and reporting of financial statements.

The Internal Control inter-alia facilitates:

• Review of long-term business and annual plans

• Adherence to applicable accounting standards and policies

• Periodic review and rolling forecasts

• Proper accounting and review mechanism

• Compliance with applicable statutes, listing requirement and internal policies and procedures

• Audit on concurrent basis, carried out by an internal auditor covering all statutes and compliance requirements

• IT systems with adequate in-built controls and security

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (“POSH Act”) and Rules made thereunder, the Company has formed

Internal Complaints Committee to address complaints pertaining to sexual harassment in accordance with the POSH Act. The Company has in place Policy as per the provisions of POSH Act. During the year, no case was reported to the Committee constituted under the said Act.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals that would impact the going concern status of the Company and its future operations.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation and thanks for the valuable co-operation and support received from the employees of your Company at all levels, Companys Bankers, lenders, suppliers, Government authorities, business partners and Members of the Company; and look forward for the same to even greater extent in the coming year.

For and on behalf of the Board of Directors

Manohar Bidaye

Chairman

Place: Mumbai

Date: August 14, 2019

Registered Office:

501, Silver Metropolis,

Western Express Highway,

Goregaon (East), Mumbai 400063.