TVS ELECTRONICS Directors Report

Board’s Report to the Shareholders


The Directors have pleasure in presenting the 22nd Annual Report of your Company for the financial year ended 31st March, 2017. The Management Discussion and Analysis (MDAR) is an integral part of this report.


Financial Results


The financial performance of the Company for the year ended 31st March 2017 is summarized below:


(Rs, in Lakhs)



















































Particulars



Year ended 31.03.2017



Year ended 31.03.2016



Revenue from operations (Net)



2,62,503



59,349



Earnings Before Interest & Tax (EBIT)



877



904



Profit/ (Loss) Before Tax (PBT) and before exceptional items



632



331



Exceptional items / Extra-ordinary Items



.



207



Profit / (Loss) Before Tax



632



538



Profit / (Loss) After Tax (PAT)



716



431



Add: Brought forward from previous year



629



198



Total available for appropriations



1,345



629



Company performance


Revenue from operations, net of excise duty has increased to Rs, 2,62,503 lakhs as against Rs, 59,349 lakhs in the previous year. Of this, revenue from core IT Products and Technical Services has grown to Rs, 30,890 lakhs from Rs, 29,677 lakhs in the previous year - a growth of 4.08%. The Earnings before interest and taxes for the year has dropped to Rs, 877 lakhs from Rs, 904 lakhs in the previous year, chiefly due to the gestation phase of a few new exclusive smart mobile service centers and the decline in service calls from certain existing exclusive service centers. The Company is taking actions towards course correction, as explained in the Management’s Discussion. However, the Profit before tax before exceptional items, has grown significantly from Rs, 331 lakhs in previous year to Rs, 632 lakhs in FY 2016-17 owing to a reduction in finance and interest costs.


Ever since the Centre withdrew the legal tender status of high value currency notes in November, there has been a sea change in the way Indians are transacting. Prior to this event, a majority of consumers were accustomed to transacting only by cash; even leading ecommerce sites reported a high consumer preference for Cash on Delivery (estimated 83 percent of ecommerce transactions - which includes 72 percent from major cities and 90 percent from smaller towns). However, with demonetization leading to paucity of hard cash, citizens were nudged to transition to digital transactions. Banks tied up with merchants to equip them with Point of Sale (POS) machines to sustain their business. When the demonetization initiative was announced, the Company quickly stepped up to help its banking clients to recalibrate their ATMs and install new POS terminals to aid the Rs ,less-cash'''' efforts of the Government. This timely and need-of-the-hour servicing not only reiterated the quality of manpower at the Company''''s disposal, but also its capability to step up to the occasion during a national emergency. With 10 years of experience in serving national banks and as a frontrunner in the POS peripheral hardware space for 20-plus years, the Company is looking to leverage burgeoning opportunities in this space and further enhance its offerings.


Dividend


The Directors are pleased to recommend a dividend of 50 paise per share for the financial year ended 31st March 2017 (Previous Year Nil). The dividend, if approved by shareholders would absorb Rs, 112.54 lakhs (including taxes) and will be paid to all the equity shareholders whose names appear in the Register of Members of the Company and with the Depositories as on 23rd June 2017.


MANAGEMENT DISCUSSION AND ANALYSIS


The Management Discussion and Analysis forms an integral part of this report and gives details of the overall industry structure, economic developments, performance and state of affairs of the Company’s two business lines viz., IT related Products and Technical Services and Distribution Services, internal controls and their adequacy, risk management systems and other material developments during the financial year 2016-17.


Economy and macro trends:


The transition to a less-cash economy, set in motion by the note replacement exercise, is just one of many steps initiated by the NDA government to transform India into a digitally empowered nation. As you may know, the government is currently working on a series of initiatives that seek to establish three strong pillars for a transition to Digital India. There are plans to address internet reach and connectivity issues across India by ramping up the national broadband network and providing more public Wi-fi hotspots so that all citizens have access to safe and secure cyber-connectivity. A series of e-governance initiatives are being flagged off to ensure that all interactions between the government and its citizens are brought online for enhanced transparency. There’s also an accompanying thrust on universal digital literacy and universal access to digital infrastructure.


While the government is putting in place the enabling infrastructure for Digital India, the private sector is also gearing up in many ways for digital disruption. The traditional retail business has already been revolutionized by e-commerce. Companies are increasingly relying on data mining and analytics to improve their strategic decision-making. Multi-national companies, BFSI players, leading FMCG firms have all jumped on to the digital bandwagon and are looking in to tap the potential of big data to gauge consumer trends, garner consumer feedback and improve the quality of service. This has motivated, and in a few cases, forced regional players to up their game and stay competitive too. It’s not just the regional chains but also the ‘mom and pop’ - the kirana stores - that are showing increased interest in tapping into technology. However, high costs and lack of service support have been a constraining factor. This is a gap that the Company is looking to bridge.


The Company is looking to assist mid and small scale enterprises in monitoring consumer buying behavior in order to adopt targeted marketing strategies through efficient data capture. The enterprises who have built their payment and billing infrastructure are today limited by the non-availability of quality POS products and the lack of efficient after-sales service. This is also a challenge that the Company looks forward to taking head-on. The Company’s aim is to provide a holistic offering of product and service support that connects an enterprise to its customers. We plan to leverage our well-established distribution & service networks to help enterprises achieve their digital transformation.


Overview of financial and operating performance:


The year witnessed some ups and downs but ended on a positive note for the mainstream IT Products and Technical Services business. The Company’s robust product quality, coupled with its ‘Make in India’ edge helped it gain a further 3% market share in Dot Matrix printers. We closed the year with a 40% share in Dot matrix printers despite the segment experiencing a decline as discussed in our previous annual reports. The Company also registered strong growth of 40 % year-on-year in its Point of Sale printers range viz., Thermal and Label printers - a high growth segment which, of late is explored by many new semi-brands. Besides catering to the market through its own product range, the Company also markets select global brands under exclusive India distribution agreements. Today, the Company is the only one in India offering POS Thermal printers with multiple options and variants at different price points.


The other high growth product range, Label printer is equally promising where the Company retains its market share at 19%. Both these POS printer ranges along with Scanners and POS DMPs are the core focus for expansion and deeper penetration. The advent of GST added with the government’s serious demonetization drive can leapfrog growth rates for the industry as a whole. The Century-old trust and deep appreciation of the market and customer preferences makes the Company the brand of choice for any retailer in India.


During the year, the Services arm has gone through a consolidation exercise where a handful of service centre’s were either merged or exited. The Company continues


A high pace of technological change, online distribution and deep-discount pricing are all set to provide a renewed push to the smart phone category. Rapid changes in consumer preferences with respect to Smartphone brands and the improvements in quality standards led to a decline in footfalls in some of our exclusive service centre’s and repair hubs. However, newly opened service outlets of a couple of brands have completed their gestation period to end the financial year with positive margins. These factors reflect in the overall operating loss of Rs 86 lakhs (Previous Year operating profit Rs 810 lakhs) for the core IT Products and Services division. to be one of the top 3 national partners for marquee electronic brands to operate authorized in-warranty and


post-warranty services. The year also witnessed the opening of 11 new service centre’s in various cities and towns. The total count of these centre’s was over 60 by year-end.


Besides running exclusive brand service centre’s for its strategic partners, the Company also offers service solutions for multiple brands under one roof in select geographies. These Multi brand service centre’s offer authorized in-warranty and out-of-warranty services for multiple brands covering smart phones, laptops, personal computers, printers etc. The Company remains the preferred national service partner for major brands in the Mobile Phones, Computers and other IT products for both warranty and repair services. The Company’s e-Auction platform ‘auctionindia.com’ continued registering steady growth in FY 2016-17.


The Company’s ‘Distribution Services’ line had shown remarkable traction during the year. As this business focuses on high volumes and controlled risks, the margins earned are low. The profit from this division for the year in absolute terms was Rs963 lakhs (Previous year Rs94 lakhs) which is fully attributable to the successful partnerships the Company has built. The dynamics of this distribution service are very volatile and susceptible to macroeconomic and regulatory changes.


Staying true to the Company’s aim of evolving with the needs of its customers and the industry, the Company as a manufacturer of Dot Matrix Printers, augmented its services to meet the entire range of customer requirements - from providing POS installation services to data capturing solutions.


It is becoming increasingly evident that data capture and mining will play a critical role in business success in future. The fast spread of telecom networks will additionally ensure that the best of digital technology reaches the last mile. With government spending on infrastructure and Telecommunications, the use of data capture devices like NFC and POS terminals may be used more widely in a multiple applications. Data capture, storage and analytics will be critical in powering Smart Cities, a marquee government project. As one of the leading B2B service providers in this segment in the country, the Company hopes to remain a go-to brand for enterprises looking to deploy POS terminals. In addition, the Company has enhanced its services to emerge as a leading service partner to major smart phone vendors, from market leaders to new entrants and innovates its processes. Its strong direct and indirect workforce of 2000 on-field engineers are tasked with providing strong customer support.


Besides technological upgrades, the smart phone segment is also witnessing the broader consumer trend of premiumization. While the sub Rs8,000 price category is witnessing a decline, encouragingly, phones priced above Rs8,000 are seeing traction. The company offers services for the top 2 pan-India brands and may add more such brands under the MBO umbrella. The Company expects the MBO initiative to be the strong growth driver for its Service line as these service outlets would be able to several multiple devices progressively, including smart phones, laptops, PCs, and printers. The Company prefers to offer these services only under the authorized partnership format through alliances with interested brands. With the long pedigree of being a consumer brand, the rich experience in electronics and service delivery, the Company is optimistic about redefining the customer experience through its own multiband service centers.


The company plans to expand its MBO footprint across the nation with an asset-light model, in addition to running the current exclusive service outlets. The onsite service delivery model envisages large-scale additions of regional and rural partnerships in order to widen its reach. The two primary service delivery models would reap cross-pollination benefits, as the respective categories expand. With cost-consciousness at the forefront, the key focus area for the Service line is to contribute positive margins in the quarters to come.


The Company’s flagship Products line appears set to achieve good growth rates, the drivers not just being government reforms, but also our own unique insights into customer needs and preferences. This deep understanding of customers, acquired over the years, help the company continuously innovate on new product ranges in the POS line, in the form of Touch POS terminals, Bluetooth printers, special scanners etc. The reforms push of government may trigger a catch-up in growth rates between Tier 1, 2 and to some extent tier 3 cities / towns. We find that new-generation retailers adapt faster to technology and prefer to be more organized. These patterns are already visible in smaller towns / up-country locations and encourages the company to expand its distribution and service reach to newer areas. While the larger business pie will continue to originate from the metros thanks to GST and digital initiatives, the growth from non-metros also offers a promising opportunity for the Company.


In addition to leveraging on the strong government supplies network and distribution channels, the Company has started partnering with Retail Solutions Providers and Systems Integrators more proactively. These partnerships are a demonstration of the robust product quality of the Company’s POS line.


Cautionary Statement:


Statements in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates and expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations, include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets, changes in Government regulations, tax laws and other statutes and incidental factors.


Business Risks & Opportunities


The Company’s key imperative over the medium term will be sustaining the current revenue streams, even as we build a strategic framework and drive the Servicetec business, leveraging macro trends and business opportunities as described elsewhere.


Key success factors (and therefore risks) are predicated on the timely execution of these plans, building the internal capabilities by attracting and retaining talent and keeping pace with technological and market changes. The Board and management of the Company are confident of proactively managing these risks.


Internal Control Systems and their adequacy


The Company ensures that all transactions are authorized, recorded and reported and has adequate internal control systems to ensure that assets are safeguarded and protected against any loss. The key processes are aligned with ISO9001:2008 system and audited periodically for compliance.


The scope and authority of the Internal Auditors are clearly defined. The findings and recommendations of the Internal Auditors are reviewed by the Audit committee of the Board on a periodical basis and necessary corrective actions by the process owners are taken.


Internal Financial Controls


The Company has established Internal Financial Controls framework including internal controls over financial reporting, operating controls and anti-fraud framework. The framework is reviewed regularly by the Company and tested by the internal auditors and presented to the audit committee. Based on periodical testing, the framework is strengthened, from time to time, to ensure adequacy and effectiveness of Internal Financial Controls.


Risk Management process


Our Company has an established Risk Management Process which is tested by the internal auditors and overseen by the Audit Committee through a structured framework. The framework is implemented through a bottom up approach identifying, assessing, monitoring and managing key risks across the Company’s business units. The management of the Company has reported to the Board that the Company’s risk management and internal compliance and control system is operating effectively.


The Company follows the policy of hedging forex risk on its imports by taking full cover.


At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of the Company.


Business Planning and Information Technology


The Company has moved its applications and data base to a Cloud-based server as planned during 2015-16. This has resulted in de-risking the storage of critical information in our own hardware. The Company also simultaneously monitors software up gradation which helps run business operations in an efficient manner.


The data analytics capabilities acquired by the Company last year helps capturing relevant information for decision-making across various businesses. The information dashboards so generated helped the management and operating teams to have real-time information on process controls and take pro-active steps to manage operations.


Human Resource Development


The Company has developed structured HR policies and programs in the areas of resourcing, performance management systems, competency-based training and development and talent management to support the current and future needs of the organization.


Leadership development is a key focus area and the Company continues to develop internal talent through structured talent assessment programs, job rotation and cross-functional team assignments.


Learning & Development is another focus area wherein technical training is given to employees through internal trainers. Employees are also encouraged to participate in external programs to acquire new skills and update their knowledge based on latest trends in the industry.


The Company continues to engage the employees through different forums. The annual Management Kick-off (MKO) meeting is organized for annual goals deployment and followed by a midyear goal alignment meeting, for review. As part of the “Awards, Recognition & Communication” (ARC) program, the Company recognizes valued employees for their exceptional performance throughout the year.


Safety


The Company is fully committed to the ultimate goal of employee safety. Safety training and safety audit are frequently conducted enabling the Company to maintain an accident-free record at its factories for several years.


Corporate Social Responsibility


Corporate Social Responsibility (CSR) activities have been embedded in the value system of the Company for many decades. The Company continues to be actively engaged in CSR initiatives for development of the society through partnerships and continued to focus on to helping lesser privileged communities in areas like education, health & hygiene, culture & heritage and actively participated in other welfare projects. The Company was not required to constitute a Corporate Social Responsibility Committee in terms of Section 135 of Companies Act, 2013 till financial year 2016-17.


However, the provisions of Section 135 of Companies Act, 2013 has become applicable to the Company with effect from 1st April 2017. Accordingly, the Board of Directors of the Company, at the Board meeting held on 12th May 2017, constituted the CSR Committee, the details of which are provided in the Corporate Governance report.


Code of Business Conduct and Ethics


All the members of the Board and senior management personnel have confirmed compliance with the Code of Business Conduct and Ethics for the year ended 31st March, 2017. The Annual Report contains a declaration to this effect signed by the Chief Executive Officer for the Code. The Code is available on the Company’s Website www.tvs-e.in.


Vigil Mechanism / Whistle Blower policy


The Company has established a vigil mechanism, which is overseen by the Audit Committee. The Chairman of the Audit Committee has been appointed as the Ombudsman for the Vigil mechanism. The policy provides a formal mechanism for all directors, employees to report to the management, their genuine concerns or grievances about unethical behavior, actual or suspected fraud and any violation of the Company’s Code of Business Conduct and Ethics policy. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning Company. The Policy is available on the Company’s Website www.tvs-e.in.


Prevention of Insider Trading


The Company has complied with the provisions of SEBI (Prevention of Insider Trading) Regulations, which is to be complied with effect from 15th May, 2015. The Company has adopted Fair Practices Code (FPC) as per the regulations. The Board and the designated employees of the Company have confirmed compliance with the FPC as applicable as on 31st March 2017. Code of Conduct for Insider Trading Regulation and the Fair Practices Code are available on the Company’s Website www.tvs-e.in.


Holding Company


TVS Investments Limited (TVSI), our Holding Company holds 59.96% of the outstanding equity as on 31st March 2017 (previous year 60.15%). TVSI has applied to National Company Law Tribunal for conversion into a private limited company. The change in the constitution of TVSI will not impact the Company in any manner.


Subsidiary Company


Prime Property Holdings Limited (PPH), is the Company’s Wholly Owned Subsidiary, in which the Company holds 100% of 50,000 Equity Shares of the Company at Rs.10/- each.


As already informed to the members, PPHL (Transferor) filed the necessary documents for an amalgamation with the Company (Transferee) with the stock exchanges. The stock exchanges have accorded their in-principle approval for the Scheme and steps are being taken to file the application with National Company Law Tribunal.


Consolidated Accounts


The Consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of Companies Act, 2013 read with Companies (Accounts) Rules, 2014 and Regulation 33 of SEBI LODR) Regulations, 2015.


M/s. Benani Foods Private Limited (BFPL) is an associate of PPHL which holds 34.06% of Cumulative Compulsorily Convertible Participating Preference Share (CCCPPS) in BFPL as on 31st March 2017. In terms of the notification dated 27th July 2016 issued by the Ministry of Corporate Affairs, the audited financial statements of PPHL and BFPL have been consolidated with the audited financial statements of the Company.


A Statement under Section 129(3) of the Companies Act, 2013 is enclosed as Annexure A. The audited consolidated financial statements together with Auditors report forms part of the Annual report.


Pursuant to the provisions of Section 136 of the Companies Act, 2013, the audited financial statements of PPHL and BFPL will be made available to the shareholders, on receipt of a request from any shareholder of the Company and it has also been placed on the website of the Company at www.tvs-e.in. This will also be available for inspection by the shareholders at the Registered Office of the Company, during business hours.


Annual Return


Extract of Annual Return in Form MGT-9 is given as Annexure B to this report.


Number of Board Meetings


The Board of Directors met four times during 2016-17. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report.


Changes in the Share Capital


The paid up share capital of the Company as on 31st March 2017 is ''''18,61,28,180/- consisting of 1,86,12,818 Equity Shares of ''''10/- each. During the year, Company allotted 60,000 Equity shares of ''''10/each under Employees Stock Option Scheme, 2011.


Particulars of Loans, Guarantees or Investments


The Company has not granted any fresh loans or guarantees or provided any security in connection with any loan to any other body corporate or person covered under the provisions of Section 186 of Companies Act 2013.


The repayment period of interoperate loan of Rs1.50 Cr given in the last financial year to Prime Property Holdings Limited (PPHL), its Wholly Owned Subsidiary, was extended up to 31st March, 2018, based on the request received from PPHL, since their investments are expected to be redeemed during the financial year 2017-18, to enable them to repay the interoperate loan. PPHL has paid on 31st March, 2017, interest of Rs18.23 Lakhs fully accrued up to 31st March, 2017.


The details of investments made by the Company are given in the financial statements.


Related Party Transactions


All the related party transactions entered into are on ‘arm’s length’ basis and in the ordinary course of business and are in compliance with the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. None of the transactions are in the nature of having any potential conflict with the interests of the Company at large. There were no material related party transactions during the year.


Omnibus approvals are obtained for related party transactions which are repetitive in nature. In respect of unforeseen transactions, specific approvals are obtained. All related party transactions are approved / reviewed by the Audit Committee on a quarterly basis, with all the necessary details and are presented to the Board and taken on record.


The details of transactions with related parties are provided in the financial statements.


The Related Party Transactions policy as approved by the Board is uploaded on the Company’s website at www.tvs-e.in


Directors and Key Managerial Personnel Retirement by Rotation


Mr. D Sundaram (DIN: 00016304), Director retires by rotation at the ensuing Annual General Meeting of the Company under Section 152(6) of the Companies Act, 2013 and being eligible offers himself for re-appointment. The brief resume of Mr. D Sundaram and other relevant information have been furnished in the Notice of Annual General Meeting (AGM). Appropriate resolutions for his appointment are being placed for approval of the shareholders at the AGM.


Independent Directors


All independent Directors hold office for a fixed period of five years and are not liable to retire by rotation. Mr. R Ramaraj, an Independent Director representing small shareholder, who was appointed for a period of three years from 1st April 2014 to 31st March 2017, by way of postal ballot on 29th September 2014, completed his term of appointment as Independent Director on 31st March, 2017. Board places on record its deep appreciation for his valuable advice and guidance and for his contribution to the Board and as a member of various board committees of the Company.


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 and Regulation 16 (1) (b) of the SEBI (LODR) Regulations,


2015. The terms of appointment of Independent Directors are available in the Company’s website www.tvs-e.in.


Separate Meeting of Independent Directors


During the year, a separate meeting of Independent Directors was held on 2nd November 2016. The Independent Directors actively participated and provided guidance to the Company in all its spheres.


Woman Director


In terms of Section 149 of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 17 of the SEBI (LODR) Regulations, 2015 the Company has appointed Mrs. Srilalitha Gopal (DIN: 02329790) who is serving on the Board of the Company, since the year 2011.


Key Managerial Personnel (KMPs)


Mr. Prakash Katama was appointed as the Chief Executive Officer of the Company with effect from 4th May 2016. Mr. Karthi Chandramouli was appointed as the Chief Financial Officer with effect from 1st September 2016. Mr. Karthi is a Chartered Accountant with about fourteen years of experience in Finance, Business Strategy and Risk Management.


In terms of Section 2(51) and Section 203 of the Companies Act, 2013, Mr. Prakash Katama, Chief Executive Officer, Mr. Karthi Chandramouli, Chief Financial Officer and Ms. S Nagalakshmi, Company Secretary are the key managerial personnel of the Company.


Mr. K E Ranganathan (DIN 00058990), Managing Director resigned from the services of the Company effective 1st July 2016. Necessary intimations have been made to the stock exchanges in which the shares of the Company are listed.


Evaluation of the Board’s performance


The Board has carried out an evaluation of its own performance, and that of its directors individually and the sub committees of the Board. The manner in which the evaluation has been carried out is explained in the Corporate Governance report.


The Company has also devised a Policy on Board Diversity detailing the functional, strategic and structural diversity of the Board.


Nomination and Remuneration Policy


The Nomination and Remuneration Committee of the Company review the composition of the Board, to ensure that there is an appropriate mix of abilities, experience and diversity to serve the interests of the shareholders of the Company.


In accordance to Section 178 of Companies Act, 2013, the Nomination and Remuneration Policy was formulated to govern the terms of nomination, appointment and remuneration of Directors, Key Managerial and Senior Management Personnel of the Company.


The Policy ensures that (a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully; (b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and (c) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. The Policy has been approved by the Nomination and Remuneration Committee and the Board. The Remuneration Policy document as approved by the Board is available on the Company Website www.tvs-e.in.


Statutory Auditors


As per the provisions of Section 139 of the Companies Act 2013, the transitional period of office of M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai as the Statutory Auditors of the Company will conclude from the close of the forthcoming Annual General Meeting of the Company.


The Board of Directors place on record their appreciation and gratitude for the services rendered by M/s. Sundaram & Srinivasan, Chartered Accountants, Chennai, during their tenure as the statutory auditors of the Company for over three decades.


The Audit Committee and the Board of Directors of the Company have recommended the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai (FRN:008072S) as the statutory auditors of the Company, subject to the approval of the shareholders. M/s. Deloitte Haskins & Sells have consented to the said appointment and confirmed that their appointment, if made, would be within the limits mentioned under the provisions of Section 141 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014.


They will hold office as statutory auditors for the first term of five years from the conclusion of the 22nd Annual General Meeting till the conclusion of 27th Annual General Meeting of the Company, subject to ratification of the appointment by members at every Annual General Meeting held during their tenure of office as statutory auditors.


Explanation to remarks in the Independent Auditors Report


With reference to the basis of qualified opinion, in the Independent Auditors report, Board wishes to state that the Central Government vide its order dated 21st March 2016, approved a remuneration of Rs90.80 Lakhs p.a for the year 2016-17 including the value of stock options to Mr. K E Ranganathan, who was the Managing Director of the Company up to 30th June 2016. While the actual remuneration was within the limits approved by the Central Government for the year 2016-17, considering the value of stock options as debited to the Statement of Profit and Loss, the total remuneration for the staid period of three months was marginally in excess by Rs1.50 Lakhs. The overall managerial remuneration including the perquisite value of stock options was less than 11% of the net profits of the Company. The Company is taking necessary steps to obtain requisite approvals for the said excess remuneration as required in terms of provisions of Section 197(1) of Companies Act, 2013.


Internal Auditors


The Company has appointed M/s. Grant Thornton India LLP, as Internal Auditors for the year 2017-18.


Cost Auditors


In terms of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audits) Rules, 2014, printers manufactured by the Company and falling under the specified Central Excise Tariff Act heading are covered under the ambit of mandatory cost audits from the financial years commencing on or after 1st April 2015.


The Audit Committee recommended and the Board of Directors appointed Mr. P Raju Iyer, Cost Accountant, Chennai as the Cost Auditor of the Company, to carry out the cost audit for 2017-18. The Company has also received the consent from Mr. P Raju Iyer for his appointment. A sum of Rs1.50 Lakhs plus service tax, has been fixed by the Board of Directors in addition to the reimbursement of out of pocket expenses and is required to be ratified by the members at the ensuing Annual General Meeting as per Section 148(3) of Companies Act, 2013.


Secretarial Auditors


The Company appointed M/s. S Krishnamurthy & Co., Practicing Company Secretaries, Chennai to carry out Secretarial Audit for the financial year 2016-17. The Secretarial Audit Report for the financial year 31st March, 2017 is enclosed as Annexure C.


The Board has re-appointed M/s. S Krishnamurthy & Co., Practicing Company Secretaries, Chennai as the Secretarial Auditors for carrying out the secretarial audit for the financial year 2017-18.


Clarification to the observations in the Secretarial Audit Report


The Company is seeking requisite approvals from shareholders at the annual general meeting for managerial remuneration. There have been delays in two instances in disclosing the outcome of the Board meetings to stock exchanges due to network connectivity issues. Disclosures to the stock exchanges, together with the proceedings of the Annual General Meetings have been made in terms of regulation 13, Part A, Schedule III of Listing Regulations.


Employee Stock Option Plan


During the year, 60,000 stock options were granted under the Employees Stock Options Scheme, 2011 to the then Managing Director of the Company. These options were exercised and 60,000 Equity Shares were allotted on 18th May 2016. The current position of the Stock Options granted under Employees Stock Option Scheme 2011 are provided in this Report as Annexure D.


Credit Rating


During the year 2016-17 Brickwork Ratings India Private Limited have reaffirmed the Company’s Credit Rating at ‘BBB ’. The Company has informed the Stock Exchanges accordingly.


Transfer to Investor Education and Protection Fund


There was no amount required to be transferred to Investor Education and Protection Fund during the year.


Particulars of Employees and related disclosures


The particulars of the employees covered by the provisions of Section 197 (12) of Companies Act, 2013 and the rules there under forms part of this report. However, as per the provisions of Section 136(1) of Companies Act, 2013, the annual report is being sent to all the members excluding this statement. This will be made available for inspection at the Registered Office of the Company during working hours.


Comparative analysis of remuneration paid


A comparative analysis of remuneration paid to Directors and employees with the Company’s performance is given as Annexure E to this report.


E-Waste Management


The Company is well ahead in terms of e-waste management compliance directed by Government of India with effect from 1st May, 2012. The Company has registered and authorized collection, storage and disposal centre’s in the required locations and has complied with the statutory requirements relating to E-Waste Management.


Report on energy conservation, technology absorption, foreign exchange and research and development


Information relating to energy conservation, technology absorption, foreign exchange earned and spent and research and development activities undertaken by the Company in accordance with the provisions of Section


134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are given in Annexure F to the Board’s Report.


Corporate Governance


Pursuant to Regulation 34(3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, a Management Discussion and Analysis Report and a Corporate Governance Report are made part of this Annual Report.


A Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to this Report.


Public Deposits


The Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 of the Companies Act, 2013 for the year ended 31st March,


2017.


Other laws


During the year under review, the Company has received a complaint from a woman employee and the same was disposed off, after following due procedures and guidelines provided under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There have been no complaints pending for disposal.


Awards and Recognitions


During the year, the Company has been awarded:


a. Most admired brand in Indian ICT Industries - 2017


b. Dell appreciation for best Service delivery performance - 2017


c. From Xiaomi India:


i. Best Service Partner (West) - 2016-17


ii. Best Service Centre - 2016-17 - Vashi


iii. 3rd Best Service Centre West - 2016-17 - Lower Parel.


iv. Individual Award - Best Centre Manager -2016-17


Directors’ Responsibility Statement


Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultants, advisors of the Company and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2016-17:


In terms of Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, further confirm:


i) that in the preparation of the annual accounts for the financial year ended 31st March, 2017, the applicable accounting standards have been followed and that there were no material departures;


ii) that they 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 31st March, 2017 and of the profits of the Company for the year under review;


iii) that they 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;


iv) that they had prepared the annual accounts for the year ended 31st March, 2017 on a “going concern” basis;


v) that they had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively;


vi) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


ACKNOWLEDGEMENT


The Directors wish to place on record their appreciation for the committed service of all the employees.


The Directors would also like to express their grateful appreciation for the assistance and co-operation received from the customers, dealer partners, business partners, bankers and its holding companies TVS Investments Limited (Formerly Sundaram Investment Limited) and T.V.Sundram Iyengar & Sons Private Limited.


The Directors thank the Shareholders for the continued confidence and trust placed by them in the Company.


For and on behalf of the Board


Chennai Gopal Srinivasan


12th May, 2017 Chairman

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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