Directors’ Report TO THE MEMBERS OF SMARTLINK NETWORK SYSTEMS LIMITED 1.The Directors of your Company take pleasure in presenting their 23rd Annual Report together with Audited Balance Sheet and Statement of Profit & Loss for the financial year ended 31st March, 2016. 2. REVIEW OF OPERATIONS In the financial year 2015-16 the company achieved an Income from operations of Rs. 736.30 million as compared to Rs. 928.80 million in the previous year. Profit before depreciation & tax was Rs. 86.57 million for the year ending 31 st March, 2016 as compared to Rs. 167.50 million in the previous year. Profit after tax was Rs. 43.83 million for the year ended 31st March, 2016 as compared to the profit of Rs. 132.07 million in the previous year. There were no material changes and commitments affecting the financial position of the company from the end of the financial year till the date of the Directors' Report. 3. BUYBACK The Board of the Directors of the Company approved the buyback of 74,54,850 equity shares (aggregating to 24.85% of the paid-up equity share capital of the Company) payable in cash for an aggregate amount of Rs. 820,033,500/- at its meeting held on 29th February 2016 which was approved by shareholders vide postal ballot, the results of which were declared on 14th April, 2016. 4. DIVIDEND Considering lower profits your Directors have not recommended any Dividend for the year 2015-16. 5. RISK MANAGEMENT The Company has a Risk Management (RM) framework to identify, evaluate Business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework helps in identifying risk trend, exposure and potential impact analysis at a Company level. The Risk Management policy formulated by the Company has identified the key business risks and also the plans to mitigate the risks. 6. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has adequate Internal Financial Control Systems, commensurate with the size, scale and complexity of its operations. The Management evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. 7. VIGIL MECHANISM The Company has established a vigil mechanism for Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of code of conduct which provides for adequate safeguards against victimization of director (s)/ employee (s) and also provides for direct access to the Chairman of the Audit committee in exceptional cases. The Audit Committee and the Board of Directors have approved the Whistle Blower Policy and the details are available on the website of the Company under the weblink <http://smartlink.co.in/wp-content/uploads/> 2014/10/Smartlink-Whistle-Blower-Policy.pdf. 8. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Company has constituted a CSR committee consisting of the following Directors namely: a. Mr. Bhanubhai Patel (Chairman) b. Mr. K. R. Naik (Member) c. Mr. Pankaj Baliga (Member) The Company has also formulated a CSR Policy and the same is displayed on the website of the Company. <http://smartlink.co.in/wp-content/uploads/2014/10/> Corporate-Social-Responsibility-Policy-Smartlink.pdf. The Report as required under CSR Rules is attached as Annexure - H to this Report. 9. DIRECTORS AND KEY MANAGERIAL PERSONNEL On recommendation of the Nomination and Remuneration Committee the Board of Directors have proposed to re-categorise and appoint Mr. Jangoo Dalal and Mr. Pradeep Rane as Independent Directors of the Company from the Annual General Meeting date i.e. 05th August, 2016 subject to the approval of the Shareholders. The resolutions seeking approval of the members for the appointment of Mr. Jangoo Dalal and Mr. Pradeep Rane along with the particulars of Directors as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) are given in the notice of the forthcoming Annual General Meeting of the Company. The Company has received a notice under section 160 of the Act along with the requisite deposit proposing their appointment. In accordance with the provisions of the Companies Act, 2013; Ms. Arati Naik, Director of the Company retires by rotation at the forthcoming Annual General Meeting and being eligible offers herself for re-appointment. During the year the non-executive directors of the Company had no pecuniary relationship or transactions with the Company. All Independent Directors have given declaration that they meet the criteria for independence as laid down under Section 149(6) of the Companies Act, 2013 and the SEBI Listing Regulations. Mr. K. R. Naik, Executive Chairman, Mr. K. G. Prabhu, Chief Financial Officer and Ms. Urjita Damle, Company Secretary have been designated as Key Managerial Personnel in accordance with provisions of Section 203 of the Companies Act, 2013. 9.1 BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and the listing regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The manner in which the evaluation has been carried out has been given in the Corporate Governance Report. 9.2 REMUNERATION POLICY The Board has, on recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The details of Remuneration Policy is stated in the Corporate Governance Report. 9.3 MEETINGS During the year 6 Board Meetings and 4 Audit Committee Meetings were convened and held. The details of the same are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 9.4 AUDIT COMMITTEE The details of the composition and roles and powers of the Audit Committee are given in the Corporate Governance Report. During the year all the recommendation of the Audit Committee were accepted by the Board. 10. DIRECTOR'S RESPONSIBILITY STATEMENT To the best of their knowledge and ability, your Directors in terms of Section 134(5) of the Companies Act, 2013, hereby state and confirm that: a) in the preparation of annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same. b) appropriate accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March, 2016 and the profit of the Company for that period. c) proper and sufficient care has been taken 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 annual accounts have been prepared on a 'going concern' basis. e) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 11. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee and also the Board for approval. The Company has developed a Related Party Transactions Policy for the purpose of identification and monitoring such transactions. 12. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There were no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. 13. EMPLOYEE STOCK OPTION SCHEME The Company has not issued any ESOPS to its employees during the year. 14. AUDITORS 14.1 STATUTORY AUDITORS Pursuant to provisions of Section 139 of the Companies Act, 2013 and rules made thereunder, M/s Deloitte Haskins & Sells LLP, having Registration No. 117366W/W-100018 Chartered Accountants, were appointed as Auditors of the Company to hold office till the conclusion of the 24th Annual General Meeting, subject to ratification of their appointment at every Annual General Meeting. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as Auditors of the Company. The auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. There were no adverse comments by the statutory auditors of the Company in their Report and Auditors' Report and notes thereto are self-explanatory in nature. 14.2 SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Dr. K. R. Chandratre, a Company Secretary in Practice (CP No. 5144) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure - B". The report does not contain any qualification. 15. INTERNAL COMPLAINTS COMMITTEE As per provisions of Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, Company has constituted an Internal Complaints Committee for redressal of complaints against sexual harassment and there were no complaints received during the financial year. 16. AWARDS & RECOGNITION The Company's products sold under the various brands have been acknowledged through numerous awards in 2015-16 and have been mentioned in the Management Discussion and Analysis Report. 17. DISCLOSURE REQUIREMENTS As per SEBI Listing Regulations, Management Discussion and Analysis is annexed as "Annexure - A" to the report. Secretarial Audit Report is annexed as "Annexure - B". A separate section on the corporate governance is annexed as "Annexure - C", together with a certificate from the Dr. K. R. Chandratre confirming compliance is annexed as "Annexure - D". Declaration by the Executive Chairman is annexed as "Annexure - E". 18. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows: A. CONSERVATION OF ENERGY The steps taken or impact on conservation of energy: i. Factory re-layout and consolidation of service activities was done in order to utilize common resources and decrease Energy consumption. ii. Investment in outdoor Solar lighting done during the earlier years has helped conserving energy to a good extend. B. RESEARCH & DEVELOPMENT & TECHNOLOGY ABSORPTION: Equipments and Instruments have been procured to develop local infrastructure required for manufacture of wireless LAN products in view of MAKE IN INDIA campaign announced by Government of India. C. FOREIGN EXCHANGE EARNINGS AND OUTGO Total foreign exchange outgo and earnings is stated in Note 34(d) and 34(e) forming part of the Accounts. 19. EXTRACT OF ANNUAL RETURN As provided under section 92 (3) of the Companies Act, 2013 the extract of the Annual Return in form MGT- 9 is annexed herewith as "Annexure - F" which forms part of this report. 20. STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL The information required under Section 197 of the Companies Act, 2013 read with Rule 5(i) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors is enclosed as "Annexure - G" to this report. 21. FIXED DEPOSITS Company has not accepted any fixed deposits during the year under review and as such, no amount of principal or interest was outstanding as on the date of Balance Sheet. 22. PARTICULARS OF LOANS/ADVANCES/INVESTMENTS OUTSTANDING DURING THE FINANCIAL YEAR Pursuant to Section 186 of the Companies Act, 2013 the Company does not have any loans/advances/ investments outstanding during the year. 23. ACKNOWLEDGEMENTS Your Directors place on record their appreciation for the continuing support and co-operation from the customers, vendors, dealers, distributors, resellers, bankers, shareholders, Goa Industrial Development Corporation, State Industries, Electricity and other Government department's. The Directors also take this opportunity to thank the employees for their dedicated service throughout the year. For and on behalf of the Board K. R. NAIK Executive Chairman DIN: 00002013 Place : Mumbai Dated : 5th May, 2016 |