DIRECTORS’ REPORT Dear Members, Your Directors have pleasure in presenting their Twenty Second Annual Report on the business and operations of the Company and the accounts for the financial year ended March 3Ist, 20I5. OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE During the year under review your Company has on standalone basis registered a turnover of Rs. 33653.35 Lacs. A net loss of Rs. 360I.86 Lacs has been made during this year as compared to net loss of Rs I34.93 Lacs in the previous year. The year to year decrease in the turnover is 3.6I%. The increase in the net loss is due to reduction in turnover. The amounts of continuing and dis-continued operation of the Company have been considered. On a consolidated basis, your Company achieved revenue of Rs. 33665.45 lacs in this year as against Rs. 35I96.09 lacs in the previous year. A net loss of Rs. 2740.38 Lacs has been made during this year as compared to net loss of Rs I98.94 Lacs in the previous year. Another factor for increase in losses is attributed to the exceptional items. The Company has made provision for writing off loans and advances given to the subsidiary Company. Additionally provision has also been made for diminution in the value of investments. No other material changes and commitments affecting the financial position of the Company has occurred between April I, 20I5 and the date of signing of this Report. DIVIDEND No Dividend was declared for the current financial year due to consistent losses incurred by the Company. TELECOM INDUSTRY IN INDIA AN OVERVIEW In today's information age, the telecommunication industry has a vital role to play. It is considered as the backbone of industrial and economic development. The industry has been aiding delivery of voice and services at rapidly increasing speeds, and thus has been revolutionizing human connection. Telecom Industry in 20I4-20I5 was in the value destructing phase based on hyper competition. Outside of the US, Indians became the biggest followers of Facebook, Whatsapp and Twitter and specifically on mobile. Indian enterprises and SMEs are adopting cloud-based services to increase the quality and reach of their offerings. E-tailors became the first large business segment to exploit consumer analytics. Telecom services have been acknowledged globally as an essential tool for the socioeconomic development of a nation. India is currently the world's second-largest telecommunications market and has registered exceptional growth in the past few years. Telecommunications is one of the prime support services needed for rapid growth and modernization of various sectors of the economy. Driven by strong adoption of data consumption on handheld devices, the total mobile services market revenue in India will reach US$ 32.5 billion in 20I5 and is expected to touch US$ 37 billion in 20I7, registering a compound annual growth rate of 5.2 per cent. It has been expected that smartphones will account for two out of every three mobile connections globally by 2020 and India is all set to become the fourth largest smartphone market. The broadband services user-base in India is expected to grow to 250 million connections by 20I7. India saw the fastest growth in new mobile-phone connections with I8 million net additions almost in each quarter, followed by China with I2 million new additions, according to a report by a reputed Swedish mobile network equipment maker. EXPORTS The Company has been exporter of Telecommunication products and related systems to various countries worldwide. The export revenue of the Company for the financial year 20I4-20I5 is Rs. 2.82 crores (F.O.B). The Company has been involved in the turnkey projects which are inclusive of survey, planning, installation, commissioning etc. We are already having various agents/distributors/value added resellers worldwide. FUTURE OF TELECOM INDUSTRY In 20I5-20I6, we will witness multiple Indian players launching 4G on a more efficient I800 MHz spectrum. Indian subscribers will adopt 4G wholeheartedly to satiate their need for mobile data. We expect 4G LTE subscribers to reach I0 million to I5 million by December 20I5 driven by competitive pricing, superior network experience and affordable smartphones. India will see a significant spurt in Wi-Fi hotspots driven by both the government 'smart cities' and 'digital India' as well as private sector initiatives. However, wired broadband for retail consumers is likely to remain work-in-progress by the end of 20I5. BUSINESS SNAPSHOT Your Company is a complete telecom solution provider offering suite of both in-building and outdoor repeaters and DAS Products. The company is a leading global telecom manufacturer supplying indoor and outdoor wireless signal enhancement solution. Your Company also deals in In-building solutions and state of the art Turnkey projects. Service providers are going big way in "In-Building solution" where your Company is one of the leading solution provider. In addition to revenue from manufacturing, handsets and accessories contribute to the turnover of the Company. The Company imports mobile handsets and accessories from world renowned suppliers like ZTE and HUAWEI.Your Company has its presence in Asia Pacific, USA, Europe, North & South America and Russia. OUTSOURCING OF MANUFACTURING ACTIVITIES CARRIED AT PLANT SITUATED AT UV-246, PHASE -IV, UDYOG VIHAR, GURGAON The Company carried out its manufacturing operations from the plant situated at UV-246, Phase-IV Udyog Vihar, Gurgaon. The Company initiated the process of Discontinuing/ outsourcing the manufacturing operations in pursuance to the resolution passed in the meeting of Board of Directors held on 9th Feberuary, 20I5 and thereby vacated the premises by I5th April, 20I5 and disposed off all tangible assets except vehicles, discharged/provided for contractual obligations of manpower/worker and resolved to outsource the operations henceforth. Consequently there is only one reportable segment as on 3Ist March, 20I5. SUBSIDIARY COMPANY The Company has only one subsidiary viz. Shyam Telecom Inc, USA. During the year, Board of Directors reviewed the affairs of the subsidiary. Sec I29(3) of the Companies Act 20I3 states that where a Company has one or more subsidiaries, a consolidated financial statement of the Company and of all subsidiaries shall be laid before annual general meeting of the Company in the same form and manner. In accordance with the section we have prepared consolidated financial statements of the Company and its subsidiary, which forms part of the Annual Report. Further a statement containing the salient features of the financial statements of the subsidiary in the prescribed format AOC-I is appended as Annexure-I to the Board's Report. The statement also provides the details of performance, financial position of the subsidiary. The financial statements including the consolidated financial statements, financial statements of subsidiary and all other documents required to be attached to this report have been uploaded on the website of your Company. (www.shyamtelecom.com) The financial year of the subsidiary is from Ist January 20I4 to 3Ist March 20I5. Accordingly, accounts enclosed are for the afore-stated period PUBLIC DEPOSIT During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 20I3 read together with the Companies (Acceptance of Deposits) Rules, 20I4. DIRECTORS In accordance with the provisions of section I52 of the Companies Act, 20I3 and Article of Association of the company, Mr. Arun Khanna, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. His brief profile has been stated in the Corporate Governance Report. Your directors recommend his re-appointment. All the Directors of the Company have confirmed that they are not disqualified from being staying on the Board of Directors in terms of Section I64(2) of the Companies Act, 20I3 and they have also filed their consent for such appointment. SEBI vide its circular dated I7th April, 20I4 had made it mandatory for all the listed companies to appoint atleast one Woman Director on the Board of Company by 3Ist March, 20I5 in alignment with the requirement of Section I49 of the Companies Act, 20I3, under corporate governance norms. Mrs. Nishi Arora Sabharwal was appointed as Women Independent Director w.e.f. 30.09.20I4 and is part of the Board. Furthermore to comply with requirement of Section 203 of the Companies Act, 20I3 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 20I4 following persons were designated as KMPs Mr. Ajay Khanna - KMP (Managing Director) Mr. Dharmender Dhingra - KMP (Company Secretary & Compliance Officer) Mr. Gursharan Singh - CFO Mr. B S Yadav - CEO The Board in its meeting held on May 30, 20I5 appointed Mr. Vinod Raina as CFO of the Company. Mr. Gursharan Singh was re-designated as CEO of the Company in place of Mr. B S Yadav, who resigned from the Company. FORMAL ANNUAL EVALUATION Your Company in the meeting of its Board held on 8th February 20I5, discussed and evaluated the performance of the Board as per below mentioned 3 tier basis: 1. Work of Chairperson evaluated by all the other Directors. 2. Work of Executive, Non-Executive Directors evaluated by all the Non - Executive Independent Directors. 3. Independent Directors contribution evaluated by the Executive & Non - Executive Directors. The parameter for evaluation was based on following points: 1. Leadership initiative 2. Initiative in terms of new ideas and planning for the Company 3. Professional skills, problem solving, and decision-making. 4. Compliance with policies of the Company, ethics, code of conduct, etc. 5. Reporting of frauds, violation etc. 6. Safeguarding of interest of whistle blowers under vigil mechanism. 7. Timely inputs on the minutes of the meetings of the Board and Committee, if any. 8. Consideration of the independent audit plan and provides recommendations 9. Is the board as a whole up to date with latest developments in the regulatory environment and the market? FAMILIARISATION PROGRAMME MODULE The Familiarization Program Module ("the Program") for Independent Directors ("ID") of the Company has been adopted by the Board of Directors pursuant to Securities and Exchange Board of India vide Circular no. CIR/CFD/POLICY CELL/7/20I4 dated September I5, 20I4 The Independent Directors were intimated and informed about the operational, financial, legal and secretarial aspects of the company. The familiarization programme has been posted on the Company's website www.shyamtelecom.com VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES The Company has established a vigil mechanism programme for overseeing the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of the employees. Your Company believes in the conduct of the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. To develop a culture where it is safe for all Directors and Employees to raise genuine concerns or grievances the Company established vigil mechanism for Directors and Employees in pursuance of Clause 49 of the Listing Agreement between the Company and the Stock Exchanges and Section I77(9) of the Companies Act, 20I3 and Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 20I4 DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE In order to prevent sexual harassment of women at work place The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 20I3 has been notified on 9th December, 20I3. Under the said Act every Company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee. Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. Details of constitution of the committee forms part of the policy and have been posted on the website of the Company (www.shyamtelecom.com >). During the year under review, there were no cases filed pursuant to the said act. RISK MANAGEMENT POLICY As per the requirements of Clause 49 of the Listing Agreement, your Company has constituted a Risk Management Committee to oversee the risk management efforts in the Company under the Chairmanship of Mr. N. Kumbhat, Independent Director. The details of the Committee along with its charter are set out in the Corporate Governance Report forming part of this Report. During the financial year 20I4-I5, the Board of Directors have approved the risk management policy and the risk appetite for your Company as proposed by the Management and recommended by the Risk Management Committee. To ensure that all current and future material risk exposure of company is identified and mitigated the Company has formulated Risk Management Policy. The policy explains the risk pertaining to financing activities, dependence on distribution network, and their mitigation. The policy is available on the company website (www.shyamtelecom.com) and can be read from there. RISK FACTORS & MITIGATION The risks associated with the Company were mostly related to expansion/modernization plan along with utilizing distribution network with current financing activities. The Company is trying to create more avenues for sale of handsets to various other buyers so that dependence on one buyer could be reduced. The Company also follows conservative finance and accounting policy and keeps regular check on various financial health parameter. DIRECTORS RESPONSIBILITY STATEMENT In terms of the provision of section I34(3)(c) of the Companies Act, 20I3, your Directors confirm that: i) in the preparation of the Annual Accounts for the year ended 3Ist March 20I5, the applicable Accounting Standards had been followed and there are no material departure from the same. ii) 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 the affairs of the Company at the end of financial year 20I4-20I5 and of the profit/ loss of the Company for the year ended as on that date; iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in the accordance with the provisions of the Companies Act, 20I3 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv) Annual Accounts have been prepared on a going concern basis. v) the Directors had laid down internal financial controls which are followed by the Company and that such internal financial controls are adequate and were operating effectively. vi) proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. AUDITORS In the Annual General Meeting held on 30.09.20I4, M/s Mehra Goel & Company, Chartered Accountants, were appointed as Statutory Auditors to hold office till the conclusion of 24th AGM, to be held for the financial year ending 20I7. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the Twenty Second Annual General Meeting through ratification. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of the Companies Act, 20I3. AUDITORS REPORT The Auditor's Report presented by M/s. Mehra Goel & Company, Chartered Accountants, the Statutory Auditors on the accounts of the Company for the financial year ended 3Ist March, 20I5 is unqualified. They have in the report drawn attention to the ongoing matter with the ARM Limited for which Company has filed an application under section 34 of the Arbitration and Conciliation Act, I996. The matter is presently sub-judice. COST AUDITOR As per Section I48 and other applicable provisions, if any, of the Companies Act, 20I3 read with Companies (Audit and Auditors) Rules, 20I4, the Board of Directors of your Company has appointed M/s. K. G Goyal & Associates, Cost Accountants as the Cost Auditor for the financial year 20I5-I6 on the recommendations made by the Audit Committee. The remuneration of Rs. 40,000/- (Rupees Forty Thousand only) per annum is proposed to be paid to the Cost Auditor, subject to the ratification by the members at the ensuing AGM, excluding taxes and out of pocket expenses, if any. Your Company has received consent from M/s. K. G Goyal & Associates, Cost Accountants, to act as the Cost Auditor for the financial year 20I5-I6 along with a certificate confirming their independence. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 20I3 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 20I4, your Company has appointed M/s A.N. Kukreja, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure - II" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 20I3 read with the Companies (Management and Administration) Rules, 20I4, are set out herewith as "Annexure - III" to this Report. RELATED PARTY TRANSACTIONS The details of the related party transactions as required under Accounting Standard - I8 are set out in Notes to the standalone financial statements forming part of this Annual Report. AOC- 2 pursuant to Section I34 (3)(h) of the Companies Act, 20I3 read with Rule 8(2) of the Companies (Accounts) Rules, 20I4 is set out as "Annexure-IV" to this Report. CORPORATE SOCIAL RESPONSIBILITY The Company has set up CSR committee to facilitate its CSR related operations. The Company donated medicines worth Rs. 2.47 lakhs for the people who were affected by the J&K Flood Disaster. In addition to this Company supports following organizations towards well-being of the society: 1. Shrimati Pushpawati Loomba Memorial Foundation for the purposes of Widows Empowerment Project in India 2. Centre for Empowerment and Initiatives 3. Bhartiya Handicapped Cricket Association 4. Shri Maharshi Dayanand Saraswati Samarak Trust Tankara. DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS Your Company has put in place adequate internal financial controls with reference to the financial statements. A note on the same has been provided in the Management Discussion and Analysis Report. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future. PARTICULARS OF CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to conservation of energy, as required under section I34(3)(m) of the Companies Act, 20I3 read with the Rule 8 of The Companies (Accounts) Rules, 20I4, is enclosed as Annexure - V and forms part of this report. PARTICULARS OF EMPLOYEES The disclosure of remuneration of Directors is in compliance with Section I97(I2) in accordance with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 20I4 read with Section I34 of the 20I3 Act. INDUSTRIAL RELATIONS The Company remains regularly in touch with each employee for the redressal of their grievances and maintains high quality standards for them. The industrial relations of your Company are normal. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES In accordance with Section I78 and other applicable provisions if any, of the Companies Act, 20I3 read with the Rules issued thereunder and Clause 49 of the Listing Agreement, the Company is having Nomination and Remuneration Policy framed on the recommendations of the Nomination and Remuneration Committee for determining qualifications, positive attributes, independence of a Director etc. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this report. The Managing Director and CEO of your Company does not receive remuneration from the subsidiary of your Company. The information required under Section I97 of the Companies Act, 20I3 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 20I4 in respect of Directors/employees of your Company is provided in this Report as "Annexure - VI". DIRECTORS AND KEY MANAGERIAL PERSONNEL During the financial year 20I4-I5, Mrs. Nishi Arora Sabharwal was appointed as Women Independent Directors of your Company on 30.09.20I4. Mr. Praveen Kumar Bhatia, Independent Director expressed his desire for not continuing as an Independent Director on the Board of Directors of your Company and stepped down on 06.06.20I4. The Board in its meeting held on May 30, 20I5 appointed Mr. Vinod Raina as CFO of the Company. Mr. Gursharan Singh was re-designated as CEO of the Company in place of Mr B S Yadav, who resigned from the Company. ANNUAL EVALUATION OF BOARD'S PERFORMANCE In terms of the provisions of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors on recommendation of the Nomination and Remuneration Committee, have evaluated the effectiveness of the Board/Director(s) for the financial year 2014-15. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE The details of the number of Board and Audit Committee meetings of your Company are set out in the Corporate Governance Report which forms part of this report. CORPORATE GOVERNANCE In compliance with the provisions of Clause 49 of the Listing Agreement, a separate report on Corporate Governance along with a certificate from the Auditors on its compliance forms an integral part of this report. DECLARATION OF INDEPENDENCE Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement. MANAGEMENT DISCUSSION AND ANALYSIS A report on Management Discussion and Analysis as stipulated under clause 49 of the Listing Agreement, as applicable, forms the part of this report as Annexure - VII. CONSOLIDATED FINANCIAL STATEMENT The consolidated financial statements of your Company for the financial year 2014-15, are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and Listing Agreement as prescribed by the Securities and Exchange Board of India (SEBI). The consolidated financial statements have been prepared on the basis of Audited Financial Statements of the Company and its subsidiary. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OFTHE COMPANIES ACT, 2013 Loans, guarantees and investment covered under Sec 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report. COMPOSITION OF AUDIT COMMITTEE Disclosure pursuant to the provisions of section 177 of the Companies Act, 2013, the Audit & Finance Committee of the Company consists of: Mr. Achintya Karati - Independent Director & Chairman Mr. Vinod Juneja - Independent Director & Member Mr. C.S.Malhotra - Independent Director & Member Mr. Narendra Kumbhat - Independent Director & Member Mr. Arun Khanna - Non Executive Director & Member Mr. Dharmender Dhingra - CS & Vice President (Legal) ACKNOWLEDGEMENT The Board wishes to place on records its-sincere appreciation for the continued assistance and support extended to the Company by its Bankers, Vendors, Government Authorities and Employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued Shareholders. On Behalf of the Board of Directors of SHYAM TELECOM LIMITED AJAY KHANNA N Kumbhat Managing Director Director PLACE: NEW DELHI DATE: 30th May,20l5 |