Your Directors present the Thirty-first Annual Report of your Companytogether with the Audited Financial Statements for the year ended March 31 2019.
Financial Results Standalone and Consolidated
The financial statements for the year ended 31st March 2019 has beenprepared in accordance with the Indian Accounting Standards (Ind AS) notified underSection 133 of the Companies Act 2013 ("the 2013 Act") read with the Companies(Indian Accounting Standards) Rules 2015 and the relevant provisions of the 2013 Act asapplicable.
( Rs. in lakhs except per share data)
| ||Standalone ||Consolidated |
| ||Current Year ||Previous Year ||Current Year ||Previous Year |
|Particulars ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Total Income ||30726.80 ||42838.62 ||46421.44 ||52837.78 |
|Total Operating expenditure ||26381.76 ||24768.82 ||45493.66 ||39642.43 |
|EBITDA ||4345.04 ||18069.80 ||927.78 ||13195.35 |
|Finance costs ||410.17 ||722.55 ||440.36 ||969.88 |
|Depreciation / amortization ||1811.89 ||2216.30 ||2602.52 ||2995.35 |
|Profit / (Loss) before exceptional item and tax ||2122.98 ||15130.95 ||(2115.10) ||9230.12 |
|Exceptional Item ||(1027.13) ||(8157.58) ||(297.05) ||(2686.43) |
|Profit / (Loss) before tax ||1095.85 ||6973.37 ||(2412.15) ||6543.69 |
|Provision for taxation ||1086.59 ||5335.61 ||1132.65 ||5356.90 |
|Profit after Tax / Net Profit for the year ||9.26 ||1637.76 ||(3544.80) ||1186.79 |
|Add: Net minority interest in profit of subsidiaries ||0.00 ||0.00 ||(19.20) ||(20.42) |
|Profit after Tax / Net Profit for the year ||9.26 ||1637.76 ||(3525.60) ||1207.21 |
|Earnings per share || || || || |
|Basic ||0.02 ||3.55 ||(7.65) ||2.62 |
|Diluted ||0.02 ||3.55 ||(7.65) ||2.62 |
RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS
The total revenue from operations for the year ended March 31 2019 wasat Rs. 14719.07 lakhs as compared to
`22671.54 lakhs for the year ended March 31 2018.
For the year under review your Company has reported profit beforefinance cost depreciation exceptional items and tax of Rs. 4345.04 lakhs compared toprofit of Rs. 18069.80 lakhs in the previous year. Profit before tax was Rs. 1095.85lakhs compared to Profit of Rs. 6973.37 lakhs in the previous year. The profit for thecurrent year is lower due to reduced earnings from Indian Energy Exchange (IEX) who weregiven a perpetual license for the software in the year 2017-18. Income of other segmentshave shown improvements despite adverse conditions faced by the Company
The net profit after tax (PAT) during the year was of Rs. 9.26lakhs as compared to profit of Rs. 1637.76 lakhs in the previous year.
The consolidated Net Loss for the year ended March 31 2019 was at Rs.3525.60 lakhs against Profit of Rs. 1207.21 lakhs in the previous year ended March 312018. Shareholders' funds as at the year ended March 31 2019 was at Rs. 317946.25 lakhsas against Rs. 320536.19 lakhs as at March 31 2018. Shareholders' fund includesnon-controlling interest of Rs. 188.01 lakhs as compared to Rs. 207.21 lakhs in previousyear.
Pursuant to the provisions of the Section 136 of the Act the financialstatements of the Company consolidated financial statements along with relevant documentsand separate audited accounts in respect of subsidiaries are available on the website ofthe Company.
The Company continues to carry out activities as stated in the mainobject clause of its Memorandum of Association as there has been no change in the natureof its business.
BUSINESS OVERVIEW: FISCAL YEAR 2018-19
Your Company despite being saddled with legal matters relating topayment crisis at one of its subsidiaries has shown vibrancy in its performance duringthe year 2018-19. Besides the Company is at a point where it feels recharged with newbelief and vigour as one of the major obstacles in the above-said legal matters has beenvanquished. The Hon'ble Supreme Court has set aside ruling on the merger order by theHon'ble Bombay High Court stating that National Spot Exchange Limited (NSEL) bemerged with your Company 63 moons technologies limited. Consequently your Company'sstand remains justified. Overall vibrancy witnessed in the businesses of your Company canbe attributed to refinements and enhancements added to the technologically innovativesolutions across the range via Parivartan' an initiative of 63 moonstechnologies limited. This initiative has proved fruitful in retaining the leadershipposition in the market. As a part of the Parivartan initiative the business verticals ofyour Company were fortified with the latest updates
Brokerage Trading Solutions (BTS) Business
Your Company's core business vertical comprises of brokeragetrading and allied solutions that targets brokers' and traders' communities ofthe securities markets.
ODIN flagship suite of solutions for brokerage - continuesto retain its leadership position in the market. During the year under review yourCompany has enabled the suite of solutions to serve several segments of financial marketsvia this product and the advancements incorporated in these offerings continues to equipthe patron of these offerings and ensures to lead them into the great future. Prominent ofthe enhancements incorporated in ODIN were
ODIN Tech Trader enables traders to explore (create strategies)evaluate (back test and optimize strategies) and execute tech-based trading strategiesfrom within ODIN Trading Terminal. ODIN has been incorporated in both algo and non-algomodes.
ODIN VAS (Value Added Services) a marketplace for FinancialValue-Added Services was introduced on ODIN front-end trading platforms.
ODIN Aero a rich internet application that enables end-to-endn-analytics and trading capabilities was launched with world-class UI (User Interface) andUX (User Experience). ODIN Institutional segment was enhanced with SWAP AlgoOne-Touch Algos for placement of Algo orders via FIX VWAP+ Algo with Vol-Curve and aredesigned Index Basket to update the trading solution.
Among others ODIN solution was enhanced to serve
Mutual Fund segment and Commodity segment was enabled tosupport commodities trades in F&O on BSE and NSE.
Among other solutions those cater to the needs of financial marketecosystem have also been enhanced to offer more specialised services. Some of theseinclude
MatchTM ProtectorTM and STP-GateTM.
With these enhancements to the service offerings your Company hastaken due care of making each of the solutions to take on the market dynamism.
Exchange Technology Business
Exchange Technology business vertical continues to support MCX as alsoequity derivatives currency derivatives and the debt segment of Metropolitan StockExchange of India (MSEI). Through this vertical your Company continues to be the providerof mission critical technology solution to these exchanges. During the year the exchangetechnology team has successfully implemented the second phase of its low-latency solutionat MCX. Further the team worked constantly to develop and deliver working solution ofInter-Operability in less than a month's time to meet MSEI's expectations.
Risk Solutions Division of your Company offers a product portfoliothat mainly caters to the needs of the financial sector on the regulatory as wellas the regulated segments. Of late the regulatory landscape is undergoing significantchanges as issues have emerged in the wake of the recent financial crisis in the bankingand non-banking financing companies (NBFCs). The new regulations for liquidity managementand stress testing have opened up some new opportunities for the products of RiskSolutions. The division thus expects business environment to improve in the comingtimes.
DataCollector a flagship product of Risk Solutions division isexploring the possibilities for extending the capabilities to the non-BFSI public sectorapex agencies. The division has launched an application surveymoons' whichis a cloud ready survey / form-building engine that is equipped to compete and takeadvantage of the rise in the digitalization of the economy.
Your Company has been at the forefront in providing number oftechnology-based solutions in the financial marketspace. With the past track-record as ashareholder-rewarding company your Company foresees the future that would enrich thelives of its patrons and maximize shareholders' value.
Technology being its DNA your Company believes in disrupting thecurrent structure for enabling a future ready technology in its sphere of operations. YourCompany's ability to convert the crisis into an opportunity has been the testimony ofit being adaptive during current times of crisis and with able leadership of visionariesat the management position of your company is sure to navigate through the challengingtimes. Now with one step forward on the path of successful resolution of the paymentcrisis we feel invigorated to march ahead with new ideas and conquer newer areas!
In the wake of the crisis at NSEL your Company has been made party toseveral litigations over the last six years. The Ministry of Corporate Affairs Govt. ofIndia ("MCA") issued a final order dated February 12 2016 ("Final MergerOrder") for amalgamation of your Company with NSEL under section 396 of CompaniesAct 1956. The Hon'ble Supreme Court was pleased to set aside the Bombay High Courtorder dated December 4 2017 dismissing our writ petition challenging the final mergerorder of the MCA. The Hon'ble Supreme Court was pleased to hold that the final mergerorder passed by the MCA was ultra vires the provisions of Section 396 of the CompaniesAct. While striking down the enforced merger of NSEL with your Company the Hon'bleSupreme Court in its Order dated April 30 2019 (Page 99 clause 58) noted and took onrecord the Affidavit cum Undertaking dated April 11 2019 submitted by your Companystating that your Company will continue to infuse funds into NSEL so that the recovery ofdues from defaulters does not in any manner get stymied and accordingly in terms of thesaid Affidavit your Company is bound to continue funding to NSEL. In a civil suit filedby L.J. Tanna Private Limited & Ors. the Hon'ble Bombay High Court passed an adinterim order dated September 30 2015 inter alia restraining your Company fromdistributing any dividend or depositing the same in the dividend distribution account inaccordance with the provisions of the Companies Act 1956 pending the final hearing anddisposal of the Notice of Motion. The matter is pending before the Hon'ble BombayHigh Court. In compliance to the order the Company has not distributed the final dividendto the shareholders pursuant to the directions of the Hon'ble Bombay High Court.Contempt petition was also filed in the civil suit filed by L.J. Tanna alleging theviolation of the orders of Bombay High Court. Show cause notice has been issued againstNSEL and the Company. Reply has been filed by the Company in the show cause notice. Thematters are pending for hearing.
The Ministry of Corporate affairs (MCA) had filed the Petition interalia under the provisions of Sections 388B 397 398 and 401 of the Companies Act 1956for removal and supersession of the Board before the erstwhile Company Law Board("CLB") being Company Petition No. 1 of 2015 ("Company Petition"). TheNCLT vide its order dated June 4 2018 rejected the prayer of the Union of India forremoval and supersession of the Board of the Company. However hon'ble tribunal waspleased to order that the Government may nominate not more than 3 directors to the Boardof your Company. Your Company has preferred appeal against the said order of the NCLTbefore the NCLAT. The NCLAT was pleased to stay the order of the NCLT. The Appeal ispending for hearing.
Your Company continues to defend itself in various other litigationsfiled against it.
The Government of Maharashtra vide its Notification dated September 212016 has attached certain properties of your Company. The Government of Maharashtra againin the month of April / May 2018 vide its various Notifications attached the various bankaccounts properties investments and ODIN software its Intellectual Property rights andits receivables. The said notifications have been challenged before the Hon'bleBombay High Court (Writ Petition 508 of 2017 and 1181 of 2018). The Hon'ble HighCourt was pleased to stay the notifications vide its interim order dated October 24 2018.The Final hearing in the matter has been concluded and the matter is now reserved fororders. EOW has filed charge sheet against your Company before the MPID court the Companydefends the same before the MPID court.
Modulus USA has filed a case against the Company for allegedinfringement of its trademark. The Notice of Motion filed in the said suit was disposedoff by a consent order dated October 7 2016. The Company has filed its written statement.
The Directorate of Enforcement has attached properties to the tune ofRs. 1350 crores (approx.) vide provisional attachment orders dated September 14 2016September 30 2016 and January 31 2017 issued under the Prevention of Money LaunderingAct 2002 ("PMLA"). The adjudication proceedings before the AdjudicatingAuthority under PMLA have been completed in respect of the provisional attachment ordersdated September 14 2016 September 30 2016 where in the attachments have been confirmed.
The Company has filed an appeal before the Appellate Tribunalestablished under the PMLA and the same are pending for hearing. The Directorate ofEnforcement has initiated a complaint under the Prevention of Money Laundering Act (PMLA)against your company before the PMLA Spl. Court. The Company defends the same before thePMLA court. The Company has filed suit for damages against Mr. Ramesh Abhishek Mr. K. P.Krishnan and Mr. P. Chidambaram before the Hon'ble Bombay High Court for their mala de actagainst the Company in NSEL payment default. The Hon'ble Bombay High Court issued summonsto the aforesaid defendants.
After investigation in the matter of NSEL EOW Mumbai has presentlyfiled 4 charge-sheets in the matter. The Company has been named in the charge sheet inDecember 2018 copy of which was received by the Company in April 2019. Except as statedabove no material changes and commitments have occurred after the close of the financialyear till the date of this Report which significantly affects the financial position ofthe Company.
Explanation to the Qualifications in Auditor Report
A. Audit Report on Standalone Financial Statements
The Management explanation for qualification made by the StatutoryAuditors in their Independent Auditors Report dated May 27 2019 on the StandaloneFinancial Statements for the year ended March 31 2019 is as under: a) During the previousyears civil suits have been filed against the Company in relation to the counter partypayment default occurred on the exchange platform of NSEL wherein the Company has beenmade a party. In these proceedings certain reliefs have been claimed against the Companyinter-alia on the ground that the Company is the holding company of
NSEL. These matters are pending before the Hon'ble Bombay HighCourt for adjudication. The Company has denied all the claims and contentions in itsreply. There is no privity of contract between the Company and the Plaintiffs therein. Themanagement is of the view that the parties who have filed the Civil Suits would not beable to sustain any claim against the Company. The matters are pending for hearing beforethe Hon'ble Bombay High Court.
First Information Reports (FIRs) have been registered against variousparties including the Company with the Economic Offences Wing Mumbai (EOW) and CentralBureau of Investigation (CBI) in connection with the counter party payment default on NSELtrading platform. After investigation EOW Mumbai has presently filed 4 charge-sheets inthe matter. The Company has been named in the charge sheet in December 2018 copy of whichwas received by the Company in April 2019. CBI has filed charge-sheets including againstthe Company for alleged loss caused to PEC Ltd. & MMTC Ltd. on NSEL platform and thecase is pending for trial before the CBI court.
The CBI - EOW has also registered an FIR which pertains to allegedconspiracy between the accused private persons and the named officials of Securities &Exchange Board of India (SEBI) in granting renewal of stock exchange license to MCX StockExchange Limited (MCX-SX) by SEBI in August 2010 by suppression of facts. There is nodirect allegation against the Company in the FIR. Therefore the Company has filed apetition before the Hon'ble Court for quashing of the said FIR against itself.
The CBI - EOW has registered complaint against the Company along withcertain officials of FMC SEBI and other for giving illegal benefits to Multi CommodityExchange of India Limited (MCX) and allowing MCX trading as private commodity exchange.The investigation in the matter is in progress.
b) The Company has filed a Writ Petition before the Bombay High Courtchallenging inter alia the provisions of the MPID Act are violative of the Constitutionand the notification dated September 21 2016 attaching the assets of the Company underthe provisions of the MPID. The matter is reserved for order. The State Government underthe MPID Act has attached several Bonds bank accounts investments Fixed Deposits andODIN software and its receivables of the Company vide gazette notifications dated April04 2018; April 07
2018; April 11 2018; April 17 2018; April 19 2018; May 15 2018;September 19 2018 and corrigendum dated September 27 2018 the Competent Authority hasfiled Misc. Applications before the MPID Court to make absolute the attached propertiesmentioned in aforesaid gazette notifications. The Company has filed a writ petition beforethe Hon'ble Bombay High Court challenging the legality and validity of the aforesaidnotifications. The Hon'ble Bombay High Court while admitting writ petition hasgranted stay to notifications. The writ petition is reserved for order.
c) Enforcement Directorate(ED') has attached assets of theCompany under the provisions of the Prevention of Money Laundering Act 2002. The threeProvisional Attachments Orders have been confirmed by the Adjudicating Authority. TheCompany has filed Appeals challenging the confirmation orders passed by the AdjudicatingAuthority before the Hon'ble Appellate Tribunal. The Hon'ble Appellate Tribunalhas granted status quo on orders passed by the Adjudicating Authority confirming threeattachments. Matter is pending for hearing. The ED has filed a prosecution complaintbefore the Spl. PMLA Court against the Company and the same is pending for trial.
d) The Serious Frauds Investigation Office published a Public Noticeduring December 2016 in a newspaper wherein it has been mentioned that the CentralGovernment had directed the SFIO to investigate into the affairs of the Company. SFIO hasconcluded its investigation and filed report to Central Govt.
B. Audit Report on Consolidated Financial Statements
The Management explanation for qualifications made by the StatutoryAuditors in their Independent Auditors Reports dated May 27 2019 on the ConsolidatedFinancial Statements for the year ended March 31 2019 are as under:
1.With respect to item no. 1 which pertains to Company refer paragraph(A) above.
2.With respect to item no. 2 which are to the qualifications made bythe Statutory Auditors of a subsidiary viz National Spot Exchange Limited (NSEL) in theirIndependent Auditors Report on NSEL's Consolidated Financial Statements for the yearended March 31 2019 which has been reproduced by the Statutory Auditors of the Company(63moons) in their Independent Auditors Report (Auditors Report) dated May 27 2019 on theConsolidated Financial Statements for the year ended March 31 2019 the explanation givenby the management of NSEL and its subsidiary "Indian Bullion Market AssociationLimited" (IBMA) are as under: ("Company" in the qualifications below referto NSEL or IBMA as the case may be)
i) With respect to qualification 2(a) in Auditors
Report explanation of NSEL's Management is as under:
I nvestigating agencies are investigating genuineness of the warehousereceipts issued by the Exchange as well as the frauds perpetrated by the erstwhile seniorofficials of the Exchange. The Government by Gazette Notification SO 2529(E) datedSeptember 19 2014 has withdrawn the Gazette Notification SO 906(E) dated June 05 2007(by which the Company was granted exemption under Section 27 of the FCR Act 1952 fortrading of forward contracts of one day duration) with immediate effect and consequentlythe notification SO 228(E) dated February 06 2012 and notification SO 2406(E) datedAugust 06 2013 ceased to be in force w.e.f. September 19 2014 as informed to theCompany by the FMC vide letter dated November 05 2014. As the reply to the said SCN hasbeen given and actions if any required due to SCN has been taken including withdrawalof the exemption itself the Company do not foresee any further consequences on the SCN.FMC / Ministry of Consumer Affairs has not adjudicated the SCN issued to NSEL forviolation of the conditions of the exemption notification dated June 05 2007 which wasthe subject matter of the SCN. All contracts traded on the Exchange platform were properand in consonance with applicable laws exemption notifications and there were noviolations in this regard. The Company had obtained a legal opinion on the legality of thecontracts traded by the members on the exchange platform. The the Company is taking allsteps to defend its position however since all matters are sub- judice the Company isunable to quantify the impact if any of such legal proceedings on the financialstatements of the Company.
I n case of provision for impairment of Financial assets relating toamounts to be recovered from defaulting members NSEL has secured decrees / ArbitrationAward worth Rs. 3365 crores and has initiated execution proceedings against theDefaulting members to recover Decretal amounts. Further the High Court Committee hascrystalized the liability to the tune of Rs. 868.25 crores of defaulting members. The saidreports will be converted into the decree once the same are accepted by the High Court.
ii) With respect to qualification 2(b) in
Report explanation of NSEL's Management is as under:
The Majority in value of the trade and receivables loans and advancesetc. are under litigation / subject to court orders. Company has already made provisionfor the majority of the value or disclosed the reason for non-provisioning. Company ismaking full efforts for recovery of the amount.
Your Directors have recommended a dividend of Rs. 2/- per share i.e.100% on the face value of Rs. 2/- per share for the FY 2018-19. The distribution of saiddividend shall be subject to the approval of shareholders at the forthcoming AnnualGeneral Meeting and appropriate judicial orders. As the Shareholders are aware thefollowing dividends are pending for distribution due to the Hon'ble Bombay High Courtorder: a. The final dividend of Rs. 5/- per share for the FY 2014-15 approved by theshareholders at the Annual General Meeting held on September 30 2015 could not be paidas the Hon'ble Bombay High Court vide its order dated September 30 2015 in Notice ofMotion no. 1490 of 2015 in Suit no. 121 of 2014 L.J. Tanna Shares & SecuritiesPvt. Ltd. and Ors. Vs. Financial Technologies (India) Limited inter-alia directed thatpending hearing and final disposal of Notice of Motion "FTIL shall not distribute anydividend amongst its shareholders and shall also not deposit any amount in compliance withSection 123 subclause
(iv) of the Companies Act 1956" (to be read as Companies Act2013). b. Payment Rs. 2/- per share for FY 2016-17 approvedof by the shareholders at the29th AGM held on September 27 2017 is pending subject to appropriate judicial orders. c.Payment Rs. 2/- per share for FY 2017-18 approved byof the shareholders at the 30th AGMheld on September 27 2018 is pending subject to appropriate judicial orders.
Prior to the above mentioned High Court order your Company has paidconsecutive dividends for the past 38 quarters which is in accordance with the sustainabledividend payout policy of the Company and linked to its long term growth objectives.
TRANSFER TO RESERVES
Your Company does not propose to transfer any sum to General Reservefor the year under review.
There was no change in the Share Capital of the Company during the yearunder review. As on March 31 2019 the paid-up equity Share Capital of your Company stoodat `921.57 lakhs comprising of 46078537 equity shares of Rs. 2/- each. During the yearunder review the Company has not issued any shares with differential voting rights nor hasit granted any Stock Option or Sweat Equity.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review asstipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(Listing Regulations') is provided in a separate section forming part of thisAnnual Report.
DETAILS OF SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES ANDTHEIR PERFORMANCE HIGHLIGHTS
Pursuant to the provisions of Section 129(3) of the Companies Act 2013("Act") a statement containing salient features of the financial statements ofCompany's subsidiaries associate companies and joint ventures is given in Form AOC-1as Annexure - I and the same forms part of this report. The statement also providesthe details of highlights of performance of subsidiaries. The financial statements of eachof the subsidiaries may also be accessed on the website of the Company www.63moons.com.These documents will also be available for inspection on all working days i.e. exceptSaturdays Sundays and Public Holidays at the Registered Office of the Company till thedate of AGM.
During the year under review Bahrain Financial Exchange BSC(C) (BFX)(subsidiary of FT Group Investments Pvt Ltd.
- FTGIPL) and BFX Clearing & Depository Corporation BSC(C)(subsidiary of BFX) step-down subsidiaries of your Company have been liquidated w.e.f.23rd October 2018 and 8th August 2018 respectively. Further Bourse Africa (Botswana)Limited (BABL) (subsidiary of FTGIPL) Bourse Africa Limited (BAL) (subsidiary of FTGIPL)and Bourse Africa Clear Limited (BACL) (subsidiary of BAL) the step-down subsidiaries ofyour Company are under liquidation.
During the year under review your Company has entered into a SharePurchase Agreement (SPA) with NTT Data Corporation Japan for selling of its 286914688equity shares of the face value of INR 1/- (Rupee one only) in ATOM Technologies Limitedfor a total consideration of
USD 9.24 million. As per the Agreement(s) NTT Data has the rightduring the period of 24 months starting from the date of closure of transaction toacquire directly or through affiliates the balance 210086610 equity shares of ATOMheld by your Company. The approval from Members has been obtained for the aforesaidtransaction by way of postal ballot concluded on June 18 2019 since ATOM became materialsubsidiary w.e.f. April 01 2019. The transaction will be completed after all requisiteapprovals. NCLAT vide its order dated July 22 2019 was pleased to allow 63 moons to sellits stake in Atom Technologies Limited.
The Policy for determining material subsidiaries as approved by theBoard may be accessed on the Company's website at the link: www.63moons.com/investors/corporate-governance/policies/Material-subsidiary-policy.pdf
The Company is committed to maintain the highest standards of CorporateGovernance and adhere to the Corporate Governance requirements set out by SEBI. The reporton Corporate Governance as stipulated by Regulation 34(3) read with Schedule V of theListing Regulations 2015 is annexed hereto and forms part of this Annual Report. ACertificate from the Auditors of the Company confirming compliance with CorporateGovernance norms is annexed to the report on Corporate Governance.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Reporting as required under Regulation 34of Listing Regulations is not applicable to your Company for the financial year endedMarch 31 2019.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
In line with the requirements of the Companies Act 2013 and ListingRegulations your Company has formulated a Policy on Related Party Transactions which isavailable on Company's website at www.63moons.com/investors/corporate-governance/policies/Related-Party-Transactions-Policy.pdf ThePolicy is to ensure that proper reporting approval and disclosure processes are in placefor all transactions between the Company and Related Parties.
All arrangements / transactions entered by your Company with itsrelated parties during the year were in ordinary course of business and on an arm'slength basis. During the year the Company has made investments in its subsidiary i.e.NSEL amounting to Rs. 1477.13 lakhs in terms of shareholders' approval obtained onMarch 08
2017. Except for the transaction with NSEL the Company did not enterinto any arrangement / transaction with related parties which could be consideredmaterial in accordance with Companies Act and Listing Regulations. All transactions withrelated parties were reviewed and approved by the Audit Committee. Prior omnibus approvalsare granted by the Audit Committee for related party transactions which are of repetitivenature entered in the ordinary course of business and are on arm's length basis inaccordance with the provisions of the Act read with the Rules issued thereunder and theListing Regulations.
The details of the transactions with related parties are provided inthe accompanying financial statements.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Corporate Social Responsibility Committee has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities to be undertaken by the Company which has been approved by the Board.
The Company has identified the areas for CSR activities which are inaccordance with Schedule VII of the Companies Act 2013 some of which are Health andsocial welfare Promotion of education Environment sustainability Employment enhancingvocational skills and Employee engagement activities. During the year the Company hasorganized a social audit by an external agency to evaluate the effectiveness and impact ofCSR projects undertaken by the Company and the result of the social audit was quiteencouraging. The Report on CSR activities as required under Companies (Corporate SocialResponsibility Policy) Rules 2014 is set out as Annexure - II and the same formspart of this report. The policy is available on the website of the company at the link:www.63moons.com/investors/ corporate-governance/policies/CSR-policy.pdf
The Board of the Company has formed a Risk Management Committee tomonitor the risk management policy for the Company. The risk management system identifiesand monitors risks which are related to the business and overall internal control systemsof the Company. The Audit Committee has oversight responsibility in the areas of financialrisks and controls. The risk management committee is responsible for reviewing the riskmanagement policy and ensuring its effectiveness.
The Audit Committee and the Board has also noted the risk prevailing inrespect of what is stated in the para relating to legal matters above effecting thebusiness of the Company.
INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has internal financial control systems which arecommensurate with its size and the nature of its operations. The Internal control systemis improved and modified on an on-going basis to meet the changes in business conditionsaccounting and statutory requirements. Internal Audit plays a key role to ensure that allassets are safeguarded and protected and that the transactions are authorized recordedand reported properly. The Internal Auditors independently evaluate the adequacy ofinternal controls. The findings and recommendations of the Internal Auditors are reviewedby the Audit Committee and followed up till implementation wherever feasible. Further asper requirement of clause (i) of sub-section (3) of section 143 of the Companies Act 2013('the Act') the statutory auditors have reported on the internal financial controls andopined that the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2019.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review the Board of Directors at their meetingheld on February 12 2019 on the recommendation of the Nomination and RemunerationCommittee (NRC) appointed Mr. Devender Singh Rawat (DIN: 02587354) as an AdditionalDirector in terms of Section 161 and other applicable provisions if any of the CompaniesAct 2013 to hold office upto the date of the forthcoming Annual General Meeting of theCompany. Further Mr. Devender Singh Rawat was appointed as non-executive Director liableto retire by rotation which was approved by the Members through postal ballot concludedon June 18 2019. The Board of Directors at its meeting held on August 09 2018 on therecommendation of the NRC further extended the tenure of re-appointment of Mr. RajendraMehta by one more year commencing from November 21 2018 which was approved by theshareholders at the AGM held on September 27 2018. However during the year Mr. RajendraMehta Whole-time Director (DIN: 00390504) ceased to be member of the Board w.e.f.November 29 2018. Your Directors place on record their appreciation for the valuableadvice and guidance provided by Mr. Rajendra Mehta during his tenure with the Company. Inview of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment)Regulations 2018 dated 9th May 2018 which came into force with effect from 1st April2019 no listed entity can continue the directorship of any person as a non-executivedirector who has attained the age of 75 (seventy five) years unless a special resolutionis passed to that effect. Accordingly three Directors of the Company who had alreadyattained the age of 75 years i.e. Mr. Venkat Chary (IAS Retd) (DIN: 00273036) ChairmanNon-Executive and Independent Director Justice (Retd.) Rajan J. Kochar (DIN: 06710558)Non-Executive & Independent Director and Mr. Suresh Salvi (IAS Retd) (DIN:07636298) Non-Executive Director were approved by Members by way of Special Resolutionin compliance of Section 102 of the Act read with the amended Regulation 17 (1A) of theSEBI (LODR) Regulations 2015 to continuance as Directors of the Company after March 312019 at the Annual General Meeting held September 27 2018. The Board of Directors of theCompany at their meeting held on August 09 2019 on the recommendation of the Nomination& Remuneration Committee and performance evaluation of the concerned Directorrecommended for the approval of the Members at the ensuing Annual General Meeting there-appointment of Mr. Venkat Chary (IAS Retd.) (DIN: 00273036) Justice Rajan J. Kochar(Retd.) (DIN: 06710558) and Mr. Achudanarayanan Nagarajan (IAS Retd.) (DIN: 02107169) asIndependent Directors of the Company for a second term of two years commencing fromSeptember 23 2019 in terms of Section 149 read with Schedule IV of the Companies Act2013 and applicable rules framed thereunder and Regulation 17 of the Listing Regulations2015.
The Company has received declarations from all the IndependentDirectors confirming that they meet the criteria of independence as provided in Section149(6) of Companies Act 2013 and Regulation 16(1)(b) of the Listing Regulations. In termsof Regulation 25(8) of the Listing Regulations the Independent Directors have confirmedthat they are not aware of any circumstance or situation which exist or may be reasonablyanticipated that could impair or impact their ability to discharge their duties.
In accordance with the provisions of Section 152 of the Companies Act2013 and the Company's Articles of Association Mr. Sunil Shah (DIN:02569359) and Mr.K. Chandrasekhar (DIN:06861358) Directors retires by rotation at the forthcoming AnnualGeneral Meeting and being eligible offers themselves for re-appointment. The Boardrecommend their re-appointment for the consideration of the Members of the Company at theensuing Annual General Meeting. The other Directors continue to be on the Board of yourCompany.
Pursuant to the provisions of Section 203 of the Act the KeyManagerial Personnel of the Company are
1.Mr. S. Rajendran Managing Director and Chief Executive Officer
2.Mr. Rajendra Mehta Whole-time Director (upto November 29 2018)
3.Mr. Devendra Agrawal Whole-time Director Chief Financial Officer
4.Mr. Hariraj Chouhan Company Secretary.
Pursuant to the provisions of the Companies Act 2013 SEBI ListingRegulations and the Guidance Note on Board Evaluation issued by the SEBI on January 52017 a process has been devised for evaluation of Board Committees and Directors takinginto consideration the various aspects of the Board's functioning execution andperformance of specific duties obligations and governance. The performance of the BoardChairman and Independent Directors was evaluated by the Board after seeking inputs fromall the Directors. The criteria for performance evaluation of the Board included aspectssuch as Board composition and structure effectiveness of Board processes contribution intreasury and risk management legal challenges faced by the Company general corporategovernance strategic planning etc. The performance of the Committees was evaluated by theBoard after seeking inputs from the committee members. The criteria for performanceevaluation of the Committees included aspects such as composition of committeeseffectiveness of committee meetings etc.
In a separate meeting of Independent Directors performance ofNon-Independent Directors and performance of the Board as a whole and performance of theChairman was evaluated taking inputs from Executive Directors and Non-ExecutiveDirectors. On review of Board as a whole members expressed satisfaction on the diversityof experience age group and induction process of new members and competency ofdirectors. The members expressed appreciation on functioning of Audit committee NRC CSRStake holders Risk Management and Investment Committee and expressed their satisfactionwith the evaluation process.
MEETINGS OF THE BOARD
The Board of Directors of the Company met 7 (seven) times during thefinancial year. The details of Board Meetings are provided in the Corporate GovernanceReport which forms part of this Annual Report.
The Audit Committee comprises of 4 (Four) members three areIndependent Directors namely Mr. Venkat Chary Justice (Retd.) R. J. Kochar Mr. A.Nagarajan and one is Non-Executive Director namely Mr. K. Chandrasekhar. andDuring theyear 5 (five) Audit Committee meetings were held and the details of which are provided inthe Corporate Governance Report which forms part of this Annual Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT BY COMPANY
Details of loans guarantees and investments have been disclosed in theFinancial Statements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The particulars relating to conservation of energy technologyabsorption foreign exchange earnings and outgo as required to be disclosed under theAct are provided in Annexure - III and the same forms part of this Report.
EXTRACT OF ANNUAL RETURN
Extract of Annual return of the Company in form MGT-9 has been postedon the website of the Company atwww.63moons.com/investors/shareholders/annual-reports.html
PARTICULAR OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures with respect to the remuneration of Directors KMPs andemployees as required under Section 197 (12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are given in Annexure - IV to this Report.
Details of employee remuneration as required under provisions ofSection 197(12) of the Companies Act 2013 read with Rule 5(2) & 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are available at theRegistered Office of the Company during working hours 21 days before the Annual GeneralMeeting and shall be made available to any shareholder on written request. Such detailsare also available on your company's website atwww.63moons.com/investors/shareholders/annual-reports.html. None of the employees listedin the said Annexure is a relative of any Director of the Company. None of the employeeshold (by himself or alongwith his spouse and dependent children) more than two percent ofthe equity shares of the Company.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns orgrievances. The Whistle Blower Policy has been posted on the website of the Company at thelink: www.63moons.com/investors/corporate-governance/policies/Whistle-Blower-Policy.pdf
NOMINATION AND REMUNERATION POLICY
The Board of Directors has framed a policy for selection andappointment of Directors including determining qualifications independence of a DirectorKey Managerial Personnel Senior Management Personnel and their remuneration as part ofits charter and other matters provided under Section 178 (3) of the Act. The details ofthe policy are provided in the Corporate Governance Report which forms part of thisAnnual Report. The Nomination and Remuneration Policy has been placed on the website ofthe Company at the link:www.63moons.com/investors/corporate-governance/policies/Nomination-and-Remuneration-Policy.pdf
MAINTENANCE OF COST RECORDS
The Company is not required to maintain cost records as specified bythe Central Government under sub-section (1) of section 148 of the Companies Act 2013.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The company has complied with the provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. The Company has a policy onprevention prohibition and redressal of complaints related to sexual harassment of womenat the workplace. The said policy is available on the internal portal of the Company forinformation of all employees. During the FY 2018-19 the Company has not received anycomplaints on sexual harassment and hence no complaints remain pending as of March 312019.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Except as stated in the para relating to legal matters mentioned abovethere are no other significant or material orders passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.The details of litigation including tax matters are disclosed in the notes to theFinancial Statements which forms part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Board of Directors to thebest of their knowledge and ability confirm that: a. in the preparation of the annualaccounts the applicable accounting standards have been followed alongwith properexplanation relating to material departures if any; b. the Directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit of the Company for thatperiod; c. the Directors have taken proper and sufficient care to maintain adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets 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 Directorshave laid down internal financial controls to be followed by the Company and such internalfinancial controls are adequate and are operating effectively; and f. the Directors havedevised proper systems to ensure compliance with the provisions of all applicable laws andsuch systems are adequate and operating effectively.
EMPLOYEES STOCK OPTION PLAN (ESOP)
The Nomination & Remuneration Committee of the Board of Directorsof the Company inter-alia administers and monitors the Employees Stock Option Plan ofthe Company in accordance with the applicable SEBI Guidelines.
During the financial year 2011-12 Remuneration and CompensationCommittee (renamed as NRC) had granted 900000 Stock Options each under the Employee StockOption Scheme - 2009 & 2010 totalling to 1800000 options at a price of 770/- to theeligible employees / Directors of the Company in terms of SEBI (Employee Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines 1999 (as amended from time to time)and as approved by the Shareholders at the Annual General Meetings of the Company held on25th September 2009 & 29th September 2010 respectively.
Since the options were granted at the market price of the equity shareson the date of grant certain modifications were made during the FY 2012-13 and 2014-15with respect to exercise price and exercise period.
During the tenure of the said schemes none of the options wereexercised by any of the eligible employees / Directors to whom options were granted as themarket price was below the exercise price. As on 31st March 2019 the tenure of both theESOP schemes (2009 & 2010) has expired and thus both the schemes stand closed.
The Company is in compliance with applicable Secretarial Standardsissued by the Institute of Company Secretaries of India.
Pursuant to the provisions of Section 139 of the Act and the rulesframed thereunder M/s. Sharp & Tannan Associates Chartered Accountants Mumbai(Regn. No. 109983W) were appointed as the Statutory Auditors of the Company at the AnnualGeneral Meeting (AGM) held on September 23 2014 for a period of five years on aremuneration mutually agreed upon by the Board of Directors and the Statutory Auditorssubject to rati cation of their appointment at every AGM. Since the period of theirappointment is upto the ensuing AGM the Board recommends for the consideration of theMembers the re-appointment of M/s. Sharp & Tannan Associates as Statutory Auditorsfor a further period of five years. M/s. Sharp & Tannan Associates have confirmedtheir eligibility and qualification for continuing as Auditors of the Company.
DETAILS OF FRAUD IF ANY REPORTED BY THE AUDITORS
There have been no instances of fraud reported by Auditors pursuant toSection 143(12) of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Act the Board hasappointed M/s BNP & Associates Practising Company Secretaries to conduct SecretarialAudit for the financial year 2018-19. The Secretarial Audit Report for the financial yearended March 31 2019 is annexed herewith marked as Annexure - V and the same formspart of this report. The Secretarial Auditors' report does not contain anyqualifications reservations or adverse remarks.
ANNUAL SECRETARIAL COMPLIANCE REPORT
The Company has undertaken an audit for the financial year 2018-19 forall applicable compliances as per Securities and Exchange Board of India Regulations andCirculars / Guidelines issued thereunder.
The Annual Secretarial Compliance Report has been submitted by yourCompany to the Stock Exchanges within 60 days from the end of the financial year.
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:
Details relating to deposits covered under Chapter V of the Act.
Issue of equity shares with differential voting rights as todividend voting or otherwise.
Neither the Managing Director nor the Whole-time Directors of theCompany receive any remuneration or commission from any of its subsidiaries.
63 moons believes in providing a great workplace where employees havefreedom to ideate towards its core philosophy of entrepreneurship and innovation and atthe same time enjoy their work. The Company remains committed to its employees and valueseach one's contribution in the collective growth. As of 31 March 2019 the companyhad employee strength of 837. Out of which Women make up 21% of the workforce. The Companystrongly believes and promotes transparent communication policy. In order to ensure thisthe HR Dept. has an open door policy where employees can walk-in anytime and meet HRofficials during office hours for any assistance. The Company has also enabledconfidential email facility to address specific issues of the employees which areotherwise difficult to highlight. The HR dept. is conditioned to be always alert andavailable for any help sought by the employees. All our systems and processes are fullyautomated to ensure that required information is available anytime. On the policies andprocesses 63 moons is most compliant and employee friendly. A number of employeebeneficial programs (Insurance health care etc.) have been initiated and also employeeengagement initiatives conducted which makes 63 moons as one of the best companies towork. 63 moons believes in equality of all religions and hence celebrates all majorfestivals like Ganesh Chaturthi Navratri Diwali Christmas Holi and Eid with similarzeal. Apart from these festive celebrations 63 moons also rejoice with yearly recurringfunctions for employees viz. Annual Day (staff ) Children's Day Women's DayInternational Yoga Day Independence Day etc. In all such events employeesenthusiastically participate and showcase their otherwise hidden talents. Theseinitiatives not only act as catalyst for fun but also goes a step ahead towards ensuringall round inclusivity to conduct employee connect events for social causes like TATAMumbai Marathon Pinkathon (female marathon race) etc. Company is equally concerned aboutholistic wellbeing of all employees. To ensure that they are always in the best of theirmental and physical health sessions on various forms of Yoga TABATA a highintensity interval training method as well as Physio Talks (by renowned Sports andFitness expert) were organized. It also promotes employees to actively participate inIndoor sports competition (JOSHLite) which was organized where employees wholeheartedlyparticipated in different indoor / outdoor games. We have round the year free healthcheck-up camps for the employees (including sub-staff) where through Doctor-on-Siteservices of specialists like Physician Gynecologist Nutritionist PsychiatristDietician Dentist Medical Counselor can be availed. At periodic intervals we alsoconduct camps on vital screening eye check-up hair and skin analysis etc. Theseinitiatives have not only helped us to strengthen our connect with employees but have alsobrought in a sense of general wellbeing and happiness at our workplace.
63 moons continues to trust the ability and quality of its HumanResources and has already started working on the next phase of the Company's growth.The Company treats its employees as integral partners of the organisation's growthstory.
As the organisation charts new horizons and revises its businessstrategy for growth in changing circumstances the employees are adequately equipped withtraining and such other programmed so that they meet the challenges positively and with anattitude to achieve higher goals in their professional lives.
While the Company continues to hire talent from outside it alsoensures that there is a required investment done to scale up the internal talent byproviding behavioral trainings along with domain expertise.
The trainings are on varied scales like training on Excel New ME -Break - Free Workshop on Self Awareness & Work -Life Balance Sales training for Salesteam Velocity Reading Program which helped employee to learn the reading techniques alongwith the Outbound trainings programs. As compared to the industry peers theCompany's attrition number is lower while the focus is on retention of Top and Nichetalent. Structured interventions like our grievance redressal process of Prevention ofSexual Harassment (POSH) Information Security Awareness (ISA) and Innovative Thinking forour employees help us to proactively identify and mitigate risks on human resources andany other organization processes.
Winning Awards and accolades at workplace are never possible withoutemployees support and contribution; hence 63 Moons would like to thank & congratulateeach member for the honour as "Maharashtra Best Employer Brand Awards" at the"13th Employer Branding Awards" as well as "National Best Employer BrandAwards 2018" hosted by the World HRD Congress at Taj Lands End Mumbai. With greatpride we share this award for our organization-wide best practices in Talent ManagementEmployee Engagement Retention Strategies promoting gender diversified workforceattracting millennials.
Your Directors place on record their gratitude to the CentralGovernment State Government clients vendors financial institutions bankers andbusiness associates for their continued support and the trust reposed in the Company. YourDirectors also wish to place on record their appreciation for the continued support ofinvestors business associates and the contribution made by the employees at all levels.
For and on behalf of the Board of Directors
|Venkat Chary ||S. Rajendran |
|Chairman ||Managing Director & CEO |
|DIN: 00273036 ||DIN: 02686150 |
Place : Mumbai
Date : August 09 2019