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ADC India Communications Ltd.

BSE: 523411 Sector: Telecom
NSE: KRONECOMM ISIN Code: INE833A01016
BSE 00:00 | 24 Apr ADC India Communications Ltd
NSE 05:30 | 01 Jan ADC India Communications Ltd
OPEN 135.00
PREVIOUS CLOSE 148.00
VOLUME 100
52-Week high 248.90
52-Week low 105.05
P/E 15.01
Mkt Cap.(Rs cr) 62
Buy Price 134.20
Buy Qty 1.00
Sell Price 146.00
Sell Qty 2.00
OPEN 135.00
CLOSE 148.00
VOLUME 100
52-Week high 248.90
52-Week low 105.05
P/E 15.01
Mkt Cap.(Rs cr) 62
Buy Price 134.20
Buy Qty 1.00
Sell Price 146.00
Sell Qty 2.00

ADC India Communications Ltd. (KRONECOMM) - Director Report


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Company director report

To the Members

The Board of Directors have pleasure in presenting the 31st Annual Report on thebusiness and operations of your Company along with the audited financial statements forthe financial year ended March 31 2019.

Financial Results

Key highlights of the financial results of your

Company prepared as per the Indian Accounting

Standards ("Ind AS") for the financial year ended

March 31 2019 are as under:

(Rs. in lakhs)

Particulars Year ended 31st March 2019 Year ended 31st March 2018
Revenue from operations 8562.21 6544.41
Other Income 305.76 303.94
Total Revenue 8867.97 6848.35
Profit before depreciation and Tax 900.40 615.80
Depreciation 32.58 29.23
Profit before Tax 867.82 586.57
Tax Expense 281.49 232.86
Profit after Tax 586.33 353.71
Other Comprehensive
Income 3.24 (6.59)
Total Comprehensive
Income 589.57 347.12

FINANCIAL PERFORMANCE

In the financial year 2018-19 the overall revenue from operations grew by 31% over thatof previous year. Revenue from the Telecommunication business declined by 18% and therevenue from IT-Networking (Enterprise network) business grew by

45% over that of previous year. Profit before tax for the year grew by 48% over that ofprevious year.

DIVIDEND

Pursuant to the approval of the Board of Directors on October 29 2018 your Companyhad distributed an interim dividend of Rs.20.00 per equity share of the face value ofRs.10/- each to Members who were on the Register of Members of the Company as onNovember 09 2018 being the record date fixed this purpose.

Your Directors have recommended final dividend of Rs.4.00 per equity share ofthe face value of Rs.10/-each to be appropriated from the profits of the financial yearended March 31 2019 subject to the approval by the Members at the ensuing Annual GeneralMeeting.

STRATEGY AND OPERATIONS

Enterprise network market growth continues to improve but the pressure onprofitability continues with greater competition across each of the market segment. TheTelecom front continues to grapple with fewer orders and pressure on margins in the marketplace for every single Opportunity. Your Company foresee continued growth in Enterprisenetwork market in the next few years and another challenging year for the Telecom sectorwhich continue to be volatile. Your Company do see continues growth in Fiber Business overcopper due to multifold increase in Bandwidth requirements with denser wireless &deeper fiber deployments across all infrastructure projects. With increase in SmartBuilding your Company do see a growth in Category 6A cabling system being deployed acrossthe network with the Digital ceiling concept.

With stable Government in place policy & decision-making is expected to improve incoming years. Market is expected to improve driven by investments in Infrastructureprojects Defence sector E-commerce Digital India & Smart city initiatives. YourCompany will be able to favorably participate in the areas of its strength within eachOpportunity as the market activities picks up.

During the year your company continued its focus on growing revenues andprofitability. Apart from outsourcing its major portion of manufacturing operations theCompany continued to look at other ways of cost reduction to be competitive in the marketplace.

DIRECTORS

Mr.Ravi Bosco Rebello retires by rotation at the ensuing Annual General Meeting of theCompany and being eligible offers himself for re-appointment. The Members of the Companyat the 26th Annual General Meeting held on August 08 2014 had appointed Mr. J.N.Mylaraiahas Managing Director of the Company for a term of five years ending on

March 31 2019. The Board of Directors based on the recommendation of the Nomination& Remuneration Committee have at their meeting held on February 11 2019 re-appointedMr. J.N.Mylaraiah as the Managing Director of the Company for a further term of five yearswith effect from April 01 2019 to March 31 2024.

The Members of the Company at the 26th Annual General Meeting held on August 08 2014had appointed Mr. S. Devarajan and Mrs. Revathy Ashok as Independent Directors of thecompany for a term of five years ending on March 31 2019 ("first term"). TheBoard of Directors based on the recommendation of the Nomination & RemunerationCommittee have at their meeting held on February 11 2019 re-appointedMr.S.Devarajan and Mrs. Revathy Ashok as Independent Directors of the Company for a secondterm of five consecutive years from April 01 2019 to March 31 2024. Brief details ofMr.Ravi Bosco Rebello Mr. J.N.Mylaraiah Mr. S. Devarajan and Mrs. Revathy Ashokwho are proposed to be re-appointed is furnished in the Explanatory Statement to theNotice of the 31st Annual General Meeting.

KEY MANAGERIAL PERSONNEL

There were no changes in the Key Managerial Personnel of the Company during the year.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the

Independent Directors of the company confirming that they meet the criteria ofindependence as provided under section 149(6) of the Companies Act 2013 and under theSEBI (Listing Obligation and Disclosure Requirements) Regulations 2015.

BOARD MEETINGS

Seven Board meetings were held during the financial year 2018-19 on April 19 2018 May23 2018; July 18 2018; August 10 2018; October 29 2018; February 11 2019 and March25 2019.The details of meetings held by various Committees of the Board are given in theCorporate Governance Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3) (C) of the Companies Act 2013 theDirectors based on the information and representations received from the CompanyManagement confirm that: a. In the preparation of Annual Accounts applicable AccountingStandards have been followed with no material departures; b. The Directors had selectedsuch accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of the financial year and of the profit of the Company for thatperiod ; c. The Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities ; d. The Directors had prepared the Annual Accounts on a ‘goingconcern' basis; e. The Directors had laid down internal financial controls to be followedby the company and that such internal financial controls are adequate and have beenoperating effectively; and f. The Directors had devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.

DIRECTORS' APPOINTMENT AND REMUNERATION

Considering the requirements of the skill-sets on the Board persons havingprofessional expertise in their individual capacity as independent professionals and whocan effectively contribute to the Company's business and policy decisions are consideredby the Nomination and Remuneration Committee for appointment of new Directors on theBoard. The Non-Executive Independent Directors appointed on the Board are paid sittingfees for attending the Board and Board Committee Meetings. No other remuneration orcommission is paid to the Non-Executive Independent Directors. Non-ExecutiveNon-IndependentDirectorsareneitherpaidanysitting fees nor paid any commission. Theremuneration paid to the Managing Director is governed by the relevant provisions of theCompanies Act 2013 rules of the Company and Members approval.

AUDITORS AND AUDITORS' REPORT

At the 26th Annual General Meeting of the Company held on August 08 2014 M/s. DeloitteHaskins & Sells were appointed as the Statutory Auditors of the Company for a term offive years from the the conclusion of this Annual General Meeting until the conclusion ofthe 31st Annual General Meeting. Consequently their term of appointment will expire on theconclusion of the forth coming 31st Annual General Meeting of the Company.

The Board of Directors based on the recommendation of the Audit Committee have attheir meeting held on May 28 2019 recommended the re-appointment of Deloitte Haskins& Sells as the Statutory Auditors of the Company for a period of three yearscommencing from the conclusion of the 31st Annual General Meeting of the Company. There-appointment of M/s. Deloitte Haskins & Sells is being placed before the 31st AnnualGeneral Meeting for the Members approval.

The Auditors report does not contain any qualification reservation or adverse remark.

SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT

Pursuant to the provisions of section 204 of the Companies 2013 and the Rules madethereunder M/s.V.Sreedharan and Associates Practicing Company Secretaries were appointedas the Secretarial Auditors to conduct a secretarial audit of the Company's Secretarialand related records for the financial year 2018-19. The Secretarial Auditors' Report forthe financial year ended March 31 2019 is annexed to this Report as Annexure 1. Thesecretarial audit report does not contain any qualification reservation or adverse remark

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to the provisions of Section 135 of the Companies Act 2013 and the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has spent an amount ofRs.12 lakhs towards various CSR Programs undertaken by the Company during the year.Education and Health were the focal areas during the year. The Annual Report on CSRactivities in accordance with the Companies (Corporate Social Responsibility) Rules 2014is annexed to this Report as Annexure 2.

CORPORATE GOVERNANCE

Your Company has always practiced sound corporate governance and has complied withvarious provisions of Corporate Governance.

As required under Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 Corporate Governance Reportand the Statutory Auditors' compliance of conditions of Certificate

Corporate Governance forms part of the Annual Report.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority

(Accounting Audit Transfer and Refund) Rules 2016 (‘the Rules') all unpaid orunclaimed dividends are required to be transferred by the Company to the IEPF establishedby the Government of India after the completion of seven years. Further according to theRules the shares on which dividend has not been paid or claimed by the shareholders forseven consecutive years shall also be transferred to the demat account of the IEPFAuthority

Accordingly during the financial year 2018-19 unclaimed dividend amount of Rs.0.77Lakhs pertaining to dividend declared for the financial year

2009-10 was transferred to the Investor Education and Protection Fund on April 122018. Further in terms of the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 as amended the Company transferredthe corresponding shares where the dividends for the last seven consecutive years havenot been claimed by the concerned shareholders to the demat account of the IEPF Authorityon May 10 2018.

TRANSFER TO RESERVES

During the year no amount has been transferred to the General Reserve.

. WEBSITE OF THE COMPANY

The Company maintains a website www.adckcl.com where information related to the Companyare provided.

FIXED DEPOSITS

During the year the Company has not accepted any fixed deposits. Hence there is nooutstanding amount as on the Balance Sheet date.

LISTING

The equity shares of the Company are listed with Bombay Stock Exchange Limited. Thereare no arrears on account of payment of listing fees to them.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION A.Conservation of Energy

The following energy conservation measures were carried out during the year:

Replacement of CFL fittings with LED lights in the factory resulting in energy savingof 225KW per month and corresponding savings in cost.

• Installation of LED lights in the Assembly Line at Sub-Contractor location.

B.T echnology

During the year the Company has set own Server System and moved all data from theerstwhile server to the new server without impacting business operations.

C.Research and Development

• Installed 250 KVA DG set at sub-contractor location to reduce wastage of rawmaterials.

• Ergonomic chairs provided to the operators for work comfort.

Hazardous materials being stored in fire resistance cabinet.

• Hi Reach Stacker installed at sub-contractor's location for material handling.

• Replacement of asbestos sheets with colour coated roofing sheets at visitorslongue and DG set areas in the factory.

FOREIGN EXCHANGE EARNINGS AND OUTFLOW

During the year your Company has earned Foreign Exchange of Rs.3.58 Lakhs and theForeign

Exchange outflow was Rs.30.69 lakhs

EXTRACT OF ANNUAL RETURN

As required under the provisions of section 92(3) of the Companies Act. 2013 an extractof the annual return for the year ended March 31 2019 is annexed to this report asAnnexure 3.

MANAGERIAL REMUNERATION AND RELATED DISCLOSURES

The details of the remuneration paid to the Directors of the Company is mentioned inthe Report of Corporate Governance. The disclosure pursuant to the provisions of section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed to this report as Annexure 4.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the Company will be provided uponrequest. In terms of Section 136 of the Companies Act 2013 the Annual Report andAccounts are being sent to the Members and others entitled thereto excluding theinformation on employees' particulars which is available for inspection by the Members atthe Registered Office of the Company during business hours on working days of the Companyup to the date of the 31st Annual General Meeting. If any Member is interested inobtaining a copy thereof such Member may write to the Company Secretary in this regard

WHISTLE BLOWER MECHANISM

The Company has established a mechanism called "Vigil Mechanism Policy" foremployees directors and others who are associated with the Company to report tomanagement instances of unethical behavior actual or suspected fraud or violation of theCompany's code of conduct. The Policy provides adequate safeguards against victimizationof employees/directors who avail the mechanism. The Vigil Mechanism also cover the WhistleBlower mechanism aspect as stipulated under clause 49 of the Listing Agreement The Companyaffirms that no person has been denied access to the Audit Committee in this respect. Thepolicy has been communicated to all employees by displaying the same on the Company'swebsite.

SUBSIDIARY/ASSOCIATES/JOINT VENTURE COMPANIES

. The Company does not have any Subsidiary/ Associate/Joint Venture Company.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has implemented a policy on Prevention Prohibition and Redressal of SexualHarassment of Women at Workplace. The Company is committed to creating a safe and healthyworking environment. The Company believes that all individuals have the right to betreated with dignity and strives to create a workplace which is free of gender bias andSexual Harassment. The Company has a zero tolerance approach to any form of SexualHarassment. The policy has been displayed in the Company's website.

During the year 2018-19 the Company has not received any complaint of sexualharassment.

RELATED PARTY TRANSACTIONS

The Related Party Transaction Policy for determining the materiality of related partytransactions and on the dealings with related parties has been displayed in the Company'swebsite www.adckcl.com.

All transactions with related parties during the year were in the ordinary course ofbusiness and at arm's length. There are no related party transactions during the yearhaving potential conflict with the interest of the Company at large. The details ofrelated party transactions are disclosed in Note No.32 to the Financial statements.

RISK MANAGEMENT

The Company has formed a Risk Management Committee and the constitution and terms ofreference of this Committee are set out in detail in the Corporate Governance Report. TheRisk Management Committee at its meeting held on February 11 2019 discussed thevarious risks encountered by the Company and the processes adopted by the Company tomitigate these risks. The same was also reviewed by the Board of Directors at its meetingheld on the same day.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Your Directors to the best of their ability have laid down internal financial controlsto be followed by the Company which they believe are adequate keeping in view the sizeand nature of Company's business.

Adequate financial procedures are in place to ensure that all the assets aresafeguarded protected against loss and all transactions are authorized recorded andreported correctly. This ensures the quality and reliability of financial data financialstatements and financial reporting. Your Company's internal financial controls aredeployed through an internally evolved framework that address material risks in yourCompany's operations and financial reporting objectives through a combination of entitylevel controls and process controls (both manual and automated) information contributionstechnology based controls period end financial reporting and closing controls and throughinternal audit. The Audit Committee of the Board reviews the adequacy of internalfinancial controls on an ongoing basis to identify opportunities for improvement in theexisting systems to further strengthen the internal control environment in your Company.

REPORTING OF FRAUDS

During the year there was no instance of fraud which required the Statutory Auditors toreport under section 143(12) of the Companies Act 2013 and the Rules framed thereunder.

BOARD EVALUATION

The Company's Policy and Process for Board evaluation lays down a structuredquestionnaire to be used in the evaluation of the entire Board of the Company BoardCommittees and Individual

Directors. This Policy has been displayed in the Company's website www.adckcl.com.Using the structured questionnaire the Board of Directors has carried out an annualevaluation of its own performance Board Committees and individual Board members pursuantto the provisions of the Companies Act 2013 and SEBI Listing Regulations. The Directorshave expressed their full satisfaction with the performance of the Board Board Committeesand the members of the Board.

Further the Independent Directors at their meeting held during the year reviewed theperformance of the Board Non-Independent Directors and other matters as stipulated underthe SEBI Listing Regulations.

LOANS GUARANTEES OR INVESTMENTS

The Company has not given any loan or guarantee nor has made any investment during thefinancial year 2018-19 attracting the provisions of section 186 of the Companies Act2013.

MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financialposition of the Company between the financial year ended March

31 2019 and the date of the Directors Report.

ACKNOWLEDGEMENTS

Your Directors place on record its appreciation of made by the employees thesignificantof the Company during the year under review. The Company's consistent growth was madepossible by the hard work cooperation and support of employees at all levels. YourDirectors also thank the customers channel partners distributors vendors and bankersfor their support and co-operation during the year. Your Directors also thank thePromoters of the Company for their advice and assistance during the year.

For and on behalf of the Board of Directors

S.Devarajan J.N.Mylaraiah

Chairman Managing Director

Place: Bangalore

Date: May 28 2019