The Board of Directors of your Company is pleased to present the 24th Annual Reportalong with the audited financial statements for the financial year ended March 31 2019.
1. FINANCIAL HIGHLIGHTS
(All amounts are in र Millions unless otherwise stated)
|Particulars ||2018-2019 ||2017-2018 |
|Revenue from Operations (Net) ||3149.26 ||3183.15 |
|Other Income ||326.67 ||300.02 |
|Total Income ||3475.93 ||3483.17 |
|Profit Before Tax ||1370.19 ||1234.16 |
|Total Tax ||451.95 ||404.11 |
|Profit After Tax ||918.24 ||830.05 |
2. BUSINESS OPERATIONS AND OUTLOOK
Your Company recorded a total income of र 3475.93 Million for the financial year2018-19 as against र 3483.17 Million in 2017-18 resulting in a decrease of 1.1% in thetotal revenue during the year under review on Consolidated basis. The Company continued toposition itself as one of the leading players in market. The Profit after Tax of theCompany rose by 10.62% from र 830.05 Million in 2017-18 to र 918.24 Million in theyear under review.
Outlook of the business has been discussed in detail in the "Management Discussionand Analysis" which forms a part of this Annual Report.
The Board of Directors of your Company have recommended a Dividend @ 20% i.e. र 2/-per equity share for the financial year 2018-19.
The payment of aforesaid Dividend is subject to the approval of the Members at theensuing Annual General Meeting.
4. SHARE BUYBACK
The Board at its meeting held on March 5 2019 approved a proposal for the Company tobuyback its fully-paid-up equity shares of face value र 10/- each from the eligibleequity shareholders of the Company for an amount not exceeding
Rs. 1750 Million. The shareholders approved the proposal of buyback of equity sharesthrough the postal ballot and e-voting that concluded on April 12 2019. The buyback offercomprised a purchase of 6363636 equity shares aggregating 23.87% of the paid-up equityshare capital and free reserves as per the latest audited financial statements of theCompany as on March 31 2018 on a standalone basis at a price of र 275/- per equityshare. The buyback will be offered to all eligible equity shareholders (including thosewho became equity shareholders as on the record date of the Company (i.e. April 26 2019)on a proportionate basis through the र Tender offer' route. In this regard the Promoterand Promoter Group entities have expressed their intention to participate in the buybackvide their letters dated March
6 2019 and may tender up to an aggregate maximum of 4602772 Equity Shares or suchlower number of equity shares in accordance with the provisions of Securities and ExchangeBoard of India (Buyback of Securities) Regulations 2018. The Company had filed the draftletter of offer with Securities and Exchange Board of India (SEBI) on April 24 2019.Further the Company has received final SEBI observations on the Draft Letter of Offerand shall be dispatching the Letter of Offer for the Buyback to the eligible shareholdersappearing on the record date of April 26 2019 on or before May 13 2019.
5. TRANSFER OF PROFITS TO RESERVES
Your Directors have decided not to transfer any amount to General Reserve and to carryforward the entire surplus under the Statement of Profit & Loss.
6. PUBLIC DEPOSITS
During the year under review your Company did not accept any deposits within themeaning of Chapter V of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014 as amended from time to time.
7. REPORT ON PERFORMANCE OF SUBSIDIARIES
A statement containing salient features of the financial statements of SubsidiaryCompanies in Form AOC-1 as required under section 129 (3) of the Companies Act 2013forms a part of this Annual Report and is annexed as Annexure A. The auditedfinancial statements in respect of each of the subsidiaries shall be kept open forinspection at the Registered Office of the Company on all working days between 11.00 a.m.to 1:00 p.m. upto the date of the forthcoming Annual General Meeting. Further the Companywill make available the audited annual accounts and related information of the subsidiarycompanies upon request by any Member of the Company.
8. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements ("CFS") of your Company along with itssubsidiaries as at March 31 2019 have been prepared in accordance with the IndianAccounting Standard on र Consolidated Financial Statements' issued by the Institute ofChartered Accountants of India read together with the provisions of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("the SEBI (LODR) Regulations") form a part of this Annual Report. TheAuditors' Report on the CFS is also attached which is unqualified.
9. MANAGEMENT DISCUSSION AND ANALYSIS
As per the provisions of Regulation 34 of the SEBI (LODR) Regulations 2015 a detailedreview by the Management of the business operations of the Company future outlook of itsbusiness is presented under separate section "Management Discussion andAnalysis" which forms a part of this Annual Report.
10. CORPORATE GOVERNANCE
Our value system culture and policies reflect in our Corporate Governance practices.The Company has complied with the regulatory provisions for Corporate Governance asprescribed under Schedule V of SEBI (LODR) Regulations 2015. The quarterly CorporateGovernance Reports are submitted with the stock exchanges in compliance with theregulatory provisions. M/s J. B. Bhave & Co. Practicing Company Secretary confirmingcompliance of conditions of the Corporate Governance forms a part of this Annual Report.
11. COMPLIANCE WITH THE CODE OF CONDUCT
A declaration signed by the Managing Director & CEO affirming compliance with theCompany's Code of Conduct by the Directors and Senior Management Personnel for thefinancial year 2018-19 as required under Schedule V of the SEBI (LODR) Regulations formsa part of this Annual Report.
12. DIRECTORS & KEY MANAGERIAL PERSONNEL
Mr. Sanjay Katkar (DIN: 00397277) Joint Managing Director of the Company retires byrotation at the ensuing Annual General Meeting and being eligible offers himself forreappointment. A Profile of Mr. Sanjay Katkar as required by Regulation 36(3) of the SEBI(LODR) Regulations are given in the Notice convening the forthcoming Annual GeneralMeeting.
Mr. Kailash Katkar Managing Director & CEO Mr. Sanjay Katkar Joint ManagingDirector & CTO Mr. Nitin Kulkarni Chief Financial Officer are the Key ManagerialPersonnel of the Company within the meaning of sections 2(51) and 203 of the CompaniesAct 2013 read together with the Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 as on March 31 2019.
During the year Mr. Raghav Mulay Company Secretary and who was also Key ManagerialPersonnel of the Company had resigned effective January 16 2019 and Mr. Srinivasa RaoAnasingaraju is appointed as Company Secretary of the Company effective May 10 2019 whois designated as Key Managerial Personnel of the Company.
Mr. Pradeep V. Bhide an Independent Director resigned as Member of the Boardeffective April 01 2019.
13. BOARD MEETINGS
During the financial year 2018-19 6 (Six) Board meetings were held details are asunder;
|S. No. ||Date of Meeting |
|1. ||April 10 2018 |
|2. ||May 10 2018 |
|3. ||August 08 2018 |
|4. ||November 12 2018 |
|5. ||February 13 2019 |
|6. ||March 05 2019 |
The maximum time gap between any two meetings did not exceed prescribed period of onehundred twenty days.
14. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 Directors of your Company herebystate and confirm that:
a) in the preparation of the annual accounts for the year ended March 31 2019 theapplicable accounting standards have been followed along with proper explanation relatingto material departures; b) they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company for the same period; c) the Directors havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe company and for preventing and detecting fraud and other irregularities; d) they haveprepared the annual accounts on a going concern basis; e) they have laid down internalfinancial controls in the company that are adequate and were operating effectively. f)they have devised proper systems to ensure compliance with the provisions of allapplicable laws and these are adequate and are operating effectively.
15. DECLARATION OF INDEPENDENCE BY INDEPENDENT DIRECTORS
The Company has received necessary declarations from each Independent Director undersection 149(7) of the Companies Act 2013 that he/she the criteria of independence laiddown in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
16. PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND DIRECTORS
The Board has established a comprehensive process to evaluate the performance of theDirectors Committee and the Board. The performance evaluation matrix defining thecriteria of evaluation for each of the above has been put in place. The performanceevaluation of the Independent Directors was carried out by the Board (excluding theDirector being evaluated). The Independent Directors also reviewed the performance ofNon-Independent Directors. The Chairman had updated the other Members of the Board aboutthe outcome of the process.
17. COMMITTEES OF THE BOARD
During the year under review the composition of different Committees of your Board ofDirectors is given hereunder:
|Sr. No ||Committee ||Chairperson ||Member ||Member ||Member ||Member |
|1 ||*Audit Committee ||Mr. Pradeep Vasudeo Bhide ||Mr. Kailash Katkar ||Mr. Manu Parpia ||Ms. Apurva Joshi ||Ms. Priti Rao |
|2 ||Nomination and Remuneration Committee ||Mr. Manu Parpia ||Mr. Kailash Katkar ||Mr. Pradeep Vasudeo Bhide || || |
|3 ||Stakeholders Relationship Committee ||Mr. Mehul Savla ||Mr. Kailash Katkar ||Ms. Apurva Joshi ||#Mr. Pradeep Vasudeo Bhide || |
|4 ||CSR Committee ||Ms. Priti Rao ||Mr. Kailash Katkar ||Mr. Sanjay Katkar || || |
* Audit Committee performs the functions of Risk Management Committee.
#Resigned as a Member of the Stakeholders and Relationship Committee effective June 262018
18. SECRETARIAL AUDIT REPORT
As required by Section 204 of the Companies Act 2013 and Rules made thereunder theBoard appointed M/s. J B Bhave & Co. Practising Company Secretaries Pune as theSecretarial Auditors of the Company for the financial year 2019-20.
The Secretarial Auditor's Report forms part of this Annual Report annexed as AnnexureB
19. STATUTORY AUDITORS
Under Section 139 of Companies Act 2013 and Rules made thereunder it is mandatory forthe Company to rotate its statutory auditors on completion of the maximum term permittedunder the said section. The current Auditors of the Company will be completing their termof 10 years on the conclusion of 24th Annual General Meeting of the Company. In thisregard the Audit Committee had proposed to the Board and the Board had recommendedappointment of M/s MSKA & Associates (Firm Registration No. 105047W) CharteredAccountants as the Statutory Auditors of the Company to hold such office for a period offive consecutive years from the conclusion of 24th Annual General Meeting to theconclusion of 29th Annual General Meeting subject to approval by Members of the Company.
M/s MSKA & Associates Chartered Accountants have confirmed their eligibility andwillingness to accept office if appointment is ratified by the Members of the Company.
20. AUDIT OBSERVATIONS
Auditors' observations are suitably explained in notes to the Accounts and areself-explanatory.
21. COST AUDITORS
Pursuant to the provisions of Section 148(3) of the Companies Act 2013 and applicablerules the Board has appointed M/s. Bhavesh Marolia & Associates as the Cost Auditorsof the Company to conduct an audit of cost records maintained by the Company for thefinancial years 2019-20 and 2020-21 at a remuneration of र 62000/- and र 70000/-respectively plus applicable taxes and out of pocket expenses. The remuneration payableto the Cost Auditors is subject to the approval of the Members at the ensuing AnnualGeneral Meeting.
22. INTERNAL AUDITORS
The Board appointed Earnst & Young LLP Chartered Accountants as Internal Auditorsof the Company for the financial year 2019-20.
23. PARTICULARS OF EMPLOYEES REMUNERATION
Pursuant to the provisions of Rule 5 of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 a statement showing details of personnel drawingremuneration in excess of the prescribed limit under the said rules are annexed as Rs.Annexure C' to the Directors' Report.
During the year under review the Company continued to focus on talent conservation andtalent development.
24. EMPLOYEE STOCK OPTION SCHEME
Your Company has two Employee Stock Option Plans namely Employees Stock Option Scheme2010 and Employees Stock Option Scheme 2014 for granting Term based and performance basedStock Options to Employees.
During the year under report no employee has been granted stock options equal to orexceeding 1% of the issued capital (excluding outstanding warrants and conversions) ofyour Company.
The details of activities under the scheme have been summarised in the Notes formingpart of Financial Statements and annexed as Annexure D.
25. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
Particulars required to be furnished under the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules 1988 are as under:
Foreign Exchange earnings and outgo:
The operations of the Company involve low energy consumption. The Company has ensuredthat adequate measures are being taken to conserve energy.
Technology Absorption Adaptation and Innovation
The Company continues to use the latest technology for improving the productivity andquality of its products and services and also focuses on innovation and protectingconsumers around the world with latest technology. With its continued focus on R&Dthe company aims at releasing newer features as well as newer products in retail as wellas enterprise/ government segment. During the year under review the Company has initiatedimplementation of SAP. The implementation of SAP would provide thrust to the Company'soperations by further streamlining the processes as well as bringing more linearity.
The company has intensified its efforts on unique opportunities which the small andmid-size businesses are projecting with the digitisation of India. Developing productsthat will address the cyber threats to these businesses and protecting their valuable datais an important area where the Company is innovating. In coming years more investmentwill go into R&D of several technologies targeted towards products for enterprisegovernment and retail segments of your Company.
Benefits derived from the R & D Activities:
Development of highly innovative product providing software security solutions and alsofulfilling various added demands of consumers. The expenditure incurred in the same isdetailed in the notes to Accounts annexed herewith.
26. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Particulars of Loans Guarantees and Investments as on March 31 2019 are given underNotes to the financial statements.
27. RELATED PARTY TRANSACTIONS
All the related party transactions carried out during the year were carried out atArm's Length basis and in ordinary course of business. There were no materiallysignificant related party transactions with the Company's Promoters Directors Managementor their relatives which could have had a potential conflict with the interests of theCompany.
All the transactions with related parties were approved by the Audit Committee and theBoard of Directors. The particulars of contracts entered during the year are given in FormAOC-2 enclosed as Annexure E.
28. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has a strong social commitment towards the society we live in. TheBoard of Directors of your Company is conscious of their inherent responsibility towardscontinued contribution to the society at large. This idea inspires your Company to be atrustworthy partner in building our nation and an ethical business player with thisinspiration your Company had formed a public charitable trust र Quick Heal Foundation'.
Your Company selects one or more CSR activities as specified under Schedule VII ofthe Companies Act 2013 for implementation in the area of its operation. The Companystrives to promote cyber awareness and internet security and is dedicated towardspromoting environment sustainability
The Board of Directors of your Company has constituted a CSR Committee to help theCompany to frame monitor and execute the CSR activities of the Company under its CSRscope. The Committee defines the parameters and observes them for effective discharge ofthe social responsibility of your Company. The Directors have further approved the CSRPolicy of the Company to provide a guideline for CSR activities of the Company.
During the year under review the Company has spent
Rs. 14200000/- on CSR activities out of the total amount of र 20928128/- as perprovisions of the Section 135 of the Companies Act 2013.
Your Company was in the process of further identifying worthwhile avenues for CSRexpenditure during the year and in its absence there was unspent of
Rs. 6728128/-. The Company continues to remain committed towards undertaking CSRactivities for the welfare of the society.
A Report on CSR activities of your Company under the provisions of the CompaniesAct 2013 during the financial year 2018-19 is given as Annexure र F'.
29. ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Board of Directors of your Company are responsible for ensuring that the InternalFinancial Controls ("IFC") are laid down in the Company and that such controlsae adequate and are operating efficiently and effectively. The Company's IFC policies arecommensurate with its requirements and are operating effectively. The Internal FinancialControls covered the policies and procedures adopted by the Company for ensuring orderlyand efficient conduct of business including adherence to the Company's policiessafeguarding of the assets of the Company prevention and detection of fraud and errorsaccuracy and completeness of accounting records and the timely preparation of reliablefinancial information.
30. VIGIL MECHANISM (WHISTLE BLOWER POLICY)
The Company has a well laid down Vigil Mechanism (Whistle Blower Policy) details ofwhich are given in the Report on Corporate Governance forming a part of this AnnualReport. The Company has also uploaded the said Whistle Blower Policy on its website athttps://www.quickheal.co.in/ documents/investors/policies/Whistle-Blower-Policy.pdf.
31. RISK MANAGEMENT POLICY
The Audit Committee also functions as the Risk Management Committee. The Company hasput in place a robust Risk Management Policy which facilitates identification of risks andalso mitigation thereof. The Audit Committee is updated on the risks on a quarterly basis.There are no risks which in the opinion of your directors threaten the existence of theCompany. However risks that may pose a concern are explained under Management Discussionand Analysis which forms part of this Annual Report.
32. OTHER MATTERS
Your Directors state that during the financial year under review -
i. Neither the Managing Director nor the Whole-time Director of the Company receivedany remuneration or commission from any of its subsidiaries.
ii. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and the Company's operations in future.
33. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of Annual Report as on March 31 2019 in FormMGT - 9 is placed on the website of the Company i.e.https://www.quickheal.co.in/documents/ investors.
34. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an Anti-Sexual Harassment Policy in line with requirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. All employees (permanent contractual temporary trainees) are covered under thispolicy. Internal Complaints Committee(s) (ICC) has been set up across all its locations inIndia to address complaints received regarding sexual harassment.
There were no complaints reported during the financial year 2018-19
35. MATERIAL CHANGES/EVENTS AFTER BALANCE SHEET DATE
There were no material changes and commitments affecting the financial position duringthe period since the end of the financial year till the date of this report.
Your Board places on record the help and the support received from the from customersvendors investors bankers end users dealers distributors business partnersregulatory bodies and other business constituents during the year under review. FurtherBoard places on record its appreciation for the co-operation received from the employees.We also wish to acknowledge the support received from various government and regulatoryauthorities.
For and on the behalf of the Board of Directors
Managing Director & CEO (DIN: 00397191)
Joint Managing Director & CTO (DIN: 00397277)
Date: May 10 2019