The Board of Directors hereby submits the report of the business and operations of yourCompany ("the Company or "Tejas") along with the audited financialstatements for the financial year ended March 31 2018. The consolidated performance ofthe Company has been referred to wherever required.
1. Results of our operations and state of affairs
in Rs. crore except per share data
| ||Standalone ||Consolidated |
|Particulars ||2018 ||2017 ||2018 ||2017 |
|Revenue from operations (1) ||761.07 ||919.72 ||767.44 ||932.58 |
|Other Income ||27.22 ||7.13 ||27.83 ||8.66 |
|Total income ||788.29 ||926.85 ||795.27 ||941.24 |
|Expenses || || || || |
|Cost of materials consumed ||382.30 ||515.39 ||382.42 ||514.05 |
|Excise duty ||17.64 ||57.95 ||17.64 ||57.95 |
|Employee benefit expense ||88.65 ||81.67 ||92.26 ||84.69 |
|Finance costs ||13.45 ||31.09 ||13.40 ||31.81 |
|Depreciation and amortization expense ||61.27 ||56.42 ||61.27 ||56.42 |
|Other expenses ||118.34 ||110.18 ||122.24 ||112.16 |
|Total expenses ||681.65 ||852.70 ||689.23 ||857.08 |
|Profit before exceptional items and tax ||106.64 ||74.15 ||106.04 ||84.16 |
|Exceptional Item ||- ||30.47 ||- ||30.47 |
|Profit before tax ||106.64 ||43.68 ||106.04 ||53.69 |
|Income tax expense || || || || |
|Current tax ||23.78 ||1.20 ||23.78 ||1.20 |
|Deferred tax (benefit) ||(24.26) ||(40.49) ||(24.26) ||(40.49) |
|Total tax expense ||(0.48) ||(39.29) ||(0.48) ||(39.29) |
|Profit after tax ||107.12 ||82.97 ||106.52 ||92.98 |
|Other comprehensive income || || || || |
|Items that will not be reclassified to profit or loss ||(1.61) ||0.30 ||(1.61) ||0.30 |
|Items that will be reclassified to profit or loss ||- ||- ||(0.15) ||0.28 |
|Total comprehensive income for the period ||105.51 ||83.27 ||104.76 ||93.56 |
|Retained earnings- opening balance ||14.88 ||(68.39) ||15.86 ||(77.42) |
|Add: Transferred from other reserve ||0.20 || ||0.20 || |
|Less: Items that will be reclassified to profit or loss ||- ||- ||(0.15) ||0.28 |
|Retained earnings- closing balance ||120.59 ||14.88 ||120.97 ||15.86 |
|Earnings per equity share || || || || |
|Equity shares of par value Rs.10 each || || || || |
|Basic ||12.48 ||12.58 ||12.41 ||14.09 |
|Diluted ||11.79 ||12.58 ||11.73 ||14.09 |
(1)Revenue from operations for the year ended March 31 2017 was inclusive ofexcise duty of
Rs. 57.95 crore. Post introduction of Goods and Services Tax (GST)effective July 1 2017 revenue from operations for the year ended March 31 2018 is net ofthe related GST
Rs. 70.56 crore. Accordingly the revenue from operations is notstrictly comparable.
in Rs. crore
| ||Standalone ||Consolidated |
|Particulars ||2018 ||2017 ||2018 ||2017 |
|Bank balances and deposits with maturity up to three months ||213.48 ||29.86 ||214.19 ||31.06 |
|Bank balances other than above || || || || |
|Current ||21.76 ||39.96 ||21.76 ||39.96 |
|Deposits with original maturity of more than twelve months ||0.04 ||99.21 ||0.04 ||99.21 |
|Investment in mutual funds ||76.52 ||- ||76.52 ||- |
|Deposits with financial institutions disclosed under other current financial assets ||205.00 ||- ||205.00 ||- |
|Cash and cash equivalents including margin money ||516.80 ||169.03 ||517.51 ||170.23 |
|less: Balances held as margin money or security against borrowings or guarantees ||(4.81) ||(47.90) ||(4.81) ||(47.90) |
|Cash and cash equivalents excluding margin money ||511.99 ||121.13 ||512.70 ||122.33 |
|Net current assets(1) ||317.10 ||498.98 ||327.42 ||503.63 |
|Property plant and equipment ||35.98 ||27.99 ||35.98 ||27.99 |
|Intangible assets (including under development) ||85.60 ||83.38 ||85.60 ||82.71 |
|Other non-current assets(2) ||204.64 ||144.40 ||193.79 ||139.86 |
|Total assets ||1155.31 ||875.88 ||1155.49 ||876.52 |
|Borrowings(3) ||2.27 ||281.47 ||2.27 ||281.48 |
|Non-current provisions ||1.14 ||2.10 ||1.14 ||2.10 |
|Total equity ||1151.90 ||592.31 ||1152.08 ||592.94 |
|Total equity and borrowings ||1155.31 ||875.88 ||1155.49 ||876.52 |
(1)current assets net of current liabilities as disclosed in balance sheetexcluding the bank balances considered as cash and cash equivalents
(2)excluding bank balances considered as cash and cash equivalents
(3)including current borrowings and current maturities of long-term debt
Our net revenues (net of taxes and component sales) from operations on a standalonebasis declined by 9.3% to Rs. 733.50 crore in fiscal 2018. Our domestic and exportrevenues comprise of 82% and 18% respectively. Out of total revenue 82% (previous year65%) came from India 6% (previous year 13%) came from Americas and 12% (previous year22%) came from Rest of the World.
Our net revenues (net of taxes and component sales) from operations on a consolidatedbasis declined by 9.6% to Rs. 739.87 crore in fiscal 2018. Our domestic and exportrevenues comprise of 82% and 18% respectively. Out of total revenue 82% (previous year65%) came from India 6% (previous year 13%) came from Americas and 12% (previous year22%) came from Rest of the World.
Standalone and Consolidated
During FY 2017 we have reassessed the marketability of our in-production intangibleassets for the development costs of our wireless products and after considering variousfactors such as technological obsolescence that require revision in the existingproducts we have written off accumulated costs relating to past salaries of the wirelessproduct development team amounting to Rs. 30.47 crore.
Our gross profit on a standalone basis amounted to Rs. 292.33 crore (39.9% of netrevenue) as against Rs. 296.92 crore (36.7% of net revenue) in the previous year. Thegross and net research and development costs were 11.8% and 5.1% of our net revenue forthe year ended March 31 2018 as compared to 9.6% and 4.6% for the year ended March 312017. Selling and marketing costs were 10.4% (previous year 8.7%) of our net revenue forthe year ended March 31 2018. The general and administrative expenses were 3.3% (previousyear 3.8%) of our net revenue for the year ended March 31 2018. The operating profitamounted to Rs. 92.87 crore (12.7% of net revenue) as against Rs. 102.69 crore (12.7% ofnet revenue) in the previous year. The profit before tax was Rs. 106.64 crore (14.5% ofnet revenue) as against Rs. 43.68 crore (5.4% of net revenue) in the previous year. Thenet profit was Rs. 107.12 crore (14.6% of net revenue) as against Rs. 82.97 crore (10.3%of net revenue) in the previous year.
Our gross profit on a consolidated basis amounted to Rs. 298.42 crore (40.3% of netrevenue) as against Rs. 310.42 crore (37.9% of net revenue) in the previous year. Thegross and net research and development costs were 11.7% and 5.1% of our net revenue forthe year ended March 31 2018 as compared to 9.4% and 4.5% for the year ended March 312017. Selling and marketing costs were 11.2% (previous year 8.9%) of our net revenue forthe year ended March 31 2018. The general and administrative expenses were 3.4% (previousyear 3.9%) of our revenue for the year ended March 31 2018. The operating profit amountedto Rs. 91.60 crore (12.4% of net revenue) as against Rs. 112.01 crore (13.7% of netrevenue) in the previous year. The profit before tax was Rs. 106.04 crore (14.3% of netrevenue) as against Rs. 53.69 crore (6.6% of net revenue) in the previous year. The netprofit was Rs. 106.52 crore (14.4% of net revenue) as against Rs. 92.98 crore (11.4% ofnet revenue) in the previous year.
Capital Expenditure on tangible assets Standalone and Consolidated
On a standalone and consolidated basis during the year we incurred Tangible capitalexpenditure of Rs. 18.27 crore (previous year Rs. 8.11 crore) comprising Rs. 7.53 crorein R&D cards (previous year - Nil) Rs. 5.67 crore in Laboratory equipment (previousyear Rs. 4.81 crore) Rs. 2.54 crore in Computing equipment (previous year Rs. 1.01crore) Rs. 0.89 crore in Furniture and Fixtures (previous year Rs. 0.59 crore) Rs. 0.55crore in Servers (previous year Rs. 0.48 crore) Rs. 0.46 crore in Electrical installation(previous year Rs. 0.96 crore) Rs. 0.31 crore in Office equipment (previous year Rs. 0.18crore) Rs. 0.19 crore in Vehicles (previous year - Nil) and Rs. 0.13 crore in Networkingequipment (previous year Rs. 0.08 crore).
We are practically a debt-free Company and maintain sufficient cash to meet ourbusiness requirements. Our principal source of liquidity are cash and cash equivalents andthe cash flow we generate from the business. We clearly understand that the liquidity inthe Balance Sheet need to cover financial and business risks and support future growth.
We have cash and cash equivalents of Rs. 511.99 crore on standalone basis and Rs.512.70 crore on a consolidated basis for the year ended March 31 2018 when compared toliquid assets of Rs. 121.13 crore on standalone basis and Rs. 122.23 crore on aconsolidated basis for the year ended March 31 2017.
The cash and cash equivalents on both standalone and consolidated basis include balancewith banks investment in liquid mutual funds and deposits with financial institutions.The details of these investments and deposits are disclosed under the currentinvestments and current financial assets' section in the standalone and consolidatedfinancial statements in this Annual report.
Earnings Per Share
Basic earnings per share declined by 0.8% to Rs. 12.48 (previous year Rs. 12.58) atstandalone level and by 11.9% to Rs. 12.41 (previous year Rs. 14.09) on consolidated basisprimarily towards issuance of shares at IPO.
The Board of Directors aim to grow the business lines of the Company and enhance therate of return on investments of the Shareholders. They periodically review the Company'sability and necessity to distribute dividends to its Shareholders with a view to preservethe profitability and long term growth plans for the Company. Accordingly the Board ofDirectors take into account various factors including current and future earningsprojections current and future cash flow projections capital expenditure requirementsfor current and future projects contingencies regulatory political economic factorswhile making a determination to transfer retained earnings to reserves in entirety orpartially for a given year and to consequently distribute dividend if any. The Board ofDirectors have not recommended any dividend for the year ended March 31 2018.
The Board of Directors at its meeting held on April 24 2018 in accordance with Clause43A of the Listing regulations adopted a dividend distribution policy setting out theparameters and circumstances including external and internal factors and financialparameters that will be taken into account in determining the distribution of dividend andalso the circumstances under which the shareholders of the Company may or may not expectdividend and how the retained earnings shall be utilized. Subject to these parameters theBoard may distribute dividend upto 25 % of the free cash flow of the correspondingfinancial year subject to applicable laws and requisite approvals if any. Free cash flowis defined as net cash provided by operating activities less capital expenditure as perthe consolidated statement of cash flows prepared under Ind AS. Dividend payout includesDividend Distribution Tax (DDT).
The details of Dividend Distribution Policy is available on the Company's website athttps://www.tejasnetworks.com/main-control/ download/Dividend-Distribution-Policy.pdf
During the year under review the Company has issued 2575622 equity shares consequentto the exercise of the employee stock options into equity shares by the eligible employeesof the company and issued 17509727 equity shares at IPO and hence the outstanding paidup equity share capital stands at Rs. 908187600 comprising of 90818760 equity sharesof Rs. 10/ each fully paid up as on March 31 2018.
Particulars of Loans Guarantees or Investments
Loans guarantees and investments covered under Section 186 of the Companies Act 2013forms part of the Notes to financial statements provided in the Annual Report.
Transfer to Reserves
The Company does not propose to transfer amounts to the general reserve out of theamount available for appropriation and an amount of Rs. 107.12 crore on a standalone basisand Rs. 106.52 crore on a consolidated basis is proposed to be retained in the profit andloss account.
We have not accepted any fixed deposit including from the public and as such noamount of principal or interest was outstanding as of the date of the Balance sheet.
Particulars of Contracts or Arrangements Made with Related Parties
All contracts / arrangements / transactions entered into during the financial year withthe related parties were on arm's length basis and were in the ordinary course ofbusiness. There were no materially significant related party transactions with DirectorsKey Managerial Personnel or other designated persons which may have a potential conflictwith the interest of the Company at large. All Related Party Transactions were placedbefore the Audit Committee for approval. Prior omnibus approval of the Audit Committee wasobtained on a quarterly basis for the transactions which are of a foreseen and repetitivenature. The transactions entered into pursuant to the omnibus approval so granted wereplaced before the Audit Committee for their review on a quarterly basis.
The policy on Related Party Transactions as approved by the Board is available at theCompany's website at https://www.tejasnetworks.com/main-control/download/Policy-for-determining-Related-Party-transaction.pdf Particularsof contracts or arrangements with related parties referred to in Section 188(1) of theCompanies Act 2013 in the prescribed Form AOC-2 is attached as Annexure 2' to theBoard's report.
Transition to Indian Accounting Standards
The Ministry of Corporate Affairs (MCA) vide its notification in the Official Gazettedated February 16 2015 notified the Indian Accounting Standards (Ind AS) applicable tocertain classes of companies. Ind AS has replaced the existing Indian GAAP prescribedunder Section 133 of the Companies Act 2013 read with Rule 7 of the Companies (Accounts)Rules 2014. For our Company Ind AS was applicable from April 1 2017 and the same wascomplied with a transition date of April 1 2016 and IGAAP as the previous GAAP.
The following are the areas which had an impact on account of transition to Ind AS:
Recording of deferred taxes.
Fair valuation of certain financial instruments.
Employee costs pertaining to defined benefit obligations.
Discounting of certain long-term financial assets and liabilities.
The reconciliations and descriptions of the effect of the transition from IGAAP to IndAS have been provided in Note 34 in the notes to accounts in the standalone andconsolidated financial statements.
Initial Public Offer (IPO)
The Company has undertaken Initial Public Offer of 30221332 Equity Shares for a cashprice of Rs. 257/- per share including a premium of Rs. 247/- per share aggregating to Rs.776.69 crore comprising a fresh issue of 17509727 Equity Shares aggregating to Rs.450.00 crore and an offer for sale of 12711605 Equity Shares by the sellingshareholders aggregating to Rs. 326.69 crore. The Company equity shares are listed in theNational Stock Exchange of India Limited (Scrip Code No: TEJASNET) and BSE Limited (ScripCode No: 540595) with effect from June 27 2017. The details of the utilization of theproceeds from the IPO is given in Note No. 38 to financial statements provided in thisAnnual Report. The Company has not deviated from the objects of the IPO as mentioned inthe Prospectus with respect to the utilization of the proceeds from the IPO. The listingfees for the fiscal 2019 are already paid to the stock exchanges.
The Company has a robust Risk Management framework to identify evaluate business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage. The business riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting. The Company has formulated a Risk Management Policyand is available on the Company's website at https://www.tejasnetworks.com/main-control/download/Risk-assessment-and-Management-and-mitigation-policy-and-procedures.pdf
According to Regulation 21 (5) of the Listing Regulations the provisions of RiskManagement Committee shall be applicable to top 100 listed entities determined on thebasis of market capitalization. As our Company is not in the top 100 listed entities forthe year ended March 31 2018 the Board at its meeting held on April 24 2018 merged theRisk Management Committee with Audit Committee.
Material changes and commitments affecting financial position between the end of thefinancial year and date of the report
Dividend Distribution Policy - The Board at its meeting held onApril 24 2018 approved the Dividend Distribution Policy in accordance with theRegulation 43A of SEBI Listing Regulations. The policy was adopted to set out theparameters and circumstances that will be taken into account by the Board in determiningthe distribution of dividend to its shareholders. The details of Dividend DistributionPolicy is available on the Company's website athttps://www.tejasnetworks.com/main-control/download/Dividend-Distribution-Policy.pdf
Additional Director - Appointed Mr. Chetan Gupta as an AdditionalDirector of the Company by the Board at its meeting held on April 24 2018. Hisappointment as a Non-Executive and Non Independent director is subject to the approval ofthe shareholders in this AGM and forms part of the Notice to the Members.
Vacation of Office - Mr. Shirish Saraf vacated his office as aNon-Executive and Non-Independent Director of the Company due to operation of law witheffect from April 24 2018.
Merger of the Risk Management Committee with Audit Committee.
2. Company's Overview
Tejas Networks is an India-based optical and data networking products Company. Tejasdesigns develops and sells high-performance and cost-competitive products totelecommunications service providers internet service providers utilities defence andgovernment entities in over 70+ countries. Tejas products utilize programmablesoftware-defined hardware architecture with a common software code-base that delivers anapp-like ease of development and upgrades of new features and technology standards. Tejasis ranked amongst top-10 suppliers in the global optical aggregation segment. A strongbrand name coupled with long-standing client relationships help us to be the employer ofchoice. Expertise in lean automation and continuous improvement help us increaseproductivity and being more for the client. Tejas seeks to differentiate in the market bydelivering business value through deep domain expertise and technology prowess.
Our company has 4 subsidiaries as on March 31 2018
Tejas Communication Pte. Limited (TCPL')
Tejas Communications (Nigeria) Limited (Subsidiary of TCPL)
vSave Energy Private Limited
Tejas (Israel) Limited
No Company has become or ceased to be joint venture or associate company during theyear within the meaning of Section 2(6) of the Act. There has been no material change inthe nature of the business of the subsidiaries. Pursuant to the provisions of Section129(3) of the Act a statement containing the salient features of financial statements ofthe Company's subsidiaries in Form AOC-1 is attached as Annexure 1' which forms partof this report. Further pursuant to the provisions of Section 136 of the Act thefinancial statements of the Company consolidated financial statements along with relevantdocuments and seperate financial accounts in respect of subsidiaries are available onthe website of the Company at https://www.tejasnetworks.com/financial-information-subsidiaries.php
Striking off and closure of unlisted wholly-owned subsidiaries (India/ Overseas) duringthe year
Striking off the name of the Company - vSave Energy Private Limited vSave EnergyPrivate Limited was incorporated on November 06 2013 as a Private Limited Company underCompanies Act 1956 and as a wholly owned subsidiary with a paid up capital of Rs. 0.14crore. The Company has discontinued its operations for the last two years and does notintend to carry on any activity in future and thus made an application with Registrar ofCompanies Bengaluru on December 06 2017 under Section 248(2) of the Companies Act 2013for removal of name of the Company and is awaiting necessary approvals towards the same.We have made a provision for investment in financials amounting to Rs. 0.14 crore for theyear ended March 31 2018.
Closure of the company - Tejas (Israel) Limited
The Company incorporated a wholly owned subsidiary under the State Laws of Israel underthe name and style as Tejas Israel Ltd on December 28 2009 with 900000 Ordinary Shares.During the year ending March 31 2013 we have made the provision for investment in TejasIsrael. The Company has discontinued its operations for the last few years and does notintend to carry on any activity in future the Company has decided to windup theoperations. Hence during the year the Company has filed necessary application with therespective authorities in Israel and is awaiting necessary approvals towards the same.
3. Human Resource Management
Several key initiatives on the Human Resources (HR) front were initiated during thefinancial year through a three pronged approach - Culture Capability and Capacity. Thefocus for Talent Acquisition from campuses of key institutes was aimed at better industryinstitute collaboration and building sustained relationships with them. Focus on rightstaffing and skilling was given greater emphasis for the purposes of spreading theorganization's global footprint. Employee Engagement gained sharper focus with initiativessuch as quarterly all hands meet Women friendly policies were introduced like increasedmaternity leave Adoption Leave Paternity Leave etc. The Company undertookimplementation of HRIS application suite Darwin Box for enabling efficient and costeffective HR systems with the objective of improving the quality of analytics available tohelp in enhancing the quality of decision making with regards to people and processesthroughout the employee life cycle.
Particulars of employees
The ratio of the remuneration of each Director and key managerial personnel (KMP) tothe median of employees' remuneration as per Section 197(12) of the Companies Act 2013read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are provided in Annexure 8' which forms part of the Board's Report.
Additionally the following details form part of Annexure 8 to the Board's Report:
Statement containing the names of top 10 employees in terms of remunerationdrawn
Details of employees posted in India throughout the year and in receipt of aremuneration of Rs. 1.02 crore or more per annum
Details of employees posted in India for part of the year and in receipt of Rs.8.5 lakhs or more a month
The details of employees posted outside India and in receipt of a remunerationof Rs. 60 lakhs or more per annum or Rs. 5 lakhs or more a month can be made available onrequest.
Employee Stock Options (ESOP) / Restricted Stock Units (RSU)
The Company has the following ESOP / RSU Schemes in force:
i. Tejas Networks Limited Employees Stock Option Plan 2014 ("ESOP Plan2014");
ii. Tejas Networks Limited Employees Stock Option Plan 2014-A ("ESOP Plan2014 - A");
iii. Tejas Networks Limited Employees Stock Option Plan 2016 ("ESOP Plan2016");
iv. Tejas Restricted Stock Unit Plan 2017 ("RSU 2017").
The details of the ESOP / RSU Plans as required under the applicable provisions of theAct read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules 2014 areprovided in Annexure 7' which forms part of the Board's Report. Further during theyear the Company has implemented the Restricted Stock Unit Plan. Hence afterimplementation of the RSU plan Company did not grant any new options from the poolavailable from the current ESOP Schemes.
The details of the ESOP / RSU Plans and the disclosure as required under Regulation 14of the SEBI (Share Based Employee Benefits) Regulations 2014 is available on theCompany's website at http:// www.tejasnetworks.com/other-documents.php
Disclosure under the Sexual Harassment of Women at workplace (Prevention Prohibitionand Redressal) Act2013
We have a mechanism in place to foster a positive work place environment free fromharassment of any nature. We have institutionalized the Anti-Sexual Harassment Initiative(ASHI) framework through which we address complaints of sexual harassment at the workplace. We follow a gender-neutral approach in handling complaints of sexual harassment.Our ASHI policy applies to everyone involved in the operations of the Company includingvendors and clients.
We have also constituted an Internal Complaints Committee (ICC) in all locations acrossIndia to consider and address sexual harassment complaints in accordance with the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Thecases are heard and resolved by an independent group.
Our whistleblower policy assures complete anonymity and confidentiality of informationto the reporting individual.
Keeping the objective of fostering a positive work place environment and free fromharassment we conduct the following awareness campaigns:
Orientation of new joinees on the Anti-Sexual Harassment Initiative (ASHI).
ASHI awareness session for our contractual staff.
The details of ASHI cases for the financial year ended March 31 2018:
|Number of cases filed ||Nil |
|Disposal by conciliation ||Nil |
|Disposal by disciplinary action(s) ||Nil |
4. Corporate Governance
Our Corporate Governance philosophy is about maximizing shareholder value legallyethically and sustainably. At Tejas the goal of corporate governance is to ensurefairness to every stakeholder. We believe sound corporate governance is critical toenhance and retain investor trust. We always seek to ensure that our performance is drivenby integrity. Our Board exercises its fiduciary responsibilities in the widest sense ofthe term. Our disclosures seek to attain the best practices in corporate governance. Wealso endeavor to enhance long-term shareholder value and respect minority rights in allour business decisions. Our Corporate governance report for the financial year ended March31 2018 forms part of this Annual Report. We wish to state that the Company has compliedwith all norms of corporate governance applicable to Listed Public Companies as envisagedunder the Companies Act 2013 and in the SEBI Listing Regulations.
Number of meetings of the Board
The Board met eight times during the financial year the details of which are given inthe Corporate Governance Report that forms part of this Annual Report. The intervening gapbetween any two meetings was within the period prescribed by the Companies Act 2013 readwith SEBI Listing Regulations.
Policy on directors' appointment and remuneration
The current policy is to have an appropriate mix of Executive Non-Executive andIndependent Directors to maintain the independence of the Board and separate its functionsof governance and management. As on March 31 2018 the Board consists of five members(two Non-Executive and Non-Independent one Executive and two Non-Executive Independentdirectors).
The Board periodically evaluates the need for change in its composition and size. Thepolicy of the Company on directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under sub-section (3) of Section 178 of the Companies Act 2013 adoptedby the Board is available on the website of the Company athttp://www.tejasnetworks.com/policies-codes.php. We affirm that the remuneration paid tothe directors is as per the terms laid out in the nomination and remuneration policy ofthe Company.
Declaration by independent directors
The Company has received necessary declaration from each Independent Director of theCompany under Section 149 (7) of the Companies Act 2013 stating that the IndependentDirectors of the Company meet with the criteria of their Independence laid down in Section149 (6).
The Board has made a formal evaluation of its own performance and that of itscommittees and individual directors as required under Section 134(3) (p) of the CompaniesAct 2013 based on the Criteria for Evaluation laid down by the Nomination andRemuneration Committee and the Guidance Note on Board Evaluation issued by the Securitiesand Exchange Board of India. The manner in which the evaluation was carried out and theprocess adopted has been given in the Corporate Governance Report.
Directors and Key Managerial Personnel
Mr. Chetan Gupta was appointed as Additional Director by the Board in its meeting heldon April 24 2018. The Board recommends his appointment as Non-Executive andNon-Independent Director of the Company liable to retire by rotation.
Dr. Gururaj Deshpande retires by rotation at the ensuing Annual General Meetingand being eligible seeks re-appointment as Non-Executive and Non-Independent Director ofthe Company. The Board recommends his re-appointment as Non-Executive and Non-IndependentDirector of the Company liable to retire by rotation.
Amb. Leela K Ponappa is being re-appointed as Non-Executive and IndependentDirector for a second term of 5 years with effect from February 16 2018. The Boardrecommends her re-appointment as Independent Director of the Company not liable to retireby rotation.
Vacation of Office
Mr. Shirish Saraf vacated his office as Director of the Company by operation of lawwith effect from April 24 2018.
Other than the above there were no changes in the Directors / Key Management Personnelas on the date of this report.
Committees of the Board
The Company has the following four committees namely: the Audit Committee theNomination and Remuneration Committee the Corporate Social Responsibility Committee theStakeholders Relationship Committee. The composition functions scope number of meetingsheld and attended by the members etc. of each committee are furnished in the Corporategovernance report which forms part of the this Annual Report. There were no instanceswhere the Board did not consider the recommendations made by the Audit Committee undersection 177(8) of Companies Act 2013.
In accordance with the Regulation 21 (5) of the Listing Regulations the provisions ofRisk Management Committee shall be applicable to top 100 listed entities determined onthe basis of market capitalization. As our Company is not in the top 100 listed entitiesas on March 31 2018 the Board at its meeting held on April 24 2018 merged the RiskManagement Committee with Audit Committee.
Internal Financial controls and its adequacy
The Company has adequate Internal Controls with proper checks and balances to ensurethat transactions are properly authorized recorded and reported apart from safeguardingits assets. These systems are reviewed and improved on a regular basis. It has acomprehensive budgetary control system to monitor revenue and expenditure against approvedbudgets on an ongoing basis. The Company's has appointed an independent auditors M/s.Singhvi Dev and Unni Chartered Accountants as Internal Auditors to reviews the controlsacross the key processes and they submit reports periodically to the Management andsignificant observations are also presented to the Audit Committee for review. There isalso a follow up mechanism to monitor implementation of the various recommendations.
Significant and material orders
In July 2017 the Income Tax Department initiated proceedings under Section 132 of theIncome tax Act 1961 and had issued a restraint order on certain bank accounts anddeposits of the Company and later the restraint order was withdrawn. The Company and itsofficials fully co-operated with the Income Tax Department. As on date there is no demandraised by the Income Tax Department.
There are no other significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and the Company's operations in future.
The details of the policies approved by the Board and adopted by the Board are providedin Annexure 9' to the Board's report
Management's Discussion and Analysis
In terms of provisions of Regulation 34 of the Listing Regulations the Management'sDiscussion and Analysis is set out in this Annual Report.
Reporting of fraud by auditors
During the year under review neither the Statutory Auditors nor the SecretarialAuditor has reported to the audit committee under Section 143 of the Companies Act 2013any instances of fraud committed against the Company by its officers or employees thedetails of which would need to be mentioned in the Board's report.
The extract of Annual Return in Form No. MGT-9 as required under under Section134(3)(a) of the Companies Act 2013 for the financial year ending March 31 2018 isannexed hereto as Annexure 3' and forms part of this report. A copy of the AnnualReturn has also been placed on the website of the Company at http://www.tejasnetworks.com/other-documents.php
The Company has complied with all applicable Secretarial Standards issued by theInstitute of Company Secretaries of India New Delhi.
Directors' responsibility statement
The financial statements are prepared in accordance with Indian Accounting Standards(Ind AS) under the historical cost convention on accrual basis except for certainfinancial instruments which are measured at fair values the provisions of the Act (tothe extent notified). The Ind AS are prescribed under Section 133 of the Companies Act2013 (the Act') read with Rule 3 of the Companies (Indian Accounting Standards)Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules 2016. The Companyhas adopted all the Ind AS standards and the adoption was carried out in accordance withapplicable transition guidance.
Accounting policies have been consistently applied except where a newly issuedaccounting standard is initially adopted or a revision to an existing accounting standardrequires a change in the accounting policy hitherto in use. Pursuant to the provisionscontained in Section 134(3) of the Companies Act 2013 the Directors to the best of theirknowledge and belief and according to information and explanations obtained from themanagement confirm that:
In the preparation of the annual accounts for the financial year ended March 312018 the applicable accounting standards had been followed and there are no materialdepartures;
The directors had 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 and loss of the company for that period;
The directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
The directors had prepared the annual accounts on a going concern basis;
The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively
The directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
5. Audit Reports and Auditors
The Statutory Auditors' Report for the year ended March 31 2018 does notcontain any qualification reservation or adverse remark. The Auditors' Report is enclosedwith the standalone and consolidated financial statements in this Annual Report.
The Secretarial Auditor's Report for the year ended March 31 2018 is enclosedas Annexure 5' to the Board's Report. The observation made by the Auditor withrespect to vacation of office by Mr. Shirish Saraf due to operation of law isself-explanatory.
As required by the Listing regulations the certificate on compliance with theregulation of the Corporate governance for the year ended March 31 2018 is enclosed inthis Annual Report. The certificate on compliance with the regulation of the Corporategovernance given by the Secretarial Auditor does not contain any qualificationreservation or adverse remark.
Under Section 139 of the Companies Act 2013 and the Rules made thereunder it ismandatory to rotate the statutory auditors on completion of the maximum terms permittedunder the said section. In line with the requirement of the Companies Act 2013 theMembers in their 17th Annual General Meeting held on September 27 2017 approved theappointment of M/s. Price Waterhouse Chartered Accountants LLP (Firm registration numberNo. 012754N/N500016) as the statutory auditors of the Company for a period of fiveconsecutive years from the conclusion of the 17th Annual General Meeting of the Companytill the conclusion of the 22nd Annual General Meeting subject to ratification of thesaid appointment at the Annual General Meeting. The first year of audit was of thefinancial statements for the year ended March 31 2018 and accordingly the appointment ofM/s. Price Waterhouse Chartered Accountants LLP (Firm registration number No.012754N/N500016) is being placed before the Members for ratification.
In accordance with Section 204 of the Companies Act 2013 and the Rules thereunder theBoard has appointed Mr. Dwarakanath C Practicing Company Secretary (FCS No. 7723 andCertificate of Practice No. 4847) as the Secretarial Auditor of the Company to conductSecretarial Audit for fiscal 2019.
6. Corporate Social Responsibility
Tejas works towards removing malnutrition improving healthcare infrastructuresupporting primary education rehabilitating abandoned women and children and preservingIndian art and culture. The Company's focus has always been to contribute to thesustainable development of the society and environment and to make our planet a betterplace for future generations. During the financial year ended March 31 2018 the Companyspent an amount of Rs. 0.54 crore towards CSR activities which constitutes 2% of theaverage net profits of the Company for the preceding three financial years.
In pursuance of the CSR Policy the Company aims to support projects that promoteeducation and therefore contributed to (i) The Akshaya Patra Foundation Bengaluru whichprovides mid-day meals as an attempt to feed the millions of children in India and givethem the motivation and nourishment they need to pursue an education and a better futureby contributing an amount of Rs. 0.34 crore and (ii) International Institute ofInformation Technology Bengaluru a Deemed University popularly known as IIITBestablished with a vision to contribute to the IT world by focusing on education andresearch entrepreneurship and innovation. The Institute is a registered not-for- profitsociety funded jointly by the Government of Karnataka and the IT industry and Company hasspent an amount of Rs. 0.20 crore towards CSR activity towards IIITB. The CSR policy andinitiatives taken by the Company on Corporate Social Responsibility during the year isavailable on the Company's website athttps://www.tejasnetworks.com/main-control/download/CSR-Policy.pdf
The annual report on the CSR activities in the format prescribed under Rule 8 of theCompanies (Corporate Social Responsibility Policy) Rules 2014 is set out inAnnexure 6' to the Board's Report.
Conservation of energy research and development technology absorption foreignexchange earnings and outgo
The particulars relating to conservation of energy technology absorption research anddevelopment foreign exchange earnings and outgo as required to be disclosed under Section134 (3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts)Rules 2014 are given in Annexure 4' to the Board's Report.
Business Responsibility Report (BRR)
The Listing regulations mandate the inclusion of the BRR as part of the Annual Reportfor top 500 listed entities based on the market capitalization. In compliance with theListing Regulations we have integrated BRR disclosures into our Annual Report. TheBusiness Responsibility Report is available on the Company's website http://www.tejasnetworks.com/other-documents.php
Electronic copies of the Annual report for the year 2018 and the Notice of the 18thAnnual General Meeting are sent to all shareholders whose email addresses are registeredwith the Company/ depository participant (s). For Members who have not registered theiremail addresses physical copies are sent in the permitted mode. To support the"Green Initiative" Members who have not registered their email addresses arerequested to register the same with their DPs in case the shares are held by them inelectronics form and with RTA in case the shares are held by them in physical form.
We thank our employees customers vendors investors bankers financial institutionand all other stakeholders for their continued support during the year. We place on recordour appreciation of the contribution made by our employees at all levels. Our consistentgrowth was made possible by their hard work solidarity cooperation and support.
We thank the Government of various countries where we operate. We thank the Governmentof India particularly the Ministry of Communications the Department ofTelecommunications the Ministry of Labour and employment the Software Technology Park ofIndia the Ministry of Electronics and Information Technology the Ministry of Commerceand Industry the Ministry of Finance the Ministry of Corporate Affairs the CentralBoard of Direct Taxes the Central Board of Indirect Taxes and Customs the Reserve Bankof India (RBI) the Securities Exchange Board of India (SEBI) and the various departmentsunder the state government and union territories and other government agencies for theirsupport and look forward to their continued support in the future.
| ||for and on behalf of the Board of Directors || |
| ||Balakrishnan V ||Sanjay Nayak |
|Place: Bengaluru ||Chairman ||Managing Director and CEO |
|Date: April 24 2018 ||DIN No: 02825465 ||DIN No: 01049871 |