Videocon Industries Ltd.
|BSE: 511389||Sector: Consumer|
|NSE: VIDEOIND||ISIN Code: INE703A01011|
|BSE 00:00 | 24 Apr 2020||Videocon Industries Ltd|
|NSE 05:30 | 01 Jan 1970||Videocon Industries Ltd|
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Videocon Industries Ltd. (VIDEOIND) - Director Report
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Company director report
Your Directors take pleasure in presenting the Twenty-Seventh Annual Report togetherwith the Audited Accounts and Auditors' Report for the financial period ended on 31stMarch 2017.
The performance of the Company on standalone basis for the 15 months period ended on31st March 2017 is summarized below:
(Rs. in Million)
The previous financial year was for 12 months commencing from 1st January2015 to 31st December 2015 and the financial period under review is of 15months commencing from 1st January 2016 to 31st March 2017. Hencethe figures are not comparable.
In order to comply with the requirements of Section 2(41) of the Companies Act 2013and Rules made thereunder the Board of Directors of the Company have accorded theirapproval for extending the financial year by a period of 3 (Three) months so as to end on31st March 2017. The subsequent financial year shall be a period of 12 monthsfrom 1st April to 31st March every year.
CONSUMER ELECTRONICS & HOME APPLIANCES
The period under review was marked by various challenges in both internal and externalenvironment. The performance of the Company was impacted by demonetisation andtransitional phase of GST introduction.
OIL & GAS
The Company continues to explore more and more opportunities in Oil and Gas sector.During the period under review a deep turbulence in Oil and Gas prices due to a supplyover hanged on account of vastly increased production of oil by United States of Americafrom its Shale oil basins was alluded to. The prices of oil have come down significantly.In November 2016 OPEC reached a deal to curtail oil production for the first time since2008. This helped oil prices to rise above the psychological mark of USD 50/bbl.
During the period under review Videocon Telecommunications Limited (VTL) a subsidiaryof the Company concluded transfer of rights to use 2 x 5 MHz spectrum in the 1800 MHzBand allotted to VTL by the Government of India Ministry of Communication & ITDepartment of Telecommunication (DoT) for six circles namely Bihar; Gujarat; Haryana;Madhya Pradesh and Chhattisgarh; Uttar Pradesh (East) and Uttar Pradesh (West) to BhartiAirtel Limited.
VTL continues to offer National Long Distance (NLD) services and International LongDistance (ILD) traffic on its own NLD networking across India.
The Company entered into a joint venture with US headquartered multinational LibertyMutual Insurance Group to setup a non-life insurance company Liberty Videocon GeneralInsurance Company Limited ("LVGICL") on 16th December 2010. Underthe terms of the agreement Liberty Mutual Insurance Group can hold a maximum of 49.0% ofequity
interest (maximum investment permitted under the applicable law) and our Company musthold a minimum of 51.0% equity interest in the joint venture. The Company currently holds56.53% stake in the joint venture and the remaining equity is owned by Liberty MutualInsurance Group.
LVGICL commenced its business in 2013 and product profile includes PropertyEngineering Liability Marine Employee Benefits Motor and Health Insurances.
The solar power project viz. 5.5 MW solar PV power project in Gujarat which has beencommissioned by the Company through its associate Unity Power Private Limited isoperating at full capacity and is generating electricity.
During the period under review the Company has sold/exited 5.75 MW solar PV powerproject in Village: Betwasiya District: Jodhpur Rajasthan through its step downsubsidiary; and 5.75MW solar Photovoltaic Power Project situated at Village: MajraDistrict: Warora Maharashtra.
CHANGE IN THE NATURE OF BUSINESS
There was no change in the nature of business of the Company during the period underreview.
In view of the loss incurred by the Company the Board of Directors do not recommendany dividend for the financial period ended 31st March 2017.
TRANSFER TO RESERVES
The Company do not propose to transfer any amount to any reserve.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
The Company has transferred a sum of ' 2.02 Million in respect of unpaid /unclaimeddividend for the Financial Year 2008-09 to the Investor Education and Protection Fund.
During the period under review out of the Foreign Currency Convertible Bonds (Bonds)amounting to US$ 97.20 Million due on 31st December 2020 the Company haspre-paid an amount of US$ 22 Million on pro rata basis to all the Bondholders. As suchas on the end of financial period the FCCBs amounting to US$ 75.20 Million wereoutstanding.
Your Company has not accepted any Deposit within the meaning of Chapter V of Section 73of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014 and assuch no amount of principal or interest was outstanding as on the Balance Sheet date.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURED AFTER THE BALANCE SHEET DATE AND AS AT THE DATE OF SIGNING THIS REPORT
No material changes and commitments affecting the financial position of the Companyoccurred after the Balance Sheet date and as at the date of signing this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Particulars of loans guarantees given and investments made during the period asrequired are provided in Notes 13 35(B)(i) and 47 of the Standalone Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS AS PER SECTION 188(1)
All the related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013 and the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015. There are no materially significant relatedparty transactions made by the Company with Promoters Directors or Key ManagerialPersonnel etc. which may have potential conflict with the interest of the Company at largeor which warrants the approval of the shareholders. Accordingly no transactions are beingreported in Form AOC-2 in terms of Section 134 of the Companies Act 2013 read with Rule
8 of the Companies (Accounts) Rules 2014. However the details of the transactionswith Related Party are provided in the Company's financial statements in accordance withthe Accounting Standards.
The Policy on Related Party Transactions as approved by the Board is uploaded on theCompany's weblink at http://www.videoconindustriesltd. com/Documents/Related%20Party%20Transaction%20Policy.pdf
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
During the period under review Comet Power Private Limited ceased to be theSubsidiary of the Company. Consequently Indigo Energy Private Limited and Percept EnergyPrivate Limited also ceased to be subsidiaries (step-down subsidiaries) of the Company.Further Videocon Telecom Towers Private Limited became the step-down Subsidiary of theCompany on 31st March 2016 and ceased to be the step-down Subsidiary w.e.f. 22ndMarch 2017.
As on 31st March 2017 your Company had 26 subsidiaries (including step downsubsidiaries) viz. Applied Energy Private Limited Chhattisgarh Power Ventures PrivateLimited Electroworld Digital Solutions Limited (Formerly: Videocon InternationalElectronics Limited) Jumbo Techno Services Private Limited Liberty Videocon GeneralInsurance Company Limited Middle East Appliances LLC Pipavav Energy Private LimitedProficient Energy Private Limited Prosperous Energy Private Limited Senior ConsultingPrivate Limited Videocon Australia WA-388-P Limited Videocon Brasil Petroleo Ltda.Videocon Brasil Ventures B.V. Videocon Easypay Private Limited (Formerly: DatacomTelecommunications Private Limited) Videocon Electronics (Shenzhen) Limited VideoconEnergy Brazil Limited Videocon Energy Limited Videocon Global Limited VideoconHydrocarbon Holdings Limited Videocon Hydrocarbon Ventures B.V. Videocon IndonesiaNunukan Inc. Videocon International Cooperatie U.A. Videocon JPDA 06-103 LimitedVideocon Mauritius Energy Limited Videocon Oil Ventures Limited and VideoconTelecommunications Limited.
The Joint Ventures of the Company are Videocon Infinity Infrastructures Private Limitedand IBV Brasil Petroleo Limitada. Further the associate companies of the Company areRadium Appliances Private Limited and Unity Power Private Limited.
The details of subsidiaries (including step down subsidiaries)/joint ventures/associatecompanies including the details of performance and financial positions of each of thesubsidiaries/joint ventures/ associates are given in Form AOC-1.
As per the provisions of the Companies Act 2013 your Company has provided theConsolidated Financial Statements as on 31st March 2017. The Financial Statements of thesubsidiaries/ joint ventures/ associate companies will also be available for inspectionduring the business hours at the Registered Office of your Company and the respectivesubsidiaries/ joint ventures/ associate companies. The Annual Report of your Company doesnot contain full financial statements of the subsidiary companies and the same aredisplayed on the Company's website viz. www.videoconworld.com. Your Company shall make available the audited annual accounts and related information ofthe subsidiary companies upon request by any Member of the Company.
COMPANY'S POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION (SECTION 178)
The Company has in place the Nomination and Remuneration Committee. The Company hasfurther formulated the Nomination and Remuneration Policy on directors' appointment andremuneration including the criteria for determining qualifications positive attributesand independence of directors. The other details form part of the Corporate GovernanceReport.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended from time to time the Board's Report include a statement showing the names of topten employees and every employee who was in receipt of remuneration in excess of thelimits prescribed under the said rules. The information as per Rule 5(1) & Rule 5(2)forms part of this report. However as per first proviso to section 136(1) of the Act theReport and Financial Statements are being sent to the Members of the Company excluding thestatement of particulars under Rule 5(1) & Rule 5(2) of the said rules. Any memberinterested in obtaining the said statement may write to the Company Secretary at theRegistered Office of the Company.
CONSERVATION OF ENERGY
Energy conversation is the goal to reduce the amount of energy required to provideproducts and services. Reduction in usage of energy reduces energy costs and result in afinancial cost saving to consumers. It is also seen as a solution to the problem ofreducing greenhouse gas emissions. Energy efficiency and renewable energy are said to bethe twin pillars of sustainable energy policy.
In today's tough economic climate all organizations are pushing harder to find costsavings techniques. At the same time many are under strain to comply with the latestenvironmental legislation and wish to reduce their carbon footprint. Every organizationtry to reduce its overheads by emphasizing the energy conservation perspective.
Some of the specific measures undertaken by the Company for the conservation of energyare:
Installation of 1MW Roof Top Solar plant and distribution through Net MeteringBanking System to ensure Green Energy generation.
Daily monitoring of Power factor and corrections immediately thereafter toensure Unity Power factor throughout the month.
Continuous monitoring and review of Contract demands of Electricity andoptimization wherever possible.
Increase productivity of manufacturing unit to minimize KWH/Product.
Structured patrolling in campus to educate people on Energy conservation andreduce misuse of Electricity.
Replacement of old Conventional luminaries by highly efficient 18 watt LED tubelights in all shop floors and workstations.
Use of energy saving lighting arrangement on roads and inside the manufacturingfacilities by using 60 watt LED Street light lamps.
Use of variable-speed drives for large variable loads. Also emphasis to usehigh-efficiency gear sets & precision alignments.
Replacement of obsolete and high power consuming air conditioners by using newStar rating and energy efficient AC's in respective locations.
Tune up the HVAC Control system to minimize flows and reduce blower/fan/pump byusing Variable Frequency Drives.
Optimizing the blow-down flow rate and ensuring turn off of unnecessary coolingtower fans when loads are reduced.
Demand efficiency restoration after motor rewinding.
The adoption of the above energy conservation measures have helped to curtail theproportionate increase in total energy usage consequent to overall increase in production.This has made it possible to maintain cost of production at optimum levels.
During the period under review your Company has won Prestigious State level Award onEnergy Conservation and Effective Management for the year 2016 from Maharashtra EnergyDevelopment Agency (MEDA).
RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION
Research & Development (R&D) is a component of Innovation and is situated atthe front end of the Innovation lifecycle. Innovation is built on R&D and includescommercialization phases. R&D is a scientific investigation that explores thedevelopment of new goods and services new inputs into production new methods ofproducing goods and services or new ways of operating and managing organizations.
In concrete terms R&D brings new knowledge and processes to a business the newhigher value-added products processes and services that company needs in order to thrivein a knowledge intensive market.
New product design and development is a crucial factor in the survival of a company. Inan industry that is changing fast the companies must continually revise their design andrange of products. This is necessary due to continuous technology change and developmentas well as other competitors and the changing preference of customers. In order to compete
with the ever changing market and to fetch the benefits of technological advancementyour Company has set up a dynamic and active R&D Centre. The R&D Centre hasqualified staff working continuously on new products process etc.
Your Company has launched number of products in Consumer Electronics Industry with awide range of Refrigerators Washing Machines Air Conditioners Televisions etc.
R&D involves constant revitalization of knowledge and expertise and could result indevelopments such as:
New / Improved products;
Improved operational process;
Meeting the changing requirements of customers;
Meeting the changing social and environmental needs; and
Maintenance of quality.
R & D activities carried out in various consumer electronics products and benefitsderived from these activities:
1. In the previous financial year Videocon has introduced "Liquid LuminousTechnology" which greatly enhances picture quality and is easily demonstrable atdealer counter. This has resulted in significant increase in market share.
2. Videocon has introduced a majestic 98" UHD TV - the biggest TV in our range.With our 98" UHD TV customers can experience theatrical ambience in the convenienceof their homes.
3. Mobile Audio feature: Customers are greatly delighted to use the mobile audiofeature. It enables customers to connect their mobile phones to a normal LED TV forlistening to mobile audio through TV speakers.
4. ASB feature - Amplifier Stereo Bass feature enhances audio quality. Customers canenjoy smooth audio with terrific bass and melodious treble.
5. E-Share feature - This feature is specifically designed for Smart TV range. Itallows the customers to wirelessly connect mobile phones to their Smart LED TV.
6. Star rated TV - This feature has been introduced as a "Go Green"initiative for power saving. It is also in compliance with BEE norms.
7. In Direct Cool refrigerators the BEE energy norms were upgraded further by 40% andto maintain the 5* Rating we had to implement the Refrigerant R600a in place of R134awhich is more efficient.
8. Changes in the Product cooling system and upgraded electrical parts from safetypoint of view for the entire range of direct cool refrigerators.
9. Up-gradation to R600a across the Frost free refrigerators.
10. Digi one with Touch screen is the most modern Washing Machine which is Tech savvyand with inbuilt heater for sterilized wash is unmatched in market for its uniquefeatures.
11. Digi Zara series of Fully Automatic Top Loading machines which are sleek and withmodern technology like UV(Ultraviolet) sterilization for Hygiene wash hot air drytechnology in top load washing machine which continue to take laundry cleaning and hygieneto New level.
12. With addition of Alpha One series of Washing Machine introduced recently whichextends the legacy of VIRAT series in Semi-Automatic category with new colour variantsimproved features and big capacity. New variants of Fully Auto washing machine Digi-Viratwith 10 kg Washing capacity and In-built heater feature which is one of its kind forcombination of Higher washing capacity with in-built heater.
13. Digi-Garcia series of Fully Automatic Washing Machines with vibrant colours andaesthetically superior looks water saver function multiple wash selection option lesserwater consumption and higher performance continues to be a popular series.
14. Aryabot AC development with Satellite controlled Air-conditioner model Operatingthrough Smart phones for comfort and convenience using Internet of Things technology.
15. Solar AC development comprising of Non-conventional energy source utilization forAC operation and environment friendly to reduce global warming.
16. Non CFC - Refrigerant AC development with Ozone friendly refrigerant R410adevelopment for environment protection against Global warming and Ozone layer depletion.
17. Inverter AC development i.e. Energy efficient Air-conditioner Energy consumptionreduction and better comfort for customer due to variable speed compressor running throughDC Inverter Technology.
18. G mark and CB approved air-conditioner models for export.
Future plan of action:
In near future the Company shall focus on environment friendly products and also focusefforts on new technologies which could offer better products in the domestic as well asinternational market. The Company has the following plans through R&D:
1. To focus on the picture quality with rich vibrant colors remarkable brightnessand a higher range of colors endowed with deeper blacks and brighter whites that can beenjoyed by our customers within value for money
2. To come up Global/Indian trends infused in our products enriching the customerproduct interactions.
3. Engaging in Internet of Things (IoT) technology which will delight the customers bycreating a web of seamless connectivity between TV and other home appliances.
4. Cost reduction projects through new innovative design ideas across both frost freeand direct cool refrigerators
5. Introduction of Inverter compressor to the existing frost free refrigerator series.
6. To bring in washing machines with excellent wash performance alongside Energy andwater efficient designs catering to environment benefits and value for money for ourcustomers.
7. Product development with new refrigerant R32 further better reduction in Globalwarming potential over R410a.
8. Energy efficient AC development as per the new ISEER rating norms by BEE for year2018.
9. Improved Satellite controlled model with support by IOS and Android technology.
During the period under review the Company has incurred ' 37.31 Million representing0.03% of the turnover towards recurring R&D expenses.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars of Foreign Exchange Earnings and Outgo during the financial periodended on 31st March 2017 are set out hereunder:
RISK MANAGEMENT POLICY OF THE COMPANY
The Company has in place the Risk Management Policy to identify the risk elements andmanage monitor and report on the principal risks and uncertainties that can impact itsability to achieve its strategic objectives. The Company has proper confidentialities andprivacy policies to control risk elements. The Company has wherever required takeninsurance policies to protect the property assets etc.
The Company has formed Risk Management Committee. The scope and composition of theCommittee forms part of the Corporate Governance Report. Further the members of the RiskManagement Committee and the senior management personnel review the Risk Management Policyperiodically discusses and mitigate the identified risks from time to time.
CORPORATE SOCIAL RESPONSIBILITY POLICY
Corporate Social Responsibility (CSR) has been a commitment at VIL and forms anintegral part of our activities. The Company's contribution to social sector developmentincludes several pioneering interventions and is implemented through the involvement ofstakeholders within the Organization and the broader community.
Over the last few years VIL has developed significant projects in specific areas andhas built capabilities for direct project implementation. The objective of the company isto pro-actively support meaningful socioeconomic development.
We are focusing on identifying and motivating the skills of the physically challengedyouth and helping them to enhance them.
This is based on the belief that growth and development are effective only when theyresult in wider access to opportunities and benefit a broader section of society.
The Company has formed a CSR Committee in terms of the provisions of Section 135 of theCompanies Act 2013 and Rules made thereunder read along with Schedule VII of the Act. Thescope and composition of the Committee forms part of the Corporate Governance Report.
Further since the average net profit for the three immediately preceding financialyears was negative the Company has not made any CSR expenditure in specific.
HEALTH & SAFETY
Safety is an area of paramount importance in our Company. A well-defined occupationalhealth and safety management system is in place to ensure the safety of employeesworkforce as well as equipment and machinery. Our Company continues to exhibit a robustassurance towards Safety Health and Environment during the period under review.
The Health & safety initiatives adopted by the Company & some new system(s)developed are-
Added new type of fire extinguisher (Ball type) to attend immediate small firein case of emergency.
Fire Demo kit is prepared for demonstrate and give training and operation ofFire extinguisher to all individual.
Established a CCTV control room in respective shop floors areas for the closemonitoring of safety and Emergency purpose.
Display of all Emergency Exit and Evacuation plan in auto glow board at shopfloors.
Increased the Fire Marshal(s) quantity in shop floor by adding skills for anyemergency.
Installed safe loader instrument to EOT crane at Molding division to avoid craneaccident at shop floor area.
Additional stopper provided in LOT crane to ensure crane will halt in specifiedlocation.
Installation of LPG gas detector at Paint shop in LPG gas bank area.
Displayed MSDS Matrix at High Hazard and Zero Zone area.
Provision of Safety equipment's in campus such as PG gas detector Road Convexmirror Fire blanket Fire Bucket First aid box and Breathing Apparatus set.
Strictly adhere to hot work permit system with availability of security guardfor close monitoring.
Provision of New Ambulance Van along with suitable medical accessories to reduceresponse time during emergency situation & human injury.
Periodic refresher training conducted for security guard regarding fireprevention & control to enhance competency level.
Conducting regular safety audit & mock drill as per calendar in the campus.
Incident/Accidents Investigation and Reporting with Root cause corrective andpreventive actions.
Defined the fire points at high hazard area (Zone-0).
Carried out HPT (Hydraulic Pressure Testing) of pressurized extinguisher as perMaharashtra Fire Prevention & Life Safety Measures Act.
Displayed cautionary signs at high hazardous area to warn workers about imminenthazard dealt at site.
Enhance road safety - displayed road convex mirror speed limit board andguidelines for visitors.
Emergency evacuation plans with location of fire extinguisher are displayed atthe entrance of the building.
Visualization in the campus to access assembly point first aid box &emergency exit door.
Displayed MSDS (Material safety Data Sheet) at chemical storage area as per Rule73-M from Maharashtra Factory Rules 1963.
To create mass awareness among all workers celebrated Safety promotionalactivities like - National safety week Fire service week Electrical safety Week.
Availability of well-equipped Occupational Health Center (OHC) in case ofemergency.
Regular counseling and medical checkups to ensure fitness of its employees.
Arrangements at manufacturing plants for ensuring safety and absence of risks tohealth in connection with the use handling storage and transport of articles andsubstances.
Compliance with the legal requirement of Directorate of Industrial Safety &Health (DISH) Chief Fire Office etc.
Conducting Safety Committee Meeting to strengthen the safety. ENVIRONMENTALPROTECTION
Environmental protection is a practice of protecting the natural environment onindividual organizational or governmental levels for the benefit of both the naturalenvironment and humans. Due to the pressures of population and technology the biophysicalenvironment is being degraded sometimes permanently. This has been recognized andgovernments have begun placing restraints on activities that cause environmentaldegradation.
Our Company is committed to Green Initiative wherein it has established a greenmanagement goal for significantly reducing greenhouse gases and launching eco- friendlyproducts.
Your Company adopted the following eco-friendly initiatives for the environment:
Installation of 2KL/Day Liter ETP Plant for Paint shop waste water treatment.
The treated water is used for plantation and flushers.
Reviewed all wash room waste water connections and ensured all washroomsconnected to STP Plant.
Established the chemical lab for Waste Water Testing purpose in campus as perCentral Pollution Control Board norms.
Recertification of ISO-14001 for Environmental Management System.
Hazardous waste sends to authorized party for disposal as per defined duration.
Regular Air & Water Monitoring as per (NAAQS - 2010) Standards.
Started online filing of watercess and Hazardous waste annual return.
Installed Environment performance board at main gate and parameter displayed inlocal language.
Upgradation of Effluent treatment & sewage treatment plant and using treatedwater for gardening.
Celebration of world environment day to increase the mass awareness among theemployees. Planted 700 Nos of trees as per State pollution control board target.
Our Company is in compliance of e-waste rules and guidelines and has a tie up on allIndia basis with authorized recycler for collection and disposal of e-waste products. TheCompany has taken the initiative to spread awareness regarding e-waste management and itshandling and disposal through print media social sites and advertisement campaign by wayof putting standee-educating the dealers and the end consumers.
Your Company continues to invest in Information Technology (IT) leveraging it as asource of competitive advantage.
A good IT infrastructure in the company is absolutely necessary for complying with theregulatory or safety norms to improve performance and quality via real-time processmonitoring and finally improve reliability via appropriate maintenance driven byup-to-date information on equipment status.
We have taken major steps in business process transformation program in directcoordination with our senior leadership team. This exercise is transforming businessprocesses as per the Industry's best business practices and helping your organization instrengthening existing processes across functions in the organization.
We as an enterprise are fully focused on leveraging complete advantage of our SAPsystem. We are continuously auditing our existing processes mapped in SAP identifying thegaps and fulfilling the same across our organization. We are also using IT to the optimumbenefits of our MIS users and decision makers. This whole exercise is helping us to be theleader in our space and helping us in reducing the cost increasing our profit marginsbringing efficiency in our operations building controls etc.
Your Company understands the significance and impact of the digital revolution and hassignificantly progressed in this direction by revamping of Brand Websites implementingmany new Microsites and opting for many Tab/Mobile based applications. Your company hasmade its presence felt across globe through social media campaigns and digitaladvertisement. We are transforming our customer's experience and operations to be thedigital leader in our space.
Your Company has developed Sales Transformation & Enhancement Program (STEP)application an innovative & customized in-house developed sales tool for providingday to day information required by sales force on the field. This tool helps in improvingefficiency enhance ability & productivity of sales force leading to long-termbusiness sustainability and customer delight. In addition to STEP we have also progressedsignificantly in ISD Sales Application roll out for PAN India Locations. This applicationwill significantly improve our ISD Sales performance.
Your Company is riding on the technology wave and improving IT systems in complete syncwith organization's goals.
DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
Your Company is committed towards providing a healthy environment and thus does nottolerate any discrimination and/or harassment in any form. The Company has in place anInternal Complaints Committee to inter-alia:
1) Prevent sexual harassment at the workplace; and
2) Redress the complaints in this regard.
During the period under review the Company did not receive any complaint.
DETAILS OF DIRECTORS/KEY MANAGERIAL PERSONNEL APPOINTED/RESIGNED DURING THE PERIOD
During the period under review Mr. Bhopinder Jagdish Mittar Chopra was appointed asan Independent Director w.e.f. 30th January 2016 to fill the casual vacancycaused by the sad demise of Mr. Anil Joshi to hold office upto the date upto which Mr.Anil Joshi would have held office if he had not passed away.
Maj. Gen. Sudhir Chintamani Nilkanth Jatar ceased to be an Independent Director of theCompany w.e.f. 14th May 2016 consequent to the resignation tendered by him.
Pursuant to the provisions of Section 167(1)(b) of the Companies Act 2013 Mrs.Ramabai V. Dhoot ceased to be the Director of the Company on account of non-attending themeetings of the Board of Directors during the period of preceding twelve months ended on29th February 2016.
The re-appointment of Mr. Venugopal N. Dhoot was approved by the shareholders of theCompany at the Annual General Meeting held on 27th June 2016.
Mr. Subhash Dayama was appointed as an Additional Director on the Board of the Companyat the meeting held on 14th May 2016. In terms of the provisions of theCompanies Act 2013 and Rules made thereunder the appointment of Mr. Subhash Dayama as anIndependent Director was approved and confirmed by the shareholders of the Company at theAnnual General Meeting held on 27th June 2016.
The nomination of Mr. Subroto Gupta was withdrawn by IDBI Bank Limited. Consequentlyhe ceased to be the Nominee Director w.e.f. 27th November 2016. Mr. PradipKumar Das was co-opted as Nominee Director of IDBI Bank Limited on the Board of theCompany at the meeting held on 11th February 2017 in place of Mr. SubrotoGupta.
During the period under review Mr. Venugopal N. Dhoot was also designated in additionto the Managing Director of the Company as Chief Executive Officer of the Company.
Mrs. Sarita Surve was appointed as an Additional Director on the Board of the Companyat the meeting held on 11th February 2017. In terms of the provisions of theCompanies Act 2013 and the Rules made thereunder she holds office upto the date ofensuing Annual General Meeting. The Company has received a notice in writing alongwith therequisite deposit from a member under Section 160 of the Companies Act 2013 signifyingits intention to propose the candidature of Mrs. Sarita Surve for the office ofIndependent Director of the Company. The Board recommends her appointment.
Changes after the Balance Sheet date:
1. Mr. Bhopinder Jagdish Mittar Chopra tendered his resignation to act as Director ofthe Company (appointed in casual vacancy) due to old age and health issues w.e.f. 22ndSeptember 2017.
2. The nomination of Mr. Pradip Kumar Das was withdrawn by IDBI Bank Limitedconsequent thereto Mr. Pradip Kumar Das ceased to be the Nominee Director of the Companypursuant to the resignation tendered by him w.e.f. 10th August 2017. Mr.Sanjiv Kumar Sachdev was co-opted as Nominee Director of the Company at the meeting of theBoard of Directors held on 22nd September 2017.
In terms of the provisions of the Companies Act 2013 Mr. Venugopal N. Dhoot is liableto retire by rotation at the ensuing Annual General Meeting and being eligible offershimself for reappointment. The Board is of the view that his continued association willprove beneficial for the growth and development of the Company. The Board recommends hisreappointment at the ensuing Annual General Meeting.
A brief profile of Mr. Venugopal N. Dhoot and Mrs. Sarita Surve nature of expertiseand in specific functional area name of other public companies in which they holddirectorship membership/chairmanship of committees of the Board of Directors particularsof the shareholding and relationship between the directors inter-se as stipulated underRegulation 36(3) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 is appended to the Notice.
The Board takes this opportunity and places on record its sincere appreciation for thevaluable guidance of Mrs. Ramabai V. Dhoot Mr. Bhopinder Jagdish Mittar Chopra Maj. Gen.Sudhir Chintamani Nilkanth Jatar Mr. Subroto Gupta and Mr. Pradip Kumar Das during theirtenure as Director of the Company.
Key Managerial Personnel:
During the period under review Mr. Vinod Kumar Bohra resigned as the Company Secretaryof the Company w.e.f. 11th February 2017 and Mr. Mandar C. Joshi was appointedas Company Secretary and Compliance Officer of the Company on the same date.
The Company is in compliance with the provisions of Section 203 of the Companies Act2013. Following are the Key Managerial Personnel(s) of the Company:
1. Mr. Venugopal N. Dhoot - Managing Director and Chief Executive Officer
2. Mr. Ashutosh Gune - Chief Financial Officer
3. Mr. Mandar C. Joshi - Company Secretary DECLARATION GIVEN BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 and the provisions of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("Listing Regulations") stating that they meet the criteria of independenceas provided therein.
NUMBER OF MEETINGS OF THE BOARD HELD DURING THE PERIOD
During the financial period under review the Board met Seven (7) times. The detailsregarding the attendance and the date of Board Meetings are provided in the CorporateGovernance Report.
COMMITTEES OF THE BOARD
Pursuant to the provisions of the Companies Act 2013 and provisions of the ListingRegulations the Company has constituted following Committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders' Relationship Committee
4. Corporate Social Responsibility Committee
5. Risk Management Committee
6. Re-organization Committee
7. Finance and General Affairs Committee
The composition scope and powers of the aforementioned Committees together withdetails of meetings held during the period under review forms part of CorporateGovernance Report.
During the period under review the Board of Directors of the Company dissolved theRights Issue Committee.
FORMAL ANNUAL EVALUATION
During the period under review pursuant to the provisions of the Companies Act 2013and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 the Nomination and Remuneration Committee adopted aformal mechanism for evaluating the performance of the Board of Directors as well as thatof its Committees and individual Directors including Chairman of the Board KeyManagerial Personnel/ Senior Management etc. The exercise was carried out through anevaluation process covering aspects such as composition of the Board experiencecompetencies governance issues etc.
The equity shares of your Company are listed on the BSE Limited (Formerly: The BombayStock Exchange Limited) and The National Stock Exchange of India Limited (NSE). The GlobalDepository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs) issued by yourCompany are listed on the Bourse de Luxembourg and Singapore Exchange Securities TradingLimited respectively.
The Company has complied with the corporate governance requirements under the CompaniesAct 2013 and as stipulated under the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015. A separate section onCorporate Governance under the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 along with a certificate from the auditorsconfirming the compliance is annexed and forms part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report as required under the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is provided in a separate section and forms an integral part of this report.
BUSINESS RESPONSIBILITY REPORT
Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 mandates inclusion of the Business Responsibility Reportas a part of the Annual Report for top 500 listed entities based on market capitalisation.Since the Company is one of the top 500 listed entities the Company has presented itsBusiness Responsibility Report for the Financial Period ended 31st March 2017as a part of this Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Regulation 33 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Consolidated FinancialStatements have been prepared by the Company in accordance with the applicable AccountingStandards. The audited Consolidated Financial Statements together with Auditors' Reportform part of the Annual Report.
Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the subsidiary associates and joint venture companies will be kept forinspection by the shareholders at the Registered Office of the Company during workinghours for a period of 21 days before the date of the Annual General Meeting. The Companyshall provide the copy of the financial statements of its subsidiaries associates andjoint venture companies to the shareholders upon their request. The audited accounts arealso available on the website of the Company viz. www.videoconworld.com
CASH FLOW STATEMENT
The Cash Flow Statement for the period ended 31st March 2017 in conformity with theprovisions of the Companies Act 2013 and Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 with the Stock Exchanges inIndia is annexed hereto.
AUDITORS AND THEIR REPORTS 1. STATUTORY AUDITORS:
In terms of provisions of section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 (the "Act") an audit firm can holdoffice as statutory auditor for two terms of five years i.e. for a maximum period of tenyears.
The Members of the Company at the 25th Annual General Meeting held on 27thJune 2015 have approved the appointment of M/s. Kadam & Co. Chartered Accountants(Firm Registration No. 104524W) Ahmednagar and M/s. Khandelwal Jain & Co. CharteredAccountants (Firm Registration No. 105049W) Mumbai for a term of 3 years i.e. from theconclusion of 25th Annual General Meeting until the conclusion of 28thAnnual General Meeting of the Company.
In view of the requirements as stipulated in proviso 3 of sub-section 2 Section 139 ofthe Companies Act 2013 every company existing on or before the Commencement of the Actshall comply with the requirements within three years from the commencement of the Act.
Further the Removal of Difficulties order dated 30th June 2016 issued byMinistry of Corporate Affairs states that the provisions in respect of rotation ofAuditors shall apply at the first Annual General Meeting being held after the completionof period of Three years from commencement of Act. As a result the Auditors of theCompany who has been appointed at the 25th Annual General Meeting will cease tobe the Statutory Auditors of the Company at the ensuing Annual General Meeting pursuantto the above provisions of the Act.
Accordingly The Board of Directors have at their meeting held on 24thNovember 2017 on the recommendation of Audit Committee recommended appointment of M/s.S. Z. Deshmukh & Co. Chartered Accountants Mumbai (Firm Registration No. 102380W)as the Statutory Auditors of the Company to hold office for a term of Five (5) consecutiveyears commencing form the conclusion of the ensuing 27th Annual General Meetingupto the conclusion of 32nd Annual General Meeting of the Company.
A certificate from M/s. S. Z. Deshmukh & Co. Chartered Accountants Mumbai (FirmRegistration No. 102380W) conforming their eligibility and consent to act as Auditors ofthe Company and that their appointment is within the prescribed limits under Section 141of the Companies Act 2013 has been obtained by the Company.
The Board recommends appointment of M/s. S. Z. Deshmukh & Co. CharteredAccountants Mumbai (Firm Registration No. 102380W) as the Auditors of the Company for aterm of 5 (Five) consecutive years from the conclusion of the ensuing Annual GeneralMeeting i.e. 27th Annual General Meeting until the conclusion of 32ndAnnual General Meeting (subject to ratification of the appointment by the members at everyAnnual General Meeting held after this Annual General Meeting) on such remuneration as maybe fixed by the Board of Directors of the Company.
2. AUDIT REPORT:
The Statutory Auditors of the Company have submitted Auditors' Report which havecertain Qualifications on the Standalone and Consolidated Financial Statements for theperiod ended on 31st March 2017.
Management's Explanation to the Auditors' Qualifications: Standalone:
In respect of the qualifications with regards to extent of realisability ofinvestments of Rs. 75002.03 Million in Videocon Telecommunications Limited (VTL) thesubsidiary the explanation of management is as under;
The Company has directly and through its subsidiaries made investments aggregating toRs 75002.03 Million to Videocon Telecommunications Limited (VTL) the subsidiary. VTL wasgranted the license for providing Unified Access Services (UAS) in 21 circles by theDepartment of Telecommunications Government of India (DoT) in 2008 and was also allottedspectrum in 20 circles. The Hon'ble Supreme Court of India vide its judgment dated 2ndFebruary 2012 quashed all the UAS licenses granted on or after 10th January2008 and the subsequent allocation of spectrum to these licensees which also included the21 UAS licenses granted to VTL and the spectrum allotted to it. Subsequently VTLparticipated in the auction conducted by DoT and has been awarded the Unified Licenses(Access Services) for 6 circles with effect from 16th February 2013 which are valid fora period of 20 years. VTL was allotted spectrum in these 6 circles. VTL has entered intoagreement dated 16th March 2016 with Bharti Airtel Limited for trading theright to use 2 x 5 MHz spectrum allotted to it in these 6 circles at an aggregateconsideration of Rs 46530.00 Million in terms of the Guidelines for Trading of AccessSpectrum by Access Service Providers dated 12th October 2015 and the saidtransaction has been concluded on 24th May 2016. Though VTL has hugeaccumulated losses its net worth is positive and the management is confident ofcontinuing its commercial operations in the National Long Distance (NLD) and InternationalLong Distance (ILD) Business. Accordingly in the opinion of the management no provisionis required for diminution in the value of aforesaid investments and advances to VTL.
a. In respect of the Auditor's qualification in the Auditors' Report on theConsolidated Financial Statement for the financial period ended 31st March 2017regarding the determination of impairment loss on its assets including assets held forsale consequent to the agreement to transfer of the right to use 2x5 MHz Spectrumallotted to Videocon Telecommunications Limited (VTL) in its 6 circles with Bharti AirtelLimited the explanation of management is as under:
VTL is in the process of ascertaining the impairment loss if any on its fixed assetsincluding capital work-in-progress. The requisite accounting effect if any will be givenupon such ascertainment/ determination.
b. In respect of the Auditor's qualification in the Auditors' Report on theConsolidated Financial Statement for the financial period ended 31st March2017 regarding advances given by Videocon Telecommunications Limited ("VTL") toQuadrant Televentures Limited (QTL) of Rs. 12193.97 Million Out of this an amount of Rs.12000.00 Million was converted into Unsecured Zero Coupon Compulsorily ConvertibleDebentures. The explanation of management is as under;
VTL had given advances of Rs. 12193.97 Million to Quadrant Televentures Limited (QTL)for the proposed acquisition of indefeasible Rights of Use (IRU) the UAS License of QTL inPunjab circle subject to regulatory approvals. Out of this an amount of Rs. 12000.00Million were converted into Unsecured Zero Coupon Compulsory Convertible Debentures offace value Rs. 1000/- each (CCD) (Convertible into 2% Non-Cumulative Non-ConvertibleRedeemable Preference Shares of Rs. 100/- each at par) on 29th March 2017. Theconversion of the said CCD shall be after 1st April 2025. Based on thebusiness plan of QTL the management is confident of generating cash flows from businessoperations through increase in subscriber base and other value added services and reducinglosses gradually. Considering the business plan of QTL the management of VTL is confidentof realisability of the said advances and investments.
Emphasis of Matter in Standalone Financial Statements
The Auditors of the Company have given emphasis of matter in the stand alone FinancialStatements with regards to reliance on the un-audited financial statements for the period01st April 2016 to 31st March 2017 in respect of the Ravva Oiland Gas Field Joint Venture. The explanation of management is as under:
The standalone financial statements reflect the share of the Company in the assets andthe liabilities as well as the income and expenditure of joint venture operations on aline by line basis. The Company incorporates its share in the operations of the jointventure based on statement of account received from the Operator. The Company hasparticipating interest of 25% in Ravva Oil and Gas Field Joint Venture through aProduction Sharing Contract (PSC). The Company has received the audited financialstatements for the period upto 31st March 2016 and un-audited financial statements forthe period 1st April 2016 to 31st March 2017 in respect of the said joint venture fromthe Operator which has been certified by the management.
In the past there was no change/difference in the un-audited financial statements andthe audited financial statements. Hence the management is not expecting any impact of thesame.
Emphasis of Matter in Consolidated Financial Statements
a) The auditors of subsidiary companies namely Videocon Hydrocarbon Holdings LimitedVideocon JPDA 06-103 Limited Videocon Indonesia Nunukan Inc. Videocon Australia WA-388-PLimited Videocon Energy Brazil Limited and the joint venture IBV Brasil PetroleoLimitada have in their respective reports on separate financial statements given Emphasisof Matter that as the said subsidiaries and the joint venture are in exploration/appraisalstage and have spent significant amounts on acquisitions explorations and evaluationcosts and have liabilities on this account in the absence of commercial operations theability to continue as a going concern is substantially dependent on their ability toraise funds or continuous financial support from Parent Company to meet their operatingand capital expenditure requirement.
The explanation of Management is as under:
The management of these companies are confident of mobilizing the necessary resourcesfor continuing the operations of these subsidiaries and the joint venture with thesupport from the Parent Company and also in view of the fact that in certain cases ofcompanies/joint venture engaged in exploration and production of oil and natural gas theoperators have reported major discoveries which they intend to develop in an integratedmanner to make it optimal and more economical. Accordingly the financial statements havebeen prepared by the said subsidiaries and joint venture on a going concern basis.
b) During the period VTL has incurred a net loss before extraordinary items of Rs.13344.61 Million and has accumulated losses of Rs. 62941.06 Million as at 31st March2017. Also VTL has traded the right to use 2x5 MHz Spectrum allotted to it in 6 circlesin terms of the Guidelines for Trading of Access Spectrum by Access Service Providersdated 12th October 2015 issued by the WPC Wing of the Department of Telecommunications(DoT) Government of India (Spectrum Trading Guidelines) which has resulted in closure ofGSM (Global System for Mobile Communications) business operations of VTL in all 6 circles.These factors raise a doubt that VTL will not be able to continue as a going concern.
The explanation of the management is as under:
Though VTL has huge accumulated losses its net worth as on 31st March 2017 ispositive. The management of VTL is confident of continuing its commercial operations inthe National Long Distance (NLD) and International Long Distance (ILD) Business.Accordingly the financial statements of VTL have been prepared on a going concern basis
3. COST AUDITOR AND COST AUDIT REPORT:
In accordance with the provisions of Section 148 of the Companies Act 2013 read withthe Companies (Audit & Auditors) Rules 2014 and amendments made thereto; from time totime the Board of Directors of the Company have accorded its approval for appointment ofMr. Jayant B. Galande Cost Accountant in Whole-Time Practice Aurangabad (MembershipNumber 5255) as the Cost Auditor of the Company to conduct audit of Cost AccountingRecords maintained by the Company for the financial year commencing from 1stApril 2017 to 31st March 2018 in respect of the products covered as below:
1. Electricals or Electronic Machinery
2. Other Machinery and Mechanical Appliances
4. Petroleum Products
5. Generation transmission distribution and supply of electricity other than forcaptive generation.
In compliance with the provisions of the Companies Act 2013 the remuneration payableto the Cost Auditor has to be ratified by the members of the Company. Accordingly consentof the Members is sought by way of an Ordinary Resolution for ratification of theremuneration amounting to ' 110000/- (Rupees One Lakh Ten Thousand Only) plus applicabletax and out of pocket expenses payable to the Cost Auditor for the financial yearcommencing from 1st April 2017 to 31st March 2018.
In compliance with provisions of the Companies (Cost Records and Audit) Rules 2014 andamendments made thereto; from time to time and General Circulars thereof we hereby submitthat the Company has filed the Cost Audit Report for the financial year started from 1stJanuary 2015 and ended on 31st December 2015 on 21st June 2016 (due date 28thJune 2016). For the financial year ended on 31st March 2017 the Companyshall file the Cost Audit Report at the earliest. The delay in filing is on technicalgrounds.
4. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:
The Board had appointed Mr. Soumitra Mujumdar Company Secretary in Whole-timePractice (CP No.: 12363) to carry out Secretarial Audit under the provisions of Section204 of the Companies Act 2013 for the financial period ended on 31st March 2017. Thereport of the Secretarial Auditor is annexed to this report as Annexure 1. In connectionwith the Secretarial Auditor's observation in the report it is clarified that the Companyis in process of filing the return of Foreign Assets and Liabilities for the FinancialPeriod ended 31st March 2017 with the Reserve Bank of India. Further thedelay in filing some of the forms including form for appointment of CEO (Additionaldesignation to Mr. Venugopal N. Dhoot) was due to technical difficulty in filing. TheCompany has filed the said forms except for the form for appointment of Mr. Venugopal N.Dhoot as Chief Executive Officer.
DETAILS OF FRAUDS REPORTED BY AUDITORS (OTHER THAN REPORTABLE TO CENTRAL GOVERNMENT)
No fraud/misconduct was detected at the time of statutory audit by Auditors of theCompany for the financial period ended on 31st March 2017.
INTERNAL CONTROLS INTERNAL AUDIT AND OTHER INITIATIVES
The Company has in place adequate internal financial controls with reference tofinancial statements. During the period such controls were tested and no reportablematerial weakness in the design or operations were observed.
The Company has in compliance with the provisions of Section 138 of the Companies Act2013 read with Rule 13 of Companies (Accounts) Rule 2014 has in place in-house internalaudit team led by in house internal auditor to carry out the audit of internal recordsmaintained by the Company.
The Company has designed Internal Controls to safeguard assets; ensure the managementhas accurate timely and complete information in order to plan monitor and reportbusiness operations; ensure compliance with various laws and regulations affecting theoperations of the Company; promote efficient and effective operations; and provide amechanism for management to monitor the achievement of operational goals and objectives.
The Company carries out physical verification of fixed assets and inventories in thephased programme of verification.
The management has initiated an exercise to determine obsolete slow- moving and staleinventories and consequently write down the valuation the impact thereof will beincorporated in the ensuing financial results on completion of the exercise.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 of the CompaniesAct 2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014is annexed herewith as Annexure 2.
ORDERS PASSED BY REGULATORS/COURTS/ TRIBUNALS
No material orders were passed by Regulators/ Courts / Tribunals during the periodimpacting the going concern status and Company's operations in future.
DIRECTOR RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard hereby submit its responsibility Statement:
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe loss of the Company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The Board of Directors would like to thank the Customers Vendors Investors FinancialInstitutions Bankers Business Partners and Government Authorities for their continuedsupport. The Board of Directors also appreciate the contribution made by the employees atall levels for their hard work dedication co-operation and support for the growth of theCompany.
The Board of Directors would also like to thank all stakeholders for the continuedconfidence and trust placed by them with the Company.
For and on Behalf of the Board of Directors of
VIDEOCON INDUSTRIES LIMITED
VENUGOPAL N. DHOOT
MANAGING DIRECTOR &
CHIEF EXECUTIVE OFFICER
Date: 24th November 2017
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