ADC India Communications Ltd
Directors Reports
To the Members,
The Board of Directors have pleasure in presenting the 32nd Annual Report on the
business and operations of your Company, along with the audited financial statements for
the financial year ended March 31, 2020.
Financial Results
Key highlights of the financial results of your Company prepared as per the Indian
Accounting Standards ("Ind AS") for the financial year ended March 31, 2020 are
provided below:
(Rs. in lakhs)
| Particulars |
Year ended 31st March 2020 |
Year ended 31st March 2019 |
| Revenue from operations |
7812.99 |
8562.21 |
| Other Income |
139.08 |
305.76 |
| Total Revenue |
7952.07 |
8867.97 |
| Profit before depreciation and Tax |
618.75 |
900.40 |
| Depreciation |
97.33 |
32.58 |
| Profit before Tax |
521.42 |
867.82 |
| Tax Expense |
141.69 |
281.49 |
| Profit after Tax |
379.73 |
586.33 |
| Other Comprehensive Income |
(7.28) |
3.24 |
| Total Comprehensive Income |
372.45 |
589.57 |
FINANCIAL PERFORMANCE
With the announcement of countrywide Lockdown by Government from March 24, 2020 to
contain the spread of Covid-19 the office & factory remained closed from March 24,
2020 until March 31, 2020.
Consequently, the revenue and profits of the fourth quarter of the financial year
2019-20 was impacted. In the financial year 2019-20 the overall revenue from operations
declined by 8.75% over that of previous year. Revenue from the Telecommunication business
declined by 34% and the revenue from IT-Networking (Enterprise network) business declined
by 5% over that of previous year. Profit before tax for the year declined by 40% over that
of previous year mainly on account of decreased turnover and reduction in interest and
rental income.
DIVIDEND
Your Directors have recommended a dividend of Rs. 2.00 per equity share, of the face
value of Rs. 10/- each, to be appropriated from the profits of the financial year ended
March 31, 2020, subject to the approval by the Members at the ensuing Annual General
Meeting.
TRANSFER TO RESERVES
The Company has not transferred any amount to the Reserves for the financial
year ended March 31, 2020.
SHARE CAPITAL
The Company's paid up Share Capital continues to stand at Rs. 460 lakhs as on March 31,
2020 and there has been no change in the capital structure of the Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loan or guarantees or made investments covered under the
provisions of section 186 of the Companies Act, 2013 during the year ended March 31, 2020.
SUBSIDIARY / ASSOCIATES / JOINT VENTURE COMPANIES
The Company does not have any Subsidiary/ Associate/Joint Venture Company.
BUSINESS AND OPERATIONS
As we emerge from the Covid-19 pandemic health emergency, with this "new
normal" your company was fully prepared towards return to work with primary focus on
the health & safety of employees first. This will be a new normal and difficult
challenge, which would be resolvable in the near term. In many ways trickier, your company
is constantly determining what the mid to long term implications of the crisis are and how
your company should respond strategically. Regardless of the shape of recovery & time,
your company firmly believe that we will emerge from the crisis stronger than before by
realigning cost structure and sharpen overall productivity. Your company Board and Risk
Management Committee has always looked at worst case scenario of times like these &
built a portion of the strong financials by making right decision which is sustainable and
consistent over years.
With Economic activities on downturn, we do see challenge in short term in both
Enterprise and Telecom market growth, which would continue to grapple with fewer orders as
the markets have shrunk due to Covid-19 which in-turn put pressure on margins in the
market place for every single opportunity. With this new normal, we do expect the market
to take longer time to bounce back, even though we could see some surge in business
immediately after the lockdown is lifted.
Your company would see an impact in the Enterprise Network copper business as we
continue to see work from home adoption growing with office space expansion requirements
coming down and going slow in short term. However, we do see continues growth in Fiber
Business over copper due to multifold increase in Bandwidth requirements, with denser
wireless & deeper fiber deployments across the upcoming infrastructure projects.
With stable Government in place, policy decision-making being quick and recent stimulus
package announcement due to Covid-19, towards Infrastructure growth would improve the
overall business sentiment and investments in next few Quarters. Market are expected to
improve driven by investments in Infrastructure projects, Defense sector, BFSI, Pharma,
Healthcare, E-commerce, Manufacturing, Digital India and Smart city initiatives where your
Company will be able to favorably participate in the areas of its strength within each
opportunity as the market activities picks up. During the year, your company will continue
its focus on sustaining revenues and profitability by realigning cost structure by looking
at ways of cost reduction to be competitive in the market place.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34 of SEBI (LODR) Regulations, 2015, the Management Discussion
and Analysis Report for the year under review, is presented in a separate section forming
part of the Annual Report.
DIRECTORS
Pursuant to the provisions of section 152 of the Companies Act, 2013 and the Articles
of Association of the Company, Mr. Ravi Bosco Rebello retires by rotation at the ensuing
Annual General Meeting of the Company and being eligible offers himself for
re-appointment.
INDEPENDENT DIRECTORS
The Company has received declarations from the Independent Directors of the company
under Section 149(7) of the Companies Act, 2013, confirming that they meet the criteria of
independence as provided in section 149(6) of the Companies Act, 2013 and Regulation 25 of
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has
also received declarations from the Independent Directors of the company under Rule 6(3)
of the Companies (Appointment and Qualification of Directors) Rules, 2014 confirming that
they have registered themselves with the Indian
Institute of Corporate Affairs, Manesar (IICA) for inclusion of their name in the data
bank maintained by IICA in compliance of Rule section 6(1) of the Companies (Appointment
and Qualification of Directors) Rules, 2014.
KEY MANAGERIAL PERSONNEL
There were no changes in the Key Managerial Personnel of the Company during the year.
BOARD MEETINGS
Six Board meetings were held during the financial year 2019-20 on May 28, 2019; July
16, 2019; August 05, 2019; November 05, 2019; January 30, 2020 and March 02, 2020. The
details of meetings held by various Committees of the Board are given in the Corporate
Governance Report.
AUDIT COMMITTEE
The composition and terms of reference of the Audit Committee is given in the Corporate
Governance Report. The Board has accepted all the recommendations made by the Audit
Committee.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3) (C) of the Companies Act, 2013, the
Directors based on the information and representations received from the Company
Management confirm that:
a. In the preparation of Annual Accounts, the applicable Accounting Standards have been
followed with no material departures;
b. They have selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view
of the state of affairs of the Company at the end of the financial year and of the profit
of the Company for that period;
c. They have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities; d. They have prepared the Annual Accounts on a going concern basis;
e. They have laid down internal financial controls to be followed by the company and
that such internal financial controls are adequate and have effectively; been operating
and
f. They have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systemsare adequate and operating effectively.
DIRECTORS' APPOINTMENT AND REMUNERATION
Considering the requirements of the skill-sets on the Board, persons having
professional expertise in their individual capacity as independent professionals and who
can effectively contribute to the Company's business and policy decisions are considered
by the Nomination and Remuneration Committee for appointment of new Directors on the
Board. The Non-Executive Independent Directors appointed on the Board are paid sitting
fees for attending the Board and Audit Committee Meetings. No other remuneration or
commission is paid to the Non-Executive Independent Directors. Non-Executive
Non-Independent Directors are neither paid any sitting fees nor paid any commission. The
remuneration paid to the Managing Director is governed by the relevant provisions of the
Companies Act, 2013, rules of the Company and Members approval. Executive Compensation
Policy Guidelines has been placed on the Company's website
www.adckcl.com/AboutADC/Policies.
BOARD EVALUATION
The Company's Policy and Process for Board evaluation lays down a structured
questionnaire to be used in the evaluation of the entire Board of the Company, Board
Committees and Individual Directors. This Policy has been displayed in the Company's
website www.adckcl.com.
Using the structured questionnaire, the Board of Directors has carried out an annual
evaluation of its own performance, Board Committees and individual Board members pursuant
to the provisions of the Companies Act, 2013 and SEBI Listing Regulations. The Directors
have expressed their full satisfaction with the performance of the Board, Board Committees
and the members of the Board.
Further, the Independent Directors, at their meeting held during the year, reviewed the
performance of the Board, Non-Independent Directors and other matters as stipulated under
the SEBI Listing Regulations.
CORPORATE GOVERNANCE
Your Company has always practiced sound corporate governance and has complied with
various provisions of Corporate Governance.
As required under Regulation 34 of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing
Regulations") Corporate Governance Report together with the certificate from
Statutory Auditors of the Company on compliance with the conditions of corporate
governance stipulated in the SEBI Listing Regulations during the year ended March 31, 2020
is provided in a separate section of the Annual Report.
CODE FOR PREVENTION OF INSIDER TRADING
Your Company has adopted a Code of Conduct to regulate, monitor and report trading by
designated persons and their immediate relatives as per the requirements under the
Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.
This Code of Conduct also includes code of practices and procedures for fair disclosure of
unpublished price sensitive information which has been displayed on the Company's website
at www.adckcl.com.
WHISTLE BLOWER MECHANISM
The Company has established a mechanism called "Vigil Mechanism Policy" for
employees, directors and others who are associated with the Company to report to
management instances of unethical behavior, actual or suspected fraud or violation of the
Company's code of conduct. The Policy provides adequate safeguards against victimization
of employees/directors who avail the mechanism. The Vigil Mechanism also cover the Whistle
Blower mechanism aspect as stipulated under the Companies Act, 2013 and the SEBI Listing
Regulations.
The Company affirms that no person has been denied access to the Audit Committee in
this respect. The policy has been communicated to all employees by displaying the same on
the Company's website.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013
The Company has implemented a policy on Prevention, Prohibition and Redressal of Sexual
Harassment of Women at Workplace. The Company is committed to creating a safe and healthy
working environment. The Company believes that all individuals have the right to be
treated with dignity and strives to create a workplace which is free of gender bias and
Sexual Harassment. The Company has a zero tolerance approach to any form of Sexual
Harassment. The policy has been displayed in the Company's website.
The Company has not received any complaint of sexual harassment during the year under
review.
RISK MANAGEMENT
The Company has formed a Risk Management Committee and the constitution and terms of
reference of this Committee are set out in detail in the Corporate Governance Report. The
Risk Management Committee at its meeting held on March 02, 2020 discussed the various
risks encountered by the Company and the processes adopted by the Company to mitigate
these risks. The same was also reviewed by the Board of Directors at its meeting held on
the same day.
RELATED PARTY TRANSACTIONS
The Related Party Transaction Policy for determining the materiality of related party
transactions and on the dealings with related parties has been displayed in the Company's
website www.adckcl.com.
All transactions with related parties are placed on a quarterly basis before the Audit
Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the
Transactions which are foreseeable and of a repetitive nature.
All transactions with related parties during the year were in the ordinary course of
business and at arm's length. There are no related party transactions during the year
having potential conflict with the interest of the Company at large. The details of
related party transactions are disclosed in Note No. 32 to the Financial statements.
Information pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2)
of the Companies (Accounts) Rules, 2014 on
Material Related Party Transactions for the financial year ended March 31, 2020 in the
prescribed Form AOC-2 is annexed to this report as Annexure A.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Directors to the best of their ability have laid down internal financial controls
to be followed by the
Company, which they believe are adequate keeping in view the size and nature of
Company's business.
Adequate financial procedures are in place to ensure that all the assets are
safeguarded, protected against loss and all transactions are authorized, recorded and
reported correctly. This ensures the quality and reliability of financial data, financial
statements and financial reporting.
Your Company's internal financial controls are deployed through an internally evolved
framework that address material risks in your Company's operations and financial reporting
objectives, through a combination of entity level controls and process controls (both
manual and automated), information technology based controls, period end financial
reporting and closing controls and through internal audit. The Audit Committee of the
Board reviews the adequacy of internal financial controls on an ongoing basis to identify
opportunities for improvement in the existing systems to further strengthen the internal
control environment in your Company.
AUDITORS AND AUDITORS' REPORT
At the 31st Annual General Meeting of the Company held on July 29, 2019 M/s. Deloitte
Haskins & Sells were appointed as the Statutory Auditors of the
Company for a term of three years, to hold office from the conclusion of the 31st
Annual General Meeting until the conclusion of the 34th Annual General Meeting to be held
in the year 2022.
The Auditors report for the financial year ended March 31, 2020 does not contain any
qualification, reservation or adverse remark.
SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT
Pursuant to the provisions of section 204 of the Companies, 2013 and the Rules made
thereunder, M/s.V.Sreedharan and Associates, Practicing Company Secretaries were appointed
as the Secretarial Auditors to conduct a secretarial audit of the Company's Secretarial
and related records for the financial year 2019-20. The Secretarial Auditors' Report in
Form MR-3 for the financial year ended March 31, 2020 is annexed to this Report as Annexure
B. The secretarial audit report does not contain any qualification, reservation or
adversere mark.
REPORTING OF FRAUDS
During the year there was no instance of fraud which required the Statutory Auditors to
report under section 143(12) of the Companies Act, 2013 and the Rules framed thereunder.
SECRETARIAL STANDARDS
The Company has complied with all applicable secretarial standards issued by the
Institute of Company Secretaries of India.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Companies
(Corporate Social Responsibility Policy) Rules, 2014, the Company has spent an amount of
Rs.14 lakhs towards various CSR Programs undertaken by the Company during the year.
Education and Health were the focal areas during the year. The Annual Report on CSR
activities is in accordance with the Companies (Corporate Social Responsibility) Rules,
2014 is annexed to this Report as Annexure C.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION A. Conservation of Energy
During the year under review, the company continued its focus at every area on the
energy conservation measures including highly effective preventive maintenance of various
equipment.
B. Research and Development
• 5S+1implementation-Operationalexcellence initiative at plant which contributed
to 2500 Square feet of free space in warehouse.
• Introduced products that would cater to Telecom and Enterprise market such as
High-density Fiber optic Equipment Panels to meet today's high-density environments.
Armored Fiber Optic cords to meet specific requirement in Data centers to protect from
rodents and continued focus on a Standard-compliant product portfolio to increase reach in
SMB segment and tier-2 cities across the country.
MANAGERIAL REMUNERATION AND RELATED DISCLOSURES
The details of the remuneration paid to the Directors of the Company is mentioned in
the Report of Corporate Governance. The disclosure pursuant to the provisions of section
197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as Annexure D.
PARTICULARS OF EMPLOYEES
The information pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 ("Rules") in respect of employees of the
Company forms part of this report. However, in terms of Section 136 of the Companies Act,
2013, the Board's Report and Financial Statements are being sent to the Members of the
Company and others entitled there to, excluding the statement of particulars of employees
under Rule 5(2) of the Rules. The statement of particulars of employees is available for
inspection by the Members of the Company at the Registered
Office of the Company during business hours on working days of the Company up to the
date of the 32nd Annual General Meeting. Any Member interested in obtaining a copy of the
said statement may write to the Company Secretary at the address of the Registered Office
of the Company.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF
Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules'), all
unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF
established by the Government of India, after the completion of seven years. Further,
according to the Rules, the shares on which dividend has not been paid or claimed by the
shareholders for seven consecutive years shall also be transferred to the demat account of
the IEPF Authority Accordingly, during the financial year 2019-20 unclaimed dividend
amount of Rs. 0.77 lakhs pertaining to dividend declared for the financial year
2010-11 was transferred to the Investor Education and Protection Fund on April 15, 2019
and Rs.0.32 lakhs pertaining to dividend declared for the financial year 2011-12 was
transferred to the Investor Education and Protection Fund on September 30, 2019. Further,
in terms of the Investor Education and Protection Fund Authority (Accounting, Audit,
Transfer and Refund) Rules, 2016 as amended, the Company transferred the corresponding
shares, where the dividends for the last seven consecutive years have not been claimed by
the concerned shareholders to the demat account of the IEPF Authority on April 10, 2019
& April 30, 2019 and September 05, 2019 respectively.
FOREIGN EXCHANGE EARNINGS AND OUTFLOW
During the year there was no Foreign Exchange earnings and the Foreign Exchange outflow
was Rs.0.89 lakhs.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of section 92(3) and section 134(3)(a) of the Companies Act,
2013 an extract of the annual return for the year ended March 31, 2020 in Form MGT-9 is
annexed to this report as Annexure E. Additionally, a copy of the annual return for the
financial year 2018-
19 has been placed on the Company's website www.adckcl.com/investor
relations/Annual Reports.
MATERIAL CHANGES AND COMMITMENTS BETWEEN END OF FINANCIAL YEAR AND DATE OF THE REPORT
There are no material changes and commitments, affecting the financial position of the
Company, which have occurred between the end of financial year of the Company to which the
financial statements relate and the date of this report.
WEBSITE OF THE COMPANY
The Company has a website www.adckcl.com where information related to the Company are
provided.
DEPOSITS
During the year under review, the Company has not accepted any deposits falling under
the ambit of section 73 of the Companies Act, 2013 and as such, no amount on account of
principal or interest on deposits was outstanding as on the date of the Balance Sheet.
LISTING
The equity shares of the Company are listed with BSE Limited. There are no arrears on
account of payment of listing fees to them.
COST RECORDS AND COST AUDIT
Maintenance of cost records and requirement of cost audit as prescribed under the
provisions of Section 148(1) of the Companies Act, 2013 are not applicable to the business
activities carried out by the Company.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant material orders passed by the regulators or courts or
tribunals impacting the going concern status and the Company's future operations.
ACKNOWLEDGEMENTS
Your Directors place on record its appreciation for the contributions made by the
employees of the Company during the year under review. Your Directors also thank the
customers, channel partners, distributors, vendors and bankers for their support and
co-operation during the year. Your Directors also thank the Promoters of the Company for
their advice and assistance during the year.
| For and on behalf of the Board of Directors |
|
| S.Devarajan |
J.N.Mylaraiah |
| Chairman |
Managing Director |
| Place: Bangalore |
|
| Date: May 20, 2020 |
|
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