Zen Technologies Ltd
Chairman Speech
Ahead with Clear Conviction
"We understand and acknowledge the need to invest in our business
to take it to the next level. Therefore our two primary focus areas this year have been
strengthening our R&D and export presence."
Dear Shareholders,
As we begin yet another year full of opportunities and growth, I am
pleased to share some insights and learnings from the year gone by, i.e., FY22, while also
touching on what FY23 might look like for us at Zen Technologies. Let me begin by thanking
our shareholders, team members, and other stakeholders for their continued support and
encouragement. We are very grateful to have you with us all the time.
The year in retrospect
FY22 was certainly a mixed bag for us. While our revenue from
operations increased this year and stood at INR 69.75 crores compared to INR 54.64 crores
in FY21, our PAT declined to INR 2.61 crores compared to INR 2.77 crores in FY21. While
the figures certainly don't paint a rosy picture, I would like to draw your attention to
some things that worked for us this year. To begin with, our AMC contracts are starting to
scale up. This is a positive sign because it covers most of our overhead expenses. This
gives us the headroom to innovate and focus on R&D and exports. The other aspect I'd
also like to bring out is our increased investments in R&D, which, in FY22, stood at
INR 13.80 crores. In an industry like ours, R&D is the key to staying ahead of the
competition curve.
This year we received our first export order for ‘Live
Simulators.'Moreover, our newly launched anti-drone systems embedded with hard-kill
technology and heavy-lift drones were well received in the market. During the FY22, we
secured two big orders, one from the export market and the other from the Indian Air
Force. Both these orders are expected to be completed by the end of the fiscal year.
In addition, our subsidiary, Unistring Tech Solutions Private Limited,
also secured its most significant order to date, worth ~INR 61 crores, from an Indian
defence PSU.
As you all know, most industries, including ours, faced challenges in
FY22, issues related to continuous supply chain disruptions, unavailability of raw
material and labour, geo-political concerns, etc. It started with the second wave of
COVID-19 in Q1FY22, which kept the country on tenterhooks. Healthcare was the priority of
the Indian Government, and luckily, it successfully averted a medical crisis and saved our
economy from worsening.
The effect of the pandemic on industries and economies worldwide is
still quite palpable, even after so many months. Some of the concerns that still haunt us
are supply chain disruptions, severe raw material shortages, and unavailability of
semiconductor chips and other electronic components, to mention a few. However, we are
much better equipped to handle such situations after adapting well to this new reality.
Moreover, we failed to execute some of the big orders on time due to a global shortage of
electronic components, mainly chips, which increased our lead time dramatically. In fact,
due to the complete unavailability of some components, we were even forced to redesign
some of our sub-systems.
We understand and acknowledge the need to invest in our business to
take it to the next level. Therefore our two primary focus areas this year have been
strengthening our R&D and export presence. In fact, with this in mind, we successfully
raised INR 89.08 crores this year through the issuance, on a preferential basis, of
Convertible Equity Share Warrants and Compulsorily Convertible Debentures to the Promoters
& Non-Promoters of the Company, respectively.
Further, we also spent significantly on business development and
promotion activities. It is our firm conviction that these investments were necessary and
that they will pay tremendous returns in the future.
Propelled by the ongoing transformation
As stated previously, this year has been a mixed bag for us. On the one
hand, we faced numerous obstacles; on the other, we received substantial government
support. ‘Make in India' and ‘Atma Nirbhar Bharat,' which were mere
‘discussion topics' for many years, began to materialize. After the outbreak of
COVID-19, global events and circumstances taught us how to become self-reliant. Recent
tensions between Ukraine and Russia have underscored the need for resilience and
preparedness. The initiatives and programs of the Indian Government strongly suggest that
we become an independent nation. As global tensions rise, India cannot remain unaffected,
particularly in light of our "not so friendly" neighbors, China and Pakistan. In
this context, strengthening the armed forces and the defence mechanism takes precedence.
As I have always stated, Zen Technologies will collaborate with the Indian Government to
train our soldiers to repel any national threat.
India's defence industry is strategically essential to the country.
India is the third largest spender on the military and has the second largest army in the
world.
With the Indian Government pushing for self-reliance, the Indian
defence industry, too, has received a much-anticipated boost in recent years. The
Government has announced various schemes and initiatives to increase indigenous defence
manufacturing capability and boost defence exports.
Let me mention some of the favorable policies of the Government
promulgated in the recent past.
• Most relevant for our Company, the Government, in Sept 2021,
promulgated a Policy Document titled ‘Framework of Simulators in the Armed Forces.
This document aims to lay down the framework for synergized and enhanced exploitation of
simulators by the three Services and the Indian Coast Guard (ICG). The policy framework
calls for an overarching vision to encourage simulation-based training across all military
domains for combatants, leaders, maintainers, administrators, life science experts,
procurement, and financial agencies. This move aims to reduce live equipment utilization,
thus also achieving cost- effectiveness, efficiency, safety, and fast-paced, innovative
training.
• A new category of capital procurement, i.e., ‘Buy Indian -
Indigenously Designed, Developed and Manufactured (IDDM),' has been introduced to
encourage indigenous design, development, and manufacturing of defence equipment.
• The Ministry of Defense has also notified three ‘Positive
Indigenisation' lists containing 310 defence equipment that are prohibited from being
imported and must be manufactured indigenously.
• Keeping in mind the revolution brought about by Unmanned Aerial
Systems (UAS), particularly small drones, the Government has taken several measures to
promote indigenous capability for drone development in the country, both in the offensive
domain and in the area of counter-drone solutions.
In addition, the Government has liberalized its Drone Rules, 2021 and
developed a PLI programme for drones and drone components. All of these policies have
substantially enhanced the nation's overall drone capability. In addition, counter-drone
systems are anticipated to be added to the PLI programme.
• To enable innovation within
Defence & Aerospace eco-system, there are supportive Government
schemes such as iDEX (Innovations for Defence Excellence) and DTIS (Defence Testing
Infrastructure Scheme).
The Indian defence manufacturing industry is undergoing a rapid
transformation, and an increase in demand is anticipated due to rising national security
concerns. In addition, the need for current and futuristic simulators within the armed
forces has increased due to various government initiatives. Zen Technologies is aware of
this opportunity and is working proactively towards its fructification.
Expanding landscape of opportunities
Simulators are a great aid to effective training. Using simulators over
time saves enormous costs and time without compromising the quality of training. Today,
technology-enabled solutions can create realistic battlefield conditions, terrains, and
environments and conduct two-way opposed training, including simulated live firing without
firing a single round of ammunition. The assessment of all the training conducted is
digital and quantified, letting the Commander know the true worth of his command besides
identifying gaps.
The global military simulation and training market is projected to grow
at a CAGR of 5.6% from 2022 to 2027, i.e., from an estimated USD 9.2 billion in 2022 to an
estimated USD 12.2 billion by 2027.
This is mainly because of an ever- increasing realization of the need
to include simulators for training, increasing defence spending across the world, and new
technological developments, which help strengthen military capabilities and efficiency.
With rising geo-political tensions across regions, defence spending across the regions has
increased manifold, which in turn is incentivizing manufacturers to design and manufacture
more high technology, high-resolution military simulators for defence personnel.
On the Indian front, the size of the simulator market is estimated at
INR 8,000 crores, and the Indian Government, through its various policies, schemes, and
announcements, is pushing for indigenous manufacturing. The Framework document, as
mentioned above, will significantly enhance the utilization of simulators by the three
armed forces and the ICG, thereby increasing demand for simulators. The Indian armed
forces are currently working on balancing the near-term security concerns with the
long-term defence self-reliance objectives.
The Company's core-competency domain of simulators will remain a
high-demand area simply because there is a growing realization in the armed forces about
the vital role of simulators in saving costs and providing training in multiple scenarios
and terrains. It is well understood across the board that while real-world equipment is
expensive, simulators are cost-effective in training personnel. For instance, the engine
life of a tank is limited to several finite hours, after which it needs an overhaul which
could cost up to a million dollars. This life can be preserved for a longer duration if
tank simulators are used extensively. Such a growing realization and acceptance augurs
well for the Company.
The Company's drones and anti-drone systems have been widely accepted
and well-received.
In FY22, the anti-drones were upgraded with hard kill features and
garnered a good market response. Further, heavy lift drones with the capability of
handling weight over distances in high-altitude areas; have also witnessed a good response
within the armed forces
A future full of opportunities
Our opportunities are not only a growing realization and acceptance by
the armed forces across the board about the inevitable use of simulators in the conduct of
effective training but also the handholding and strengthening document by the Ministry of
Defence (MoD) on the Framework of the Use of Simulators in the Armed Forces. The
implementation of this document itself (as a policy direction from the MoD) is bound to
catalyze the demand for simulators in the Armed Forces and the ICG manifold. Moreover,
with the growing demand for simulators, the need for AMCs will also increase
simultaneously, making such contracts a lucrative opportunity for the Company.
Another emerging opportunity that has come our way is the Agnipath
Pravesh Yojna (APY) announced by the Government on 14 June 2022, providing an opportunity
for the youth of the country to serve in the Armed Forces as Agniveers for a tour-of-duty
of 4 years. Since the tenure of the Agniveers is very short, there is a fundamental need
to train them to an acceptable level in a much faster time compared to the duration spent
for the former recruits. This is where the simulators fit in aptly since these have the
intrinsic capability to conduct training in a drastically reduced time frame. The Company
is fully aware of this opportunity and is working proactively to make the best of it.
An evolving opportunity steadily taking shape is the increasing
acceptance of our products by foreign customers. The Company's growing visibility is also
a rising demand for our products, especially in drones and counter-drone solutions.
The Company is working actively to increase its export footprint.
Towards this, a dedicated core team has been earmarked.
It is expected that in times to come, we will be able to tap into more
opportunities in the countries within the Middle East, CIS, and Africa regions, as also in
the USA and other friendly nations. We already have a branch office in the UAE, and we are
further planning to set up a demo centre and a subsidiary in the UAE to increase our
business in the entire Middle East.
In this context, it is relevant to note that the Indian and the UAE
Governments entered into the Comprehensive Economic Partnership Agreement (CEPA) on 18
February 2022, which operationalized on 01 May 2022. This is India's first free trade
agreement to be signed in a decade. This Agreement will further help us to increase our
business in the UAE.
Zen technologies pride itself on its rich wealth of Intellectual
Property (IP). To date, we have filed 112 patents for our pioneering initiatives.
Patents filed for our pioneering initiatives. Since our business is
IP-Driven and our bills of material costs are usually between 10-30% of the final price,
our contribution post breakeven point is significant.
Since our business is IP-Driven and our bills of material costs are
usually between 10-30% of the final price, our contribution post breakeven point is
significant. The Company is not only continuing to invest significantly into R&D to
keep the lead and continue to add to its IP assets, but it is also planning strategies to
monetize its IP in a big way.
To capitalize on these opportunities,
Zen is hiring top-of-the-line professionals to formulate a growth
strategy for the Company, identify Gaps in the current strategy and suggest an
implementation roadmap. For this task, negotiations are in progress with one of the Big
Four firms. Besides this, two well-known and experienced consultants who worked earlier
with L&T and PwC in very senior positions have been advising us on strategy.
Another factor that works to our advantage is that we do not carry too
much dead weight. We are an assets- light business, outsourcing most of our manufacturing
to a reliable supply chain developed over the last three decades.
While opportunities are plenty, there also exist some threats to our
business, the most significant one being competition from foreign companies and companies
within India. However, Zen Technologies is well-suited to tackle such a situation.
Our biggest strength continues to be our IP, not to mention our
signature and customized products, which are gold-class and feature cutting-edge
technological muscle. All this is duly backed up with ease-of-doing business, fast
deployment, and quick deliveries.
Also, our high investment in R&D throughout our Company's lifetime
creates a high entry barrier for any new entrant, making it a competitive advantage.
Outlook for FY23
The outlook for FY23 is quite robust, with multiple orders on hand. Our
order book for FY23 also looks strong with a healthy balance of revenues from AMC, which
stands at INR 115.63 crores, and equipment, which stands at INR 315.09 crores. Further, we
expect a sizeable order book position by the end of the fiscal year through our
synergistic efforts in R&D and exports. The Governmental push certainly augurs well
for us, and we are confident that we will be stronger in the year ahead.
Before I end, I would like to thank each of you for your trust and
faith in the Company. While we may stumble a few times, our passion and courage fuel us
continuously to get up and march again with renewed zeal, confidence in our abilities, and
resolve to scale greater heights.
Thank you for your support.
Regards,
Ashok Atluri
Chairman and Managing Director
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Zen Technologies Ltd
Directors Reports
Dear Members,
Your Directors have great pleasure in presenting the report on the Business and
Operations of your Company (‘the Company' or ‘Zen'), along with the audited
financial statements, for the financial year ended 31 March 2023.
FINANCIAL HIGHLIGHTS
The financial highlights of the Company are as follows:
( in lakhs)
| Particulars |
Consolidated |
Standalone |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
| Total Income |
22,609.36 |
7,513.07 |
16,848.90 |
5,898.63 |
| Total Operating Expenditure |
14,623.49 |
6,518.39 |
11,016.00 |
5,170.50 |
| Operating Profit (PBIDT) |
7,985.87 |
994.68 |
5,832.9 |
728.13 |
| Less: Interest |
407.55 |
153.05 |
202.55 |
140.38 |
| Less: Depreciation & Amortization |
605.65 |
483.35 |
437.62 |
373.40 |
| Add/Less: Exceptional Items |
200.00 |
(27.96) |
200.00 |
(27.96) |
| Profit/(Loss) before tax |
7,172.66 |
330.32 |
5,392.74 |
186.39 |
| Current Tax |
1,548.71 |
127.95 |
952.00 |
36.33 |
| Prior Period Taxes |
0 |
(92.84) |
0 |
(92.84) |
| Deferred Tax |
627.14 |
34.24 |
676.96 |
40.54 |
| Net Profit after Tax |
4,996.82 |
260.96 |
3,763.78 |
202.36 |
| Add: Other Comprehensive Income/(Expense) |
40.51 |
3.48 |
(13.25) |
2.38 |
| Total Comprehensive income |
5,037.33 |
264.45 |
3,750.53 |
204.74 |
| Earnings per Share ( ) (face value 1/- per share) |
|
|
|
|
| Basic: |
5.39 |
0.25 |
4.75 |
0.25 |
| Diluted: |
5.20 |
0.25 |
4.58 |
0.25 |
REVIEW OF OPERATIONS
During the year under review, your Company achieved total income of 16,848.90 lakhs as
against 5,898.63 lakhs during the previous year. The Net profit after tax stood at
3,763.78 lakhs as against 202.36 lakhs for the previous year.
During the year, the R&D expenditure (capital and revenue) is 19.09 crores
(previous year 13.80 crores).
DIVIDEND
The Board of Directors of your Company in its meeting held on 06 May 2023 recommended a
dividend @ 20% ( 0.20/- per equity share of 1/- each) for the financial year 2022-23 after
having considered ongoing and imminent commitments, subject to shareholders' approval at
the ensuing annual general meeting (AGM) and shall be subject to deduction of income tax
at source.
Dividend Distribution Policy
Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (“the Listing Regulations”), as amended, the Dividend
Distribution Policy duly approved by the Board is available on the website of the Company
at:
https://www.zentechnologies.com/investor_relations/zen-dividend-distribution-policy.pdf
ALLOTMENT OF EQUITY SHARES
The Board of Directors of the Company on 24 May 2023, allotted 40,64,627 equity shares
of 1/- each at premium of 212/- pursuant to conversion of Compulsory Convertible
Debentures (CCDs) and 4,69,633 equity shares 1/- each at premium of 212/- pursuant
to conversion of Convertible Warrants.
Further, the Stock Exchanges granted trading approval for the above mentioned equity
shares on 18 July 2023, which is effective from 19 July 2023.
ZEN TECHNOLOGIES LIMITED EMPLOYEE STOCK OPTION PLAN-2021
The Board of Directors and the shareholders of the Company at their meetings held on 24
July 2021 and 28 August 2021, respectively and further amended by the Board of Directors
and shareholders of the Company at their meetings held on 06 September 2022 and 29
September 2022, respectively, approved the Zen Technologies Limited Employee Stock Option
Plan-2021 (“ZEN ESOS 2021”/“Scheme”) to create, issue, offer, grant,
allot and/or transfer from time to time, in one or more tranches up to 40,00,000 (Forty
lakhs) Employee Stock Options (“ESOPs”) exercisable into 40,00,000 (Forty lakhs)
equity shares of face value 1/- (Rupee one) each. The scheme is being implemented through
a Trust set up by the Company namely “Zen Technologies Limited Employees Welfare
Trust” and involves acquisition of shares from the secondary market for which the
Company has also obtained the in-principle approval from both the stock exchanges viz.,
BSE Limited and the National Stock Exchange of India Limited.
The Scheme is in compliance with the Securities and Exchange Board of India (Share
Based Employee Benefits and Sweat Equity) Regulations, 2021.
During the period under review, the Company has granted 2,70,900 (Two lakh Seventy
thousand Nine hundred only) Employee Stock Options (ESOPs) convertible into 2,70,900
equity shares of face value of 1/- each under “Zen Technologies Limited Employee
Stock Option Plan – 2021” at a price of 100/- per option on 21 February
2023. The said price is more than the face value of equity shares of the Company and less
than the prevailing Market Price as on the date of the grant.
Disclosures pursuant to Regulation 14 read along with Part F of Schedule-I of
Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021 are placed on the Company's: Website: https://www.zentechnologies.com/
policies-and-code-of-conduct
Further, the certificate from the Secretarial Auditors of the Company certifying that
the Company's Scheme is being implemented in accordance with the Securities and Exchange
Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the
resolutions passed by the Members is also placed on the Company's Website: https://www.zentechnologies.com/investor-information
SHARE CAPITAL
The paid-up equity share capital of the Company stood at 7,95,10,000 comprising
of 7,95,10,000 equity shares of 1/- each as on 31 March 2023.
Subsequent to the allotment of equity shares pursuant to conversion of CCDs and
Warrants issued in November 2021, the paid-up equity share capital of the Company stood at
8,40,44,260 comprising of 8,40,44,260 equity shares of 1/- each w.e.f 24 May 2023.
Further, the amount so raised from the above said preferential issue in November 2021,
was utilized as per the objects approved by the shareholders at their meeting held on 11
November 2021. During the period under review, there has been no deviation or variation in
the utilization of the proceeds of the preferential issue.
RESERVES
No amounts were proposed to be transferred to Reserves for the period under review.
FIXED DEPOSITS
The Company has not accepted any deposits from Public and as such, no amount on account
of principal or interest on deposits from public was outstanding as on the date of balance
sheet.
LISTING OF EQUITY SHARES
The securities of the Company are listed at National Stock Exchange of India Limited
(NSE) and BSE Limited (BSE). Further, the Company has no equity shares carrying
differential rights.
The Company has paid Listing Fees for the Financial Year 2023-24, to each of the Stock
Exchanges, where its equity shares are listed.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES
The Company has Four (4) subsidiaries in India and overseas as mentioned below and
there are no associate or joint venture companies within the meaning of Section 2(6) of
the Companies Act, 2013 (“Act”). There has been no material change in the nature
of the business of the subsidiaries:
a. Unistring Tech Solutions Private Limited;
b. Zen Medical Technologies Private Limited;
c. Zen Technologies USA, Inc;
d. Zen Defence Technologies L.L.C, UAE.
Consolidated financial statements have been prepared by the Company in accordance with
the requirements of Ind AS 110 issued by Institute of Chartered Accountants of India
(ICAI) and as per the provisions of the Act.
Pursuant to the provisions of Section 129(3) of the Act and Rule 8(1) of Companies
(Accounts) Rules, 2014, a statement containing the salient features of the financial
statements of the Company's subsidiaries, in Form AOC-1, is attached as Annexure-1
to this report.
Further, pursuant to the provisions of Section 136 of the Act, the financial statements
of the Company, including the consolidated financial statements, along with the relevant
documents and the separate audited financial statements in respect of subsidiaries are
made available on the website of the Company at: https://www.
zentechnologies.com/investor-information.
Further, the Company's policy on determining the material subsidiaries, as approved by
the Board is uploaded on the Company's website at: https://www.zentechnologies.com/
policies-and-code-of-conduct.
Unistring Tech Solutions Private Limited (UTS)
UTS is a subsidiary of the Company in India with 51% of holding. UTS works for design
and development of various products in Communication and RADAR applications. UTS offers
services to Govt and private clients in the area of FPGA based firmware development,
Embedded software development on Intel and PowerPC architectures. UTS's major products and
services are targeted for military clients (DRDO, ECIL and BEL). UTS has demonstrated
remarkable financial progress in the financial year 2022-23, which turned the Company as a
material Subsidiary of the Company in term of the Listing Regulations and playing a
significant role in shaping the consolidated financial statements.
Zen Medical Technologies Private Limited (ZMTPL)
ZMTPL is a wholly-owned subsidiary of the Company in India.
Zen Medical is primarily involved in the field of medical and hospital equipment.
Zen Technologies USA, Inc
Zen Technologies USA is a wholly-owned subsidiary of the Company in USA. It operates
within the simulator industry, which complements the parent Company's core competencies.
Zen Technologies USA is primarily dedicated to offering combat training products to
defense and security customers worldwide.
Zen Defence Technologies L.L.C, UAE (ZDT)
ZDT is a wholly-owned subsidiary in UAE, incorporated on 15 November 2022. ZDT
is dedicated to the import and export of training equipment and simulators, as well as
engaging in trading, development, and maintenance of defense and surveillance systems on a
global scale. ZDT is yet to commence the operations.
CONSOLIDATED FINANCIAL STATEMENTS (CFS)
During the year, the Board of Directors reviewed the affairs of its subsidiaries. Your
Company has prepared its Consolidated Financial Statements in accordance with the
requirements of IND AS-27 issued by the Institute of Chartered Accountants of India (ICAI)
and as per the provisions of Section 129(3) of the Companies Act, 2013. The Consolidated
Financial Statements together with the Auditors' Report form part of this Annual Report.
In accordance with Section 136 of the Companies Act, 2013, the financial statements of
the Company, including the consolidated financial statements, and all other documents
required to be attached to this report are available for inspection by the members at the
registered office of the Company during the business on all days, except Saturdays,
Sundays and public holidays, up to the date of the Annual General Meeting (‘AGM').
Any member desirous of obtaining a copy of the said financial statements may write a mail
to the Company Secretary of the Company. The above-mentioned documents have also been
uploaded on the website of the Company at: https://www.zentechnologies.com/annual-reports
ANNUAL RETURN
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as
on 31 March 2023 is made available on the Company's website at:
https://www.zentechnologies.com/ investor-information
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis (MDA) for the year under review as stipulated
under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) 2015 (“the Listing Regulations”) forms part of this
Annual Report.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
The Business and Responsibility Sustainability Report (BRSR) as stipulated under
Regulation 34(2)(f) of the Listing Regulations is applicable to your Company for FY
2022-23 and the same is provided as separate section to this Annual Report which indicates
the Company's performance against the principles of the ‘National Guidelines on
Responsible Business Conduct'. This would enable the members to have an insight into
environmental, social and governance initiatives of the Company.
CORPORATE GOVERNANCE
A separate report on Corporate Governance as required under the Listing Regulations is
provided as separate section to this Annual Report.
OUTLOOK AND FUTURE PLANS
“Management Discussion and Analysis” contains a section on the Company's
outlook and future plans and members may please refer the same on this.
DIRECTORS
The Board of Directors of the Company has an optimum combination of Executive (4),
Non-Executive and Independent Directors (4) including one woman Independent Director.
Independent and Non-executive Directors
As prescribed under Listing Regulations and pursuant to Section 149(6) of the Act, the
Non-Executive and Independent Directors (as on the date of signing this report) of the
Company are Mr. Amreek Singh Sandhu, Dr. Ajay Kumar Singh, Dr. Ravindra Kumar Tyagi and
Ms. Sirisha Chintapalli. All the above mentioned directors were appointed as independent
directors by the shareholders in their respective meetings.
Executive Directors
The following are the Whole-Time directors of the Company. Mr. Ashok Atluri, Chairman
and Managing Director, Mr. Kishore Dutt Atluri, President and Joint Managing Director, Mr.
M Ravi Kumar, Whole-Time Director and Mrs. Shilpa Choudari, Whole-Time Director.
CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
During the year under review,
a) Mr. M Ravi Kumar (DIN: 00089921) has been re-appointed as the Whole-Time Director of
the Company, not liable to retire by rotation, for a period of three years, with effect
from 29 June 2022.
b) Mr. Afzal H. Malkani has been appointed as Chief Financial officer of the Company,
in the place of Mr. Ashok Atluri, the then Chief Financial Officer of the Company, with
effect from 01 August 2022.
c) Dr. Ajay Kumar Singh (DIN: 08532830) has been re-appointed as the Non-executive
Independent Director of the Company, for the second consecutive term of three years, with
effect from 02 November 2022.
d) Mr. Ashok Atluri (DIN:00056050) has been re-appointed as Chairman and Managing
Director for a period of 3 years with effect from 01 May 2023, subject to approval of the
shareholders in the ensuing Annual General Meeting.
e) Mr. Kishore Dutt Atluri (DIN: 09691242) has been re-appointed as President and Joint
Managing Director for a period of 3 years with effect from 01 May 2023, subject to
approval of the shareholders in the ensuing Annual General Meeting.
f) Mr. Hansraj Singh Rajput, Company Secretary and Compliance officer, was resigned
w.e.f. 14 December 2023.
g) Mr. M. Raghavendra Prasad has been appointed as Company Secretary and Compliance
Officer of the Company with effect from 06 May 2023.
h) Mrs.Shilpa Choudari (DIN:06646539) has been re-appointed as the Whole-Time Director
for a period of 3 years with effect from 01 November 2023, subject to approval of the
shareholders in the ensuing Annual General Meeting.
i) Ms. Sirisha Chintapalli (DIN: 08407008) has been re-appointed as the Non-Executive
Independent Director of the Company, for the second consecutive term of three years, with
effect from 07 August 2023 subject to approval of the shareholders in the ensuing Annual
General Meeting.
DIRECTORS RETIRING BY ROTATION
Pursuant to the provisions of the Act, Mr. Ashok Atluri retires at the AGM and being
eligible, offers himself for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134, sub-section 3(c) and sub-section 5 of
the Companies Act, 2013, the Board of Directors, to the best of their knowledge and
ability, state and confirm that:
i. in the preparation of the Annual Accounts, the applicable Accounting Standards have
been followed, along with proper explanation relating to material departures;
ii. such accounting policies have been selected and applied consistently and judgments
and estimates have been made that are reasonable and prudent to give a true and fair view
of the Company's state of affairs as on 31 March 2023 and of the Company's profit or loss
for the year ended on that date;
iii. they have taken proper and sufficient care for maintenance of adequate accounting
records in accordance with the provisions of this Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities; i
v. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and
that such internal financial controls are adequate and are operating effectively; and
vi. they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems are adequate and operating effectively.
DECLARATIONS OF INDEPENDENT DIRECTORS
All independent directors of the Company have given declaration that they meet the
criteria of independence as provided in sub-section (6) of section149 of the Act.
The Company also received a declaration of compliance of sub-rule (1) and sub-rule (2) of
the Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
Pursuant to the provisions of the Act and the Listing Regulations, the Nomination and
Remuneration committee identifies persons who are qualified to become directors in
accordance with the criteria laid down and recommend to the Board for their appointment
and removal.
The Company adopted a policy relating to the remuneration for Directors and Key
Managerial Personnel. This Policy covers the remuneration and other terms of employment
for the Company's Executive Team. The remuneration policy for members of the Board and for
management, aims at improving the performance and enhancing the value of the Company by
motivating and retaining them and to attract the right persons to the right jobs in the
Company. The object of this Remuneration Policy is to make your Company a desirable
workplace for competent employees and thereby secure competitiveness, future development
and acceptable profitability. In order to achieve this, it is imperative that the Company
is in a position to offer competitive remuneration in all its operational locations.
The Company's policy on directors' appointment and remuneration and other matters
provided in Section 178(3) of the Act is made available on the website of the Company at:
https://www. zentechnologies.com/policies-and-code-of-conduct.
POLICY FOR SELECTION OF DIRECTORS AND DETERMINING DIRECTORS' INDEPENDENCE
The Nomination and Remuneration committee (NRC) shall assess the independence of
directors at the time of appointment, re-appointment and the Board shall assess the
same annually based on the criteria provided by NRC. The Board shall re-assess the
determination of independence when any new interests or relationships are disclosed by a
Director.
The criteria of independence are as prescribed in the Act and the Listing Regulations
and the independent directors shall abide by the Code specified for them in Schedule IV of
the Act.
NUMBER OF MEETINGS OF THE BOARD
During the financial year, five (5) meetings of the Board of Directors were held on 07
May 2022, 30 July 2022, 06 September 2022, 12 November 2022 and 28 January 2023 in
compliance with provisions of the Act read with rules made thereunder, Secretarial
Standards and the Listing Regulations.
COMMITTEES OF THE BOARD
Currently the Board has 6 (six) committees: Audit, Nomination and Remuneration,
Corporate Social Responsibility, Stakeholders' Relationship, Risk Management and Borrowing
committee.
The compositions of the committees are in line with the applicable provisions of the
Act, Rules and Regulations and are as given below:
| Name of the Committee |
Composition of the Committee |
Remarks |
| Audit Committee |
Mr. Amreek Singh Sandhu, Chairman |
The Audit committee of the Board of Directors was constituted in conformity with the
requirements of Section 177 of the Act and Regulation 18 of the Listing Regulations and
its role has been the same as stipulated in the Act and the Listing Regulations. |
|
Dr. Ajay Kumar Singh, Member |
|
|
Dr. R.K. Tyagi, Member |
|
|
Mr. Ashok Atluri, Member |
|
|
|
All recommendations made by the Audit committee during the year were accepted by the
Board. |
| Nomination and Remuneration Committee |
Mr. Amreek Singh Sandhu, Chairman |
The Nomination and Remuneration committee of the Board of Directors was constituted in
conformity with the requirements of Section 178 of the Act and Regulation 19 of the
Listing Regulations and its role has been the same as stipulated in the Act and the
Listing Regulations. |
|
Dr. Ajay Kumar Singh, Member |
|
|
Dr. R.K. Tyagi, Member |
|
| Corporate Social Responsibility Committee |
Dr. R.K. Tyagi, Chairman |
The Corporate Social Responsibility committee of the Board of Directors was
constituted in conformity with the requirements of Section 135 of the Act. |
|
Mr. M.Ravi Kumar, Member |
The Committee monitored the implementation of the CSR Policy from time to time. |
|
Mr. Ashok Atluri, Member |
|
| Stakeholders' Relationship Committee |
Ms. Sirisha Chintapalli, Chairman |
The Stakeholders' Relationship committee of the Board of Directors was constituted in
conformity with the requirements of Section 178 of the Act and Regulation 20 of the
Listing Regulations and its role has been the same as stipulated in the Act and the
Listing Regulations. |
|
Mr. Ashok Atluri, Member |
|
|
Mr. Amreek Singh Sandhu, Member |
|
| Risk Management Committee |
Mr. Amreek Singh Sandhu, Chairman |
The Risk Management committee of the Board of Directors was constituted in conformity
with the requirements of Regulation 21 of the Listing Regulations with its role as
stipulated in the Listing Regulations. |
|
Mr. Ashok Atluri, Member |
|
|
Mr. M. Ravi Kumar, Member |
|
|
Dr. Ajay Kumar Singh, Member |
|
| Borrowing Committee |
Mr. Amreek Singh Sandhu, Chairman |
The Borrowing Committee of the Board of Directors was constituted pursuant the
resolution passed by the Board of Directors in line with the proviso under Section 179(3)
of the Companies Act, 2013. |
|
Mr. M. Ravi Kumar, Member |
|
|
Mr. Kishore Dutt Atluri, Member |
|
|
Mrs. Shilpa Choudari, Member |
|
|
Mr. Ashok Atluri, Member |
|
A detailed note on the Board and its mandatory Committees is provided in the Corporate
Governance Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of contracts or arrangements with related parties referred to in
sub-section (1) of Section188 in Form AOC-2 pursuant to clause (h) of sub-section (3) of
Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 are enclosed
as Annexure-2 to this report.
The policy on materiality of related party transactions and also on dealing with the
related party transactions as approved by the Audit committee and the Board of Directors
was placed on the website of the Company at: https://www.zentechnologies.com/
policies-and-code-of-conduct.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read
with the Companies (Accounts) Rules, 2014, with respect to Conservation of Energy,
Technology Absorption, and Foreign Exchange Earnings and Outgo are provided in Annexure-3
to this Report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The details of loans given, guarantees provided and investments made, if any, during
the Financial Year ended on 31 March 2023 are enclosed as Annexure-4 to this Report
in compliance with the provisions of Section 186 of the Companies Act, 2013 read with the
Companies (Meetings of the Board and its Powers) Rules, 2014. The particulars of aggregate
loans, guarantees and investments under Section 186 of the Act are disclosed in the notes
to Financial Statements, which may be read as part of this Report.
RISK MANAGEMENT POLICY
The Board formulated and implemented Risk Management Policy for the Company which
identifies various elements of risks which in its opinion may threaten the existence of
the Company and measures to contain and mitigate risks. The Company has adequate internal
control systems and procedures to combat the risk. The Risk Management procedures are
reviewed by the Audit committee and the Board on periodical basis.
The Company has adopted a Risk Management Policy in accordance with the provisions of
the Act and Regulation 21 of the Listing Regulations and the same is also made available
on the website of the Company at: https://www.zentechnologies.com/
policies-and-code-of-conduct.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The annual report on CSR activities, in terms of Section 135 of the Act, and the
details about the policy developed and implemented by the Company on CSR initiatives taken
during the year are enclosed as Annexure-5 to this report. A detailed policy on CSR is
placed on the Company's website under the web link: https://www.
zentechnologies.com/investor_relations/CSR-Policy.pdf
BOARD EVALUATION
Pursuant to the provisions of the Act and the Listing Regulations, the Board has
carried out annual performance evaluation of its own, the individual directors as well as
the mandatory committees of the Board. A structured set of criteria was adopted after
taking into consideration the inputs received from the directors, covering various aspects
of the Board's functioning such as adequacy of the composition of the Board and its
Committees, Board culture, execution and performance of specific duties, obligations and
governance. Evaluation of the Board members is conducted on an annual basis by the Board,
Nomination and Remuneration committee and Independent Directors with specific focus on the
performance and effective functioning of the Board and individual directors.
The Nomination and Remuneration committee had specified criteria for performance
evaluation of Directors, Committees and Board as a whole and recommended the same to the
Board for evaluation.
CRITERIA FOR PERFORMANCE EVALUATION
a. Ability of the candidate to devote sufficient time to his professional obligations
as Independent Director for informed and balanced decision making.
b. Adherence to the Code of Conduct in letter and in spirit by the Independent
Directors.
c. Bringing objectivity and independence of view to the Board's discussions in relation
to the Company's strategy, performance, and risk management.
d. Statutory compliance and ensuring high standards of financial probity and Corporate
Governance.
e. Responsibility towards requirements under the Companies Act, 2013, responsibilities
of the Board and accountability under the Director's Responsibility Statement.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Independent Directors attend a Familiarization/Orientation Program on being
inducted into the Board. Further, various other programmes are conducted for the benefit
of Independent Directors to provide periodical updates on regulatory front, industry
developments and any other significant matters of importance. The Company issues a formal
letter of appointment to the Independent Directors, outlining their role, function, duties
and responsibilities, the format of which is available on the Company's Website.
The details of training and familiarization program are available on the website of the
Company at: https://www.zentechnologies.com/ investor-information.
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES
OR ASSOCIATE COMPANIES
During the year under review, Zen Defence Technologies L.L.C, UAE (ZDT) became a
subsidiary of the Company and no subsidiary Company ceased to be the subsidiary of the
Company during the same period.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE
FINANCIAL STATEMENTS
Your Company has established and maintained a framework of internal financial controls
and compliance systems. Based on the framework of internal financial controls and
compliance systems established and maintained by the Company, the work performed by the
internal, statutory and secretarial auditors and external consultants, including the audit
of internal financial controls over financial reporting by the statutory auditors and the
reviews performed by management and the relevant board committees, including the audit
committee, the Board is of the opinion that the Company's internal financial controls were
adequate and your Company is constantly endeavoring to improve the standards of internal
control in various areas and taking steps to strengthen the internal control system to
make it commensurate and effective with the nature of its business.
Further, the statutory auditors of your Company have also issued an attestation report
on internal control over financial reporting (as defined in section 143 of Companies Act,
2013) for the financial andattention year ended 31 March 2023, which forms part to the
Statutory Auditor's Report.
VIGIL MECHANISM
The Board of Directors, on the recommendation of the Audit Committee, established a
vigil mechanism for directors and employees called “Whistle Blower Policy”,
pursuant to the provisions of the Act and the Listing Regulations to report genuine
concerns or grievances about unethical behavior, actual or suspected fraud or violation of
the Company's Code of Conduct or Ethics Policy and to provide adequate safeguards against
victimization of persons who use such mechanism and to provide direct access to the
Chairperson of the Audit Committee in appropriate or exceptional cases.
The Whistle Blower Policy is posted under the Investors section of the Company's
website at: https://www.zentechnologies.com/ policies-and-code-of-conduct.
FRAUD REPORTING
During the Financial Year under review, the Statutory Auditors have not reported any
incident of fraud to the Board of Directors of the Company, pursuant to the provisions of
Section 143(12) of the Companies Act, 2013.
DISCLOSUREUNDERTHESEXUALHARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND
REDRESSAL) ACT, 2013
Your Company has zero tolerance towards sexual harassment at the workplace and has
adopted a policy on Prevention of Sexual Harassment of Women at Workplace in accordance
with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013. The Company has taken several initiatives across the organization to build
awareness amongst employees about the Policy and the provisions of the Prevention of
Sexual Harassment of Women at Workplace Act. The details of sexual harassment complaints
as per the provisions of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 and the Rules thereunder are as follows: No. of
Complaints Received : Nil
No. of Complaints disposed off : NA
Further, during the year under review, the Company has complied with the provisions
related to the constitution of Internal Complaints Committee under the Sexual Harassment
of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
The Board of Directors has adopted the Insider Trading Policy in accordance with the
requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015. The Insider
Trading Policy of the Company lays down guidelines and procedures to be followed and
disclosures to be made while in possession of Unpublished Price Sensitive Information and
while dealing in the shares of the Company, as well as the consequences of violations. The
Policy has been formulated to regulate, monitor and ensure reporting of trading by
insiders by employees and to maintain the highest ethical standards while dealing in the
Company's securities. The Insider Trading Policy of the Company, covering the Code of
Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information
and Code of Conduct for prevention of insider trading is available on the website of the
Company at: https://www. zentechnologies.com/policies-and-code-of-conduct.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
During the year under review, pursuant to the provisions of Section 124 (5) of
the Act (section 205A of the Companies Act 1956), an amount of 1,18,157.20/- relating to
FY 2014-15, which remained unclaimed for a period of 7 years was transferred to the
Investor Education and Protection Fund by the Company on 11 November 2022.
TRANSFER OF UNCLAIMED SHARES TO INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY
During the year under review, all shares in respect of which dividend has not been paid
or claimed for seven consecutive years or more (relevant shares) up to and including the
financial year 2014-15 were transferred by the Company in the name of IEPF from time to
time and the statement containing such details as prescribed is placed on the Company's
website at:https://www.zentechnologies.com/unpaid-unclaimed-dividend/2021-2022
STATUTORY AUDITORS & AUDITOR'S REPORT
At the twenty-sixth (26th) AGM held on 21 September 2019 the Members
approved appointment of Ramasamy Koteswara Rao and Co LLP., Chartered Accountants (Firm
Registration No. 010396S/S200084) as Statutory Auditors of the Company to hold office for
a period of five years from the conclusion of that AGM the conclusion of the thirty-first
(31 st) AGM.
The Auditor's Report on the financial statements of the Company does not contain any
qualifications, reservations, or adverse remarks or disclaimer and the Notes on the
financial statements referred therein are self-explanatory, thereby not requiring any
further comments on the same.
MAINTENANCE OF COST RECORDS
During the year under review, Section 148(1) of the Act is applicable to your Company
and accordingly such accounts and records are made and maintained by the Company as
specified.
COST AUDIT
The Company is required to appoint Cost Auditors for conducting the audit of cost
records being maintained by the Company for FY 2023-24 (for W 2022-23 this requirement was
not applicable). Accordingly, the Board of Directors based on the recommendations of the
audit committee, appointed M/s. M P R & Associates, Cost Accountants, Hyderabad, as
Cost Auditors for conducting the audit of cost records for FY 2023-24, with a remuneration
which is subject to ratification by the members at the ensuing AGM.
SECRETARIAL AUDITORS AND AUDIT REPORT
During the year under review, the Company has complied with the provisions of Section
204 of the Act and Regulation 24A of the Listing Regulations.
The Secretarial Audit Report for the financial year ended 31 March 2023 issued by Mrs.
Vanitha Nagulavari (ACS No. 26859/CP No. 10573) is enclosed as Annexure-6 to this
Report and it does not contain any reservation, qualification or adverse remarks.
The Board has appointed Mr. D.S. Rao (ACS no. 12394/CP no. 14487), Practicing Company
Secretary, as Secretarial Auditors to conduct secretarial audit, pursuant to the
recommendations of the Audit committee, for the FY 2023-24.
Further, the Secretarial Audit report of Unistring Tech Solutions Private Limited
(UTS), a material subsidiary of the Company, is also available on the Company's website
at: https://www. zentechnologies.com/subsidiary-Company-accounts
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The remuneration paid to your directors is in accordance with the Nomination and
Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013
and Regulation 19 of the Listing Regulations.
The information required under Section 197 of the Companies Act, 2013 read with
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including
any statutory modification(s) or re-enactment(s) thereof for the time being in force) in
respect of directors/employees of the Company is enclosed as Annexure-7 to this
Report.
INSURANCE
All the properties of the Company including buildings, plant and machinery and stocks
have been adequately insured.
INDUSTRIAL RELATIONS
Industrial relations have remained cordial during the year under review, and your
directors appreciate the sincere and efficient services rendered by the employees of the
Company at all levels, contributing to the successful operations of the Company.
GREEN INITIATIVES
In commitment to keep in line with the Green Initiatives and going beyond it,
electronic copy of the Notice of 30th Annual General Meeting of the Company
including the Annual Report for FY 2022-23 are being sent to all members whose e-mail
addresses are registered with the Company/Depository Participant(s).
COMPLIANCE WITH SECRETARIAL STANDARDS
During the year under review, the Company has complied with secretarial standards
issued by the Institute of Company Secretaries of India on Board Meetings (i.e., SS-1),
General Meetings (i.e., SS-2) and on Dividend (i.e., SS-3).
GENERAL
Your Directors state that no disclosure or reporting is required in respect of the
following items as there were no transactions on these items during the financial year
under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise;
2. No significant or material orders were passed by the Regulators or Courts or
Tribunals which impact the going concern status and Company's operations in future;
3. No material changes and commitments in the business operations of the Company from
the financial year ended 31 March 2023 to the date of the signing of the Directors'
Report;
4. Neither the Managing Director nor the Whole-time Directors of the Company receive
any remuneration or commission from any of its subsidiaries; and
5. There is no change in the nature of the business of the Company.
ACKNOWLEDGMENTS
Your directors thank various departments of Central and State Government, Organizations
and Agencies for the continued help and co-operation extended by them to your Company.
Your directors also gratefully acknowledge all stakeholders of the
Company viz. shareholders, customers, dealers, vendors, financial institutions, banks
and other business partners for the excellent support received from them during the year.
Your directors place on record their sincere appreciation to all employees of the Company
for their unstinted commitment and continued contribution to the Company.
For and on behalf of the Board
| Place: Hyderabad |
Ashok Atluri |
| Date: 05 August 2023 |
Chairman and Managing Director |
|
DIN: 00056050 |
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