HFCL Ltd
Directors Reports
Dear Members,
Your Board of Directors has pleasure in presenting the 36th Annual Report on the
business and operations of your Company together with the Audited Financial Statements for
the financial year ended March 31,2023.
FINANCIAL HIGHLIGHTS
Your Company's financial performance (standalone and consolidated) for the financial
year ended March 31, 2023 is summarised below:
|
|
|
|
(Rs. in crore) |
| Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
|
| Revenue from Operations (Net) |
4,395.68 |
4,286.44 |
4,743.31 |
4,727.11 |
| Other Income |
49.46 |
43.83 |
47.18 |
42.91 |
| Total Income |
4,445.14 |
4,330.27 |
4,790.49 |
4,770.02 |
| Total Operating Expenses |
3,929.19 |
3,758.66 |
4,124.63 |
4,077.04 |
| Depreciation and Amortisation expenses |
57.43 |
57.30 |
82.97 |
78.25 |
| Total Expenses |
3,986.62 |
3,815.96 |
4,207.60 |
4,155.29 |
| Profit before Finance Cost and Tax |
458.52 |
514.31 |
582.89 |
614.73 |
| Finance Cost |
116.83 |
132.64 |
152.19 |
166.40 |
| Share of net profits of joint ventures accounted for using equity method |
- |
- |
(0.09) |
0.16 |
| Exceptional Items |
- |
- |
- |
6.38 |
| Profit before Tax (PBT) |
341.69 |
381.67 |
430.61 |
442.11 |
| Tax Expense Net of MAT Credit Entitlement |
87.09 |
98.89 |
112.9 |
116.25 |
| Profit after Tax (PAT) |
254.60 |
282.78 |
317.71 |
325.86 |
| Attributable to: |
|
|
|
|
| Shareholders of the Company |
- |
- |
300.97 |
313.12 |
| Non-Controlling Interests |
- |
- |
16.74 |
12.75 |
| Opening Balance of Retained Earnings |
1,444.65 |
1,160.24 |
1,510.63 |
1,196.28 |
| Profit for the year |
254.60 |
282.77 |
300.97 |
313.12 |
| Transfer to Retained Earnings |
0.30 |
20.98 |
(0.22) |
20.57 |
| Amount available for appropriation |
1,699.55 |
1,463.99 |
1,811.38 |
1,529.97 |
| Appropriations: |
|
|
|
|
| Dividend on Equity Shares (Previous Year) |
(24.80) |
(19.34) |
(24.80) |
(19.34) |
| Closing Balance of Retained Earnings |
1,674.75 |
1,444.65 |
1,786.58 |
1,510.63 |
During the FY23, total Consolidated Income of your Company is Rs.4,790.49 crores as
compared to Rs.4,770.02 crores during the previous year, showing an increase of 0.43%.
Your Company has achieved Consolidated EBIDTA of Rs.665.86 crores in FY23 from
Rs.692.98 crores in the previous year, recording a decline of 3.91%. Profitability, i.e.,
Consolidated PBT has decreased by 2.60% to Rs.430.61 crores in FY23 from Rs.442.11 crores
during the previous year.
In FY23, your Company has a Consolidated PAT of Rs.317.71 crores from Rs.325.86 crores
in the previous year, slight decline of 2.50%.
Net Worth
The net worth of your Company has increased during the year under review to Rs.2,993.01
crores from Rs.2,728.36 crores in the previous year.
Gross Debt
The consolidated Debt in FY23 stood at Rs.748.31 crores as against Rs.729.78 crores in
FY22.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129 read with Schedule III to the
Companies Act, 2013 (hereinafter referred to as the "Act") and the Companies
(Accounts) Rules, 2014, Regulation 33 of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred
to as the "SEBI Listing Regulations") and applicable Indian Accounting
Standards, the Audited Consolidated Financial Statements of the Company for the FY23,
together with the Auditors' Report form part of this Annual Report.
TRANSFER TO RESERVES
The Board of Directors has decided to retain the entire amount of profits for the FY23,
under Retained Earnings and has not transferred any amount to the General Reserves, during
the year under review.
DIVIDEND
Your Board of Directors, at its meeting held on May 08, 2023, has recommended a
Dividend @20% i.e., H0.20/- (Twenty Paise) per equity share of face value of HI/- each,
aggregating to dividend pay-out of Rs.28.58 crores for the financial year ended March 31,
2023, subject to approval of shareholders at the ensuing annual general meeting
("AGM") of the Company. The above decision is in accordance with the Company's
Dividend Distribution Policy.
The dividend shall be subject to deduction of TDS before payment to shareholders, as
per applicable provisions of the Income-Tax Act, 1961.
Dividend Distribution Policy
As per Regulation 43A of Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015, top 1000 listed companies based on the
market capitalisation, shall formulate a Dividend Distribution Policy.
Accordingly, the Policy has been adopted by the Board of Directors of the Company
setting out the parameters and circumstances that will be taken into account by the Board
in determining the distribution of dividend to its shareholders and/ or retaining profits
earned by the Company.
The Dividend Distribution Policy is available on the Company's website at https://www.hfcl.com/wp-content/
uploads/2017/05/Dividend Distribution Policy.pdf
Investor Education and Protection Fund (IEPF)
In accordance with the applicable provisions of the Act read with the Investor
Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF
Rules"), all unclaimed dividends are required to be transferred by the Company to
the IEPF, which remain unpaid or unclaimed for a period of seven years, from the date of
transfer to Unpaid Dividend Account.
Further, according to IEPF Rules, the shares on which dividend has not been claimed by
the shareholders for seven consecutive years or more shall be transferred to the demat
account of the Investor Education and Protection Fund Authority ("IEPF
Authority").
During the year under review, no amount of the unclaimed/ unpaid dividend and any such
share in the Company, was due to be transferred to the IEPF Authority.
The following table provides a list of years for which unclaimed dividends and their
corresponding shares would become eligible to be transferred to the IEPF on the dates
mentioned below:
| Financial Year |
Dividend per Share (7) |
Date of Declaration |
Last date for claiming Dividend |
Due Date for Transfer |
Amount (K) (Unpaid as on March 31,2023) |
| 2017-18 |
0.06 |
September 29, 2018 |
November 04, 2025 |
December 04, 2025 |
|
| 2018-19 |
0.10 |
September 28, 2019 |
November 03, 2026 |
December 03, 2026 |
16,29,588.40 |
| 2020-21 |
0.15 |
September 30, 2021 |
November 05, 2028 |
December 05, 2028 |
24,46,573.47 |
| 2021-22 |
0.18 |
September 30, 2022 |
November 05, 2029 |
December 05, 2029 |
31,63,367.71 |
Details of unpaid dividend for the FY18, 2018-19, 2020-21 and 2021-22, can be accessed
from the website of the Company at www.hfcl.com and claim can be made by making
request to the Company.
Details of Nodal Officer
The Company has designated Mr. Manoj Baid, President & Company Secretary of the
Company as a Nodal Officer for the purpose of IEPF Authority.
INDIAN ACCOUNTING STANDARDS (IND-AS)
Financial Statements of your Company and its subsidiaries, for the financial year ended
March 31, 2023, are prepared in accordance with Indian Accounting Standards (Ind-AS), as
notified under Section 133 of the Act read with the Companies (Indian Accounting
Standards) Rules, 2015, as amended from time to time.
FIXED DEPOSITS
During the FY23, your Company has not accepted any deposit within the meaning of
Section 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
SHARE CAPITAL AND CHANGES IN CAPITAL STRUCTURE
Authorised Share Capital
As on March 31, 2023, the Authorised Share Capital of your Company stood at Rs.760
crores (Rupees Seven Hundred Sixty crores only) divided into 510 crores (Five Hundred Ten
crores) equity shares of face value of Rs.1/- (Rupee One) each, aggregating to Rs.510
crores (Rupees Five Hundred Ten crores only) and 2.50 crores (Two crores Fifty Lakhs)
Cumulative Redeemable Preference Shares (CRPS) of Rs.100/- (Rupees Hundred) each,
aggregating to Rs.250 crores (Rupees Two Hundred Fifty crores only).
Paid-up Share Capital
As on March 31, 2023, the Paid-up Equity Share Capital of your Company stood at
Rs.137.78 crores comprising of 137,77,58,321 equity shares of face value of Rs.1/- each.
Allotment of equity shares /warrants: During the year, your Company, on June 08,
2022, had allotted 11,74,100 equity shares of face value of Rs.1/- each, to HFCL
Employees' Trust for implementing the benefits of HFCL Employees' Long Term Incentive Plan
- 2017, in lieu of the vested Employee Stock Options (ESOPs) granted to eligible employees
of the Company, pursuant to the Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021.
Further, during the year, the Allotment Committee (Warrants) of the Board of Directors,
vide its resolution dated October 15, 2022, had allotted 1,41,00,000 (One crores Forty One
Lakh) Warrants convertible into 1,41,00,000 equity shares at a price of Rs.80/- per Equity
Share (Warrant Exercise Price), to persons belonging to Promoter and Non-Promoter category
in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations,
2018 ("SEBI ICDR Regulations") and applicable provisions the Companies
Act, 2013, as approved by the Board of Directors and the Shareholders of the Company at
their meetings held on September 02, 2022 and September 30, 2022 respectively.
The Company had received an upfront amount of Rs.20/- (Rupees Twenty Only), per warrant
which is equivalent to 25% of Warrant Exercise Price, being the warrants subscription
price aggregating to Rs.28,20,00,000. The Warrant Holders will be required to make
payments of balance 75% of the Warrants Exercise Price, at the time of exercise of the
right attached to Warrant(s) to subscribe to equity share(s). The tenure of Warrants shall
not exceed 18 (eighteen) months from the date of allotment. If the entitlement against the
Warrants to apply for the equity shares of the Company is not exercised by the Warrant
Holders within the aforesaid period of 18 (eighteen) months, the entitlement of the
Warrant holder to apply for equity shares of the Company along with the rights attached
thereto shall expire and any amount paid by the Warrant Holders on such Warrants shall
stand forfeited by the Company. There are 1,41,00,000 convertible warrants in the Company,
which are pending for conversion, as on the date of this Report.
Qualified Institutions Placement: In order to meet funding requirements of capital
expenditure for capacity expansion of optic fiber and optic fiber cables by the Company or
through its subsidiaries ("OFC Expansion"); funding expenditure towards research
& development initiatives including acquisition of technologies;
repayments/pre-payments of short term borrowings availed from banks; funding working
capital requirements and general corporate purposes, the Board of Directors of the Company
at its meeting held on September 02, 2022 which was also approved by the Shareholders of
the Company at its Annual General Meeting held on September 30, 2022, decided to raise
funds up to Rs.650 crores by way of issue of Equity Shares, through various permissible
modes under the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2018 ("SEBI ICDR Regulations") and the Act and the
rules made thereunder.
Subsequently, the Fund Raising Committee of Directors has, at its meeting held on
August 28, 2023, approved that the proposed fund raise shall be by way of issue of Equity
Shares through a qualified institutions placement ("QIP") in accordance with the
provisions of the SEBI ICDR Regulations and the Act and the rules made thereunder, each as
amended.
Pursuant to above, the Fund Raising Committee of Directors, has allotted 5,10,14,491
equity shares through QIP at an issue price of Rs.69/- per equity share (including a
premium of Rs.68/- per equity share) aggregating to approximately Rs.352 crores, on August
31, 2023.
Pursuant to the said allotment, the paid-up equity share capital of the Company
increased from Rs.137,77,58,321 divided into 137,77,58,321 equity shares of Rs.1/- each to
Rs.142,87,72,812/- divided into 142,87,72,812 equity shares of Rs.1/- each, as at August
31,2023.
Your Company has not issued equity shares with differential rights as to dividend,
voting or otherwise.
MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) REPORT
The Management Discussion and Analysis Report for the year under review, as stipulated
under Regulation 34(2)(e) of the SEBI Listing Regulations, is presented in a separate
section, forming part of this Annual Report.
CORPORATE GOVERNANCE
Your Company is committed to benchmark itself with global standards for providing good
corporate governance. Your Board constantly endeavors to take the business forward in such
a way that it maximises long term value for the stakeholders. The Company has put in place
an effective corporate governance system which ensures that the provisions of SEBI Listing
Regulations are duly complied with.
A detailed report on the Corporate Governance pursuant to the requirements of the SEBI
Listing Regulations forms part of this Annual Report.
A Certificate from the Secretarial Auditor of the Company, confirming compliance of
conditions of corporate governance as stipulated in SEBI Listing Regulations, is provided
in the Report on Corporate Governance which forms part of the Corporate Governance Report.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
As stipulated under Regulation 34(2)(f) of the SEBI Listing Regulations, the Business
Responsibility and Sustainability Report, describing the initiatives taken by the Company
from environmental, social and governance perspective forms part of this Annual Report.
EMPLOYEES' LONG TERM INCENTIVE PLAN
In terms of the Securities and Exchange Board of India (Share Based Employee Benefits
and Sweat Equity) Regulations, 2021 ("SEBI SBEB & SE Regulations"),
as amended from time to time and with the objective to promote entrepreneurial behaviour
among employees of the Company, motivate them with incentives and reward their performance
with ownership in proportion to the contribution made by them as well as align the
interest of the employees with that of the Company, "Himachal Futuristic
Communications Limited Employees' Long Term Incentive Plan-2017" ("HFCL Plan
2017") was approved by the Board of Directors of your Company on August 26, 2017,
which was further approved by the members of the Company, in their 30th Annual General
Meeting held on September 25, 2017.
The HFCL Plan 2017 comprises of the following three subsets:
1. Employee Stock Option Plan (ESOP) under which Options would be granted;
2. Restricted Stock Units Plan (RSUP) under which Units would be granted;
3. Employee Stock Purchase Scheme (ESPS) under which shares would be issued.
During the financial year ended March 31,2023, your Company has not granted any ESOPs
and RSUs in terms of the HFCL Plan 2017.
During the year under review, the RSUs granted under the HFCL Plan 2017 were forfeited
due to non-achievement of defined annual performance parameters as determined by the
Nomination, Remuneration and Compensation Committee in its meeting held on April 23, 2022.
Further, your Company, on June 08, 2022, has also allotted 11,74,100 equity shares of
face value of HI/- each, to HFCL Employees' Trust for implementing the benefits of HFCL
Employees' Long Term Incentive Plan - 2017, in lieu of the vested Employee Stock Options
(ESOPs) granted to eligible employees of the Company, pursuant to the Securities and
Exchange Board of India (Share Based Employee Benefits) Regulations 2014 (now replaced
with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021 ("SEBI SBEB & SE Regulations") w.e.f.
August 13, 2021). Applicable disclosures as stipulated under the SEBI SBEB & SE
Regulations with regard to the HFCL Plan 2017, are provided as Annexure - A to this
Report.
Your Company has obtained a Certificate from Mr. Baldev Singh Kashtwal, Secretarial
Auditor (FCS: 3616; C.P. No.: 3169) that the HFCL Plan, 2017 for grant of stock options
has been implemented in accordance with the SEBI SBEB & SE Regulations and the
resolution passed by the members in their 30th Annual General Meeting held on September
25, 2017.
The said Certificate would be placed at the ensuing annual general meeting for
inspection by the members.
The Nomination, Remuneration and Compensation Committee of the Board of Directors,
inter-alia, administers and monitors, the HFCL Plan 2017 of your Company.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
As on March 31, 2023, your Company had nine subsidiaries and two associates viz.
1. HTL Limited,
2. Polixel Security Systems Private Limited,
3. Moneta Finance Private Limited,
4. HFCL Advance Systems Private Limited,
5. Raddef Private Limited,
6. DragonWave HFCL India Private Limited,
7. HFCL Technologies Private Limited
8. HFCL B.V. Netherlands
9. HFCL Inc. USA
10. Nimpaa Telecommunications Private Limited - Associate
11. BigCat Wireless Private Limited - Associate
The Company regularly monitors the performance of these companies.
There has been no material change in the nature of the business of the subsidiaries.
A statement containing the salient features of the financial statements of subsidiary
companies of the Company in the prescribed Form AOC- 1 forms a part of the
Consolidated Financial Statements (CFS) in compliance with Section 129(3) and other
applicable provisions, if any, of the Act read with Rule 5 of the Companies (Accounts)
Rules, 2014, as amended.
The said Form also highlights the financial performance of each of the subsidiaries,
included in the CFS of the Company, pursuant to Rule 8(1) of the Companies (Accounts)
Rules, 2014.
In accordance with the provisions of Section 136 of the Act, the financial statements
of the subsidiaries are available for inspection by the members at the Registered Office
of the Company during business hours on all days except Saturdays, Sundays and public
holidays up to the date of the ensuing AGM. Any member desirous of obtaining a copy of the
said financial statements may write to the Company Secretary at HFCL Limited, 8,
Commercial Complex, Masjid Moth, Greater Kailash - II, New Delhi - 110048 and the same
shall be sent by post.
The financial statements including the CFS and all other documents required to be
attached to this Report have been uploaded on the website of the Company at www.hfcl.com.
Material Subsidiaries
The Company has adopted a Rs.Policy for determining Material Subsidiaries' as per
requirements stipulated in Explanation to Regulation 16(1)(c) of the SEBI Listing
Regulations.
The said policy may be accessed on the website of the Company at https://www.hfcl.com/wp-content/uploads/2021/07/HFCL-
Policy-on-Determining-Material-Subsidiaries Revised.pdf
The Company has one material subsidiary company viz. HTL Limited, as on March 31, 2023.
DIRECTORS AND KEY MANAGERIAL PERSONNELS (KMPs)
Re-Appointments/Appointments
In accordance with the provisions of Section 152 of the Act and the Articles of
Association of the Company, Mr. Ranjeet Mal Kastia (DIN: 00053059), Director
(Non-Executive), is liable to retire by rotation at the ensuing AGM and being eligible
offers himself for re-appointment.
The brief resume of him and other related information are being given in the Notice
convening the 36th AGM of your Company.
Your Directors recommend his re-appointment as a Non-Executive Director of your
Company.
The Nomination, Remuneration and Compensation Committee and the Board of Directors, on
the basis of performance evaluation of Independent Directors and taking into account the
external business environment, the business knowledge, acumen, experience and the
substantial contribution made by Mr. Bharat Pal Singh (DIN: 00739712) during his tenure,
had recommended to the shareholders that continued association of Mr. Bharat Pal Singh as
an Independent Directors would be beneficial to the Company.
Based on the above, the shareholders, in their AGM held on September 30, 2022, approved
re-appointment of Mr. Bharat Pal Singh for a second term of consecutive three years,
commencing from January 21, 2023 to January 20, 2026 to hold office as Independent
Director of the Company, not liable to retire by rotation on the Board of the Company.
In the opinion of the Board, Mr. Bharat Pal Singh possess requisite qualifications,
experience, expertise and holds highest standards of integrity.
Further Mr. Bharat Pal Singh is exempt to qualify on-line proficiency self-assessment
test conducted by the Indian Institute of Corporate Affairs.
Cessation
IDBI Bank Limited vide its letter no. LCG-SSCB.53/15/Nom.8/ 202223 dated April 30, 2022
which was received by the Company on May 02, 2022, has withdrawn the nomination of Mr.
Ramakrishna Eda (DIN: 07677647) Non-Executive Non-Independent Director who was nominated
on the Board of the Company by IDBI Bank Limited.
Consequently, Mr. Ramakrishna Eda has ceased to be a director (Nominee-IDBI Bank
Limited) of the Company w.e.f. May 02, 2022.
Further, Board of Directors places on record its sincere appreciation for the support
and valuable guidance given by Mr. Ramakrishna Eda during his tenure as Non-Executive
Director of the Company.
Key Managerial Personnel
During the year under review, Mr. Mahendra Nahata, Managing Director, Mr. Vijay Raj
Jain, Chief Financial Officer and Mr. Manoj Baid, President & Company Secretary,
continue to be the Key Managerial Personnel of your Company, in accordance with the
provisions of Section 2(51) and 203 of the Act read with the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014.
Declaration by the Company
The Company has issued confirmation to its Directors, confirming that it has not made
any default under Section 164(2) of the Act, as on March 31, 2023.
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors confirming
that they meet the criteria of independence as prescribed under the provisions of the Act,
read with the Schedules and Rules issued thereunder as well as clause (b) of
sub-regulation (1) of Regulation 16 of the SEBI Listing Regulations (including any
statutory modification(s) or re-enactment(s) thereof for the time being in force) and that
they are independent of management.
In terms of Regulation 25(8) of the SEBI Listing Regulations, the Independent Directors
have confirmed that they are not aware of any circumstance or situation, which exist or
may be reasonably anticipated, that could impair or impact their ability to discharge
their duties.
The Independent Directors have also confirmed that they have complied with the
Company's Code of Conduct.
In the opinion of the Board, Independent Directors fulfil the conditions specified in
the Act, Rules made thereunder and SEBI Listing Regulations and are independent of the
management.
Familiarisation Programme for Independent Directors
As per Regulation 25(7) of SEBI Listing Regulations, the Independent Director of the
Company need to be imparted with familiarisation programme.
The familiarisation programme aims at making the Independent Directors of the Company
familiar with the business and operations of the Company through various structured
familiarisation Programmes.
The details of programmes for familiarisation of Independent Directors with the
Company, their roles, rights, responsibilities in the Company and related matters are
available on the website of the
Company at the web-link: https://www.hfcl.com/wp-content/
uploads/2023/04/HFCL-Familiarisation-Prog.-ID 2023.pdf
REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES
As required under Section 197(12) of the Act, read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, information relating
to percentage increase in remuneration, ratio of remuneration of each Director and Key
Managerial Personnel to the median of employees' remuneration etc. is annexed as Annexure
(B) to this report.
The details of remuneration of top 10 employees of the Company as required to be
disclosed under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this
Report. Further, pursuant to second proviso to Section 136(1) of the Act, this Report is
being sent to the members excluding the said information. Any member interested in
obtaining a copy of the same may write to the Company Secretary and Compliance Officer at secretarial@hfcl.com
The remuneration paid to the Directors is in accordance with the Remuneration Policy
formulated in accordance with Section 178 of the Act and Regulation 19 of the SEBI Listing
Regulations (including any statutory modification(s) or re-enactment(s) thereof for the
time being in force).
Disclosure under Section 197(14) of the Act
The Managing Director of your Company does not receive remuneration or commission from
any of the subsidiaries of the Company.
Remuneration Policy
Pursuant to provisions of Section 178 of the Act and the SEBI Listing Regulations, the
Nomination, Remuneration and Compensation Committee ('NRC Committee') of your Board
has formulated a Remuneration Policy for the appointment and determination of remuneration
of the Directors including criteria for determining qualifications, positive attributes,
independence of a director, Key Managerial Personnel, Senior Management Personnel and
other employees of your Company.
The NRC Committee has also developed the criteria for determining the qualifications,
positive attributes and independence of Directors and for making payments to Executive and
Non-Executive Directors and Senior Management Personnel of the Company.
The detailed Policy is available on the Company's website at https://www.hfcl.com/wp-content/uploads/2019/06/
Remuneration-Policy.pdf and the salient aspects covered in the Remuneration Policy
have been outlined in the Corporate Governance Report, which forms part of this Report.
BOARD AND COMMITTEE MEETINGS
Six meetings of the Board of Directors were held during the FY23.
The intervening gap between any two consecutive meetings of the Board was within the
stipulated time frame prescribed under the Act and the SEBI Listing Regulations.
Details of meetings held and attendance of directors are mentioned in Corporate
Governance Report, which forms part of this Annual Report.
Separate Meeting of Independent Directors
In terms of requirements of Schedule IV to the Act and Regulation 25 of the SEBI
Listing Regulations, a separate meeting of the Independent Directors was held on March 28,
2023 for the FY23.
The meeting of the Independent Directors was attended by all the four independent
directors, namely, Mr. Bharat Pal Singh, Mr. Ajai Kumar, Mr. Surendra Singh Sirohi, and
Dr. (Ms.) Tamali Sengupta.
Board Committees
Your Company has constituted several Committees of the Board which have been
established as part of the best corporate governance practices and are in compliance with
the requirements of the relevant provisions of applicable laws and statutes.
As on March 31, 2023, your Board has 05 (five) mandatory Committees, namely,
1. Audit Committee;
2. Nomination, Remuneration & Compensation (NRC) Committee;
3. Stakeholders' Relationship Committee (SRC);
4. Corporate Social Responsibility (CSR) Committee; and
5. Risk Management Committee (RMC).
The details with respect to the composition, powers, roles, terms of reference, number
of meetings etc. of the Committees held during the FY23 and attendance of the Members at
each Committee Meeting, are provided in the Corporate Governance Report which forms part
of Annual Report.
All the recommendations made by the Committees of the Board including the Audit
Committee were accepted by the Board.
Also, details pertaining to Risk Management & Internal Financial Control are
mentioned in Management Discussion & Analysis, which forms part of the Annual Report
for FY23 of the Company.
PERFORMANCE EVALUATION
The Act mandates formal annual evaluation by the Board of its own performance and that
of its committees and individual Directors. Schedule IV to the Act provides that the
performance evaluation of Independent Directors shall be done by the entire Board of
Directors, excluding the Directors being evaluated.
Pursuant to the provisions of the Act read with relevant rules issued thereunder,
Regulation 17(10) of the SEBI Listing Regulations and the Circular issued by SEBI on
January 5, 2017 with respect to Guidance Note on Board Evaluation, the evaluation of the
annual performance of the Directors/ Board/Committees was carried out for the FY23.
The parameters for the performance evaluation of the Board, inter-alia, include
performance of the Board on deciding long term strategy, rating the composition and mix of
Board members, discharging of governance and fiduciary duties, handling critical and
dissenting suggestions, etc.
The performance of the Board was evaluated after seeking inputs from all the Directors
on the basis of above parameters.
The performance of the Committees was evaluated after seeking inputs from the Committee
members on the basis of criteria such as the composition of Committees, effectiveness of
Committee meetings, etc.
The Nomination, Remuneration and Compensation Committee reviewed the performance of the
Individual Directors, the Committees of the Board and the Board as a whole. A
questionnaire for the evolution of the Board, its committees and the individual members of
the Board, covering various aspects of the performance of the Board and its Committees,
including composition and quality, roles and responsibilities, processes and functioning,
adherence to Code of Conduct and Ethics and best practices in corporate governance was
sent to the Directors.
The Board of Directors reviewed the performance of the Independent Directors.
Performance Evaluation was done on the basis of criteria such as the contribution of the
individual director to the Board and Committee meetings like preparedness on the agenda
items, technical knowledge on the subject matter, meaningful and constructive contribution
and inputs in meetings, etc.
In a separate meeting of the Independent Directors, performance of Non-Independent
Directors and the Board as a whole was evaluated, taking into account the views of
Executive Directors and Non-Executive Directors.
The Directors expressed their satisfaction with the evaluation process.
The details of the evaluation process are set out in the Corporate Governance Report
which forms part of this Annual Report.
AUDITORS AND AUDITORS' REPORT
Statutory Auditors & their Report
M/s S. Bhandari & Co. LLP, Chartered Accountants (FRN: 000560C/ C400334) and M/s
Oswal Sunil & Company, Chartered Accountants (FRN: 016520N) were re-appointed as
Statutory Auditors for second term of 05 (five) consecutive years, at the 35th Annual
General Meeting (AGM) of the Company, held on September 30, 2022, for auditing the
accounts of the Company from the financial year 202223 to 2026-27.
The Auditors' Report does not contain any qualification, reservation or adverse remark.
Further, there were no frauds reported by the Statutory Auditors to the Audit Committee
or the Board under Section 143(12) of the Act.
Secretarial Auditors & their Report
Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended or
re-enacted from time to time), your Company had appointed Mr. Baldev Singh Kashtwal,
Company Secretary in whole-time practice, having COP No. 3169 and Membership No. F-3616,
for conducting the Secretarial Audit of your Company for the FY23.
The Secretarial Audit Report in prescribed form MR-3, issued by the Secretarial Auditor
is annexed herewith as Annexure - C to this Report. Further, as required under
Regulation 24A of the SEBI Listing Regulations, the Secretarial Audit Report of HTL
Limited, a material subsidiary of the Company is also annexed herewith as Annexure C1 to
this Report.
Remarks by Secretarial Auditor
The Secretarial Audit Report does not contain any qualification, reservation or adverse
remark for the FY23.
Cost Auditors
The Board of Directors of the Company has appointed M/s SKG & Co., Cost Accountants
(FRN.000418), having its office at Plot no. 32, 3rd Floor, Pocket -8, Sector -25, Rohini,
Delhi - 110085 as Cost Auditor of the Company for conducting the Cost Audit for financial
year 2022-23. The Report of the Cost Auditor will be filed with the Ministry of Corporate
Affairs within the prescribed period.
INSOLVENCY AND BANKRUPTCY CODE, 2016
There is no application made or any proceeding pending under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) during the FY23.
VIGIL MECHANISM/ WHISTLE-BLOWER POLICY
The Board of Directors of your Company has formulated a Whistle-Blower Policy, which is
in compliance with the provisions of Section 177(9) & (10) of the Act and Regulation
22 of the SEBI Listing Regulations.
The Company, through this Policy envisages to encourage the Directors and employees of
the Company to report to the appropriate authorities any unethical behaviour, improper,
illegal or questionable acts, deeds, actual or suspected frauds or violation of the
Company's Codes of Conduct for the Directors and the Senior Management Personnel.
During FY23, no complaint was received and no individual was denied access to the Audit
Committee for reporting concerns, if any.
The Policy on Vigil Mechanism/Whistle-Blower Policy may be accessed on the Company's
website at the link: https://www.hfcl.
com/wp-content/uploads/2020/01/HFCL-Whistle-Blower- Policy Revised1.pdf
Brief details of establishment of Vigil Mechanism in the Company, is also provided in
the Corporate Governance Report which forms part of this Report.
CREDIT RATINGS
CARE Ratings Limited (a SEBI Registered Credit Rating Agency) ("CARE") vide
its letter dated June 30, 2022, had reaffirmed the credit ratings for the Bank Loan
facilities of the Company, the details of which are given below: -
| Instrument/Facility |
Ratings |
Rating Action |
| Long term Bank Facilities - Term Loans |
CARE A; Stable (Single A; Outlook: |
Reaffirmed |
|
Stable) |
|
| Short term Bank |
CARE A2+ (A Two |
Reaffirmed |
| Facilities - Cash Credit Plus) |
|
Subsequently, CARE, vide its letters dated July 03, 2023, has enhanced the credit
rating for the short term bank facilities of the Company to CARE A1 (A One) from CARE A2+
(A Two Plus). Further, CARE has also reaffirmed the credit rating for the long term bank
facilities of the Company.
The details of Credit ratings assigned to the Company for bank facilities are as under:
| Insturment/Facilitiy Ratings |
Rating Action |
| Short Term Bank |
Care A1 (A One) |
Revised from CARE |
| Facilities |
|
A2+ (A Two Plus) |
| Long Term Bank |
Care A; Stable |
Reaffirmed |
| Facilities |
(Single A; Outlook: Stable) |
|
Infomerics Valuation and Rating Pvt. Ltd. (RBI & SEBI Registered Credit Rating
Agency) vide its letter dated November 22, 2022, had assigned the credit ratings for the
Bank Loan facilities of the Company, the details of which are as below: -
| Insturment/Facilitiy |
' Ratings |
Rating Action |
| Long Term Fund |
IVR A/Stable (IVR A |
Reaffirmed |
| Based Bank Facilities - Term Loans |
with Stable Outlook) |
|
| Short Term Fund |
IVR A/Stable (IVR A |
Reaffirmed |
| Based Bank Facilities - Cash Credit |
with Stable Outlook) |
|
| Short Term Non-Fund IVR A1 (IVR A One) Based Bank Facilities - LC/BGs |
Reaffirmed |
ANNUAL RETURN
The Annual Return of the Company as on March 31, 2023, in prescribed e-Form MGT-7 in
accordance with Section 92(3) of the Act, read with Section 134(3)(a) of the Act, is
available on the Company's website at www.hfcl.com
Further the Annual Return (i.e., e-form MGT-7) for the FY23 shall be filed by the
Company with the Registrar of Companies, Himachal Pradesh, within the stipulated period.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Details of loans, guarantees and investments, as on March 31, 2023, as stipulated under
Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules,
2014, are as follows:-
|
Amount (Rs. in crores) |
| Loans given |
90.08 |
| Guarantees given |
268.16 |
| Investments made |
102.97 |
Loans given, Guarantees provided and Investments made during the FY23:
| Name of the entity |
Relation |
Amount (Rs. in crores) |
Particulars of Loans, Guarantees & Investments |
Purpose for which the Loans, Guarantees and Investments are proposed to be utilised
by the recipient |
| BigCat Wireless Private Limited |
Associate |
7 |
Investment in Equity Shares |
For Product development, working capital and general corporate business purposes. |
| Raddef Private Limited |
Subsidiary |
3.38 |
Loan given |
For Product development, working capital and general corporate business purposes |
| HFCL Technologies Private Limited |
Subsidiary |
44.08 |
Loan given |
For working capital and general corporate business purposes. |
For more details, please refer Note No.7, 9, 48(c) and 52 to the Standalone
Financial Statements for FY23 of the Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Your Company has adopted a "Policy on Dealing with and Materiality of Related
Party Transactions", in accordance with the provisions of the Act and Regulation 23
of the SEBI Listing Regulations, inter-alia, providing a framework for governance and
reporting of Related Party Transactions including material transactions and threshold
limits for determining materiality.
The said Policy is also available on the website of the Company at the web-link: https://www.hfcl.com/wp-content/
uploads/2022/06/HFCL-Policy-on-RPTs Revised.pdf
During the year under review, all contracts/ arrangements/ transactions entered into by
the Company with related parties were in ordinary course of business and on arm's length
basis.
The Company has entered into contracts/ arrangements/ transactions with related parties
which qualify as material in accordance with the Policy of the Company on materiality of
related party transactions.
Thus, there are transactions required to be reported in prescribed Form AOC-2 pursuant
to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules,
2014, the details of which is annexed herewith as Annexure - D to this Report.
All transactions with related parties were reviewed and approved by the Audit Committee
and are in accordance with the Policy on Related Party Transactions, formulated by the
Company.
There are no materially significant related party transactions that may have potential
conflict with interest of the Company at large.
The details of the transactions with person(s) or entities forming part of the
Promoter(s)/Promoter(s) Group, which individually hold 10% or more shareholding in the
Company and other related parties as per Indian Accounting Standards (IND-AS) - 24 are set
out in Note 52 to the Standalone Financial Statements of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of energy conservation, technology absorption and foreign exchange earnings
and outgo as required under Section 134(3)(m) of the Act, read with the Rule 8 of the
Companies (Accounts) Rules, 2014, are annexed herewith as Annexure - E to this
Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has been proactively carrying out CSR activities since more than two
decades.
The Company is undertaking CSR activities through Registered Society i.e., HFCL Social
Services Society ("HSSS") established in the year 1996.
In compliance with requirements of Section 135 of the Act, the Company has laid down a
Corporate Social Responsibility (CSR) Policy. The CSR Policy is available on the website
of the Company and may be accessed at the web-link https://www.hfcl.com/wp-
content/uploads/2022/09/CSR Poliicy 2022.pdf.
The composition of the CSR Committee, brief contents of CSR Policy, unspent amount and
reason thereof, if any, and report on CSR activities carried out during the FY23, in the
format, prescribed under Rule 9 of the Companies (Corporate Social Responsibility Policy)
Rules, 2014 is annexed herewith as Annexure - F.
For other details regarding the CSR Committee, please refer to the Corporate Governance
Report, which forms part of this Report.
MATERIAL CHANGES AFFECTING HE COMPANY
A. Change in nature of business
The Company has not undergone any change in the nature of the business during the FY23.
B. Material changes and commitments, if any, affecting the financial position of the
Company
There are no material changes and commitments affecting the financial position of the
Company, which have occurred between the end of the FY23 and the date of this Report.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS, TRIBUNALS AFFECTING THE
GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There is no significant/material order passed by the Regulators, Courts, Tribunals
affecting the going concern status and the Company's operations in future.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has in place a Policy on Prevention of Sexual Harassment at Workplace, in
line with the requirements of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition & Redressal) Act, 2013 and the rules made thereunder.
Internal Complaints Committee(s) (ICCs) at each workplace of the Company, have been set
up to redress complaints, if any, received regarding sexual harassment. All employees
(permanent, contractual, temporary, trainees) are covered under this Policy.
ICC of each workplace of the Company has also filed Annual Return for the calendar year
2022 at their respective jurisdictional offices, as required under Section 21(1) of the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
read with Rule 14 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Rules, 2013.
During the year under review, the Company has received 1 (one) complaint from one of
the employees of the Company, which has been resolved.
SIGNIFICANT DEVELOPMENTS
Although, the Company has achieved various milestones which have already been set out
in the Management Discussion and Analysis forming part of the Annual Report, however there
were no other significant developments during the year under review.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(3)(c) of the Act, the Directors confirm
that:
(a) in the preparation of the annual accounts, the applicable accounting standards had
been followed and there were no material departures from the same;;
(b) the Directors had selected such accounting policies and applied them consistently
and made judgements 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 March
31,2023 and of the profits of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding the
assets 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;
(e) the Directors, had laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were operating
effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems were adequate and operating effectively.
LISTING
The equity shares of your Company are presently listed on the BSE Limited ('BSE') and
the National Stock Exchange ofIndia Limited ('NSE').
The Company has paid annual listing fee for the FY24 to the BSE Limited and the
National Stock Exchange of India Limited.
DEPOSITORY SYSTEMS
Your Company's Scrip has come under compulsory dematerialisation w.e.f. November 29,
1999 for Institutional Investors and w.e.f. January 17, 2000, for all Investors. So far,
99.96% of the equity shares have been dematerialised.
The ISIN allotted to the equity shares of the Company is INE548A01028.
IMPLEMENTATION OF CORPORATE ACTION
During the year under review, the Company has not failed to implement any Corporate
Action within the specified time limit.
COMPLIANCE WITH SECRETARIAL STANDARDS
Pursuant to the provisions of Section 118(10) of the Act, the Company has complied with
the applicable provisions of the applicable Secretarial Standards issued by the Institute
of Company Secretaries of India (ICSI).
REPORTING PRINCIPLE
The Financial and Statutory Data presented in this Report is in line with the
requirements of the Act (including the rules made thereunder), Indian Accounting Standards
(Ind AS) and the Secretarial Standards (SS).
REPORTING PERIOD
The Financial Information is reported for the period April 01,2022 to March 31, 2023.
Some parts of the Non-Financial Information included in this Board's Report are provided
as on the date of this Report.
CAUTIONARY STATEMENT
Statements in the Management Discussions & Analysis Report describing the Company's
projections, estimates, expectations or predictions may be Rs.forward looking statements'
within the meaning of applicable securities laws and regulations. Actual results could
differ materially from those expressed or implied. Important factors that would make a
difference to the Company's operations include demand supply conditions, raw material
prices, changes in government regulations, tax regimes and economic developments within
the Country and abroad and such other factors.
PERSONNEL
Your Directors wish to place on record their sincere appreciation for the devoted
services of all the employees and workers at all levels and for their dedication and
loyalty, which has been critical for the Company's success.
ACKNOWLEDGEMENTS
Your Company's organisational culture upholds professionalism, integrity and continuous
improvement across all functions as well as efficient utilisation of the Company's
resources for sustainable and profitable growth.
Your Directors wish to place on record their appreciation for the valuable co-operation
and support received from the Government of India, various State Governments, the Banks
and other stakeholders such as, shareholders, customers and suppliers, among others. The
Directors look forward to their continued support in future.
The Directors thank the Central Government, Government of Goa, Government of Telangana,
Government of Himachal Pradesh, IDBI Bank Limited, State Bank of India, Punjab National
Bank, erstwhile Oriental Bank of Commerce & United Bank of India, Bank of Baroda,
Union Bank of India, ICICI Bank Limited, Indian Bank, Yes Bank Limited, KEB Hana Bank and
other Banks for all co-operations, facilities and encouragement they have extended to the
Company.
Your Directors acknowledge the continued trust and confidence you have reposed in the
Company.
|
For and on behalf of the Board |
|
|
Mahendra Nahata |
Arvind Kharabanda |
| Place: New Delhi |
Managing Director |
Non-Executive Director |
| Date: September 01, 2023 |
DIN: 00052898 |
DIN: 00052270 |
  Â