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HOV Services
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Download Annual Report PDF Format 2015 | 2014 | 2011 | 2011 | 2010
Directors Report Year End : Mar '15    « Mar 14
Dear Members,
 
 The Directors are pleased to present the Company''s Twenty-Seventh
 Annual Report on the Business and Operations of HOV Services Limited
 (the Company or HOVS) together with the Audited Financial
 Statements for the financial year ended March 31, 201S.
 
 The financial statements are prepared for the year comprising of the 12
 (Twelve) months period ended on March 31, 201S and are not comparable
 to the financial statements of previous year comprising of 1S (Fifteen)
 months ended March 31, 2014, as the financial year was changed from
 calendar year to financial year as per the Companies Act, 2013.
 
 FINANCIAL RESULTS AND OPERATIONS:
 
                                               Rs. In Million
 
                                Consolidated            Standalone
 
                               Twelve   Fifteen     Twelve     Fifteen
 Particulars                   months    months     months     months
                               period    period     period     period
                               ended     ended      ended      ended
                               on        on         on         on
                               March     March      March      March 
                             31, 2015    31, 2014   31, 2015   31, 2014
 
 INCOME
 
 Income from Operation        164.04     1 73.26    12S.45      159.24
 
 Other Income                 5.71       10.14      8.17        12.74
 
                              169.75     183.40     133.62      171.98
 
 EXPENDITURE
 
 Staff Cost                   104.21     128.50     100.64      122.17
 
 General and Administrative
 Expenses                     77.90      69.92      33.33       31.72
 
                              182.11     198.42     133.97      153.89
 
 Profit / (Loss) before
 Interest, Depreciation       (12.36)    (15.02)    (0.35)      18.09
 & Tax 
 
 Less: Interest               4.11       1.60        -           -
 
 Less: Depreciation           10.13      9.74       4.37        4.03
 
 Profit / (Loss) before Tax   (26.6)     (26.36)    (4.72)      14.06
 
 Tax pertaining to earlier
 years                         -         0.04         -         0.04
 
 Less: Provisions for taxes    -          -           -          -
 
 Current Tax                   -         6.23         -         6.23
 
 Deferred Tax                 (1.79)     (1.94)     (1.79)      (0.74)
 
 Profit / (Loss) after Tax    (24.81)    (30.69)    (2.93)       8.53
 
 Less: Minority Interest      4.70       (6.41)       -          -
 
 Profit/(Loss) after
 minority interest            (20.11)    (24.28)    (2.93)       -
 
 Add: Share of Profit/
 Loss) from an Associate     (1,S33.11)  (464.S0)    -           -    
 
 Profit / (Loss) for
 the year/period             (1,553.22)  (488.78)   (2.93)      8.53
 
 1.  Results of Operations 
 
 Consolidated Financial Performance
 
 * Consolidated total Income for the current year was Rs. 169.75
 million.
 
 * EBIDT for the current year was Rs. (12.36) million.
 
 * Net Profit/ (Loss) for the current year was Rs. (1553.22) million.
 
 * The basic and diluted Earnings per share (EPS) is Rs. (124.20) for
 the current year.  
 
 Standalone Financial Performance
 
 * Total Income for the current year was Rs. 133.62 million.
 
 * EBIDT for the current year was Rs. (0.35) million.
 
 * Net Profit/(Loss) for the current year was Rs. (2.93) million.
 
 * The basic and diluted Earnings Per Share (EPS) is Rs. (0.23) for the
 current year under reporting.
 
 2.  Appropriations
 
 (i) Dividend:
 
 Your Company intends to conserve available resources to invest in the
 growth of the business and pursue strategic growth opportunities and
 also in view of losses during the financial year 2014-15 the Board of
 Directors, accordingly did not recommend any dividend for the year.
 
 (ii) Transfer to Reserve:
 
 No amount was transferred to Reserve during the financial year ended on
 March 31, 2015.
 
 3.  Subsidiary companies and Associate
 
 A.  The Company has following subsidiary companies:
 
 i) HOVS LLC incorporated in Delaware State under the laws of Unites
 States of America;
 
 ii) HOV Environment LLC incorporated in Nevada State under the laws of
 United States of America;
 
 iii) HOVS Holdings Limited incorporated under the Companies Ordinance
 of Hong Kong; and
 
 iv) HOV Environment Solutions Private Limited incorporated in
 Maharashtra under Indian Company Law.
 
 B.  Associate
 
 SourceHOV Holdings Inc., in which HOVS LLC, wholly owned subsidiary of
 the Company, has 44.8% stake holding.
 
 A report on the performance and financial position of Subsidiaries,
 Associate companies as per the Companies Act, 2013 is annexed to the
 financial statements.
 
 4.  Significant developments
 
 A) Merger transaction
 
 On November 4, 2014 the SourceHOV Holdings Inc. (SourceHOV), a
 company in which HOVS LLC, wholly owned US subsidiary, holds an
 investment, has completed the merger with BancTec Group LLC. The
 shareholders'' approval was obtained through notice of postal ballot
 dated September 30, 2014. The result of postal ballot was declared on
 November 4, 2014 wherein the shareholders had approved with requisite
 majority. Post-merger the stake holding of HOVS LLC in SourceHOV has
 increased from 26.1% to 44.8% in the combined entity.
 
 B) Proposed sale transaction
 
 i) The Board of Directors of the Company vide its notice of postal
 ballot dated September 30, 2014 conducted a postal ballot process for
 taking shareholders'' approval seeking in-principle approval for sale of
 Company''s investment in SourceHOV vide the notice of postal ballot
 dated September 30, 2014. The result of postal ballot was declared on
 November 4, 2014 wherein the shareholders had approved with requisite
 majority.
 
 ii) Certain group of shareholders had filed on November 3, 2014 a
 petition before Mumbai Bench of the Hon''ble Company Law Board (CP No.
 101/397-398/CLB/ MB/2014), against the three resolutions put before the
 shareholders vide the notice of postal ballot dated September 30, 2014.
 As part of the hearing process with the Mumbai Bench of the Hon''ble
 Company Law Board, all necessary documents including the valuation
 report and fairness report were submitted for due consideration by the
 Hon''ble Company Law Board.
 
 iii) The Hon''ble Company Law Board vide its order dated January 29,
 201S disposed- off the petition by permitting the objecting
 shareholders, on the request of objecting shareholders, to withdraw the
 petition. The Company had filed necessary disclosure regarding the
 outcome of the hearing with the Hon''ble Company Law Board vide its
 intimation dated February 19, 201S to BSE Limited and National Stock
 Exchange of India Limited.
 
 iv) The proposed sale transaction did not consummate on account of the
 prevailing situation including shareholder litigation and transaction
 delays. The Company had immediately communicated to the shareholders
 vide intimations filed with the BSE Limited and National Stock Exchange
 of India Limited on April 20, 201S.
 
 5.  ADR/GDR
 
 The shareholder''s in their Annual General Meeting dated July 21, 2007
 granted approval for proposed 1S,000,000 of ADR/GDR issue. However, so
 far none of the underlying equity shares were issued by the Company.
 
 6.  Share Capital of the Company
 
 During the financial year, the Company has allotted twice equity shares
 under ESOP Plan 2007 to its employee''s on May 21, 2014 and on December
 19, 2014 allotted 3,000 and 10,S00 equity shares respectively.
 Consequently, after the allotment, the paid up share capital of the
 Company has gone up from 12,499,S22 equity shares of Rs. 10/- each
 aggregating to Rs.  124,99S,220/- to 12,S14,022 equity shares of Rs.
 10/- aggregating to Rs. 12S,140,220/-
 
 7.  Employee Stock Option Plan (ESOP)
 
 Your Company instituted HOVS Stock Option Plan 2007 and HOVS Stock
 Option Plan 2008 for its employees and for employees of its subsidiary
 companies as detailed below:
 
 Plan                 Shareholder''s   No. of     No. of       Total
                      Approval        Options    Options
                       Date           for        for 
                                      employees  employees
                                      of the       of 
                                      Company    subsidiary
                                                 ompanies
 
 HOVS Stock Option
 Plan 2007           July 21, 2007   400,000    700,000      1,100,000
 
 HOVS Stock Option
 Plan 2008           September        0         750,000      750,000
                      30, 2008
 
 The information to be disclosed as per SEBI (Employees Stock Option
 Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed
 herewith as ANNEXURE - ''A'' to this report.
 
 8.  Conservation of Energy, Technology Absorption and Foreign Exchange
 
 The information on conservation of energy, technology absorption and
 foreign exchange earnings and outgo stipulated under Section 13 (3) (m)
 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts)
 Rules, 2014, is annexed herewith as ANNEXURE - ''B'' to this report.
 
 9.  Human Resources
 
 During the financial year the Company had maintained cordial relations
 with all its employees and has taken utmost care of its employees
 deployed. All employees are aligned under our value system which
 propagates and practices open, transparent and honest, collaborative,
 honoring commitments and demanding excellence among them.
 
 The Company has no employees who received remuneration in excess of
 limits prescribed under Section 197 of the Companies Act, 2013 read
 with the Companies (Appointment & Remuneration of Managerial Personnel)
 Rules, 2014.
 
 10.  Disclosure as per Section 197 (12) of the Companies Act, 2013 and
 Rule S of the Companies (Appointment and Remuneration of Managerial
 Personnel) Rules, 2014 is annexed herewith as ANNEXURE - ''C'' to this
 report.
 
 11.  Directors Responsibility Statement
 
 Information as per Section 134(5) of the Companies Act, 2013 is annexed
 herewith as ANNEXURE - ''D'' to this report.
 
 12.  Financial Summary and Highlights
 
 The Company''s current year financial summary and highlights are
 mentioned in the Management Discussion and Analysis Report.
 
 13.  Board Meetings
 
 During the financial 8 (Eight) Board Meetings were held the details of
 which are given in the Corporate Governance Report.
 
 14.  Directors
 
 Mr. Sunil Rajadhyaksha, Executive Director, retires by rotation and
 being eligible has offered himself for re-appointment.
 
 Mrs. Lakshmi Kumar was appointed as an Additional Director of the
 Company by the Board of Directors pursuant to the Section 161 of the
 Companies Act, 2013, who shall hold office till the conclusion of the
 ensuing 27th Annual General Meeting. In terms of provisions of Section
 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement,
 her appointment is proposed for further period as an Independent
 Director, who shall hold office for five years (from July 22, 201S to
 July 21, 2020) subject to the shareholders'' approval in the ensuing
 27th Annual General Meeting of the Company.
 
 Mr. Parvinder S Chadha, Executive Director and Mr. Surinder Rametra,
 Executive Director and Mr. Sunil Rajadhyaksha, Executive Director were
 appointed as whole-time directors of the Company for a period of five
 years from April 1, 2011 to March 31, 2016 by the Shareholders'' in
 their 23rd Annual General Meeting held on August 3, 2011. The tenure of
 their office as whole-time director will be ending on March 31, 2016.
 Pursuant to the provisions of the Sections 196, 197 read with Schedule
 V of the Companies Act, 2013 the approval of the Shareholders'' of the
 Company is being sought for their re-appointment as whole-time
 directors for a further term of five years from April 1, 2016 to March
 31, 2021.
 
 Mr. Prakash Shukla, Independent Director ceased to be director w.e.f.
 from July 26, 2014.
 
 None of the Directors were materially interested in any contract &
 agreements existing or at the end of the financial year that was
 significant in relation to the business of the Company.
 
 All Independent Director of the Company have given declaration under
 Section 149(7) of the Companies Act, 2013, stating that they meet the
 criteria of independence as mentioned in the Section 149(6) of the
 Companies Act, 2013 and Clause 49 of the Listing Agreement.
 
 15.  Meeting of Independent Directors
 
 Independent Directors of the Company met on March 21, 201S, to review
 the performance of non-independent directors, the Board as a whole and
 the Chairman of the Company and assess the quality, quantity and
 timeliness of flow of information between the Company management and
 the Board that is necessary for the Board to effectively and reasonably
 perform their duties.
 
 The familiarisation program was arranged by the Company to Independent
 Directors with regard to their roles, rights, responsibilities with the
 Company, the nature of the industry in which the Company operates and
 business model of the Company on March 21, 201S. The details of the
 familization program is disclosed on the Company''s website http://www.
 hovsltd.eom/Policies_Disclosures.html#
 
 16.  Performance Evaluation
 
 The evaluation of Independent Directors, Board, Committees and other
 non-independent directors was carried out as per criteria such as
 objective, attendance, contribution, interactive, experience,
 integrity, disclosures provided, ability to monitor corporate
 governance, domain expertise, strategic vision, industry knowledge,
 participation in discussions etc., prescribed by the Nomination and
 Remuneration Committee. The details of the same are as mentioned below.
 
 Board: The Board regularly spent quality time in reviewing performance
 of the Company and has working environment which is congenial and
 co-operative. It has appropriate committees and skill sets to enable
 its working. It receives timely information from the management to
 fulfill its role.
 
 Committees: The Board Committees are appropriately constituted with
 clear charter which is effective, interactive and decisive.
 
 Directors: All the directors invest time in understanding Company and
 its requirements. They bring external knowledge and participate during
 discussion in the meeting of Board and its various committees. Each one
 expresses his views on the matter of discussion in the Board/
 Committee. All directors keep abreast of the updated issues that are
 likely to be taken up at the Board level. They are committed to
 fulfillment of director obligation and fiduciary responsibilities.
 
 17.  Key Managerial Personnel
 
 During the financial year Company has appointed Mr. Sriram Iyengar, as
 a Chief Financial Officer w.e.f. April I, 2014 pursuant to the
 provision of Section 203 of the Companies Act, 2013. Mr. Bhuvanesh
 Sharma resigned from the post of Company Secretary and Compliance
 Officer of the Company w.e.f. July 30, 2014 and the Board re-appointed
 him from January 1, 201S as VP-Corporate Affairs and Company Secretary
 and Compliance Officer of the Company.
 
 18.  Internal Financial Controls
 
 The Company has adopted adequate procedures for ensuring the internal
 financial controls.  The Company adheres best practices for
 safeguarding its assets, the prevention and detection of frauds and
 errors, the accuracy and completeness of the accounting records and
 timely preparation of reliable and accurate financial informations.
 
 19.  Related Party Transactions
 
 The transactions entered with related parties are in ordinary course of
 business and on arm''s length basis of the Company. The particulars of
 transactions entered with related parties is annexed herewith as
 ANNEXURE - E'' to this report.
 
 20.  Corporate Governance Report
 
 The Company believes in good corporate governance which are essential
 to enhance the value of the Company for the stakeholders and abide by
 the Corporate Governance norms as stipulated under Clause 49 of the
 Listing Agreement with the Stock Exchanges. The Corporate Governance
 report is annexed as the part of the Director''s report.
 
 21.  Management Discussion and Analysis
 
 Management Discussion and Analysis report for the year under review, as
 stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges is presented as a separate section forming part of the
 Director''s report.
 
 22.  Code of Conduct for Board and Senior Management
 
 The Company has adopted Code of Conduct for the Directors and Senior
 Management and the same is available on the Company''s website
 http://www.hovsltd.com/code_of_conduct.html.  All Directors and Senior
 Management personnel have affirmed their compliance with the said Code.
 A declaration signed by the Whole-time Director to this effect is
 annexed as part of the Director''s report.
 
 23.  Auditors and Auditors'' Report Statutory Auditors
 
 At the 26th Annual General Meeting held on July 26, 2014, M/s. Lodha &
 Co, Chartered Accountants, Mumbai, were appointed as Statutory Auditors
 of the Company to hold office till the conclusion of 29th Annual
 General Meeting subject to ratification for their appointment by
 shareholders at every Annual General Meeting and being eligible have
 expressed their willingness to continue.
 
 A resolution proposing ratification for their appointment is submitted
 at the ensuing 27th Annual General Meeting.
 
 The Statutory Auditors'' Report does not contain any qualification,
 reservation or adverse remark.
 
 Secretarial Audit Report
 
 The Board appointed M/s. JDNASSA & Associates, Pune for conducting
 secretarial audit, the Secretarial Audit Report for FY 2014-1S is
 annexed herewith as ANNEXURE - ''F'' to this report.
 
 The Secretarial Auditors'' Report does not contain any qualification,
 reservation or adverse remark.
 
 24.  Extract of Annual Return
 
 Extract of Annual Return is annexed herewith as ANNEXURE- ''G'' to this
 report.
 
 25.  Committees of the Board Audit Committee
 
 The Company has constituted Audit Committee, the details of the same
 disclosed in the Corporate Governance Report. The Board accepts all the
 recommendations of the Audit Committee.
 
 Nomination & Remuneration Committee
 
 The Board has, on the recommendation of the Nomination & Remuneration
 Committee framed a policy for selection and appointment of Directors,
 Senior Management and their remuneration. The said Policy is annexed as
 part of the Director''s report.
 
 Stakeholders Relationship Committee
 
 The Company has constituted the above committee to resolve the
 grievances of the shareholders.
 
 The details of the committees along with their charters is annexed as
 part of this Board''s report.
 
 26.  Whistle Blower Policy
 
 The Board of Directors had adopted the Vigil Mechanism/Whistle Blower
 Policy in order to establish a mechanism for directors and employees to
 report genuine concerns or grievances about unethical behaviour, actual
 or suspected frauds or violation of the Company''s Code of Conduct. It
 provides necessary safeguards for protection of employees from
 reprisals or victimisation, for whistle-blowing in good faith. In line
 with the commitment of Company to the highest possible standards of
 ethical, moral and legal business conduct and its commitment to open
 communication and make provisions for direct access to the Chairman of
 the Audit Committee in appropriate and exceptional cases. The said
 policy is annexed as part of this Board''s report.
 
 27.  Prevention of Insider Trading
 
 The Board of Directors has adopted new internal Code of Conduct for
 Prevention of Insider Trading and Fair disclosure of Unpublished Price
 Sensitive Information. The Code of Conduct for Prevention of Insider
 Trading is to regulate, monitor, govern and report trading in
 securities of the Company by insiders and compliance of the SEBI
 (Prohibition of Insider Trading) Regulations, 201S. The said Code is
 annexed as part of this Board''s report.
 
 28.  General
 
 On following points no reporting or disclosure is required as there
 were no transactions on these items during the financial year under
 review:
 
 i.  Details relating to deposits covered under Chapter V of the
 Companies Act, 2013;
 
 ii.  No significant and material orders passed by the regulators or
 courts or tribunals which impacting the going concern status and
 operations of the Company;
 
 iii. Issue of equity shares with differential rights as to dividend,
 voting or otherwise;
 
 iv.  Issue of sweat equity shares;
 
 v.  None of the whole-time directors of the Company received any
 remuneration or commission from the subsidiaries of the Company.
 
 29.  Acknowledgement
 
 Your Directors'' place on record their appreciation for co-operation and
 support received from the, the Government of India, Government of
 Maharashtra, Reserve Bank of India, Software Technology Parks of India,
 Registrar of Companies, Pune, other local governmental bodies, NASSCOM,
 the National Stock Exchange, the BSE Limited, Bankers of the Company
 and Shareholders during the financial year.
 
 Your Directors express their sincere appreciation for the efforts made
 by employees at all levels for their hard work, co-operation and
 support extended to your Company during the financial year.
 
                             For and on behalf of the Board of Directors
 
 
 Place: Mumbai                            Sunil Rajadhyaksha
 Date: May 22, 201S                       Chairman & Executive Director
                                         (DIN- 00011683)
 
 
Source : Dion Global Solutions Limited
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