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63 Moons Technologies Ltd.

BSE: 526881 | NSE: 63MOONS |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE111B01023 | SECTOR: Computers - Software

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

To,

The Members,

The Directors present the Thirtieth Annual Report of your Company together with the Audited Financial Statements for the year ended March 31, 2018.

FINANCIAL PERFORMANCE

Financial Results Standalone and Consolidated

The financial statements for the year ended 31st March 2018 has been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (“the 2013 Act”) read with the Companies (Indian Accounting Standards) Rules, 2015 and the relevant provisions of the 2013 Act, as applicable.

(Rs. in lakhs, except per share data)

Standalone

Consolidated

Particulars

Current Year 2017-18

Previous Year 2016-17

Current Year 2017-18

Previous Year 2016-17

Total Income

42,838.62

42,270.20

52,837.78

49,262.63

Total Operating expenditure

24,768.82

25,735.04

39,642.43

37,627.62

EBITDA

18,069.80

16,535.16

13,195.35

11,635.01

Finance costs

722.55

2,113.03

969.88

2,302.12

Depreciation/amortization

2,216.30

2,707.07

2,995.35

3,273.88

Profit / (Loss) before exceptional item and tax

15,130.95

11,715.06

9,230.12

6,059.01

Exceptional Item

(8,157.58)

(3,075.00)

(2,686.43)

0.00

Profit / (Loss) before tax

6,973.37

8,640.06

6,543.69

6,059.01

Provision for taxation

5,335.61

3,732.14

5,356.90

3,763.64

Profit after Tax/Net Profit for the year

1,637.76

4,907.92

1,186.79

2,295.37

Add: Net minority interest in profit of subsidiaries

0.00

0.00

(20.42)

(16.07)

Profit after Tax/Net Profit for the year

1,637.76

4,907.92

1,207.21

2,311.44

Earnings per share

Basic

3.55

10.65

2.62

5.02

Diluted

3.55

10.65

2.62

5.02

RESULTS OF OPERATIONS AND THE STATE OF COMPANY’S AFFAIRS

Standalone Financials

- The total revenue from operations for the year ended March 31, 2018 was at Rs. 22,671.54 lakhs as compared to Rs. 15,006.16 lakhs for the year ended March 31, 2017.

- For the year under review, your Company has reported profit before finance cost, depreciation, exceptional items and tax of Rs. 18,069.80 lakhs, compared to profit of Rs. 16,535.16 lakhs in the previous year. Profit before tax was Rs. 6,973.37 lakhs, compared to Profit of Rs. 8,640.06 lakhs in the previous year.

- The net profit after tax (PAT) during the year of Rs. 1,637.76 lakhs as compared to profit of Rs. 4,907.92 lakhs in the previous year.

Consolidated Financials

Pursuant to the provisions of the Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

The consolidated Net Profit for the year ended March 31, 2018 was at Rs. 1,207.21 lakhs, against Rs. 2,311.44 lakhs in the previous year ended March 31, 2017. Shareholders’ funds as at the year ended March 31, 2018 was at Rs. 320,536.19 lakhs as against Rs. 316,886.15 lakhs as at March 31, 2017. Shareholders’ fund includes non controlling interest of Rs. 207.21 lakhs as compared to Rs. 227.62 lakhs in previous year.

The Company continues to carry out activities as stated in the main object clause of its Memorandum of Association as there has been no change in the nature of its business.

BUSINESS OVERVIEW: FISCAL YEAR 2017-18

As you are aware, your Company has been facing legal challenges due to a payment default at one of its subsidiaries, the National Spot Exchange Limited (NSEL). Since then, your Company is fighting legal battles to protect its reputation, identity and uniqueness in the fin tech sphere and, at the same time, countering all kinds of baseless and false allegations thrust upon it by vested interests.

Your Company has always extended complete cooperation to all investigative agencies with the sole purpose of unravelling the truth of the NSEL payment default and supported the subsidiary in taking all necessary steps to recover the default amount from the 24 defaulters.

It was way back in 1998 that your Company launched the path-breaking brokerage trading solution ODIN, a multi-exchange, multi-segment front-office trading and risk management system that enables seamless trading on multiple markets. ODIN soon emerged as the single largest player with a market share of over 80% pan-India and providing job-opportunities to over a million.

Your Company has a proven track record of generating jobs and enormous growth opportunities, something it had done by creating 10 world-class multi-asset exchange companies across continents. Your Company is confident of creating a million more jobs and building shareholder value by using innovative technology as its mainstay.

Your Company is aspiring to build synergies with the new next-gen advancements in technology such as artificial intelligence (AI) to enrich its suite of solutions in trading and risk management. During the year under review, your Company has incorporated a number of features into its suite of solutions ranging from brokerage trading solutions, risk solutions, and other mid office and back office solutions that provide ease of operations.

Technology Business & Outlook

1. Exchange Technology

The exchange technology business continues to support India’s largest commodity exchange - MCX, and Equity / Derivatives / Currency Derivatives / Debt exchange MSEI. Your company is provider of mission critical technology solution to these exchanges. As one of the revenue stream is linked to turnover at the exchange, the growth of the exchange technology business is a function of growth of turnover value of these exchanges. The exchange technology team successfully implemented first phase of it’s low latency solution at MCX in September, 201 7. The second and final phase of the same is expected to go into production shortly.

2. Brokerage Technology Solutions

Business has witnessed a challenging year in 201718 largely due to unfair environment from a legal perspective. We are seeing a positive response to some of our new product offerings. We are also in the process of launching new products and services in mobility, online solutions & artificial intelligence. We believe these will be significant revenue drivers in the next fiscal.

The Brokerage Technology Solutions business has firmly re-established itself as the leader in this space with the success of its new and improved products & services. The Company expects business environment to improve further in the coming years. With the commercial successes achieved in creating newer products and services, your Company is well positioned to take advantage of the growth in the capital markets and further cement its leadership position in this space.

New Ventures

63 moons is sprinting towards its mission ‘Digital India @2025’. New Ventures, Heroes of the FT 3.0 wing, are applying various new age technologies for building robust and flexible technology framework, with Human-centered innovation to create new quantum leap in technology.

New Ventures is Crafting an avant-garde technology framework with agile blocks, for accelerating new possibilities with Technology transformation. It is enabling idea & digitisation to speed up realising value vision FT 3.0; “Technology partner of choice across industry segments”.

Risk Solutions

‘Risk Solutions’ division broadly has two products:

1. DataCollector

2. Riskalculator

‘DataCollector’ caters to leading regulatory clients in India and abroad. During the year under review, ‘Risk Solutions’ was awarded a project from the Government of Rajasthan for implementing ‘Integrated Management Information System’ (iMIS). The division also successfully implemented ‘Foreign Accounting Tax Compliant Act’ (FATCA) system for a regulator abroad. This is a comprehensive solution enabling users to report United States tax information from its entities.

‘Riskalculator’ caters to the Enterprise Risk Management of banks and comprises of the following modules:

1. Credit Risk

2. Market Risk

3. Operational Risk

4. Asset Liability Management

5. Compliance reporting / ADF.

This application computes Regulatory Capital as per Basel norms prescribed by the Regulator. Riskalculator operates on a web platform with a single underlying data model, insulated from client’s information architecture. ‘Riskalculator’ has been successfully implemented in seven Multi-National Banks.

During the year under review, ‘Risk Solutions’ won ‘Best Solution provider of the year, 2017’ and our client bank won the ‘Best Risk Technology Implementation of the year’ in the ‘CRO Leadership Summit 2017’.

surveymoons.in:

surveymoons.in is a web-based / online ‘software as a service’ (SaaS) provider that specializes in online form building and survey. The product shall be launched for public access soon.

New Vision

As one of the best shareholder-rewarding corporate, your Company has been continuously looking forward to new initiatives and innovations to maximise its shareholders value.

With your Company’s philosophy of ‘entrepreneurial innovation and next-gen technology’ as its strong foundation, it is expanding its horizons by using its core strength of innovation and technological expertise to build new businesses to remain ahead in business.

Your Company believes that with the right opportunity, it can set newer milestones with its strength in innovation and technology in the emerging space of Digital India. In the years to come, your Company has a vision to become a technology partner of 108 digital disruptors spread across 12 industries. Your Company foresees itself to become the leader of the evolving digital ecology that will eventually govern the future, and that day is not far off.

Legal matters

In the wake of the crisis at NSEL, your Company has been made a party to several litigations over the last five years. Further, the Ministry of Corporate Affairs, Govt. of India (“MCA”) issued a final order dated February 12, 2016 (“Final Order”) for amalgamation of your Company with NSEL under section 396 of Companies Act, 1956. Your Company opposed the order for merger and challenged the said order for amalgamation before the Hon’ble Bombay High Court. The Hon’ble High Court has dismissed the writ petition challenging the final order of merger vide its order dated December 4, 2017. The Company has preferred the Special Leave Petition (SLP), before the Hon’ble Supreme Court of India, against the said order dated December 4, 2017. The Hon’ble Supreme Court was pleased to continue the relief of stay order of the High Court and the SLP is pending for admission.

Further, in a civil suit filed by L.J. Tanna Private Limited & Ors., your Company has been restrained from distributing any dividend amongst its Shareholders and/or pay any remuneration at the increased rate to its Managing Director/Directors/Senior Employees.

The Ministry of Corporate affairs (MCA) had filed the Petition inter alia under the provisions of Sections 388B, 397, 398 and 401 of the Companies Act, 1956 for removal and supersession of the Board, before the erstwhile Company Law Board (“CLB”) being Company Petition No. 1 of 2015 (“Company Petition”). The NCLT vide its order dated June 4, 2018 rejected the prayer of the Union of India for removal and supersession of the Board of the Company, however, Hon’ble Tribunal was pleased to order that the Government may nominate not more than 3 directors to the Board of your Company. Your Company has preferred appeal against the said order of the NCLT before the NCLAT. The NCLAT was pleased to stay the order of the NCLT.

Your Company continues to defend itself in various other litigations filed against it.

The Economic Offences Wing of the Mumbai Police (“EOW”) had issued a Notice dated February 28, 2015 to your Company inter alia restraining / restricting your Company from dealing with its assets. The Hon’ble Bombay High Court vide its order dated June 12, 2015 has granted a stay on the operation of the said letter. Further, EOW vide its notice dated July 18, 2016, secured the assets of your Company. The same was challenged by your Company before the Hon’ble Bombay High Court. The EOW in its affidavit has stated that it has no objection; if your Company utilizes the funds secured by its above said notice for incurring expenses necessary towards the running of its ordinary course of day-to-day business, payment of salaries to its employees and payment of statutory dues. The said affidavit has been recorded in the Order dated August 01, 2016 of the Hon’ble Bombay High Court.

The Government of Maharashtra vide its Notification dated September 21, 2016 has attached certain properties of your Company. The Government of Maharashtra, in the month of April / May 2018, vide its various Notifications attached the various bank accounts, properties, investments and ODIN software, its Intellectual Property rights and its receivables. The said notifications have been challenged before the Hon’ble Bombay High Court which is pending for hearing.

Modulus, USA has filed a case against the Company for alleged infringement of its trademark. The Notice of Motion filed in the said suit was disposed off by a consent order dated October 7, 2016. The Company has filed its written statement.

The Directorate of Enforcement has attached properties to the tune of Rs. 1,350 Crores (approx.) vide provisional attachment orders dated 14th September 2016, 30th September 2016 and 31st January 2017 issued under the Prevention of Money Laundering Act, 2002 (“PMLA”).

The adjudication proceedings before the Adjudicating Authority under PMLA have been completed in respect of the provisional attachment orders dated 14th September 2016 and 30th September 2016 where in the attachments have been confirmed. The Company has filed appeals against these orders before the Appellate Tribunal established under PMLA. Vide interim orders dated 09.05.2017 and 12.05.2017 the parties have been directed by the Appellate Tribunal to maintain status quo in respect of the attached properties till the next date of hearing.

The adjudication proceedings in respect of provisional attachment order dated 31st January 2017 has been concluded and the Ld. Adjudicating Authority was pleased to confirm attachments vide its order dated 14.07.2017. The Company has filed an appeal before the Appellate Tribunal established under the PMLA, the parties have been directed by the Appellate Tribunal to maintain status quo till the next date of hearing.

Serious Fraud Investigation Office (SFIO), Regional Office, Mumbai, has sought certain information from the Company in respect of investigation into the affairs of NSEL and the Company has provided the requisite information as required by SFIO.

Except as stated above and explanation to the qualifications in auditor report as stated below, no material changes and commitments have occurred after the close of the financial year till the date of this Report, which significantly affects the financial position of the Company.

Explanation to the Qualifications in Auditor Report

A. Audit Report on Standalone Financial Statements

The Management explanation for qualifications made by the Statutory Auditors in their Independent Auditors Report dated May 21, 2018 on the Standalone Financial Statements for the year ended March 31, 2018 is as under:

a) During the previous years, civil suits have been filed against the Company in relation to the event that occurred on the exchange platform of NSEL, wherein the Company has been made a party. In these proceedings certain reliefs have been claimed against the Company, inter-alia, on the ground that the Company is the holding company of NSEL. These matters are pending before the Hon’ble Bombay High Court for adjudication. The Company has denied all the claims and contentions in its reply. There is no privity of contract between the Company and the Plaintiffs therein. The management is of the view that the parties who have filed the Civil Suits would not be able to sustain any claim against the Company. The matters are pending for hearing before the Hon’ble Bombay High Court.

First Information Reports (FIRs) have been registered against various parties, including the Company, with the Economic Offences Wing of the Mumbai Police (EOW) and Central Bureau of Investigation (CBI) in connection with the events occurred on NSEL’s trading platform. After investigation, EOW, Mumbai has presently filed 3 charge-sheets. It is pertinent to note that till date, no charge sheet has been filed against the Company by EOW. All investigations are presently pending. CBI has filed charge-sheets against the Company for alleged loss caused to PSUs - PEC Ltd. & MMTC Ltd. on NSEL platform and the case is pending for trial before the CBI court.

The CBI - EOW has also registered an FIR which pertains to alleged conspiracy between the accused private persons and the named officials of Securities & Exchange Board of India (SEBI) in granting renewal of stock exchange license to Metropolitan Stock Exchange of India Limited (MSEI) by SEBI in August 2010, by suppression of facts. There is no direct allegation against the Company in the FIR. Therefore, the Company has filed a petition before the Hon’ble Court for quashing of the said FIR against itself.

CBI EOW, has registered complaint against the Company along with certain officials of FMC, SEBI and other for giving illegal benefits to MCX and allowing MCX trading as private commodity exchange. The investigation in the matter is still in progress.

b) The Company has challenged EOW letter dated February 28, 2015 before Hon’ble Bombay High Court wherein Hon’ble Bombay High Court by its order dated June 12, 2015 granted a stay to EOW letter dated February 28, 2015 on the condition that the Company shall deposit Rs. 84 crs from the sale proceeds of IEX within four weeks from completion of sale of IEX. Accordingly, the Company has deposited Rs. 84 crs with the Registrar, Criminal Appellate Side, High Court, Bombay. The matter is pending for hearing before Hon’ble Bombay High Court.

c) On July 18, 2016, the Company received a notice from the EOW Mumbai inter alia directing the Company not to dispose of, alienate, encumber, part with possession of or create any third party right, title and / or interest, in, to, upon or in respect of any of the assets of the Company without permission of Hon’ble Designated Court under MPID Act, Mumbai. This letter has been challenged by the Company in a Writ Petition before the Bombay High Court and the same is pending for hearing. By virtue of an Affidavit filed by the EOW in the matter the Company is not prohibited from incurring day to day expenses. The Government of Maharashtra vide its Notification dated 21st September, 2016, notified the attachments of certain assets of the Company.

The Company has filed on 16th January, 2017 a Writ Petition before the Bombay High Court challenging inter alia, the notification attaching the assets of the Company under the provisions of the Maharashtra Protection of Interest of Depositors Act. The matter is pending for hearing.

EOW issued a letter dated 31st January, 2017 to NSDL directing it not to dispose of, alienate, encumber, part with possession of or create any third party right, title and / or interest in, to, upon, or in respect of any assets mentioned in the letter dated 31st January, 2017 of the Company without the permission of the Hon’ble Designated Court under the MPID Act, Mumbai. The Company challenged the letter dated 31st January, 2017 before the Hon’ble Bombay High Court, inter alia, on the ground that the EOW did not have the power to do so. The Hon’ble Court has been pleased to stay the same. The matter is pending for hearing.

The State Government under the MPID Act has attached several Bonds, bank accounts, investments, Fixed Deposits and ODIN software and its receivables of the Company vide gazette notifications dated April 4, 2018, April 7, 2018, April 11, 2018, April 19, 2018 and May 15, 2018 respectively. The Competent Authority has filed Misc. Applications before the MPID Court to make absolute the attached properties mentioned in aforesaid gazette notifications. The said Misc. Applications are pending for hearing before Hon’ble MPID Court, Mumbai. The Company has filed a writ petition before the Bombay High Court challenging the aforesaid notifications attaching the various assets of the Company under the provisions of the MPID Act. The Hon’ble High Court has granted partial relief to the Company. The said Writ Petition will come up for hearing in June, 2018

d) Certain assets of the Company have been attached by the Enforcement Directorate under the provisions of the Prevention of Money Laundering Act, 2002. The three Provisional Attachments Orders have been confirmed by the Adjudicating Authority. The Company has filed Appeals challenging the confirmation orders passed by the Adjudicating Authority, before the Hon’ble Appellate Tribunal. The Hon’ble Appellate Tribunal has granted status quo on orders passed by the Adjudicating Authority confirming three attachments. The matter is pending for hearing before Hon’ble Appellate Tribunal.

e) The Serious Frauds Investigation Office (SFIO) published a Public Notice during December, 2016 in a newspaper wherein it has been mentioned that the Central Government had directed the SFIO to investigate into the affairs of the Company and also inviting the members of the public to lodge their alleged grievances against the Company with them. The Company is exploring its options in relation to the SFIO orders in consultation with its attorneys and Counsel.

B. Audit Report on Consolidated Financial Statements

The Management explanation for qualifications made by the Statutory Auditors in their Independent Auditors Reports dated May 21, 2018 on the Consolidated Financial Statements for the year ended March 31, 2018 are as under:

1. With respect to item no. 1 which pertains to the Company refer paragraph (A) above.

2. With respect to item no. 2 which are pertaining to the qualifications made by the Statutory Auditors of a subsidiary viz National Spot Exchange Limited (NSEL) in their Independent Auditors Report on NSEL’s Consolidated Financial Statements for the year ended March 31, 2018 which has been reproduced by the Statutory Auditors of the Company (63moons) in their Independent Auditors Report (Auditors Report) dated May 21, 2018 on the Consolidated Financial Statements for the year ended March 31, 2018, the explanation given by the management of NSEL and its subsidiary “Indian Bullion Market Association Limited” (IBMA) are as under: (“Company” in the qualifications below refer to NSEL or IBMA, as the case may be)

i) With respect to qualification 2(a) in Auditors Report, explanation of NSEL’s Management is as under:

Investigating agencies are investigating genuineness of the warehouse receipts issued by the Exchange as well as the frauds apparently perpetrated by the then senior officials of the Exchange. The Government of India by the Gazette Notification SO 2529(E) dated September 19, 2014 has withdrawn its earlier Gazette Notification SO 906(E) dated June 05, 2007 (by which the Company was granted exemption under Section 27 of the FCR Act, 1952 for trading of forward contracts of one day duration) with immediate effect and consequently the notification SO 228(E) dated February 06, 2012 and notification SO 2406(E) dated August 06, 2013 ceased to be in force w.e.f. September 19, 2014, as informed to the Company by the FMC vide letter dated November 05, 2014.

As the reply to the said SCN has been given and actions, if any, required due to SCN have been taken, including withdrawal of the exemption itself, the Company does not foresee any further consequences on the SCN. Further, neither FMC nor MCrA has held the Company guilty of having violated any of the conditions of the exemption notification dated June 05, 2007 - which was the subject matter of the SCN. The company maintains that all contracts traded on the Exchange platform were proper and in conformity with applicable laws and exemption notifications. As per the records there were no violations in this regard. The Company had obtained a legal opinion on the legality of the contracts traded by the members on the exchange platform. The Company is taking all steps to defend its position, however since all matters are sub-judice, the Company is unable to quantify the impact, if any, of such legal proceedings on the financial statements of the Company.

ii) With respect to qualification 2(b) in Auditors Report, explanation of NSEL’s Management is as under:

Majority in value of the trade and other receivables, loans and advances etc. are confirmed and such confirmations are available on record. Some confirmations were received from debtors, which were not in agreement with the balances shown in the books of accounts. Reconciliation process has been undertaken for such accounts and completed. The differences between account balances were communicated to debtors but the disagreement remains. The company has decided to litigate for recovering money where amounts are above Rs. 5 lakhs. Management is still contemplating legal action for the cases where amounts are below Rs. 5 lakhs.

iii) With respect to qualification 2(c) in Auditors Report, explanation of NSEL’s Management is as under:

As per records, the Board came to know about the relationship between Mr. Anjani Sinha and MD of M/s SNP Design Pvt. Ltd. (SNP) as his wife only after the forensic audit was completed by Grant Thornton India LLP. IBMA has already initiated suitable legal action towards recovery. Although a provision of 75% of the outstanding amount is made in the previous years, the management is hopeful of recovery and no further provision is made in the current financial year.

iv) With respect to qualification 2(d) in Auditors Report, explanation of NSEL’s Management is as under:

The Subsidiary Company [IBMA] has taken steps towards recovery of the unrealised outstanding debtors and receivables. During current financial year 2016-17, IBMA has made the provision for doubtful debts (Excluding Other Receivable) of Rs. 45.96 lakhs of debtors other than SNP and Harley Carmbel Pvt. Ltd. (Harley). With regard to the SNP, Company has initiated legal action as stated in note no (iii). For Harley, IBMA has initiated arbitration process towards recovery and the matter is currently sub-judice.

Further, Management is hopeful of recovering the amounts due from SNP and Harley, hence, in the current year no provision in respect of amount due from them is made.

DIVIDEND

Your Directors have recommended a dividend of Rs. 2/per share i.e. 100% on the face value of Rs. 2/- per share for the FY 2017-18. The distribution of said dividend shall be subject to the approval of shareholders at the forthcoming Annual General Meeting and appropriate judicial orders.

As the Shareholders are aware, the following dividends are pending for distribution due to the Hon’ble Bombay High Court order:

a. The final dividend of Rs. 5/- per share for the FY 201415, approved by the shareholders at the Annual General Meeting held on September 30, 2015, could not be paid as the Hon’ble Bombay High Court vide its order dated September 30, 2015 in Notice of Motion no. 1490 of 2015 in Suit no. 121 of 2014 - L.J. Tanna Shares & Securities Pvt. Ltd. and Ors., Vs. Financial Technologies (India) Limited inter-alia directed that pending hearing and final disposal of Notice of Motion “FTIL shall not distribute any dividend amongst its shareholders and shall also not deposit any amount in compliance with Section 123 sub-clause (iv) of the Companies Act, 1956”, (to be read as Companies Act, 2013).

b. Payment of Rs. 2/- per share for F.Y 2016-17 approved by the shareholders at the 29th AGM held on September 27, 2017 is pending subject to appropriate judicial orders.

Prior to the above mentioned High Court order, your Company has paid consecutive dividends for the past 38 quarters which is in accordance with the sustainable dividend payout policy of the Company and linked to its long term growth objectives.

TRANSFER TO RESERVES

Your Company does not propose to transfer any sum to General Reserve for the year under review.

SHARE CAPITAL

There was no change in the Share Capital of the Company during the year under review. As on March 31, 2018, the paid-up equity Share Capital of your Company stood at Rs. 921.57 lakhs comprising of 46,078,537 equity shares of Rs. 2/- each. During the year under review the Company has not issued any shares with differential voting rights nor has it granted any Stock Option or Sweat Equity.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’), is presented in a separate section forming part of this Annual Report.

DETAILS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES AND THEIR PERFORMANCE HIGHLIGHTS

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (“Act”), a statement containing salient features of the financial statements of Company’s subsidiaries, associate companies and joint ventures is given in Form AOC-1 as Annexure - I and the same forms part of this report. The statement also provides the details of highlights of performance of subsidiaries, associates and joint venture company and their contribution to the overall performance of the Company. The financial statements of each of the subsidiaries may also be accessed on the website of the Company www.63moons.com. These documents will also be available for inspection on all working days i.e. except Saturdays, Sundays and Public Holidays at the Registered Office of the Company till the date of AGM.

The Policy for determining material subsidiaries as approved by the Board may be accessed on the Company’s website at the link: www.63moons.com/ investors/corporate-governance/policies/Material-subsidiary-policy.pdf

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The report on Corporate Governance as stipulated by Regulation 34(3) read with Schedule V of the Listing Regulations, 2015, is annexed hereto, and forms part of this Annual Report. A Certificate from the Auditors of the Company confirming compliance with Corporate Governance norms is annexed to the report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Reporting as required under Regulation 34 of Listing Regulations is not applicable to your Company for the financial year ended March 31, 2018.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

In line with the requirements of the Companies Act, 2013 and Listing Regulations, your Company has formulated a Policy on Related Party Transactions which is available on Company’s website at www.63moons. com/investors/corporate-governance/policies/Related-Party-Transactions-Policy.pdf The Policy is to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

All arrangements / transactions entered by your Company with its related parties during the year were in ordinary course of business and on an arm’s length basis. During the year, the Company has made investments in one of its subsidiary i.e. NSEL amounting to Rs. 3081.66 lakhs in terms of shareholders’ approval obtained on March 08, 2017. Except for the transaction with NSEL, the Company did not enter into any arrangement / transaction with related parties which could be considered material, in accordance with Companies Act and Listing Regulations. All transactions with related parties were reviewed and approved by the Audit Committee. Prior omnibus approvals are granted by the Audit Committee for related party transactions which are of repetitive nature, entered in the ordinary course of business and are on arm’s length basis in accordance with the provisions of the Act read with the Rules issued thereunder and the Listing Regulations.

The details of the transactions with related parties are provided in the accompanying financial statements.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The Company has identified the areas for CSR activities which are in accordance with Schedule VII of the Act, some of which are highlighted as under:

- Health and social welfare

- Promotion of education

- Environment sustainability

- Employment enhancing vocational skills

- Employee engagement activities

The Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure - II and the same forms part of this report. The policy is available on the website of the company at the link: www.63moons.com/investors/ corporate-governance/policies/CSR-policy.pdf

RISK MANAGEMENT

The Board of the Company has formed a Risk Management Committee to monitor the risk management policy for the Company.

The risk management system identifies and monitors risks which are related to the business and overall internal control systems of the Company. The Audit Committee has oversight responsibility in the areas of financial risks and controls. The risk management committee is responsible for reviewing the risk management policy and ensuring its effectiveness.

The Audit Committee and the Board has also noted the risk prevailing in respect of what is stated in the para relating to legal matters above effecting the business of the Company.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has internal financial control systems, which are commensurate with its size and the nature of its operations. The Internal control system is improved and modified on an on-going basis to meet the changes in business conditions, accounting and statutory requirements. Internal Audit plays a key role to ensure that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported properly. The Internal Auditors independently evaluate the adequacy of internal controls. The findings and recommendations of the Internal Auditors are reviewed by the Audit Committee and followed up till implementation wherever feasible. Further, as per requirement of clause (i) of sub-section (3) of section 143 of the Companies Act, 2013 (‘the Act’), the statutory auditors have reported on the internal financial controls and opined that the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Suresh Salvi (Retd. IAS) (DIN: 07636298) and Mr. Kanekal Chandrasekhar (DIN: 06861358) were appointed as Directors (Non-Executive) at the Annual General Meeting of the Company held on September 27, 2017.

Further, Mr. S. Rajendran (DIN: 02686150) was appointed as Managing Director and CEO of the Company not liable to retire by rotation for a period of 3 years w.e.f. February 10, 2017. Mr. Devendra Agrawal (DIN: 03579332), Chief Financial Officer of the Company was appointed as Whole-time Director & CFO of the Company liable to retire by rotation w.e.f May 27, 2017 for a period of three years. The aforesaid two appointments were approved by the Members through postal ballot on August 23, 2017.

The following Directors ceased to be member of the Board:

1. Mr. Berjis Desai (DIN: 00153675), Non-Executive Director w.e.f. May 26, 2017

2. Mr. Jigish Sonagara (DIN: 07024688), Non-Executive Director w.e.f. August 10, 2017

Your Directors place on record their appreciation for the valuable advice and guidance provided by the above Directors during their tenure with the Company.

The Board of Directors at its meeting held on November 09, 2017, on the recommendation of the Nomination and Remuneration Committee (NRC), re-appointed Mr. Rajendra Mehta (DIN: 00390504) as a Whole-time Director of the Company for a period of one year commencing from November 21, 2017 subject to the approval of shareholders. Since the tenure of the said re-appointment shall be expiring on November 20, 2018, the Board of Directors at its meeting held on August 09, 2018, on the recommendation of the NRC, further extended the tenure of re-appointment of Mr. Rajendra Mehta by one more year commencing from November 21, 2018 subject to the approval of shareholders at the ensuing AGM.

In view of the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 dated 9th May, 2018 which will come into force with effect from 1st April, 2019, no listed entity can continue the directorship of any person as a non-executive director who has attained the age of 75 (seventy five) years unless a special resolution is passed to that effect. Accordingly, three existing Directors of the Company who have already attained the age of 75 years i.e. Mr. Venkat Chary (DIN: 00273036), Chairman, NonExecutive and Independent Director (aged 78 years), Justice (Retd.) Rajan J. Kochar (DIN: 06710558), NonExecutive & Independent Director (aged 76 years), and Mr. Suresh Salvi (DIN: 07636298), Non-Executive Director (aged 76 years) are recommended for their continuance as Directors of the Company after March 31, 2019 at this AGM as Special Business by way of Special Resolution in compliance of Section 102 of the Act read with the amended Regulation 17 (1A) of the SEBI (LODR) Regulations 2015. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company’s Articles of Association, Mr. Devendra Agrawal (DIN: 03579332) and Mr. Suresh Salvi (DIN: 07636298), Directors, retires by rotation at the forthcoming Annual General Meeting and, being eligible offers themselves for re-appointment. The Board recommend their re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.

The other Directors continue to be on the Board of your Company.

Pursuant to the provisions of section 203 of the Act, the Key Managerial Personnel of the Company are -

1. Mr. S. Rajendran, Managing Director and Chief Executive Officer

2. Mr. Rajendra Mehta, Whole-time Director

3. Mr. Devendra Agrawal, Whole-time Director and Chief Financial Officer (appointed as Whole-time Director w.e.f. May 27, 2017)

4. Mr. Hariraj Chouhan, Company Secretary.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013, SEBI Listing Regulations and the Guidance Note on Board Evaluation issued by the SEBI on January

5. 2017, a process has been devised for evaluation of Board, Committees and Directors taking into consideration the various aspects of the Board’s functioning, execution and performance of specific duties, obligations and governance. The performance of the Board and Independent Directors was evaluated by the Board after seeking inputs from all the Directors. The criteria for performance evaluation of the Board included aspects such as Board composition and structure, effectiveness of Board processes, contribution in treasury and risk management, legal challenges faced by the Company, general corporate governance, strategic planning etc. The performance of the Committees was evaluated by the Board after seeking inputs from the committee members. The criteria for performance evaluation of the Committees included aspects such as composition of committees, effectiveness of committee meetings, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking inputs from Executive Directors and Non-Executive Directors.

On review of Board as a whole, members expressed satisfaction on the diversity of experience, age group, and induction process of new members, and competency of directors. The members expressed appreciation on functioning of Audit committee, NRC, CSR, Stake holders, Risk Management and Investment Committee as observed from the minutes of those meeting placed for noting in the Board.

MEETINGS OF THE BOARD

The Board of Directors of the Company met 7 (seven) times during the financial year. The details of Board Meetings are provided in the Corporate Governance Report, which forms part of this Annual Report.

AUDIT COMMITTEE

The Audit Committee comprises of 5 (five) members, three of whom are Independent Directors namely Mr. Venkat Chary, Justice (Retd.) R. J. Kochar, Mr. A. Nagarajan and two are Non-Executive Directors namely Mr. Suresh Salvi and Mr. K. Chandrasekhar. During the year, 6 (six) Audit Committee meetings were held and the details of which are provided in the Corporate Governance Report, which forms part of this Annual Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT BY COMPANY

Details of loans, guarantees and investments have been disclosed in the Financial Statements.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure - III and the same forms part of this Report.

EXTRACT OF ANNUAL RETURN

Extract of Annual return of the Company in form MGT-9 has been posted on the website of the Company at www.63moons.com/investors/shareholders/ annual-reports.html

PARTICULAR OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors, KMPs and employees as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure - IV to this Report.

Details of employee remuneration as required under provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours, 21 days before the Annual General Meeting and shall be made available to any shareholder on written request. Such details are also available on your company’s website at www.63moons.com/investors/shareholders/annual-reports.html

WHISTLE BLOWER POLICY / VIGIL MECHANISM

The Company has a whistle blower policy to report genuine concerns or grievances. The Whistle Blower Policy has been posted on the website of the Company at the link: www.63moons.com/investors/corporate-governance/policies/Whistle-Blower-Policy.pdf

NOMINATION AND REMUNERATION POLICY

The Board of Directors has framed a policy for selection and appointment of Directors including determining qualifications, independence of a Director, Key Managerial Personnel, Senior Management Personnel and their remuneration as part of its charter and other matters provided under Section 178 (3) of the Act. The details of the policy are provided in the Corporate Governance Report, which forms part of this Annual Report. The Nomination and Remuneration Policy has been placed on the website of the Company at the link: www.63moons.com/investors/corporate-governance/ policies/Nomination-and-Remuneration-Policy.pdf

MAINTENANCE OF COST RECORDS

The Company is not required to maintain cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

During the FY 2017-18, the Company has not received any complaints on sexual harassment and hence no complaints remain pending as of March 31, 2018. Further, the company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

Except as stated in the para relating to legal matters mentioned above, there are no other significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future. The details of litigation including tax matters are disclosed in the notes to the Financial Statements which forms part of this Annual Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;

b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c. the Directors have taken proper and sufficient care to maintain 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 have prepared the annual accounts on a going concern basis.

e. the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and

f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

EMPLOYEES STOCK OPTION PLAN (ESOP)

The Nomination & Remuneration Committee of the Board of Directors of the Company, inter-alia, administers and monitors the Employees Stock Option Plan of the Company in accordance with the applicable SEBI Guidelines.

The applicable disclosures as required under SEBI Guidelines as on March 31, 2018, with regards to the Employees Stock Option Plan and as per the Act are given in Annexure - V and the same forms part of this report.

The Company has received a certificate from the Auditors of the Company that the ESOP Schemes have been implemented in accordance with the SEBI Guidelines and the resolution passed by the members. The certificate would be available at the Annual General Meeting for inspection by members.

SECRETARIAL STANDARDS

The Company is in compliance with applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

AUDITORS

Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s. Sharp & Tannan Associates, Chartered Accountants, Mumbai (Regn. No. 109983W) were appointed as the Statutory Auditors of the Company at the Annual General Meeting (AGM) held on September 23, 2014 for a period of five years, subject to ratification of their appointment at every AGM. In accordance with the Companies Amendment Act, 2017, enforced on May 07, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is no longer required to be ratified at every Annual General Meeting.

M/s. Sharp & Tannan Associates have confirmed their eligibility and qualification for continuing as Auditors of the Company.

DETAILS OF FRAUD, IF ANY REPORTED BY THE AUDITORS

There have been no instances of fraud reported by Auditors pursuant to Section 143(12) of the Companies Act, 2013.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Act, the Board has appointed M/s BNP & Associates, Practising Company Secretaries, to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure - VI and the same forms part of this report. The Secretarial Auditors’ report does not contain any qualifications, reservations or adverse remarks, except one observation as under:

During the year, SEBI has imposed penalty of Rs. 1 lakh stating that the Company did not seek prior approval from Stock Exchanges i.e. BSE & NSE in terms of Regulation 45(3) of LODR Regulations, before obtaining certificate for effecting change in its name from ROC. The penalty was paid by the Company on 04.01.2018.

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 year under review:

- Details relating to deposits covered under Chapter V of the Act.

- Issue of equity shares with differential voting rights as to dividend, voting or otherwise.

- Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

HUMAN RESOURCES

63 moons technologies Limited (formerly known as FTIL) provides an equal opportunity which ensures nondiscrimination at the workplace. The Company remains committed to its employees and values each one’s contribution in the collective growth. As of 31 March 2018, the Company had employee strength of 847.

The HR Team is conditioned in a way to be always alert and available for any help sought by the employees. All HR systems and processes are fully automated to ensure that required information is available anytime. A number of employee beneficial programs (Insurance, health care etc.) have been initiated and also employee engagement initiatives conducted which makes 63 moons as one of the best companies to work. Company is equally concerned about the health of the employees. 63 moons have round the year free health check-up camps for the employees which (includes sub-staff) through Doctor-on-Site services of specialists like Physician, Gynaecologist, Nutritionist, Surgeon, Dietician, Dentist, Medical Counsellor etc.

In addition to the Privilege and Other leaves, the Company has also recently introduced ‘Family Bliss’ leaves, one for the anniversary and the other for birthday so that employees can spend time with their near and dear ones on their special day. A religion-specific holiday has also been introduced this year so that employees can take leave for their respective religious festival.

There are many training (Inbound and Outbound) program conducted to groom our employees in behaviour and domain aspects. A two day special training program was organized for female employees on Stress Management which was well appreciated by all our female staff.

63 moons has also launched an e-module on Prevention of Sexual Harassment (POSH), Information Security Awareness (ISA) and Innovative Thinking for the employees.

The Company has been awarded by World HRD Congress in employer Branding Awards as “Maharashtra Best Employer Brand Awards in 2018” in providing next generation technology ventures, innovations platforms and solutions for creating digital markets and market places that enable price discovery and transaction efficiencies across industry segments.

During the year under review, cordial relationship has been maintained with all the employees.

ACKNOWLEDGEMENT

Your Directors place on record their gratitude to the Central Government, State Government, clients, vendors, financial institutions, bankers and business associates for the assistance and co-operation extended to your Company.

Your Directors also wish to place on record their appreciation for the continued support of investors, business associates and the contribution made by the employees at all levels.

For and on behalf of the Board of Directors

Venkat Chary S. Rajendran

Place : Mumbai Chairman Managing Director & CEO

Date : August 09, 2018 DIN: 00273036 DIN: 02686150

Director’s Report