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Hathway Cable and Datacom Ltd.

BSE: 533162 | NSE: HATHWAY |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE982F01036 | SECTOR: Media & Entertainment

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

DIRECTORS'' REPORT

Dear Members,

The Directors have pleasure in presenting the 58th Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March, 2018.

1. FINANCIAL AND OPERATION OVERVIEW:

a. financial Highlights:

Your Company''s performance during the year ended 31st March, 2018 as compared to the previous financial year, is summarized as below:

(Rs, in Crores)

standalone

Consolidated

particulars

2017-18

2016-17

2017-18

2016-17

Operating & Other Income

556.51

1330.50

1544.36

1368.23

Earnings before interest, depreciation, amortization, exceptional item, share of profit of associates and JVs & taxes

236.98

259.93

345.37

220.56

Finance Cost

78.34

110.30

152.76

110.75

Depreciation & Amortization

97.19

300.76

334.70

305.75

Exceptional Items

(16.21)

3.49

5.34

0.74

Share of profit / (loss) of an associate and joint ventures

-

-

39.13

2.89

Provision for Taxation - Current Tax & Deferred Tax

-

-

0.44

0.34

Net Profit/(Loss)

77.66

(154.62)

(107.86)

(193.45)

Other Comprehensive Income/(Loss)

1.26

0.31

2.65

0.26

total comprehensive Income/(loss)

78.92

(154.31)

(105.21)

(193.19)

During the year under review, the total income of your Company was Rs, 556.51 Crores on a standalone basis and Rs, 1544.36 Crores on a consolidated basis as compared to the previous financial year''s total income of Rs, 1330.50 Crores on a standalone basis and Rs, 1368.23 Crores on a consolidated basis. For the financial year under review, the Company has earned net profit of Rs, 78.92 crores on a standalone basis reflecting a significant growth of 151.00% as against net loss of Rs, 154.31 crores in the previous financial year. During the year under review, the net loss of the Company was Rs, 105.21 crores compared to Rs, 193.19 crores in the previous financial year on a consolidated basis.

As of closing hours of 31st March 2017, the Company had transferred its Cable Television business through slump sale to its wholly owned subsidiary, Hath way Digital Private Limited. Hence the standalone numbers for the current financial year are not comparable with the standalone numbers of previous financial year.

b. Operational Highlights:

During the year under review, the broadband business has performed exceptionally well. The new upgraded technology DOCSIS 3.1, advent of GPON Fiber to the home, delighting customers with enhanced data limits and efficient customer services have helped your Company reach 5th position in cable wire line broadband. (Source TRAI - The Indian Telecom Services Performance Indicators - Jan - Mar, 2018)

Your Company has carved out its Cable Television business and transferred it to its wholly owned subsidiary - Hath way Digital Private Limited (f.k.a Hath way Datacom Central Private Limited), through slump sale as of closing hours of March 31, 2017. Hath way Digital Private Limited (HDPL) is now, one of the largest MSO with 7.2 Mn digital subscribers which are spread across pan India. HDPL has made concentrated efforts to accelerate monetization across all the phases.

Y during the year, the focus has been on monetization of Phase III and IV in Cable Television Business and to increase Broadband foot prints through, network expansion in Chennai, Indore and Kolkata.

YTPL Hath way Limited, one of the Joint ventures of your Company, has been successfully listed on BSE Limited and National Stock Exchange of India Limited on 4th July, 2017. Your Company had offered sale of 7.2 Mn shares in the Initial Public Offer (IPO) and money received from such sale of shares has been used for repayment of debt. Post the IPO, the Company now holds 37.32% in GTPL Hath way Limited.

broadband business:

Yue to constant focus on network expansion, your Company has added 0.8 Mn Home Pass during the year, reaching 5.2 Mn Home Pass at the end of the year under review.

India has around 17.96 Mn wire line broadband subscribers as on 31st March, 2018 (As per revised definition i.e. a Broadband customer is a customer having minimum speed of 512 kbps). Comparing the trend on year on year basis, the wire line broadband number has declined by 0.28 Mn subscribers (March 2017 18.24 Mn) [Source -TRAI report December 2017]. However, your Company has added 0.16 Mn customers during the year. Customers increasingly prefer wire line broadband as it allows online media consumption and seamless accessibility of data to multiple devices while at home.

As of 31st March, 2018, your Company has 0.80 Mn broadband subscribers with ARPU of '' 710/. With high quality and high capacity Hybrid Fiber Coaxial (HFC) Network, your Company is well placed to garner a larger share of high speed broadband market.

Your Company is providing services in all 4 metros and all major mini metros with latest addition of ultra-high speed ''GpON FTTH'' technology in South and West regions. Your Company is the first MSO to provide GPON FTTH service to retail customers. GPON FTTH facilitates data speed up to 1 Gbps and the equipment and network is designed to provide data speed up to 1 Gbps without any incremental investment. Your Company currently offers data speed up to 200 Mbps - 500Mbps to premium customers and provides data limit up to 1 Terabytes per customer per month (PCPM).

Y he average download PCPM has now increased to 103 GB / PCPM which clearly shows the consumption pattern shift from the small screen to larger screen.

We continue to upgrade our Docsis 3.0 customers to 3.1 and at the same time GPON FTTH parallel network is being deployed in high potential Docsis home passes. This increases the opportunities to increase market share by offering 200-500 Mbps speed to premium customers.

The customer consumption habits have changed and their experience of watching content has been enhanced in last 3 years due to abundant availability of regional content and content provided by Over The Top (OTT) players such as Netflix, Hotstar, Voot, Zee5, Sun Nxt, Yupp TV etc. This allows your customers to watch media content on the larger screen without compromising on the speed.

Your Company is equipped with technical upgrades that can provide speed up to 1 Gbps with nearly unlimited data access (up to 1024 GB/PCPM) at any point of time without any further investment or increase in cost.

Your National brand ambassador is versatile and popular actor R. Madhavan, he has added star power to drive the broadband business. He is a well-known actor and has been among the early movers in digital phenomenon and we are extremely proud to have him as the face of our brand.

cable television business:

Your company''s footprints through its 100% wholly owned subsidiary i.e. HDPL in DAS III and IV market has now started getting monetized. During the year, in the Phase III and IV market the ARPUs have significantly increased to Rs, 70/- from Rs, 50/- last year and subsequently the Phase IV ARPUs have now reached Rs, 55/- which has resulted in healthy growth in subscription revenue.

Y he Company''s online portal “Hath way Connect” has been implemented in 2/3rd of our customer base and 55% of payment by LCOs and primary subscribers are now paid online. This creates stability in business and increase in collection efficiency to 98%.

New regulation

With reference to the new regulations i.e. Telecommunication (Broad casting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017 (The Regulations), the Telecommunications

(Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017 (The Tariff Order) and The Telecommunication (Broadcasting and Cable) Services Standards of Quality of Service and Consumer Protection (Addressable Systems) Regulations, 2017 (QOS) brought in by the Sector Regulator-Telecom Regulatory Authority of India and notified on 3rd March, 2017, which were stayed, have now, post the Order by majority pronounced by the Hon''ble High Court of Madras on 2nd March, 2018 and 23rd May, 2018 have been vacated, where it was pending for hearing.

Y he Madras High Court after hearing all parties to the Writ Petition vide its majority view, has rejected the plea of Star India Private Limited and Vijay Television Private Limited and held that the challenge to the Regulation and Tariff Order by the above Broadcasters should fail.

These regulations envisage sweeping changes in the existing model and is expected to benefit all the stakeholders in the value chain (viz) Broadcaster, MSO, LCO and Customer. The proposed regulation is the outcome of several issues arising out of flaws and imbalances in the erstwhile regulatory regime which was skewed in favour of the broadcaster and LCO.

IT & Other initiatives

You serve our growing customer base and taking the lead for future your Company has taken various initiatives on backend IT support.

The Company has tied up with Tata Consultancy Service (TCS) as Implementation Partners to automate various functions/processes and to improve the Quality of services.

To support “Digital India” Flag ship campaign and for customer convenience, your company has promoted the “Go Cashless” options by encouraging online payment options including a tie up with digital wallet platforms to encourage LCOs and the Subscribers to pay online. Due to these initiatives we now receive 70% of our Broadband collections online and 55% of our Cable television business collections online.

The Company is focusing constantly on utilization of technology to automate its processes across functions to achieve cost optimization.

c) consolidated Accounts:

The consolidated financial statements of your Company for the financial year 2017-2018 are prepared in compliance with applicable provisions of

the Companies Act, 2013, Indian Accounting Standards (“Ind AS”) notified u/s 133 of the Companies Act, 2013 and relevant rules issued there under and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR)) as prescribed by the Securities and Exchange Board of India.

d) Report on performance of subsidiary companies, associate companies and joint ventures:

A statement containing the performance and financial position of each of the subsidiaries, associates and joint ventures for the financial year ended 31st March, 2018 is given pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 (including any subsequent amendment thereof) in AOC-1 in Annexure

- I to this report.

Details of Companies/entities which have become or ceased as subsidiary company, associates and joint ventures, during the year under review, are as under:

Name of the Company

Relationship with the Company

Details of changes

Date of change

*GTPL Hath way Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Anjali Cable Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Solanki Cable Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Zigma Vision Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL SK Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Video Badshah Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Broadband Private Limited

(f.k.a GTPL Kutch Network Private Limited)

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL City Channel Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL SMC Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Surat Telelink Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Vidarbha Telelink Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Space City Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Vision Services Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Narmada Cyberzone Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Shivshakti Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Link Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL VVC Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Blue Bell Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Parshwa Cable Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Insight Channel Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Kolkata Cable & Broadband Pariseva Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

Name of the Company

Relationship with the Company

Details of changes

Date of change

GTPL Dahod Television Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Jay Santoshima Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Sorath Telelink Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

Gujarat Telelink East Africa Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Shiv Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL DCPL Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Bansidhar Telelink Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Sharda Cable Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Ahmedabad Cable Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

DL GTPL Cabnet Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL V & S Cable Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Video Vision Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

Vaji Communication Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL KCBPL Broad band Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Junagadh Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Deesha Cable net Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Kaizen Infonet Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Meghana Distributors Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Abhilash Communication Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Chelikam Networks (India) Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

Vizianagar Citi Communications Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL Jay Mataji Network Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

GTPL TV Tiger Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

DL GTPL Broadband Private Limited

Subsidiary Company

Ceased to be Subsidiary Company of the Company

04.07.2017

Hath way Patiala Cable Private Limited (f.k.a. Hath way Sukhamrit Cable and Datacom Private Limited)

Subsidiary Company

Ceased to be Subsidiary Company of the Company

31.03.2018

*GTPL Hath way Limited is now an Associate Company.

** During the financial year 2017-18, the investment in equity shares of Hath way Patiala Cable Private Limited (f.k.a. Hath way Sukhamrit Cable and Datacom Private Limited) was classified as investment in Joint Venture. However, the management no longer intends to exercise its influence in operations of Hath way Patiala Cable Private Limited. Accordingly, such interest in Hath way Patiala Cable Private Limited has been reclassified and measured as financial assets in terms of IndAS 109 and hence ceases to be a subsidiary company.

A he financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays up to the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of your Company.

e) Management Discussion and Analysis:

The Management Discussion and Analysis forms an integral part of this Report and gives detail of the overall industry structure and development, business overview, financial performance review in broadband business, key growth drivers, opportunities and threats, risks and concerns, internal control systems and its adequacy.

f) Dividend:

A considering the losses incurred during the year under review, your directors have not recommended any dividend for the financial year under review. However, as per Regulation 43A of SEBI (LODR), the Company has formulated Dividend Distribution Policy, which can be accessed through web link http://www. Hath way.com/About/Policies

g) Transfer to reserves:

I n view of losses incurred during the year under review, your Directors have not recommended transfer of any amount to reserves during the financial year under review.

h) Revision of financial statement:

There was no revision of the financial statements for the year under review.

i) Deposits:

A our Company has not accepted any public deposits during the year under review within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

j) Disclosure of Internal Financial Controls:

Your Company''s internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance of corporate policies. Your Company has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. Your Company uses an enterprise resource planning (ERP) system to record data for accounting and management information purposes and connects to different locations for efficient exchange of information. Your Company had already developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes entity level policies, process and operating level standard operating procedures. It has continued its efforts to align all its processes and controls with global best practices.

The entity level policies include code of conduct, whistle blower policy and other polices (like organization structure, insider trading policy, HR policy, Electronic Communication policy and Forex policy). The Company has also prepared Risk Control Matrix (RCM) for each of its pocesses like procure to pay, order to cash, treasury, fixed assets, inventory etc.

The Management Audit Team (MAT) had conducted a review and evaluated the design, adequacy and operating effectiveness of the Internal Financial Controls of the Company. Management testing has been conducted on a sample basis for Revenue ISP, Expenses and payables, Fixed Assets, Inventory, Procure to pay processes, Borrowings, Investments, Leases, Forex Exposure and Hedging, Compliances, Related Party, Consolidation, Retirement Benefit, Finalization, Loans & Advances, Contingent Liability and remedial action has been taken or agreed upon with a finite closure date where control weaknesses were identified. A summary of operating controls covered during the year are as follows:

Sr. No.

Particulars

No.

1

Total controls

1158

2

Controls verified

1103

3

% of coverage

96

During the year, no reportable material weakness in design and effectiveness was observed.

Based on the above, the Management believes that adequate Internal Financial Controls exist in relation to its Financial Statements.

k) Particulars of loans, guarantees, investments and securities:

As per Section 186 (11)(a) read with Schedule VI of the Companies Act, 2013, since the Company qualifies to be the Company providing infrastructural facilities, it is exempted from the applicability of Section 186 except for sub-section (1) of section 186 of the Companies Act, 2013. Accordingly, disclosure of details with respect to investment made, loan given, guarantee given and security made during the financial year 2017-18 in terms of Section 186(4) of the Companies Act, 2013 is not applicable.

2. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

a) BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As per the provisions of Section 152 of the Companies Act, 2013, Mr. Vinayak Aggarwal (DIN: 00007280), shall retire by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. Your Directors recommend the same for your approval.

A n accordance with the provisions of the Companies Act, 2013, none of the Independent Directors are liable to retire by rotation.

A r. Vineet Garg resigned as Chief Financial Officer (Key Managerial Personnel) of the Company w.e.f May 15, 2018.

b. DECLARATION BY INDEPENDENT DIRECTORS:

our Company has received declarations from all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence vis-a-vis the Company.

3. DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES

a. BOARD MEETINGS:

The Board of Directors of the Company met 7 (seven) times during the financial year ended 31st March, 2018 in accordance with the provisions of the Companies Act, 2013 and rules made there under.

A he dates on which the Board of Directors of the Company met during the financial year under review are as under:

Sr. No.

Date of Meeting

1.

30th May, 2017

2.

21st July, 2017

3.

10th August, 2017

4.

15th September, 2017

5.

2nd November, 2017

6.

22nd December, 2017

7.

12th February, 2018

b. DIRECTOR''S RESPONSIBILITY STATEMENT:

An terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2018, the Board of Directors of the Company hereby confirm that:

a. i n the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the directors 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 as at 31st March, 2018 and of the profit of the Company for that year;

c. a roper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. t he annual accounts of the Company have been prepared on a going concern basis;

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

f. t roper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

c. NOMINATION AND REMUNERATION COMMITTEE:

B he Board of Directors have in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining credentials, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and Senior Management Personnel. Annexure-II to this report provides Nomination and Remuneration Policy.

d. AUDIT COMMITTEE:

the scope and terms of reference of the Audit Committee is in accordance with section 177 of the Companies Act, 2013, Audit Charter adopted by the Board of Directors in their meeting held on 11th February, 2015 and the applicable provisions of SEBI (LODR).

The Audit Committee as on the date of this report comprises of:

Sr. No.

Name of the Member

Designation

1

Mr. Sridhar Gorthi

Chairman

2

Mr. Viren Raheja

Member

3

Mr. Sasha Mirchandani

Member

4

Mr. Devendra Shrotri

Member

5

Ms. Ameeta Parpia

Member

During the year under review, the Board of Directors of the Company accepted all the recommendations of the Committee.

e. STAKEHOLDERS'' RELATIONSHIP COMMITTEE:

Pursuant to Section 178 of the Companies Act, 2013, the Company has Stakeholders'' Relationship Committee of Board of Directors comprising of the following as on the date of this report:

Sr. No.

Name of the Member

Designation

1

Mr. Vinayak Aggarwal

Chairman

2

Mr. Viren Raheja

Member

3

Mr. Rajan Gupta

Member

B he Company Secretary acts as the Secretary of the Stakeholders'' Relationship Committee.

f. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:

B he Board of Directors of the Company have pursuant to the provisions of Section 178(9) read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 of the Companies Act, 2013, framed “Vigil Mechanism Policy” for directors and employees of the Company. The said policy provides a mechanism which ensures adequate safeguard to employees and directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc.

B he employees of the Company have the right/option to report their concern/ grievance to the Chairman of the Audit Committee.

Your Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

g. RISK MANAGEMENT POLICY:

the Board of Directors of the Company have designed Risk Management Policy and guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company''s businesses and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews.

h. CORPORATE SOCIAL RESPONSIBILITY POLICY:

As per the provisions of Section 135 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 of the Companies Act, 2013 and any subsequent amendment thereof, the Board of Directors have constituted Corporate Social Responsibility (CSR) Committee. However, since the Company has no profits in the immediately preceding

3 (three) financial years, no amount was required to be spent for corporate social responsibility activities. However, the Company voluntarily spends on various social causes. The CSR Policy of the Company is available on the Company''s website and can be accessed in the link provided herein below: http://www.Hath way.com/assets/InvFile/HCDL CSR Policy.pdf

i. ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:

B he performance of the Board of Directors and its Committees, Individual Directors and Chairman was evaluated and the same was recorded as satisfactory. The manner of performance evaluation was carried as set out in Nomination and Remuneration Policy.

j. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION AMENDMENT RULES, 2016:

B he ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year under review and Statement containing the particulars of employees in accordance with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 is given in

Annexure - III.

k. COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

B he Board of Directors of the Company have complied with the applicable secretarial standards issued by the Institute of Company Secretaries of India and approved by the Central Government under section 118(10) of the Companies Act, 2013.

4. AUDITORS AND REPORTS

B he matters related to Auditors and their Reports are as under:

a. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2018:

The report of Statutory Auditors on accounts for the year ended 31st March, 2018 forms part of the financial statement. The observations made by the Statutory Auditors in their report for the financial year ended 31st March, 2018 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board of Directors under Section 134(3) of the Companies Act, 2013.

b. SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31st MARCH 2018:

Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates to obtain Secretarial Audit Report from Practicing Company Secretary. M/s. Rathi and Associates, Company Secretaries had been appointed to issue Secretarial Audit Report for the financial year 2017-18.

secretarial Audit Report issued by M/s. Rathi and Associates, Company Secretaries in Form MR-3 for the financial year 2017-18 forms part to this report and the same is attached as Annexure - IV. The said report does not contain any qualification, reservation or adverse remark and therefore do not call for any further explanation or comments from the Board of Directors under Section 134(3) of the Companies Act, 2013.

c. COST AUDITORS:

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications/ Circulars issued by the Ministry of Corporate Affairs from time to time and as per the recommendation of the Audit Committee, the Board of Directors at their meeting held on 28th May, 2018, appointed M/s. Ashok Agarwal & Co, Cost Accountants, as the Cost Auditors of the Company for the financial year 201819. The remuneration proposed to be paid to the Cost Auditor, subject to the ratification by the members at the ensuing AGM would not be exceeding '' 5,75,000/-(Rupees Five Lakh Seventy Five Thousand only) plus reimbursement of out of pocket expenses plus applicable taxes, if any. The Cost Audit Report will be filed within the stipulated period of 180 days from the closure of the financial year.

5. OTHER DISCLOSURES

A) OTHER DISCLOSURES AS PER PROVISIONS OF SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ACCOUNTS) RULES, 2014 ARE FURNISHED AS UNDER:

a. EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)

(a) of the Companies Act, 2013, extract of the Annual Return for the financial year ended 31st March, 2018 made under the provisions of Section 92(3) of the Companies Act, 2013 is attached as Annexure -V which forms part of this Report.

b. A ONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

B he particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure - VI which forms part of this Report.

c. RELATED PARTY TRANSACTIONS:

During the financial year 2017-18, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014 and any amendment thereof, which were in the ordinary course of business and on arms'' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued there under and Regulation 34(3) and 53(f) and Schedule V of SEBI (LODR). During the financial year 2017-18, there were no transactions with related parties which qualify as material transactions under the applicable provisions of Companies Act, 2013 and SEBI (LODR).

* Includes provident fund of Rs, 665,520/-

d. A ORPORATE GOVERNANCE: (Applicable to Companies giving remuneration as per Section II of Schedule V):

Particulars

Rajan Gupta

All elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc. of all the directors (Applicable only in case of Managing Director)

Rs, 21,916,092*

Details of fixed component and performance linked incentives along with the performance

Fixed: Rs, 19,853,092*

criteria

Variable: Rs, 2,063,000

Service contracts, notice period, severance fees

-

Stock option details, if any and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable

-

B) BUSINESS RESPONSIBILITY REPORT

As stated under Regulation 34(2)(f) of SEBI (LODR), since the Company falls under top 500 listed entities based on market capitalisation, as on 31st March, 2018, your Company is required to prepare the Business Responsibility Report covering key principles on areas like environment, social, governance, stakeholders'' relationships etc. and should form part of the Annual Report. As per SEBI''s Press Release No. 283/2015, the Business Responsibility Report can be given on the website of the Company, as a green initiative and a website link for the same can be given in Annual Report.

I n accordance with the aforesaid, your Company has published the Business Responsibility Report on its website which can be accessed through web link http://www.Hath way.com/About/AnnualReport

6. GENERAL:

Aour 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:

1. Details relating to deposits covered under Chapter V of the Companies Act, 2013.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014.

3. Issue of sweat equity shares to employees of the Company as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014.

4. Issue of equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014.

5. Instances of exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.

6. Payment of remuneration or commission from any of its holding or subsidiary companies to the Managing Director of the Company.

7. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

8. A assess filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

9. B here were no frauds reported by the auditor of the Company pursuant to sub-section 12 of section 143 of the Companies Act, 2013.

7. ACKNOWLEDGEMENTS AND APPRECIATION:

Aour Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/ associates, financial institutions, Regulatory bodies and Central and State Governments for their consistent support and encouragement to the Company.

For and on behalf of the Board

Rajan Gupta Vinayak Aggarwal

Place : Mumbai Managing Director Director

Date : 28th May, 2018 DIN 07603128 DIN 00007280

Registered Office

Rahejas, 4th Floor, Corner of Main Avenue & V. P. Road,

Santacruz West, Mumbai 400054

CIN: L64204MH1959PLC011421

Tel No. 022-26001306 Fax No. 022-26001307

Mail: info@Hath way.net

website: www.Hath way.com

Director’s Report