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iStreet Network Ltd.

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Annual Report

For Year :
2016 2015 2014 2013 2012 2011 2010 2009 2008

Director’s Report

DIRECTORS'' REPORT

To, The Members, iStreet Network Limited

The Directors have pleasure in presenting the Twenty Ninth Annual Report together with the Audited Standalone and Consolidated Financial Statements of the Company for the year ended March 31, 2016.

1. FINANCIAL RESULTS:

Standalone

*Consolidated

Particulars

Rs. in Lakhs

Rs. in Lakhs

March

31,2016

March

31,2015

March 31,2016

Total Revenues

1,862.09

94.87

1,862.70

Total Expenditure

2,135.90

398.55

2,160.50

Earnings before interest, tax, depreciation and amortization (EBITDA)

(273.81)

(303.68)

(297.80)

Other Income (Net)

-

-

-

Finance Cost

-

-

-

Depreciation and amortization expense

15.79

14.28

15.79

Profit/(Loss) before tax from operations

(289.60)

(317.96)

(313.59)

Profit from disposal of assets of discontinued operations

-

260.66

-

Profit /(Loss) before tax

(289.60)

(57.30)

(313.59)

Tax Expense

-

-

-

Net Profit /(Loss) for the year after tax

(289.60)

(57.30)

(313.59)

*There are no corresponding figures for March 31, 2015

The company launched Internet Retail Store concept in January, 2014 and named it as ''iStreet Bazaar'', The Company has set up 5,756 such iStreet Bazaar Stores till 31st March 2016. More details about the concept and spread have been provided in this report in the section Management Discussion and Analysis Report. On standalone basis, Company''s total revenues increased from Rs 94.87 Lakhs in FY 2014-15 to Rs. 1,862.09 Lakhs during the financial year, registering a growth of 1,862 %. Net Loss from operations is decreased from Rs. 317.96 Lakhs in FY 2014-15 to Rs. 289.60 Lakhs during the financial year 2015

16. On consolidated basis, total revenues were Rs. 1,862.70 Lakhs and Net Loss after tax was Rs. 313.59 Lakhs during the financial year.

During the year, in order to expand its business faster and raise resources / funds for this purpose, the Board of Directors in the meeting held on April 29,2015 decided to transfer company''s business to a 100% subsidiary company and accordingly the Company acquired 100% Equity Shares of iStreet Bazaar Private Limited (iSBPL) (100% subsidiary). However, you (members) via Postal Ballot on October 1, 2015 rejected the proposal for transfer of the business to 100% subsidiary. As the proposal of transferring its business to 100% subsidiary didn''t get approval from you, the business continued as usual in the company. Based upon your decision of non subsidiarisation of business, the Board of Director in the meeting held on May 28, 2016 had decided to dispose of its investment in 100% subsidiary - iSBPL. Accordingly, entire investment was disposed off on June 22, 2016 and ISBPL is no longer 100% subsidiary of the company with effect from June 22, 2016. However, iSBPL was 100% subsidiary company as on 31.03.2016, the financials has thus been consolidated.

2. DIVIDEND:

In view of the losses, your Directors do not recommend any dividend during the year.

3. SHARE CAPITAL:

During the year, your Company has allotted 10,75,000 Equity Shares of Rs. 4 each against equal number of Equity warrants on receipt of full payment of Rs 20/- per share from the warrant holders. Consequently, the issued, subscribed and paid up capital has increased from Rs. 8,01,00,000 shares to Rs. 8,44,00,000 as on March 31, 2016. The money has been utilized for the purpose of which it was raised.

4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given hereinafter and forms part of this Annual Report.

5. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the year Ms. Meethu Malu (DIN: 07074018), Woman Director (Non - Executive Non-Independent category) and Mr. Naval Choudhary (DIN: 00192164), Independent Director were regularized in the 28th AGM. In accordance with the provisions of Section 152 of the Companies Act,2013 Ms. Meethu Malu, Director retires by rotation at the forthcoming Annual General Meeting and, being eligible offers herself for re-appointment for the consideration of the Members of the Company at the ensuing Annual General Meeting.

Board Evaluation: Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the formal annual evaluation was carried out for the Board''s own performance, its committee & Individual directors. The manner and detail in which evaluation was carried out is explained in the Corporate Governance Report.

Remuneration and Nomination Policy: The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board Members. The details of this policy are explained in the Corporate Governance Report. The ratio of Managerial Remuneration to that of median remuneration along with other prescribed details are annexed herewith as “Annexure -1

Meetings: During the year ten Board Meetings (other than Meeting of Independent Directors) were convened and held, details of which are given in the Corporate Governance Report which is annexed to this report and forms a part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act,2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015.

Independent Directors affirmation: The Company has received the necessary declaration from each Independent Director, in accordance with Section 149(7) of the Companies Act, 2013, that they met the criteria of independence as laid out in subsection (6) of Section 149 of the Companies Act, 2013.

Familiarization Programmes for Independent Directors:

The Company has put in place a system to familiarize its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarization programmes are put up on the website of the Company at http://istreetnetwork.com/wp-content/uploads/2015/04/Familarisation-prog.pdf

Key Managerial Personnel: During the year, Ms. Ruchi Seksaria resigned as Company Secretary of the Company w.e.f April

30,2016. The Directors place on record their appreciation for the contribution made by her during her tenure. The Board at its Meeting held on April 30,2016 has appointed Mr. Dipankar Basu as Company Secretary.

6. DIRECTORS RESPONSIBILITY STATEMENT:

Based on the framework of internal financial controls established and maintained by the Company, reviews performed by Management in concurrence with the Audit Committee, is of the opinion that the Company''s internal financial controls were adequate and effective as on 31 March, 2016.

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(ii) 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;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the annual accounts on a going concern basis;

(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(vi) there is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

7. WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy with a view to provide vigil mechanism to Directors, employees and other stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct policy. The Whistle Blower Policy also states that this mechanism should also provide for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy has been posted on the website of the Company and the details of the same are explained in the Report on Corporate Governance forming part of this Annual Report. The Whistle blower Policy is available at the website of the Company http://istreetnetwork.com/wp-content/uploads/2013/08/Whistleblower-Policy.pdf

8. SUBSIDIARY DETAILS AND FINANCIAL PERFORMANCE:

During the year, in order to expand its business faster and raise resources / funds for this purpose, the Board of Directors in the meeting held on April 29,2015 decided to transfer company''s business to a 100% subsidiary company and accordingly the Company acquired 100% Equity Shares of iStreet Bazaar Private Limited (iSBPL) (100% subsidiary). However, members via Postal Ballot on October 1, 2015 rejected the proposal for transfer of the business to 100% subsidiary. As the proposal of transferring its business to 100% subsidiary didn''t get approval from you, the business continued as usual in the company. Based upon your decision of non subsidiarisation of business, the Board of Director in the meeting held on May 28, 2016 had decided to dispose of its investment in 100% subsidiary - iSBPL. Accordingly, entire investment was disposed off on June 22, 2016 and ISBPL is no longer 100% subsidiary of the company with effect from June 22, 2016. However, iSBPL was 100% subsidiary company as on 31.03.2016, the financials has thus been consolidated. The Gross Revenue of the iSBPL for FY 15-16 stood at 0.61 Lakh and incurred a loss of Rs. 23.99 Lakhs.

9. MATERIAL CHANGES AND COMMITMENTS AFTER THE DATE OF FINANCIAL STATEMENTS:

There were no material changes and commitments occurred between the date of financial statements and the Board''s Report that may affect the financial position of the Company.

10. INTERNAL FINANCIAL CONTROL SYSTEM:

The Companies Act, 2013 has mandated the Company to have a formal framework of Internal Financial Controls (IFC) and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC.

The financial control system and framework is required to ensure:

- The orderly and efficient conduct of its business,

- Safeguarding of its assets,

- The prevention and detection of frauds and errors,

- The accuracy and completeness of the accounting records and

- The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective actions where weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls and Information Technology environment. Based on this evaluation, no significant events had come to notice during the year that have materially affected, or are reasonably likely to materially affect, our IFC. The Management has also come to a conclusion that the IFC and other financial reporting was effective during the year and is adequate considering the business operations of the Company.

The Statutory Auditors of the Company has audited the IFC over Financial Reporting and their Audit Report is annexed as Annexure - A to the Independent Auditors'' Report under Consolidated Financial Statements and as Annexure- B to the Standalone Financial Statements.

11. RISK MANAGEMENT:

Risk management is embedded in your Company''s operating framework. Your Company believes that managing risks helps in maximizing returns. The Company''s approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. Some of the identified risks are related to adoption of the new and innovative business concept by the consumers and retailers, capabilities of our network partners to deliver the desired experience to the customers, not able to raise resources and funds for reaching to a sustainable level of business etc.

12. DISCLOSURE UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013:

The Company has a ''Prevention of Sexual Harassment Policy ''in force in terms of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees will deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature.. There were no complaints pending for the redressal at the beginning of the year and no complaints received during the financial year.

13. RELATED PARTY TRANSACTIONS:

There was no related party transactions entered between the Company, Directors, management, or their relatives except for those disclosed in the financial statements and all such transactions were well within the approved / prescribed limits All the contracts/arrangements/transactions entered into by the Company with the related parties during the financial year 2015-16 were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material, requiring approval of the Board/ shareholders, in accordance with the policy of the Company on materiality of related party transactions. The policy on Related Party Transactions as approved by the Board is available on website of the Company at http://istreetnetwork.com/wp-content/uploads/2013/08/Related-party-transcation-policy.pdf. The details of related party disclosure form a part of the notes to the financial statements provided in the annual report.

As the company is expanding its business, it may be necessary to bring in or to deal / transact with related parties to utilize their respective strength and therefore, a fresh approval is being sought from you in the forthcoming Annual General Meeting (For details, please refer to the Notice of 29th Annual General Meeting available here).

14. PUBLIC DEPOSITS:

During the year, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2016.

15. MATERIAL ORDERS PASSED BY THE REGULATORY AUTHORITIES OR COURT:

There are no significant material order passed by the regulators/courts which can impact the going concern status of the Company and its future operations.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Particulars of loans, guarantees and investments have been disclosed in the financial statements.

17. CONSOLIDATED FINANCIAL STATEMENTS:

The Consolidated Financial Statements of the Company are prepared in accordance with relevant Accounting Standards viz. AS-21, AS-23 and AS-27 issued by the Institute of Chartered Accountants of India and forms an integral part of this Report. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiaries/Associate Companies/Joint Ventures is given in Form AOC-1 and forms an integral part of this Report Annexure 2.

18. COMMITTEES OF THE BOARD:

The Board of Directors has the following Committees:

(i) Audit Committee

(ii) Remuneration and Nomination Committee

(iii) Stakeholders'' Relationship Committee

The details of the Committees along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance Report.

19. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9, as required under Section 92 of the Companies Act, 2013, are annexed as Annexure - 3 and form an integral part of this Report.

20. LISTING:

The Shares of the Company will continue to be listed on the Bombay Stock Exchange (the BSE Ltd.) situated at Phiroze Jeejeebhoy Towers, 25th Floor, Dalal Street, Mumbai - 400 001. The Company has paid the listing fees up to the financial year 2016-17.

21. CORPORATE GOVERNANCE:

The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider management and is further maintained across the entire functioning of the Company. The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI. The report on Corporate Governance for the financial year ended March 31, 2016, as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms a part of this Annual Report. The requisite Certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance annexed herewith as “Annexure - 4

22. CERTIFICATION:

The CEO and CFO certification on the financial statement is annexed hereto as “Annexure- 5

23. SECRETARIAL AUDIT:

Pursuant provisions of section 204 of the Companies Act 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s Dilip Bharadiya & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as “Annexure - 6 and forms an integral part of this Report.

24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

(a) Consumption of Energy : Not Applicable

We consume only Electricity for maintaining office and our systems.

(b) Technology Absorption. Research & Development (R&D)

(i) Technology imported and absorbed. : We build process of consuming technology internally and also by

the common people of India. Most of the technology development is outsourced and also available through open source. Technology is more towards building ecommerce platform (front end) and back end process.

(ii) Expenditure on R&D : We continuously innovate our business processes to improve

user experience and bring in ease of operation, automation, cost effectiveness and higher productivity. However, though such expenditure are incurred on regular basis but not identified as R&D expenses hence considered as NIL (Previous year Nil)

(c) Foreign exchange earnings and outgo

(i) Foreign exchange earnings : Nil (Previous year Nil)

(ii) Foreign exchange outgo : Rs. 4,60,628 (Previous year Rs. 2,40,415)

25. GREEN INITITAVTIES:

Electronic copies of the Annual Report 2015-16 and Notice of the 29th Annual are sent to all members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their email address, physical copies are sent in the permitted mode.

26. STATUTORY AUDITORS:

At the AGM held on September 23, 2015, the Members approved the appointment of M/s. Jhawar Mantri & Associates, Chartered Accountants, bearing Firm Registration No. 113221W as statutory auditors for a period of two years commencing from the Twenty-Eighth AGM till the conclusion of the Thirtieth AGM subject to ratification by members every year. As recommended by the Audit Committee the Board has proposed the ratification of appointment of M/s. Jhawar Mantri & Associates Chartered Accountants, bearing Firm Registration No. 113221W as statutory auditors for the Financial Year 2016

17. Their appointment is accordingly proposed in the Notice of the forthcoming AGM vide item No.3 for ratification by Members.

27. EXPLANATION OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE:

The reports of Statutory Auditor and Secretarial Auditor are free from any qualification, reservation or adverse remark or disclaimer.

28. INFORMATION PURSUANT TO SECTION 134(3) OF THE COMPANIES ACT, 2013:

The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to the Company as Company has not employed any employees who was receiving remuneration of Rs.60,00,000/- p.a. or Rs. 5,00.000/- p.m. if employed part of the year.

29. ACKNOWLEDGEMENTS:

We thank our network partners, customers, vendors, service providers, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all level. Our growth was made possible by their hard work, solidarity, cooperation and support and believing in us and in themselves that they were ''game changers''.

30. CAUTIONARY STATEMENT:

Statement in this report, particularly those which relate to Management Discussion and Analysis, describing company''s objectives, projections, future outlook, estimates and expectations may constitute forward looking statement within the meaning of applicable laws and regulations and actual results might differ.

For and on Behalf of Board of Directors

Pradeep Malu Sanjeev Chhajed

Date : August 17, 2016 Managing Director Director

Place : Mumbai DIN: 00001959 DIN:02849462

Director’s Report