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Life Insurance Corporation of India

Moneycontrol

Budget 2022

Associate Partners:

  • Kotak Mutual Fund
  • Pharmeasy
  • Indiabulls
  • SBI

Presenting Partner

Life Insurance Corporation of India

Moneycontrol

Budget 2022

Technology Partner

Dell Technologies

Associate Partners

Kotak Mutual Fund
Pharmeasy
Indiabulls
SBI
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NELCO Ltd.

BSE: 504112 | NSE: NELCO |

Shares falling in the `Trade-to-Trade` or `T-segment` are traded in this series and no intraday is allowed. This means trades can only be settled by accepting or giving the delivery of shares.
Series: BE | ISIN: INE045B01015 | SECTOR: Telecommunications - Equipment

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Annual Report

For Year :
2019 2018 2016 2014 2013 2012 2011 2010 2009

Director’s Report

DIRECTORS'' REPORT

To

The Members,

Your directors have pleasure in presenting their Seventy Sixth Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the year ended 31st March 2019.

The Hon''ble National Company Law Tribunal (NCLT), Mumbai Bench has approved, the Composite Scheme of Arrangement and Amalgamation (Scheme) involving the internal restructuring of the various businesses of the Company and its two wholly owned subsidiaries viz. Tatanet Services Ltd. (TNSL) and Nelco Network Products Ltd.(NNPL). The necessary steps for obtaining approvals from Department of Telecommunications (DoT) are being taken after which the Scheme will become effective. In the first phase of the Scheme, Nelco will transfer its two businesses to NNPL on a going concern basis by way of slump sale. These businesses are (a) ISSS and (b) sale and maintenance of VSAT and related equipment. In the second phase, TNSL will amalgamate with Nelco. Post the said restructuring, the VSAT Communication service business will be in Nelco, which is the listed parent entity and the related equipment business will be in NNPL. The VSAT license will be transferred from TNSL to Nelco.

1. Financial Results

Pending the DoT approval, the Scheme has not been given effect to in the financial results for the year ended 31st March 2019.

(Rs, in lakhs)

Sr.

No.

Particulars

Standalone

Consolidated

FY 2018-19

FY 2017-18

FY 2018-19

FY 2017-18

A

Continuing Operations

a

Net Sales / Income from Other Operations

3,357

3,190

19,101

14,961

b

Operating Expenditure

2,914

3,064

15,502

12,448

c

Operating Profit

443

126

3,599

2,513

d

Add:- Other Income

245

290

428

494

e

Less:- Finance Cost

439

478

738

593

f

Profit before Depreciation and Tax

249

(62)

3,289

2,414

g

Less :- Depreciation / Amortization/ Impairment

93

61

1,296

949

h

Less : Minority Interest

-

-

-

-

i

Add : Share of Profit of Associates

-

-

9

57

j

Net Profit / (Loss) after Minority interest and Share of Profit of Associates

156

(123)

2,002

1,522

k

Exceptional items

-

-

-

-

l

Current / Deferred Tax Expenses

(779)

-

(227)

311

m

Net Profit / (Loss) after Tax, Minority interest and Share of Profit of Associates from Continuing operations

935

(123)

2,229

1,211

B

Discontinuing Operations1 (being transferred to Wholly Owned Subsidiary)

n

Profit from Discontinuing operations (before exceptional item and tax)

1,192

1,274

-

-

o

Add:- Exceptional Profit

-

-

-

-

p

Tax Expenses

355

174

-

-

q

Profit after Tax from Discontinuing operations

837

1100

-

-

C

Profit after tax from Total operations

1,772

977

2,229

1,211

r

Add : Other Comprehensive Income/ (expenses)

(21)

(18)

(22)

(21)

s

Total Comprehensive Income

1,751

959

2,207

1,190

Operations that are being transferred to Nelco Network Products Ltd. (Wholly Owned Subsidiary) as a part of internal restructuring.

2. Dividend

Based on the Company''s performance, the Directors are pleased to recommend for approval of the Members a dividend of 15% ('' 1.50 per share of ''10/- each) for FY2018-19.

3. Financial Performance and the state of the Company''s affairs

3.1 Standalone

On a Standalone basis, your Company achieved revenue of Rs, 3,357 Lakhs in FY 2018-19 from Continuing Operations as against Rs, 3,190 Lakhs in FY 2017-18. On a total operation basis, your Company achieved revenue of Rs, 12,632 Lakhs in FY 2018-19 as against Rs, 9,363 Lakhs in FY 2017-18.

In FY 2018-19 the Company earned a net profit after tax of Rs, 1,772 Lakhs from total operations as against profit of Rs, 977 Lakhs in FY 2017-18. This profit was higher due to higher margin in service income of VSAT division, reduction of losses in Automation & Control division and reduction in interest expenses.

Profit from Discontinuing Operations are calculated considering the direct cost of those Operations and interest on identifiable loans that are being transferred under the Scheme. The entire corporate overheads are considered part of Continuing Operations.

3.2 Consolidated

On a Consolidated basis, revenue from Operations was Rs, 19,101 Lakhs in FY 2018-19 as against Rs, 14,961 Lakhs in FY 2017-18 i.e. increase by 28% over previous year.

The segment wise performance (Consolidated) from total operations for the year was as follows:

The revenue from Automation & Control segment was Rs, 361 Lakhs in FY 2018-19 as against Rs, 243 Lakhs in FY 2017-18. The segment loss was Rs, 284 Lakhs in FY 2018-19 as against loss of Rs, 340 Lakhs in FY 2017-18. This segment is being operated on a restricted mode and currently completing only its existing contractual obligations.

The revenue from Network Systems segment was Rs, 18,740 Lakhs in FY 2018-19 as against Rs, 14,718 Lakhs in FY 2017

18. The segment profit was Rs, 4,119 Lakhs in FY 2018-19 as against profit of Rs, 3,633 Lakhs in FY 2017-18.

The Company added 23,844 VSATs during FY 2018-19 and the installed base is approximately 71,500 as on 31st March 2018.

The Company earned a net profit after tax of Rs, 2,229 Lakhs from total operations as against profit of Rs, 1,211 Lakhs in FY 2017-18. There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the year under review and the date of this Report.

3.3 Operations

The Consolidated revenue (% wise) from each segment was as under:

FY2018-19

FY2017-18

Network Systems comprising of VSAT and SATCOM business

98.11%

98.38%

Automation & Control

1.89%

1.62%

Further information in detail has been given in the Management Discussion & Analysis which forms a part of this report.

4. Reserves

The Board of Directors has not proposed any amount for transfer to reserves for the year ended 31st March 2019.

5. Subsidiary and Associate Company

5.1 The Company has two wholly owned subsidiaries viz. Tatanet Services Ltd. (TNSL) & Nelco Network Products Ltd. (NNPL) and one Associate Company i.e. Nelito Systems Ltd. (NSL).

TNSL holds the VSAT License as well as the Inflight & Maritime Communication (IFMC) licence issued by Department of Telecommunication (DoT). The Revenue of TNSL for FY 2018-19 was Rs, 9,827 Lakhs against Rs, 8,788 Lakhs for FY 2017-18. The Profit after tax was Rs, 468 Lakhs against Rs, 211 Lakhs in the previous year. The profit was higher mainly due to increase in overall turnover of the Company against increase in cost.

5.2 The organizational and operational structure would be simplified on implementation of the Scheme of Arrangement and Amalgamation with the VSAT communication service business vesting in the Company, the flagship listed parent entity and the related hardware business vesting in NNPL. This would result in the recurring revenue from VSAT communication service being in the Company and the revenue from sale of hardware including VSAT equipment being in NNPL. The enhanced net worth of the Company after the Scheme is effective will improve its ability to bid for larger projects and pursue bigger opportunities. Also, there will be increase in overall efficiency in terms of utilization of assets, employees, etc.

5.3 During the year the National Company Law Tribunal (NCLT) approved the scheme vide its order dated November

2, 2018 (the Scheme). As required by the NCLT Order, the Company intimated the Registrar of the Companies (RoC) about the approval of the Scheme by NCLT, stating that Department of Telecommunications (DoT) approval has been pending. The RoC records were, however, updated to reflect the Scheme as effective and Company as amalgamated with the Nelco Limited. Based on legal advice, the Company has approached NCLT to direct the RoC to amend their records to reinstate Company to its earlier status and cancel the effect of the Scheme with immediate effect. The hearing on this matter is ongoing. The Scheme will be given effect to in the financial statements on receipt of all necessary approvals.

5.4 The Board of Directors of the Company at its meeting held on 21st September, 2018 has decided to exit from Nelito Systems Limited (an Associate Company). Considering the intent of the Board, this investment in the Associate has been classified as ''Assets classified as held for sale'' in accordance with IND AS 105. This decision has an impact on the way Company account for its investment in Associate. The Company has stopped recognizing its share of profit/ loss in Associate and valued its investment in Associate at cost or realizable value whichever is lower.

There has been no major change in business of the aforesaid Companies. Also, none of the existing Subsidiaries or Associates of the previous year ceased to be Subsidiary/ Associate of the Company during the year under review. The report on the performance and financial position of each of the Subsidiaries and Associate Company has been provided in Form AOC-1.

The Policy for determining material subsidiaries of the Company has been provided in the following link: http://www.nelco.in/pdf/Policies/Policy%20for%20determining%20Material%20Subsidiaries.pdf

6. Directors and Key Managerial Personnel

In terms of Section 149 of the Companies Act, 2013 (Act) the Members at the AGM held on 28th January 2015 appointed the following Independent Directors of the Company till 27th January 2020:

- Mr. K.Raghuraman

- Mr. K.Ramachandran

- Ms. Hema Hattangady

In accordance with the requirements of the Act and the Articles of Association of the Company, Mr. R.R. Bhinge, Director retires by rotation at the ensuing AGM and is eligible for re-appointment. Additional information and brief profile as stipulated under SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015 (Listing Regulations) and Secretarial Standards - 2 on General Meetings with respect to Mr. Bhinge being a Director seeking re-appointment is annexed to the Notice of AGM.

On the recommendation of the Nominations, HR & Remuneration Committee, the Board of Directors of the Company approved the appointment of Mr. Rahul Shah as an Additional Director effective from 21st July 2018 who holds the office till the ensuing AGM. His reappointment has been placed for approval of the Members at the ensuing AGM scheduled on 24th July 2019.

Mr. S.Ramakrishnan resigned from the Directorship with effect from 21st July 2018 to facilitate restructuring of the Board as per the advice of The Tata Power Company Ltd., the Holding Company. The Board places on record its deep sense of appreciation of the valuable contribution to the Company made by Mr. Ramakrishnan during his tenure as a Board member.

In terms of Section 203 of the Act, the Board has designated the following persons as Key Managerial Personnel of your Company:

- Mr. RJ. Nath, Managing Director & CEO

- Mr. Uday Banerjee, Chief Financial Officer

- Mr. Girish Kirkinde, Company Secretary & Head-Legal

During the year under review, Nine Board Meetings were held. For further details, please refer Report on Corporate Governance.

The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Act and Listing Regulations.

Governance Guidelines:

The Company has adopted Governance Guidelines on Board Effectiveness. The said Guidelines covers aspects related to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, Director''s term, retirement age and Committees of the Board. It also includes aspects relating to nomination, appointment, induction and development of Directors, Director Remuneration, subsidiary oversight, Code of Conduct, Board Effectiveness Review and mandates of Board Committees.

7. Annual Evaluation of Board Performance and Performance of its Committees and Individual Directors.

As required under the Act and Listing Regulations, the Board has carried out formal annual evaluation of the performance of the Board, its Committees and of individual directors.

The following process was adopted for Board Evaluation:

- Feedback was sought from each Director about his/her views on the performance of the Board covering various criteria such as degree of fulfillment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the Management and efficacy of communication with external stakeholders. The Nominations, HR and Remuneration Committee (NRC) then discussed the above feedback received from all the Directors.

- Based on the inputs received, the Chairman of the NRC also made a presentation to the Independent Directors at their meeting, summarizing the inputs received from the Directors about Board performance, and of the Chairman. The performance of the non-independent non-executive Directors and Board Chairman was also reviewed by them.

- Post the meeting of the Independent Directors, their collective feedback on the performance of the Board (as a whole) was discussed by the Chairman of the NRC with the Chairman of the Board. It was also presented to the Board and a plan for improvement was agreed upon.

- Every statutorily mandated Committee of the Board conducted a self-assessment of its performance and these assessments were presented to the Board for consideration. Areas on which the Committees of the Board were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings. Feedback was provided to the Directors as appropriate. Significant highlights, learning and action points arising out of the evaluation were presented to the Board.

7.1 Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The following substantive Committees constituted by the Board function according to their respective roles and defined scope:

- Audit Committee of Directors

- Nominations, HR and Remuneration Committee (NRC)

- Stakeholders Relationship Committee

- Corporate Social Responsibility Committee

- Executive Committee of the Board

Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance which forms part of the Annual Report.

The details of the familiarization programs for Independent Directors are disclosed on the Company''s website and the web link for the same is: https://www.nelco.in/pdf/Policies/programme-for-familiarisation-development-of-board-members-fy2018-19.pdf

The Board has laid down separate Codes of Conduct for Non-Executive Directors and Senior Management personnel of the Company and the same are posted on the Company''s website. All Board Members and Senior Management personnel have affirmed compliance with the Code of Conduct. The Managing Director & CEO has also confirmed and certified the same. The certification is reproduced at the end of the Report on Corporate Governance.

7.2 Remuneration Policy for the Directors, Key Managerial Personnel and other Employees.

In terms of Section 178(3) of the Act and Part D of Schedule II of Listing Regulations, the NRC is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity, which is reproduced in Annexure-I forming part of this report and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company is available on the websites of the Company at https://www.nelco. in/pdf/Policies/Remuneration%20Policy%20for%20Directors,%20KMP%20and%20Other%20employees.pdf.

Silent Features of this policy are as under:-

- The philosophy for remuneration of Directors, Key Managerial Personnel (KMP) and all other employees of Nelco Ltd. (company) is based on the commitment of fostering a culture of leadership with trust. The remuneration policy is aligned to this philosophy.

- Independent Directors (ID) and non-independent non-executive directors (NED) may be paid sitting fees (for attending the meetings of the Board and of committees of which they may be members) and commission within regulatory limits.

- Overall remuneration should be reflective of size of the company, complexity of the sector/ industry/ company''s operations and the company''s capacity to pay the remuneration.

- The NRC will recommend to the Board the quantum of commission for each director based upon the outcome of the evaluation process which is driven by various factors including attendance and time spent in the Board and committee meetings, individual contributions at the meetings and contributions made by directors other than in meetings.

- The extent of overall remuneration to Managing Director (MD)/ Executive Directors (ED)/ KMP/ rest of the employees should be sufficient to attract and retain talented and qualified individuals suitable for every role.

- The remuneration mix for the MD/ EDs is as per the contract approved by the shareholders.

- In addition to the basic/ fixed salary, the company provides to other KMPs and employees with certain perquisites, allowances and benefits to enable a certain level of lifestyle and to offer scope for savings and tax optimization, where possible and also performance linked bonus.

- Remuneration is payable to Director for services rendered in professional capacity and which NRC is of the opinion that the director possesses requisite qualification for the practice of the profession.

There is no change in the aforesaid policies during the year under review

Except the Performance Linked Payment (PLP) which is a part of his Cost to the Company (CTC), the Managing Director &CEO has neither received any commission from the Company nor from its Holding or Subsidiary Company.

7.3 Particulars of Employees and Remuneration

The information required under Section 197(12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in Annexure - II (A) forming part of this Report.

The information required under Rule 5 (2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in the Annexure II (B) forming pat of this Report. In terms of first proviso to Section 136 of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid Annexure II (B). Any Member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure II (B) is related to any Director of the Company.

8. Significant and material Orders passed by the Regulators or Courts or Tribunal

There were no significant and material orders passed by the Regulators / Courts or Tribunal which would impact the going concern status of the Company and its future operations. Further, no penalties have been levied by Regulators during the year under review.

8.1 Sales Tax matters of Tatanet Services Ltd. (TNSL) Wholly Owned Subsidiary

Maharashtra Sales Tax Department (Dept.) has issued orders against TNSL demanding payment of MVAT on the entire satellite communication services provided by TNSL claiming The facility to use the transponders is a property, is commercial in nature and goods and therefore, transaction of lease of facility to use the transponders is a deemed sale and accordingly MVAT is applicable. The orders issued are for financial year 2006-07 to 2010-11 and aggregate amount under dispute is Rs, 38.36 Crores. The Company filed writ petition in Bombay High Court for the financial year 2008-09. The said Writ Petition was disposed by the Bombay High Court and referred to Maharashtra Sales Tax Tribunal (MSTT) to decide the above-mentioned matter.

MSTT in its order dated 29th April 2017, allowed the appeal of TNSL and set aside the demand of the Dept. made for financial year 2008-09. However, the Dept. has filed appeal in Bombay High Court against the order passed by MSTT for the year 2008-09.

Since, the facts of the above matter are similar for other financial years viz. 2006-07, 2007-08, 2009-10 and 2010-11, the Joint Commissioner of Sales Tax (JCST) has passed order against the Company demanding payment of MVAT for these financial years also. The Company has filed Appeals to MSTT against the said orders of JCST.

8.2 Income Tax matters of Nelco Ltd

Income Tax Department has reduced certain liabilities of Rs, 1,893 Lakhs while computing long term Capital Gain on a business sold under slump sale for Assessment Year 2011-12, due to which a Tax demand of Rs, 631 Lakhs has been raised on the Company. The said liabilities are not directly related to the businesses sold and as such the Company has gone in appeal against the demand. During the year, Company has received order from CIT(Appeals) rejecting claims of the Company and confirming tax demand. Company is in process of filling appeal against order of the CIT(Appeals).

8.3 Corporate Governance

Pursuant to Listing Regulations and relevant provisions of the Act, a Management Discussion and Analysis Statement, Report on Corporate Governance and Auditors'' Certificate are included in the Annual Report.

8.4 Vigil Mechanism

The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. In line with the Tata Code of Conduct (TCOC), any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the TCOC cannot be undermined.

Pursuant to Section 177(9) of the Act, a vigil mechanism has been established for Directors and employees to report to the management the instances of unethical behavior, actual or suspected, fraud or violation of the Company''s code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chief Ethics Counsellor (CEC) as well as the Chairman of the Audit Committee of the Company.

9. Risks and Concerns

The Company is faced with risks of different types, all of which need different approaches for mitigation. Details of various risks faced by the Company are provided in Management Discussion & Analysis.

9.1 Risk Management Framework and Internal Financial Controls

Risk Management framework: The Company and its Subsidiary have Risk Management framework to inform the Audit Committee and Board members about risk assessment and minimization procedures and periodical review to ensure that Executive Management controls risks by means of properly designed framework.

The Company has also established a risk management policy based on which risks are identified and assessed across its businesses. The Risk Management Committee which comprises of the CEO, CFO, Senior Lead -Business Analytics and Risk Management and key business and operations heads, ensures that existing and future risk exposures of the Company are identified, assessed, quantified, minimized, managed and appropriately mitigated. The Company''s framework of risk management process provides clear basis for informed decision making at all levels of the organization on an ongoing basis, having duly evaluated likely risks and their mitigation plans being controllable and within risk appetite of the Company. There are no elements of risk, which in the opinion of the Board may threaten the existence of the Company.

Internal Financial Control and Systems: The Company has an internal control system, commensurate with its size, scale, nature and complexity of its operations. The Company has appointed independent Chartered Accountant firm as Internal Auditors who audits governance, risks management and internal controls and processes. The Internal Auditors present their findings to the Audit Committee. Testing of Internal Financials Controls also form a part of internal audit schedule. The scope and authority of internal audit is defined in Audit Committee Charter adopted by the Company.

As per the Audit Committee Charter adopted by the Board and as per provisions of Section 177 of the Companies Act, 2013 (the Act) one of the responsibilities of the Audit Committee is to review the effectiveness of the Company''s Internal control system, including Internal Financial Controls. Internal controls have been discussed in detail in Management Discussion & Analysis in this report.

Process Robustness: The Company assesses the process maturity and robustness for its key functions on the following:

- Process documentation and workflow

- Process measures and controls (manual/system driven) including maker - checker mechanisms

- Performance tracking for key measures/metrics

- Initiatives taken for process improvements

The Company also carries out internal audits and process deep-dives through external agencies to establish and improve efficiency and effectiveness of processes in various key functions. In addition, the statutory auditors carry out an audit at quarterly intervals and these reports have not reported any adverse findings.

10. Sustainability

10.1 Corporate Social Responsibility

Your Company has formed a CSR committee comprising of the following Directors:

Mr. R. R. Bhinge, Chairman Mrs. Hema Hattangady and Mr. P J. Nath

As the Company during the year under review has not earned net profit calculated as defined in Section 198 of the Act., it is not mandatorily required to spend any amount on CSR activity. However, as a good Corporate practice it has taken a project which involve installing 15 VSATs in identified schools in some remote areas, which will be used for downloading educational content during off-peak hours at night. The Company has formulated the policy on CSR which is available on Company''s websites: https://www.nelco.in/pdf/Policies/CSR%20Policy.pdf.

10.2 Safety, Health and Environment:

Nelco places utmost importance to the Safety agenda. An office Fire Evacuation Drill is regularly conducted covering all staff working at its Mahape office to check emergency preparedness. Existing safety policy, system, roles, site safety inspection and action planning, statutory compliances & records, counsel to Safety Committee & safety promotional activities were taken up with consultation of Occupational Health, Safety & Environment (OHSE) Management consultant. Office safety drawing documentation was completed and training & awareness sessions were conducted periodically. Inspection of Mahape office was conducted by OHS consultant and initial observations were communicated for discussion with Safety Committee and action on gaps monitored on periodic basis. The Occupation Health, Safety and Environment Policy was revised and safety processes & procedures drafted. Safety standards are maintained across all office locations. During National Safety Week, safety training, awareness sessions and promotion campaigns were conducted for Nelco employees, contract staff, suppliers & customers. Free health check-up camp through local hospital, regular health consultation through company doctor and annual health checkup through medical service provider were organized for employees. Proactive initiatives have been taken towards energy conservation and reduction of carbon footprint like conversion of office lighting at Mahape office from conventional to LED, Air Conditioner Refrigerants from R22 to R32, tree plantation, etc.

11. Human Resources

As on 31st March 2019, the Company had employee strength of 166. During the year under review, 41 employees were recruited, and 24 employees were separated.

Various people related initiatives were undertaken by the Company during the year to enable organizational growth through people care and development which include:

- Employee Engagement: Higher employee engagement leads to higher business productivity and Nelco is cognizant of the fact. It conducted the annual employee engagement survey for all permanent employees. It utilises multiple platforms like Voices, Engagement Action Planning, Open House, Employee Connect, HR Connect, Manager connect, Skip level meetings, weekly review meetings like AHM (All Hands Meet) that encourage open communication amongst all employees and allow them to voice their opinion in the Company.

- Reward & Recognition schemes like individual/ team quarterly performance awards, HoD spot awards, Nelco Innovista awards and peer recognition are various ways that the Company recognizes employee contributions.

- Engagement activities are planned based on a calendar and implemented on monthly basis covering all locations. Employee recreation and team-building activities like sports, festivals, picnics and team outings are also planned across locations to ensure employee engagement. As per Maternity Benefit Act, 2017, creche facility has been created at Mahape premises to enable new mothers to manage office work as well as child care as required by them.

- Capability Development: Company focuses on capability building of both functional, managerial and behavioural skills. Innovation in working is encouraged through competitions like Reimagine Nelco, Tata Innovista and Tata Business Leadership Awards, where employees showcase creative ideas/actions in process or technology. Training needs are primarily sourced through performance appraisals with respective managers and through dynamic business requirements. Training programmes are facilitated by both internal and external trainers. . Focused group training was organized to address specific emerging business needs like key account management & solutions selling. e-learning solution was implemented on anytime-anywhere basis to provide instant access to training content to employees and increase training coverage. Effectiveness of training programmes are monitored to ensure achievement of training objectives. Employees were also encouraged to take up relevant educational courses on self-learning basis.

- Performance & Talent Management: Employee performance is monitored through rigorous goal setting and audit, quarterly performance dialogues and developing manager capability on performance coaching. Continuous dialogue is encouraged between managers and their teams. Career discussions with high performers and new promotees were organized. Performance enablement programme was organized for employees whose performance did not meet expectations. Performance coaching workshop for people managers was organized. Development Centre was conducted at TMTC, Pune, focusing on evaluation and development of all its senior leaders based on Tata leadership competencies.

- Succession Planning: Successors and caretakers have been identified for critical positions in the Company to ensure business continuity. Based on the outcome, decisions to hire capable person for specific positions have also been recommended.

- The Company has an instituted Policy on Prevention of Sexual Harassment which seeks to govern guidelines and grievance redressal procedures as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. As per policy, a Complaints Redressal Committee/ Internal Complaints Committee has been formed at Nelco with inclusion of an external lady member. POSH theme training was conducted for employees and allied resources. No complaints related to POSH have been received in the current year.

12. Credit Rating

During the year CARE Ratings has reaffirmed ratings for long term and short-term bank facilities of the Company to CARE A/Stable and CARE 1 respectively.

13. Loans, Guarantees, Securities and Investments (LGSI)

Details of LGSI covered under the provisions of Section 186 of the Act, 2013 are given in Annexure III forming part of this report.

14. Foreign Exchange - Earnings and Outgo.

(Rs, in lakhs)

Particulars - Standalone

Year ended 31st March 2019

Year ended 31st March 2018

Foreign Exchange Earnings

44.31

215.39

Foreign Exchange Outflow

5,367.24

2,302.88

15. Auditors

At the 74th Annual General Meeting (AGM), the Members appointed Price Waterhouse Chartered Accountants LLP, Chartered Accountants (ICAI Firm Registration No. 012754N/N500016) as Statutory Auditors to hold the office for the period of five years from the conclusion of 74th AGM till the conclusion of 79th AGM of the Company to be held in the year 2022 on such remuneration as may mutually agree between the Board of Directors of the Company and the Auditors.

16. Auditors'' Report

The Auditors Report does not contain any qualifications, reservations or adverse remarks. The consolidated financial statements of the Company have been prepared in accordance with Indian Accounting Standard 110 Consolidated Financial Statements, Indian Accounting Standard 28 Accounting in Associates and Joint Ventures and other applicable Indian Accounting Standard prescribed under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 and other provisions of the Companies Act, 2013 as amended from time to time. The Notes to the Accounts referred to in the Auditors'' report are self-explanatory and therefore do not call for any further clarification under section 134(3)(f) of the Act.

During the year under review, neither the statutory auditors nor the secretarial auditors has reported to the Audit committee, under Section 143 (12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s report.

17. Maintenance of cost records

As specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, the Company has made and maintained cost accounts and records.

18. Secretarial Audit Report

M/s. Bhandari & Associates, Practicing Company Secretaries, were appointed as Secretarial Auditors to conduct Secretarial Audit of records and documents of the Company for the year ended 31st March 2019. The Secretarial Audit Report confirms that the Company has generally complied with the provisions of the Act, Rules, Regulations, and Guidelines, etc. The Secretarial Audit Report is given in Annexure - IV forming part of this report. There are no remarks, qualifications or reservations in the Secretarial Audit Report. The Company confirms compliance with the requirements of Secretarial Standards 1 and 2.

19. Conservation of Energy and Technology Absorption

The information on conservation of energy and technology absorption stipulated under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is given in as Annexure - V forming part of this report.

20. Related Party Transactions

All related party transactions entered during the year under review were on an arm''s length basis and were in the ordinary course of business. There were no other materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel and Body Corporate(s) which had a potential conflict with the interest of the Company at large. Accordingly, the disclosure of these Related Party Transactions as required under Section 134 (3) (h) of the Act in Form AOC 2 is not applicable for the year under review. The Directors draw attention of the Members to Note no. 38 to the Financial Statements (Standalone) which sets out related party disclosures.

In line with the requirements of the Act and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has formulated a Policy on Related Party Transactions and the same is available on the Company''s website: https://www.nelco.in/pdf/Policies/Related%20Party%20Transaction%20Policy.pdf

Disclosures of transactions of the listed entity with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity, in the format prescribed in the relevant accounting standards for annual results.

21. Deposits

The Company has not accepted any deposits from the public during the period under review.

22. Extract of Annual Return

Pursuant to Section 92 of the Act and Rule 12 of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9, is given in Annexure-VI forming part of this report. The Annual Return in Form MGT-7 for the year ended 31st March 2018 filed with ROC is uploaded on the Company''s website: https://www. nelco.in/pdf/disclosure-of-events/annual-return.pdf.

23. Directors'' Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost auditors, secretarial auditors and external consultants and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board believes the Company''s internal financial controls were adequate and effective during the period under review.

Accordingly, pursuant to Section 134(5) of the Companies Act 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the annual accounts for the period ended 31st March 2019 the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the Company for the period ended 31st March 2019 and of the profit of the Company for that period;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the accounts for the period under review on a going concern basis;

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

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

24. Acknowledgment

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our Shareholders, Customers, Business Partners, Vendors, Bankers and Financial Institutions. The Directors are thankful to the Government of India and the various Ministries and Regulatory Authorities. We appreciate and value the contributions made by all our employees.

On behalf of the Board of Directors,

R.R. Bhinge

Chairman

Mumbai, 27th April, 2019.

Director’s Report