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Redington (India) Directors Report, Redington Reports by Directors
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Redington (India)

BSE: 532805|NSE: REDINGTON|ISIN: INE891D01026|SECTOR: Computers - Hardware
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Directors Report Year End : Mar '19    Mar 18

To the Members,

The Directors are pleased to present their Twenty Sixth Annual Report together with the Audited Financial Statements of the Company for the Financial Year ended on March 31, 2019.

The Directors feel that it is appropriate to present the consolidated financial performance of the Company in the manner set out below:

(Figures in Rs. /Crore)

2018-19

2017-18

Particulars

India

Consolidated

Overseas

Consolidated

Total

Consolidated

India

Consolidated

Overseas

Consolidated

Total

Consolidated

Revenue from operations

17,021.0

29,515.2

46,536.2

15,025.5

26,577.1

41,602.6

Other Income

47.8

15.4

63.2

24.4

14.7

39.1

Total Revenue

17,068.8

29,530.6

46,599.4

15,049.9

26,591.8

41,641.7

Total Expenses:

a) Cost of goods sold

15,841.5

27,971.3

43,812.8

13,920.7

25,279.1

39,199.8

b) Employee Benefits

201.2

523.0

724.2

187.0

466.0

653.0

c) Other Expenses

622.9

477.6

1,100.5

522.1

411.3

933.4

Profit before Interest, Depreciation and Tax

403.2

558.7

961.9

420.1

435.4

855.5

a) Interest Expenses

128.8

75.4

204.2

101.1

66.9

168.0

b) Depreciation & Amortization Expenses

21.8

41.6

63.4

20.9

36.0

56.9

Profit before Tax and exceptional item

252.6

441.7

694.3

298.1

332.5

630.6

Exceptional item - Impairment of goodwill and other intangibles

-

71.1

71.1

-

-

-

Profit before Tax

252.6

370.6

623.2

298.1

332.5

630.6

Tax Expense

87.0

51.9

138.9

104.7

41.5

146.2

Minority Interest

1.2

(24.7)

(23.5)

1.1

1.7

2.8

Profit after Tax

164.4

343.4

507.8

192.3

289.3

481.6

Your Directors have made the following appropriations out of the standalone profits of the Company:

(Rs. in Crore)

Surplus in the Standalone Statement of Profit and Loss

Balance as per the last Balance Sheet as on March 31, 2018

1,162.98

Less: Expenses relating to buyback of Equity Shares

(2.29)

Profit for the Financial Year 2018-19

152.14

Sub total

1,312.83

Less: Appropriations

Final Dividend paid (FY 2017-18)

96.04

Dividend Distribution Tax on Dividend paid 1

15.92

Balance at the end of the year as on March 31, 2019

1,200.87

* Net of the Dividend Distribution Tax credit of Rs. 3.81 Crore on account of dividend received from subsidiary companies.

FINANCIAL PERFORMANCE OF THE COMPANY

The Standalone and Consolidated Financial Statements of the Company for the Financial Year 2018-19 have been prepared in accordance with the Indian Accounting Standards (Ind AS) as required under the Companies Act, 2013.

The consolidated revenue of your Company was Rs. 46,599.4 Crore as against Rs. 41,641.7 Crore in the previous year registering a growth of 12 %, while the consolidated net profit for the year grew by 5 % to Rs. 507.8 Crore for 2018-19 as against Rs. 481.6 Crore in the previous year.

The Earnings Per Share (EPS) on a consolidated basis (based on weighted average number of shares during the year) increased to Rs. 12.8 for the year under review as compared to Rs. 12.0 for the previous year.

A detailed analysis on the financial performance of the Company is given as part of the Management Discussion and Analysis report, which forms part of this report.

Statement on the salient features of the financial statements of Subsidiaries and Associate Companies in the prescribed Form AOC 1 is appended as part of this report. The details of the subsidiaries incorporated/acquired during the financial year under review are given as part of notes to the consolidated financial statements.

Dividend

To commemorate the 25 years of Company being in Distribution business and considering the continued good performance, the board recommended approximately 25% of the consolidated profits as final dividend. The Final dividend recommended is Rs. 3.30 per share (i.e. 165% of the Face Value) for the year ended March 31, 2019 as compared to Rs. 2.40 per share (i.e. 120% of the Face Value) for the previous year.

INDIAN OPERATIONS

INFORMATION TECHNOLOGY PRODUCTS

Compute and Print

While the PC still remains a primary device for both content creation and content consumption, during this decade, its primacy, especially in the content consumption space has been sharply eroded by the explosive increase in the use of large screen Smart Phones.

Lack of Broadband connectivity in tier-3 & tier-4 cities and slow pace of adoption of non-mobility technology outside the metros and large cities have resulted in a stagnant PC penetration ratios. Increase in product life-cycle span has also resulted in reduced traction in PC demand.

It is therefore significant that your company’s deep understanding of the industry nuances and strong engagement with major PC brands enabled it to effectively leverage two key customer segments. The Education sector, driven by growth in technology-based digital education, was the most significant growth engine for consumer PC products and gave the much-needed buoyancy to the industry. The growing popularity of internet gaming is driving growth of PCs as gaming devices. Recognizing a potential growth, vendors have started offering customers broader choice of products. Experience in distributing Microsoft’s X-Box gaming solutions has helped your Company develop a focused “Go To Market” strategy for Gaming PCs.

Stagnant/falling unit sales have been somewhat offset by the growing preference of Indian consumers for high-end personal computing machines. Consequent increase in Average Selling price (ASP) helped boost your company’s revenue in the PC segment during FY 18-19.

Your Company’s strong engagement with e-commerce companies has helped it take advantage of this GTM opportunity whose growth has been fuelled by “ease of buying experience” and attractive schemes involving “cash-back” and “interest-free EMI” options.

In Commercial computing space, your Company outpaced the Industry’s moderate growth through strong engagements with vendors & partners who focused on Government, BFSI and Enterprise sectors. A finely tuned strategy of selective engagement for large projects, while aggressively targeting business in the SMB segment allowed your Company to strike an optimum balance between risk-prudence and revenue growth.

The last fiscal was for your Company in the Print & Print Consumable business. Your Company strengthened its Print portfolio by adding Canon as a new vendor. Alignment with technology trends in the Print segment allowed it to take advantage of the rapid growth in the demand for “Ink-tank” based printers, which offer consumers very low-cost print options.

Enterprise and Infrastructure

Demonstrating a good alignment with the prevailing demand environment, your Company exploited opportunities thrown up by the Central Government’s and PSUs’ focus on digitalization, net-based services and its ever-increasing adoption of technology for back-end and public interface functions.

The BFSI vertical continued its investment on technology refresh, driven by the need to have robust IT systems and databases, high-level Cyber Security systems and increased multi-channel data traffic from their users. Your Company’s has strong relationship with BFSI focused partners and this helped it access revenue gains in this growth segment.

In contrast, the Telecom vertical - a major customer for IT products & solutions in the past, displayed reluctance in Capex decisions, resulting in muted demand. This can be attributed to stagnant revenues, worsened by cut-throat price competition, resulting in sharply falling “Average Revenue Per User” (ARPU).

The Manufacturing sector too failed to take off in spite of the Government’s strong intention to promote “Make in India”. Customers in this vertical tended to defer investments in IT infrastructure. There was some upswing in the second half of the fiscal year and this offers promise for the coming fiscal.

MOBILITY

The Indian consumer’s demand for Mobile phone continued unabated, although the pace of growth did witness a degree of moderation. A steady decrease in prices of Smart Phones led to this category growing at a faster pace compared to the feature phones.

The explosion in the use of social media and Mobile apps has converted Smart phones into an essential part of everyday life, cutting across demographic segments and social strata.

The traditional brick-and-mortar stores faced increasing challenges in maintaining their business viability. In the latter part of the year, the introduction of e-Commerce business guidelines by the Government was an attempt towards levelling the playing field to some extent. The offline channel still remains the strongest GTM for most brands and the eco-system will develop a balance which will allow both online and offline stores co-exist, just like the traditional retail stores have maintained their viability despite the expansion of Large Format Retail stores in the country.

The mobile phone industry, which depends on large scale imports of finished goods, faces unique challenges in the light of Government’s initiative to push for local manufacturing in India. Increase in import duty of mobile phones, coupled with a weakening rupee has impacted the businesses of most brands outside the Top 5.

The overall smartphone average selling price remained flat, with products in the USD 100 - 200 price bracket accounting for more than half of the smartphone market in India. The premium end of the market (above USD 500/- price range), though constituting only 3% of the overall demand, showed the fastest growth.

For your Company, the Mobility segment contributed nearly 19% of the annual revenue for India business. Your Company maintained its strong engagement with premium vendors like Apple, Google and Samsung. Apple India’s GTM for the Indian market witnessed significant changes with the vendor deciding to consolidate the Distribution space. By the end of the last fiscal, your Company remained one of the two distribution partners for Apple and this helped your Company grow its revenues significantly in this portfolio.

Your company remains Google’s key distributor in India for its Pixel brand of smartphones and strengthened its engagement with the vendor during the year gone by.

Your company continued to grow its engagement and market share with Samsung and is a major distributor in the B2B space.

EMERGING BUSINESS

Health & Medical Equipment

The year, FY 2018-19 witnessed your Company’s growing presence in multiple areas of care and therapy.

While your Company strengthened its foothold with imaging, respiratory and homecare products, key new vendor contracts won in the area of critical care and diagnostics helped your Company establish its reputation as a multi-product, pan-India distributor for Medical Equipment, with a steadily increasing geographical presence and partner base.

Solar

The current state of the solar power generation industry is anything but encouraging. With issues such as a safeguard duty on imported panels and low per unit solar tariffs, FY19 was an extremely challenging period for the Indian solar industry. Apart from protective tariffs, issues like the lack of clarity on GST for turnkey projects, and implementation of new BIS standards pose major impediments to business. Market confidence was down due to cancellation and under-subscription of some major tenders. We have downsized our operations in this vertical and will review the business once there is a more favorable climate.

SERVICES

Cloud

The pace of Cloud adoption in India continues to rise with an increasing number of customers contemplating moving their non-critical workloads to the cloud. This has been accelerated by the continuous reduction in the “Total Cost of Ownership” for adopting the Cloud environment with many Service Providers expanding their in-country infrastructure footprint.

Your Company ventured early into the cloud business by investing, learning and building strong competencies as a cloud solutions-provider over the last three years.

Redington has established itself as the leading Distributor of Cloud Technology, with an emphasis on Managed Services. Our “Partner Focused - End Customer Oriented” approach has positioned it as the Distributor-of-Choice for both Cloud vendors as well as the channel community.

Your Company developed a unified digital cloud platform, to offer a portfolio of world-class cloud services, complete with a dashboard that partners can use for auto-provisioning, consumption analysis reports, subscription management and billing services.

The Company then proceeded to invest in a team of advanced pre-sales cloud solution architects and consultants who devised a cloud adoption framework. This helped as a prime focal point in offering solutions to enterprise business problems through cloud assessments, migration, security and optimization solutions.

Your Company has a team of cloud engineers to implement, migrate and manage the customers’ workloads. This is offered under the umbrella of ‘Redington Managed Cloud Solutions’ and includes 24x7 support, cloud monitoring & cloud management, along with reactive and proactive support services.

We will continue to sharpen our cloud-services portfolio to capture an increasing share of this fast-expanding opportunity.

Other services

During FY 18-19, your Company’s Digital Printing Solutions vertical maintained its industry leading performance in the segment it operates in. The Company shifted its focus to higher end machines which allow higher productivity and larger throughputs while offering the latest technological advancements in the field. With a rapidly growing installed machine base, the annuity based business model leveraging “pay-per-print impression” has ensured an uninterrupted income stream.

Indigo business is unique in that Redington does not limit its engagement with a customer just to the sale of a machine. Its involvement starts with discussing and establishing the business viability and encompasses commercial structuring, installation services, operator training and post-sales services through consumable / parts supply & equipment maintenance. In the APAC region, your Company was the no. 2 ranked partner for HP during FY 18-19 and over 8 successive quarters it ranked amongst the top two in Quarterly Channel Score Card rating.

Demand for 3D Printing equipment and solutions remain in its nascent stage. It is clearly the technology of the future with significant applications in the manufacturing sector and the medical industry. With its partnership with HP and investment in prototyping and manufacturing, your Company is strategically positioned to participate in future growth opportunities.

INDIAN SUBSIDIARIES

ProConnect Supply Chain Solutions Limited

ProConnect Supply Chain Solutions Limited (ProConnect) maintained its remarkable record of business growth. It is now recognized as a strong and established player in the 3PL business segment. During the course of FY 18-19, ProConnect took steps to consolidate its business with the customers and in the verticals that it already operates in, while identifying, evaluating and accessing unexplored growth segments.

Introduction of the GST regime has so far been a mixed blessing. While it has gone a long way towards streamlining operations, critical areas of integration were stabilized by the Government only during the course of the year and ProConnect is likely to experience the full benefits of the transition from FY 19-20 onwards.

During the course of the year, ProConnect further enhanced its Infrastructure back-bone. It now operates over 180 warehouses across India, spanning 6.80 million sq. ft. It upgraded its operational efficiency, service levels & process excellence to attain the certification level of ISO 9001:2015. With an aim to digitize its operations and further improve its service levels, ProConnect has rolled out a robust and customized ERP Software System. The modernization of IT infrastructure will help ProConnect during its next phase of accelerated growth.

ProConnect has adopted a finely balanced strategy of a mix of organic and inorganic growth. During FY 18-19, the company delivered a Revenue growth of 26%. Its acquisition of Auroma Logistics Pvt. Ltd. towards the end of the fiscal year allows it a strong footprint in the Consumer Durables industry. An important segment of ProConnect’s business is the Mission Critical Services it offers to leading Global customers for their India operations. This business elevates ProConnect’s position as a Value Added Service Provider in the 3PL business. Ensure Support Services (India) Limited

Ensure Support Services (India) Limited (Ensure) is into repair and maintenance of technology products like printers, desktops, and laptops on behalf of brands and through contractual agreements with corporates. Over the last few years this business is getting commoditized posing a challenge for revenue and profit growth. Ensure is in the process of migrating to high end services like Managed Print Service and E-waste management. The focus and investment in the ensuing years will be on these high end business segment.

INDIAN ASSOCIATE

Redington (India) Investments Limited is an Associate Company of your Company. It has a wholly owned subsidiary, Currents Technology Retail (India) Limited (Currents) which operates a chain of Apple retail stores. During the year, Currents diversified business beyond Apple retail stores, to further tap online segment. Currents has strategically exited its business operations from Northern and Eastern regions in India and has now focused on its operations in the Southern region. This move is expected to bring more operational efficiency resulting in a profitable business scenario.

OVERSEAS OPERATIONS

Your Company’s overseas operations are carried out through two wholly owned subsidiaries; Redington International Mauritius Limited, Mauritius (RIML) addressing Middle East, Turkey, Africa (META) region and Redington Distribution Pte Limited, Singapore (RDPL) addressing the South Asian region comprising of Sri Lanka, Bangladesh, Nepal and Maldives markets.

The overseas operations of your Company were challenged by significant macro-economic issues in many of the markets it operates in. Global headwinds caused by slowing growth, dampened demand and trade wars led to uncertain business environments. However, your Company’s ability to anticipate challenges and take the necessary steps to mitigate their impact was instrumental towards another year of stellar business results. Your Company’s overseas business grew Revenue by 11%, EBITDA by 28% and net profit by 19%.

During the last fiscal, the Turkish economy faced some of the harshest challenges in its history. Its currency, the Lira, depreciated by as much as 36% against the dollar, before stabilising. Unemployment is at an all-time high at almost 15% and inflation touched an alarming 25% before receding slightly by the end of the fiscal year. The resultant steep decline in demand coupled with high interest rates made it one of the most difficult years for Turkish business houses. Your Company’s subsidiary in Turkey too got impacted by these adverse circumstances and this resulted in the Company taking an impairment charge against the investment made in Arena. In spite of several adversities, Arena, by reducing costs and through better management of its working capital, delivered an EBITDA growth of 41% during the last quarter of FY 19.

Amidst continuing geopolitical tensions in the Middle East and general market slowdown, Governments in the region stepped up their investments in infrastructure, education, healthcare and other key sectors. Oil-exporting economies have also sharpened focus on diversifying their economies by increasing investments in non-oil industries. The economic blockade of Qatar by other Arab nations entered its second year and this, coupled with increased US sanctions on Iran continued to impact both geopolitical as well as economic stability of the region.

On the positive side, a significant increase in oil prices from historic lows have boosted national earnings of Nigeria and the countries in the Middle East. However, the sustainability of this price increase is in doubt due to a slowdown in the growth of many world economies. With a focus on economic diversification away from oil, the region is witnessing changes in the tax and regulatory landscape. After the introduction of Value Added Tax (VAT) and Excise Duty in UAE and KSA in 2018, several GCC governments, notably KSA, are now implementing other regulations such as transfer pricing in an effort to further boost revenues.

In spite of a harsh business environment, your Company successfully overcame the challenges and recorded revenue and profit growth while maintaining tight control on working capital.

In terms of product mix, Mobility business continues to be a key contributor to the company’s overseas revenues. Significant investments are being made to develop and build Analytics and Cloud Practice in the Enterprise business. Focus is also on building scale in the Services business, leveraging the consulting practice of its subsidiary, Citrus Consulting.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors at their meeting held on 14th March 2019 appointed Ms. Anita P Belani as a Non-Executive Independent Director (Additional Director) for a period of three years with effect from April 1, 2019. A resolution for appointment of Ms. Anita as a Non-Executive Independent Director of the Company is included in the notice of the ensuing Annual General Meeting.

Prof. J. Ramachandran, Mr. V.S. Hariharan and Mr. Keith WF Bradley were appointed as Independent Directors on the Board for a period of five consecutive years at the Annual General Meeting held on July 31, 2014.

The Companies Act, 2013 (Act) provides that the appointment of Independent Directors can only be for two consecutive terms up to five years each and their office shall not be liable to retire by rotation. Since the aforesaid directors are completing their first term of appointment under the Companies Act, 2013 by July 31, 2019, it is proposed to re-appoint Prof. J. Ramachandran, Mr. V.S. Hariharan and Mr. Keith WF Bradley for a second term till March 31, 2024.

Mr. E. H. Kasturi Rangan (DIN: 01814089) was appointed as a Whole-Time Director at the Annual General Meeting held on July 27, 2016 for a period of three years with effect from May 24, 2016. As per his terms of appointment, his office as whole-Time Director of the Company would have expired on May 23, 2019. The Board of your Company felt that ProConnect Supply Chain Solutions Limited (ProConnect), a wholly owned subsidiary of the Company has immense potential to expand in the near future and decided that a senior management person to be appointed to focus and drive the growth of that entity. It suggested appointing Mr. E. H. Kasturi Rangan, who was monitoring the operations of ProConnect as its Managing Director. Accordingly, Mr. E H Kasturi Rangan tendered his resignation from the services of the Company with effect from 22nd May 2019.

Nomination and Remuneration Committee acknowledging the contribution by Mr. S V Krishnan, Chief Financial Officer, recommended his elevation as the Whole Time Director of the Company in the place of Mr. E. H. Kasturi Rangan. Considering the recommendation of Nomination and Remuneration Committee, the Board of Directors approved appointment of Mr. S V Krishnan as Whole Time Director for a period of 3 years with effect from 22nd May 2019.

Ms. Chen, Yi-Ju and Mr. Udai Dhawan, Directors of the Company will retire by rotation, and being eligible, have offered themselves for re-appointment.

Brief resumes of the Directors who are getting appointed / reappointed are furnished in the Notice to the Annual General Meeting.

DIRECTORS’ RESPONSIBILITY STATEMENT

In compliance with Section 134(5) of the Companies Act, 2013, the Directors of the Company, state that:

a) in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards read with the requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit of the Company for the year ended on that date;

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

d) The Directors have prepared the annual accounts on a ‘going concern’ basis;

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

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

AUDITORS

The Company’s Statutory Auditors, M/s. BSR & Co. LLP (“BSR”), Chartered Accountants (Firm Registration No. 101248W/W - 100022) issued their report on the Standalone and Consolidated Financial Statements of the Company and the same is appended here to this Report. The Auditors’ Reports on the Standalone and Consolidated Financial Statements do not contain any qualification, reservation or adverse remark.

OTHER REPORTS

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, reports on the Corporate Governance, Business Responsibility and Management Discussion and Analysis are attached to this Annual Report.

DISCLOSURES

Board and its committees

The details of the composition of the Board and its committees and its meetings held during the financial year are given in the Corporate Governance Report.

Independent Director Declaration

All the Independent Directors have given declaration of independence, as required under the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Internal Financial Controls

The Company prepared a comprehensive document on Internal Financial Controls (IFC) in line with the requirement under the Companies Act 2013, which included Entity Level Controls (ELC), Efficiency Controls, Risk Controls, Fraud Preventative Controls, Information Technology General Controls (ITGC) and Internal Controls on Financial Reporting (ICFR). A brief note on IFC including ICFR is given in Annexure A to this Report.

Based on the results of assessments carried out by Management, no reportable material weakness or significant deficiencies in the design or operation of internal financial controls was observed. The Board opines that the internal controls implemented by the Company for preparation of financial statements are adequate and sufficient.

Risk Management

The Risk Management Committee monitors the Risk management practices of the Company. The Committee meets periodically and reviews the potential risks associated with the Company’s business and discusses steps taken by the management to mitigate the same.

The Board of Directors reviewed the risk assessment and procedures adopted by the Company and is of the opinion that there are no risks which may threaten the existence of the Company.

Details of Employee Benefit Scheme

During the year, 28,630 equity shares of ‘2 each, at a premium of ‘77.30 per share were allotted to employees including employees of Subsidiary Companies under the ESOP Scheme, 2008.

The disclosures as required under Regulation 14 of SEBI (Share Based Employee benefits) Regulations, 2014 is given in Annexure B to this Report. Certificate from the Statutory auditors of the Company stating that the Employee Stock Option Plan 2008 and Redington Stock Appreciation Right Scheme, 2017 have been implemented in accordance with SEBI (Share Based Employee benefits) Regulations, 2014 and the resolution passed by the shareholders, will be placed at the Annual General Meeting.

Information on Conservation of Energy and Technology Absorption

A. Conservation of Energy:

The operations of your Company involve low energy consumption. Adequate measures have, however, been taken to conserve energy by way of optimizing usage of power and virtualization of Data Centre.

B. Technology Absorption:

i. Effort made towards technology absorption:

Your Company continues to use the latest technologies for improving the quality of services it offers. Digitalization adoption and absorption across cloud technology, virtualization and mobility resulted in better operational efficiencies and Turnaround Time (TAT). Business Intelligence (BI) and Analytics facilitate key decisions and improves process efficiency.

ii. Import of Technology:

The Company has not imported any technology during the year.

iii. Expenditure on Research and Development:

Since your Company is involved in the Wholesale Distribution of Technology Products, there is no expenditure incurred on research and development.

Foreign Exchange earnings and outgo

The details of Foreign Exchange earnings and expenditure during the year are given below:

Earnings in Foreign Currency:

Particulars

Rs in Crore

Rebates & discount

131.08

Dividends from overseas subsidiaries

12.84

FOB value of exports

-

Others

0.23

Total

144.15

Expenditure in foreign currency:

Particulars

Rs in Crore

CIF value of imports

3863.09

Royalty (cost of software included under purchases)

29.82

Foreign travel

0.01

Director’s sitting fee

0.13

Director’s commission

0.54

Total

3893.59

Policy on Appointment and Remuneration of Directors

The Board on the recommendation of the Nomination and Remuneration Committee has laid down a policy on appointment of Directors and remuneration for the Directors, Key Managerial Personnel and Other Employees. The same is enclosed as Annexure C to this report.

Performance evaluation of the Board and Committees

The details of annual evaluation made by the Board of its own performance and that of its committees and individual Directors and performance criteria for Independent Director laid down by Nomination and Remuneration Committee are enclosed as Annexure D to this report.

Particulars of Employees

The Particulars of employees required under Section 197 (12) of the Companies Act, 2013 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been given in the Annexure E appended hereto and forms part of this report.

Particulars of Loans given, Investments made, Guarantees given and Securities provided

Particulars of loans given and investments made are given under Notes 16 and 7 respectively to the Standalone Financial Statements. Corporate Social Responsibility

The Corporate Social Responsibility (CSR) Committee has formulated and recommended to the Board a policy on CSR indicating the activities to be undertaken by the Company. The Report on CSR is given under Annexure F to this report.

Secretarial Audit Report

Pursuant to Section 204 of Companies Act, 2013, a Secretarial Audit was conducted by a Practicing Company Secretary, Ms. CS R. Bhuvana. The report furnished by the Secretarial Auditor is enclosed as Annexure G to this report and such report does not contain any qualification, reservation or adverse remark.

Vigil Mechanism

The Company has implemented a vigil mechanism to provide a framework for the Company’s employees and Directors to promote responsible and secure whistle blowing. It protects employees who raise a concern about serious irregularities within the Company. A brief summary of the vigil mechanism implemented by the Company is annexed under Annexure H to this report.

Extract of Annual Return

Extract of Annual Return of the Company in Form MGT-9 is annexed herewith as Annexure I to this Report.

Buyback of Shares

The Board of Directors at their meeting held on 17th September 2018 considered and approved the proposal for buy-back of upto 11,120,000 equity shares of the Company at ‘125 per equity share for an aggregate amount not exceeding Rs.139 Crores representing 8.22% and 4.32% respectively of the aggregate of standalone and consolidated paid up share capital and free reserves of the Company as on March 31, 2018. The Company has adopted the Tender Offer route for the purpose of the Buyback. A Letter of Offer was made to all eligible shareholders. On December 4, 2018, the Company completed the buy-back of 11,120,000 equity shares resulting in a reduction in the share capital and securities premium of the Company by Rs.2.22 Crores and Rs.136.78 Crores respectively.

Further, pursuant to the buy-back, the Company has also transferred an amount of Rs. 2.22 Crores from general reserve to capital redemption reserve in accordance with the provisions of the Companies Act, 2013. The transaction costs relating to buy-back amounting to Rs. 2.29 Crores was charged to Surplus in the Statement of Profit and Loss (Retained earnings) under Other Equity.

Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company is required to transfer the unpaid or unclaimed dividend and shares in respect of which dividend entitlements are remaining unpaid or unclaimed for a period of seven consecutive years or more by any shareholder, to the Investor Education and Protection Fund. Accordingly the Company has transferred the unclaimed dividend of Rs. 1,26,589 to the IEPF and 1,094 shares to the demat account of the IEPF authority. The details of the shares due to be transferred to IEPF during FY 19-20 is made available in our website https://redingtongroup.com/india/shareholders_information/

Others

- There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

- The Company has not received any deposits as defined under Companies Act, 2013 during the Financial Year 2018-19.

- The Board decided not to transfer profit to the reserves.

- None of the transactions with related parties falls under the scope of section 188(1) of the Act. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure J in Form AOC-2.

- There are no material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2019 and the date of this report.

- The Dividend Distribution Policy pursuant to SEBI (LODR) Regulations, 2015 is disclosed in Annexure K and on the website of the Company.

- The Company is not required to maintain cost records as specified under Companies Act, 2013.

- The Company has complied with applicable secretarial standards

Web links

Particulars

Weblink

Policy on Related Party Transaction

https://redingtongroup.com/wp-content/uploads/2018/12/Policy-on-dealing-with-Related-Party-Transactions.pdf

Policy for determining Material Subsidiaries

https://redingtongroup.com/wp-content/uploads/2019/04/Policy-on-dealing-with-Material-subsidiaries-final.pdf

Details of

Familiarization

Programmes

https://redingtongroup.com/wp-content/uploads/2018/12/Familiarisation-programme.pdf

Criteria of Making payment to Non-Executive Directors

https://redingtongroup.com/india/wp-content/uploads/sites/4/2018/05/PolicyonpaymenttoDirectors.pdf

Policy on appointment of Directors and remuneration for the Directors, Key Managerial Personnel and Other Employees

https://redingtongroup.com/wp-content/uploads/2018/12/NOMINATION-AND-REMUNERATION-POLICY.pdf

Annual Return

https://redingtongroup.com/wp-content/uploads/2019/06/Annual-Return.pdf

COMPLIANCE WITH OTHER REGULATIONS

Downstream Investment

With regard to the downstream investments in Indian Subsidiaries, the Company is in compliance with the FEMA regulations Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has constituted Internal Complaints Committees as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to consider and resolve all sexual harassment complaints. Your Company has framed a policy on Sexual Harassment of Women to ensure a free and fair enquiry process on complaints received from the women employee about Sexual Harassment. No complaint was reported by any employee pertaining to Sexual Harassment, during the year under review.

ACKNOWLEDGMENT

Your Directors take this opportunity to thank the shareholders including the principal shareholders, suppliers, customers, bankers, business partners/associates, for their consistent support and encouragement to the Company. Please join me and the Board members in conveying our sincere appreciation to all employees of the Company, its subsidiaries and Associates, for their hard work and commitment. Their dedication and competence has ensured that the Company continues to be a significant and leading player in the industry.

On behalf of the Board of Directors

Place: Chennai J Ramachandran

Date: May 22, 2019 Chairman

Source : Dion Global Solutions Limited
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