The Directors have pleasure in presenting their Twenty Third Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2016.
The Company''s financial performance for the year under review alongwith previous year figures are given hereunder:
(Rupees in Lacs)
Sales and Services
Loss before Tax
Loss Before Tax
Provisions for Income Tax
- Current tax
- Deferred tax
Income tax/ Deferred Tax for earlier year
Loss After Tax
OVERVIEW OF COMPANY''S FINANCIAL PERFORMANCE
During the year under review your company has on standalone basis registered a turnover of 24,416 Lacs. A net loss of 799 Lacs has been made during this year as compared to net loss of 3,601 Lacs in the previous year. The year to year decrease in the turnover is 27.45%. The losses incurred are due to lower turnover causing insufficient margins to service the fixed costs.
The Company has been the National Distributor and Service Provider of Sistema Shyam Teleservices (Sistema) and were earning revenues since January 2014. But Sistema is under a Scheme of Arrangement demerging and vesting its Telecom business segment as Transferred Undertaking by rolling out spectrum licenses and related infrastructure to Reliance group, the contract of services and telecom products with your company have been withdrawn in view thereof. Your company is exploring other avenues for business with other operators and other ancillary Industry operators.
No other material changes and commitments affecting the financial position of the Company has occurred between April 1, 2016 and the date of signing of this Report.
No Dividend was declared for the current financial year due to consistent losses incurred by the Company.
TELECOM INDUSTRY IN INDIA
India is currently the world''s second-largest telecommunications market and has registered strong growth in the past decade and half. The Indian mobile economy is growing rapidly and will contribute substantially to India''s Gross Domestic Product (GDP), The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to consumer at affordable prices. The deregulation of foreign direct investment (FDI) norms has made the sector one of the fastest growing and a top five employment opportunity generator in the country.
Driven by strong adoption of data consumption on handheld devices, the total mobile services market revenue in India is expected to touch US$ 37 billion in 2017, registering a Compound Annual Growth Rate (CAGR) of 5.2 per cent between 2014 and 2017.
According to a study by GSMA, smart phones are expected to account for two out of every three mobile connections globally by 2020 making India the fourth largest Smartphone market. The broadband services user-base in India is expected to grow to 250 million connections by 2017, It is expected that India to overtake US as the second-largest Smartphone market globally by 2017 and to maintain high growth rate over the next few years as people switch to smart phones and gradually upgrade to 4G.
The Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years. The employment opportunities are expected to be created due to combination of government''s efforts to increase penetration in rural areas and the rapid increase in Smartphone sales and rising internet usage.
The government has fast-tracked reforms in the telecom sector and continues to be proactive in providing room for growth for telecom companies. Some of the other major initiatives taken by the government are as follows:
- The Telecom Regulatory Authority of India (TRAI) has directed the telecom companies or mobile operators to compensate the consumers in the event of dropped calls with a view to reduce the increasing number of dropped calls.
- With a view to encourage consolidation in the telecom sector, the Government of India has approved the rules for spectrum trading that will allow telecom companies to buy and sell rights to unused spectrum among themselves. The guidelines on spectrum sharing, aimed to improve spectral efficiency and quality of service, based on the recommendations of the Telecom Regulatory Authority of India (TRAI) has also been approved.
- The Central Government''s several initiatives to promote manufacturing in the country, such as ''Make in India'' campaign appears to have had a positive impact on mobile handsets manufacturing in the country. Companies like Samsung, Micromax and Spice had been assembling handsets in the country already. Xiaomi and Motorola, along with Lenovo have also started assembly of smart phones in India. Firms like HTC, Asus and Gionee too have shown interest in setting up a manufacturing base in the country.
- The Government of India plans to roll out free high-speed Wi-Fi in 2,500 cities and towns across the country over the next three years. The program entails an investment of up to Rs 7,000 crore (US$ 1.06 billion) and will be implemented soon.
India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025. With the government''s favorable regulation policies and 4G services hitting the market, the Indian telecommunication sector is expected to witness fast growth in the next few years.
The Company had only one foreign subsidiary of the Company i.e. Shyam Telecom Inc incorporated under the laws of State of Delaware has been dissolved due to its non viability, regular losses and lack of orders in US markets. The dissolution has been made effective from 22ndDecember, 2015. Hence the consolidated Accounts have not been prepared and annexed as subsidiary has no assets.
During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.
DIRECTORS AND KEY MANAGERIAL PERSONS
In accordance with the provisions of section 152 of the Companies Act, 2013 and Article of Association of the company, Mr. Alok Tandon, Director of the company, retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. His brief profile has been stated in the Corporate Governance Report.
Your directors recommend his re-appointment. All the directors of the Company have confirmed that they are not disqualified from staying on the Board of directors in terms of Section 164(2) of the Companies Act, 2013.
The Company has received declaration from all the Independent directors, they meet the criteria of Independence as prescribed both under the Companies Act, 2013 and Sebi(Listing Obligations and Disclosure Requirements) Regulation, 2015.
FORMAL ANNUAL EVALUATION
Your Company in the meeting of its Board held on 8th February 2016, discussed and evaluated the performance of the Board.
Pursuant to the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Board Committees. A structured questionnaire was prepared after circulating the drafts forms, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.
The performance evaluation of the Independent Directors was done by the entire Board excluding the Directors being evaluated. The performance evaluation of the Chairman, Board as a whole and the Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.
FAMILIARISATION PROGRAMME MODULE
The Familiarization Program Module for Independent Directors of the Company has been adopted by the Board of Directors. The Independent Directors were intimated and informed about the operational, financial, legal and secretarial aspects of the company. The familiarization programme has been posted on the Company''s website.
VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
The Company has established a vigil mechanism programme for overseeing the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of the employees.
Your company believes in the conduct of the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. To develop a culture where it is safe for all Directors and Employees to raise genuine concerns or grievances the company established vigil mechanism for Directors and Employees in pursuance of Regulation 22 of Sebi (LODR) 2015 and Section 177(9) of the Companies Act, 2013 and Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 (posted on companies website).
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
Your Company has adopted under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 a policy for prevention of Sexual Harassment of
Women at workplace and has set up Committee for implementation of said policy. Details of constitution of the committee forms part of the policy and have been posted on the website of the Company (www.shya.mtelecom.com). During the year Company has not received any complaint of harassment.
RISK MANAGEMENT POLICY
As per the requirements of Regulation 21 of Sebi (LODR) 2015, your Company has constituted a Risk Management Committee to oversee the risk management efforts in the Company under the Chairmanship of Mr. N. Kumbhat, Independent Director. The details of the Committee along with its charter are set out in the Corporate Governance Report forming part of this Report.
The Company has adopted the procedures in its Risk Management policy concerning the development and implementation of a Risk Management after identifying the elements of risks which in the opinion of the Board may threaten the very existence of the Company itself.
To ensure that all current and future material risk exposure of company is identified and mitigated the company has formulated Risk Management Policy. The policy explains the risk pertaining to financing activities, dependence on distribution network, and their mitigation. The policy is available on the company website (www.shyamtelecom.com) and can be read from there.
RISK FACTORS & MITIGATION
The risks associated with the Company were mostly related to expansion/modernization plan along with utilizing distribution network with current financing activities. The Company is trying to create more avenues for sale of handsets to various other buyers. The company also follows conservative finance and accounting policy and keeps regular check on various financial health parameter. Every quarter the risk analysis is reviewed by the Board of Directors.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of the provision of section I34(3)(c) of the Companies Act, 2013, your directors confirm that::
i) In the preparation of the Annual Accounts for the year ended 31st March 2016, the applicable Accounting Standards had been followed and there are no material departure from the same.
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 the affairs of the company at the end of financial year 2015-2016 and of the profit/ loss of the company for the year ended as on that date;
iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in the 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.
iv) Annual accounts have been prepared on a going concern basis.
v) the directors had laid down internal financial controls which are followed by the company and that such internal financial controls are adequate and were operating effectively.
vi) Proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.
In the Annual General Meeting held on 30.09.2014, M/s Mehra Goel & Company, Chartered Accountants, were appointed as Statutory Auditors to hold office till the conclusion of 24th AGM, to be held for the financial year ending 2017. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting through ratification. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
The Auditor''s Report presented by M/s. Mehra Goel & Company, Chartered Accountants, the Statutory Auditors on the accounts of the Company for the financial year ended 31st March, 2016 is unqualified.
Your Board in view of cessation of manufacturing activity of the company resolved and noted the non- applicability of Cost Audit provisions of the company and hence decided not to recommend the appointment of cost auditor for the financial year 2016-2017. The contribution and enlightening experience with M/s K G Goel & Associate, Cost Accountants was appreciated.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s A.N. Kukreja, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as Annexure - I to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure - II to this Report.
RELATED PARTY TRANSACTIONS
The details of the related party transactions as required under Accounting Standard - 18 are set out in Notes to the standalone financial statements forming part of this Annual Report. The Form AOC- 2 pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure-III to this Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has set up CSR committee to facilitate its CSR related operations. The company made various donations during the year.
DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
Our Company has put in place adequate internal financial controls with reference to the financial statements. A note on the same has been provided in the Management Discussion and Analysis Report.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future.
PARTICULARS OF CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information relating to conservation of energy, as required under section 134 (3) (m) of the Companies Act, 2013 read with the Rule8 of The Companies (Accounts) Rules, 2014 , is enclosed as Annexure - IV and forms part of this Report.
PARTICULARS OF EMPLOYEES
The disclosure of remuneration of Directors is in compliance with Section 197(12) in accordance with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 read with Section 134 of the 2013 Act.
The Company remains regularly in touch with each employee for the redressal of their grievances and maintains high quality standards for them. The industrial relations of your Company are normal.
DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES
In accordance with Section I78 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued there under and Regulation 19 of Sebi (LODR) 2015, the Company is having Nomination and Remuneration Policy framed on the recommendations of the Nomination and Remuneration Committee for determining qualifications, positive attributes, independence of a director etc.
The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report.
The Managing Director and CEO of your Company does not receive remuneration from the subsidiary of your Company.
The information required under Section I97 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/employees of your Company is provided in this Report as Annexure - V.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The company has proper composition of the Board and has following KMP''s
Mr. Ajay Khanna - Managing Director
Mr. Gursharan Singh - CEO Mr.Vinod Raina - CFO
Mr. Dharmender Dhingra - Company Secretary & Compliance Officer
NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE
The details of the number of Board and Audit Committee meetings of your company are set out in the Corporate Governance Report which forms part of this Report.
In compliance with the provisions of Sebi(Lodr) Regulation 2015 a separate report on Corporate Governance along with a certificate from the Auditors on its compliance forms an integral part of this Report.
DECLARATION OF INDEPENDENCE
Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(5) of Companies Act, 2013 read with the Schedules and Rules issued there under as well as Sebi(Lodr) Regulation 2015.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on Management Discussion and Analysis as stipulated under Sebi(Lodr) Regulation 2015, as applicable, forms the part of this report as Annexure - VI.
CONSOLIDATED FINANCIAL STATEMENT
Shyam Telecom Inc. (Corporation) was a subsidiary of Shyam Telecom Limited (STL) an Indian company. The stockholders had authorized the Dissolution of the corporation by unanimous consent on 22 December 2015. The corporation has been Dissolved as per the Certificate of Dissolution issued by the State of Delaware (USA) pursuant to Section 275 and 391 (a) (b) (c). The said Corporation had no assets and ceased to transact business as of 22 December 2015. In View of above as on 31-3-2016 there was no subsidiary, the consolidation of accounts has not been done.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
Loans, guarantees and investment covered under Sec 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.
COMPOSITION OF AUDIT COMMITTEE
Disclosure pursuant to the provisions of section 177 of the Companies Act, 2013, the Audit & Finance Committee of the company consists of:
Mr. Achintya Karati - Independent Director & Chairman
Mr. Vinod Juneja - Independent Director & Member
Mr. C.S.Malhotra - Independent Director & Member
Mr. Narendra Kumbhat - Independent Director & Member
Mr. Arun Khanna - Non Executive Director & Member
Mr. Dharmender Dhingra - Company Secretary & Vice President (Legal)
The Board wishes to place on records its-sincere appreciation for the continued assistance and support extended to the Company by its Bankers, Vendors, Government Authorities and Employees.
Your directors acknowledge with gratitude the encouragement and support extended by our valued Shareholders.
On Behalf of the Board of Directors of
SHYAM TELECOM LIMITED
AJAY KHANNA ALOK TANDON
Managing Director Director
PLACE: NEW DELHI
DATE: 9th August, 2016