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Directors Report of Cityon Systems (India) Ltd.

Mar 31, 2015

The Directors have pleasure in presenting the Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2015.


The financial results of the Company are fairly reasonable:-


1. Profit after Tax 378262.00

2. Depreciation 70914.00

3. Cash Profit for the year 449176,00


The Company has no public deposits as of date and will not accept any deposits without prior approval of the Statutory Authorities concerned.


The particulars of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 have been disclosed in the financial statements.

During the year, the Company has not given any guarantees as covered under aforesaid provisions of the Act,


The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Auditors is subject to provisions of the Companies Act, 2013 and rules made thereunder. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Managing Director.

The Internal Audit Department monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of internal audit

function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

Mr. Ankur Agarwal retires by rotation and being eligible offers himself for re- appointment. Your Directors recommend his reappointment.

During the year, the Board of Directors appointed Mrs. Kavita Awasthi as an Additional Director with effect from 27th March, 2015, to hold office up to the date of forthcoming Annual General Meeting. Being eligible, Mrs. Kavita Awasthi offered herself to be appointed as the Independent Woman Director of your Company.

Pursuant to the provisions of Section 149 of the Act, which came into effect from 1st April, 2014, Mr. Gaya Prasad Gupta, Mr. Om Prakash Agarwal and Mr. Anoop Srivastava were appointed as Independent Directors at the Annual General Meeting of the Company held on 30th September, 2014, The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. Your Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 42 of the Listing Agreement (BSE SME{ITP}) with the Stock Exchanges and there has been no change in the circumstances which may affect their status as Independent Director during the year.

As required under Clause 42 of the Listing Agreement (BSE SME{ITP}) with the Stock Exchange, the information on the particulars of the Directors proposed for appointment/ re-appointment has been given in the Notice of the Annual General Meeting.

Pursuant to the provisions of Section 203 of the Act, which came into effect from April 1, 2014, the appointments of Key Managerial Personnel were formalized during the financial year 2014-15. There has been change (s) in Key Managerial Personnel during the financial year 2014-15 due to resignation(s).


The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") in the Listing Agreements BSE SME{ITP}).

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.


Ten meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.


Pursuant to Section 134(5} of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, state the following:

a. that in the preparation of the annual financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

c. that proper and sufficient care has been taken 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. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial control were adequate and were operating effectively;

f. that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.


Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s J Agarwal & Associates, Chartered Accountants (ICAI Firm Registration No. 002601C), were appointed as statutory auditors of the Company from the conclusion of annual general meeting (AGM) of the Company held on September 30, 2014 till the conclusion of the annual general meeting (AGM) to be held in the year 2017, subject to ratification of their appointment at every AGM.

The Company has received a letter from statutory auditors to the effect that their re- appointment, if made, would be within the provision prescribed under Section 139 of the Companies Act, 2013. Your Directors recommend their re-appointment.

The auditor's report does not contain any qualifications, reservations or adverse remarks & Notes to the financial statements referred in the Auditors Report are self- explanatory and therefore do not call for any comments under Section 134 of the Companies Act, 2013.


Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rules made thereunder, the Company had appointed Mr. Pushp Raj Singh, Practicing Company Secretary to undertake the Secretarial Audit of the Company but due to resignation tendered by Mr. Pushp Raj Singh, Company appointed another Secretarial Auditor. The Secretarial Audit Report for financial year 2014-15 is annexed, which forms part of this report as Annexure-A. There were no qualifications, reservation or adverse remarks given by Secretarial Auditor of the Company.


The details forming part of the extract of the Annual Return in Form MGT-9 are annexed to this Report as Annexure-B.


All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large.


The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Code has been placed on the Company's website www.cityonsystems.in. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.

All the Board Members and the Senior Management personnel have confirmed compliance with the Code.


The Company is committed to the high standards of Corporate Governance and stakeholder responsibility. The Company has established a vigil mechanism to be known as the 'Whistle Blower Policy' for its Directors and employees, to report instances of

unethical behavior, actual or suspected, fraud or violation of the Company's Code of Conduct. The aim of the policy is to provide adequate safeguards against victimization of whistle blower who avails of the mechanism and also provide direct access to the Chairman of the Audit Committee, in appropriate or exceptional cases.

Accordingly, 'Whistle Blower Policy' has been formulated with a view to provide a mechanism for the Directors and employees of the Company to approach the Ethics Counselor or the Chairman of the Audit Committee of the Company.

The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It protects employees willing to raise a concern about serious irregularities within the Company.


The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code.


Pursuant to section 134 {3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the company has constituted a business risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report.

At present the company has not identified any element of risk which may threaten the existence of the company.


The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered office of the company during business hours on working days of the company up to the date of ensuing Annual General Meeting. If any, member is interested in inspecting the same, such member may write to the Company Secretary in advance.


The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.


The Independent Directors met on 25th March, 2015, without the attendance of Non- independent Directors and members of the Management. The Independent Directors reviewed the performance of non-independent directors and the Board as a whole; the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.



Separate reports on Corporate Governance compliance and Management Discussion and Analysis as stipulated by Clause 42 of the Listing Agreement (BSE SME{1TP}) forms part of this Annual Report along with the required Certificate from Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated by Clause 42 of the Listing Agreement (BSE SME{ITP}}.

In compliance with Corporate Governance requirements as per Clause 42 of the Listing Agreement (8SE SMEIJTP}), your Company has formulated and implemented a Code of Business Conduct and Ethics for all Board members and senior management personnel of the Company, who have affirmed the compliance thereto.


Your directors take this opportunity to extend their thanks to the customers, business, partners, business associates and bankers of the Company for their continued support during the year. The directors also sincerely acknowledge the dedication and commitment of the employees of the company at all levels.


Place: Delhi (Mukesh Kumar) (Ankur Agarwal)

Date: 29.05.2015 Director Director

DIN:06573251 DIN:06598310