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Directors Report of Nettlinx Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their 21st Annual Report on the business and operations of your Company for the financial year ended March 31, 2014.

1. FINANCIAL RESULTS

The financial performance of the Company for the financial year ended March 31, 2014 is summarized below:

Rs in lakhs Particulars For the For the Year ended year ended 31.03.2014 31.03.2013

Income from

operations 682.78 553.24

And other income

Total Expenditure 616.00 490.80

Interest 14.23 32.34

Depreciation 48.52 54.67

Profit / (Loss) 3.19 (24.57)

Before Taxation

Mat Tax Credit 0.6

Current Tax

Deferred Tax Asset 5.35 4.32

Profit / (Loss) after Tax 8.55 (19.73)

2. OPERATIONS OF THE COMPANY

The Turnover of the company for 2013-2014 was Rs 500.45 (operations) compared to Rs 466 lakhs (Operations) of the previous year, a growth of 7.36%. The profit after tax of Rs 8.55 for the year under review is against a net loss of Rs 24.57 lakhs in the previous year ended 31st March 2013.

Overall performance, based on the consolidated accounts of your company has registered a nett loss of Rs (19.28) lakhs against of net profit of 58.33 lakhs in the previous year ended 31st March 2013.

3. SHARE CAPITAL :

During the year under review the Authorised Share Capital of the Company is Rs 20,00,00,000/ -.The Issued, Subscribed and Paid up Share Capital of the Company as on March 31, 2014 is Rs114,633,120/- divided into 11,463,312 equity shares of Rs 10/- (Rupees Ten) each.

4. DIVIDEND:

As there are no adequate profits in this financial year, hence no dividend is recommended.

5. TRANSFER TO RESERVES:

The Company proposes not to transfer any amount to Reserves.

6. DIRECTORS :

Approval of the shareholders is being sought for re-appointment of Dr. Manohar Loka Reddy, who retires by rotation at forthcoming Annual General Meeting of the Company and being eligible, offer themselves for reappointment in accordance with the Articles of Association and Companies Act, 2013.

The Company has, pursuant to the provisions of Clause 49 of the Listing Agreements entered into with Stock Exchange appointed Sri K. Kameswara Rao, Sri J.V. Hanumanth Rao, Sri. M. Vijay Kumar and Sri. M. Appa Rao as Independent Directors of the Company. The 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 49. In accordance with the provisions of Section 149(4) and proviso to Section 152(5) of the Companies Act, 2013, these Directors are being appointed as Independent Directors to hold office as per their tenure of appointment mentioned in the Notice of the forthcoming AGM of the Company.

During the year under review, the Board proposed to re-designate Sri Chandra Sekhar Pogula, as CEO wef November 1, 2013, till his remaining tenure of appointment. Further the Board also proposes to approve increase the total remuneration from Rs 15,75,000 (Rupees Fifteen Lakhs Seventy Five Thousand only) per annum to Rs 24,00,000 (Rupees Twenty Four Lacs) per annum. The Board recommends this resolution to be passed as special resolution.

7. STATUTORY AUDITORS :

The Statutory Auditors of the Company M/s Deva & Co, Chartered Accountants, Hyderabad, retire at this AGM, have signified their willingness for their re-appointment and have confirmed their eligibility under section 139(1) of the Companies Act, 2013. Members are requested to re-appoint them for a period of thr ee years and to authorize the Board to fix their remuneration.

8. COST AUDITORS

Mr. PLN Sarma, Cost Accountants, Hyderabad have been appointed as Cost Auditors of the Company to conduct Audit of Cost Accounts records to be maintained by the Company for the year ended 31.03.2015.

9. REPLIES TO AUDITORS'' REPORT:

The obser-vations of the auditors are explained, wherever necessary, in appropriate notes to the accounts

10. LISTING :

Details of Listing are annexed to the Corporate Governance Report.

Listing at Stock Exchanges:

The Equity Shares of the company are listed on Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001.

Listing fees to the Bombay Stock Exchange Limited has been paid up-to-date.

11. REQUIREMENTS UNDER CLAUSE 49 OF LISTING AGREEMENT

Corporate Governance :

The Company has been in full compliance with the norms of Corporate Governance as outlined in Clause 49 of the Listing Agreement with the Bombay Stock Exchange, Mumbai. A separate report on Corporate Governance is produced as a part of the Annual Report along with the Auditor''s Certificate on its compliance.

Management''s Discussion And Analysis : As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the Management''s discussion and Analysis Report is enclosed as a part of this Report as Annexure -I

12. DIRECTORS'' RESPONSIBILITY STATEMENT

In compliance of section 217 (2AA), as incorporated by the Companies (Amendment) Act, 2000, in the Companies Act, 1956, your directors confirm: -

a) That in the preparation of the accounts for the financial year ended 31st March, 2014 the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the company for the year under review;

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities and

d) That the Directors have prepared the accounts for the financial year ended 31st March 2014 on a going concern basis.

13. FIXED DEPOSITS :

Your Company has not raised any Fixed Deposits as on 31st March, 2014 so as to attract the provisions of Section 58A of the Companies Act, 1956, read with the Companies (Acceptance of Deposits) Rules, 1975 as amended from time to time.

There is no amount outstanding or due to any deposit holder

14. INTERNAL CONTROL SYSTEMS

Your Company has well established procedures for internal control commensurate with its size and operations. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

15. SUBSIDIARIES :

Company has three wholly owned subsidiaries namely Nettlinx Inc., Nettlinx Realty Private Limited, Nettlinx Aquaculture Private Limited (formely Nettlinx Chanel Private Limited) and as at 28th March, 2014 Nettlinx Limited has sold 100% stake in its subsidiary company Host Department LLC.

Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate Affairs vide its circular dated February 8, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Annual Report of the parent Company. Accordingly the Company has availed the exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary Companies.

A statement containing brief financial details of the subsidiaries for the financial year ended March 31, 2014 is annexed. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/its subsidiaries at the registered office of the Company. The annual accounts of the subsidiaries will also be available for inspection, as above, at registered office of the respective subsidiary companies.

16. STATUTORY INFORMATION

During the year under review, there were no employees drawing remuneration in excess of the limits laid down in section 217(2A) of the Companies Act, 1956 read with (Particulars of Employees) Rules,1975.

The Directors are pleased to record their sincere appreciation of the contribution by the staff.

17. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details of Energy Conservation, Research & Development, Technology Absorption, Foreign Exchange Earnings and Outgo as required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors'') Rules, 1988, are given in Annexure III, to the Directors Report.

18. EMPLOYEE STOCK OPTION PLANS

Company has earlier offered Stock Options under Nettlinx Stock Option Plan 2007 aggregating to 800000 (Eight Lakhs only) Equity Shares of face value Rs 10.00 each . Out of which , initially 5,75,000 options at a price of Rs 11.20 were offered with 50 % vesting at end of year 1 and year 2 respectively. Balance 2, 25,000 stock options were outstanding. However , owing to market conditions and preference of the employees, no one vested any shares even after 5 years cut off time from the year of issuance 2007-08. Under the circumstances Stock Option Plan 2007 aggregating to a total of 800000 Shares stands void and cancelled as at end 31.03.2104. Should there be a new Employee Stock Option Plan in future, The company may spell out a new ESOP scheme accordingly after obtaining necessary approvals.

19. AUDIT COMMITTEE:

The Company has constituted an Audit Committee, pursuant to the provisions of Companies Act, 1956 and listing agreement requirements. The roles, powers, independence and competency of the audit committee and other details are given under the Corporate Governance Report.

ACKNOWLEDGEMENTS:

Your Directors place on record their sincere appreciation for the services of the Department of Telecommunications (DOT), Bankers and the Software Technology Park of India (STPI). Your Directors also place on record their sincere appreciation and gratitude for the valuable assistance, support and co-operation from the Company''s Customers, Employees and shareholders during the period under review,

for and on behalf of the Board

Sd/- (Dr. Manohar Loka Reddy) Chairman DIN: 00140229

Date : 06-08-2014 Place : Hyderabad


Mar 31, 2012

To The Members M/s. Nettlinx Limited

The Directors present the 19th Annual Report together with the Audited Statements of Account for the year ended 31st March 2012.

FINANCIAL RESULTS

Rs.in lakhs

Particulars For the For the Year ended year ended 31.03.2012 31.03.2011

Income from operations 503.13 584.32 and other income

Total Expenditure 474.25 677.94

Interest 47.93 59.77

Depreciation 55.58 67.19

Profit / (Loss) (74.64) (220.58)

Before Taxation

Current Tax 0.00 0.00

Deferred Tax Asset 4.32 6.62

Profit / (Loss) after Tax (70.32) (213.95)

MANAGEMENT'S DISCUSSION AND ANALYSIS

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the Management's discussion and Analysis Report is enclosed as a part of this Report as Annexure - I

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Dr. Loka Narayan Reddy, Mr. Manohar Loka Reddy and Mr. K. Kameswara Rao retire by rotation at this Annual General Meeting and being eligible offer themselves for reappointment.

During the year, Sri. M. Suresh Kumar Reddy has resigned and Board wishes to place on record their appreciation for the services rendered by him during his tenure as Director of the Company respectively.

During the year, Sri. V. Harish Kumar has resigned and Board wishes to place on record their appreciation for the services rendered by him during his tenure as Director of the Company respectively.

DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217(2AA) OF THE COMPANIES ACT, 1956:

In compliance of section 217 (2AA), as incorporated by the Companies (Amendment) Act, 2000, in the Companies Act, 1956, your directors confirm: -

a) That in the preparation of the accounts for the financial year ended 31st March, 2012 the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimatr the financial year ended 31st March 2012 on a going concern basis.

SUBSIDIARIES

Company has invested in 100% of the paid up capital of Nettlinx Inc., Nettlinx Realty Pvt. Ltd., Nettlinx Channel Pvt. Ltd., Host Department LLC, Consolidated Financial performance has been given separately.

CORPORATE GOVERNANCE

Your Directors' affirm their commitment to the Corporate Governance Standards prescribed by the Securities and Exchange Board of India (SEBI). A report on Corporate Governance with Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is Annexed to this report and marked as Annexure - II.

Audit Committee has been reconstituted with the following members.

1. Sri K. Kameswara Rao, Chairman

2. Sri J.V. Hanumanth Rao

3. Sri Vijay Kumar Maistry

FIXED DEPOSITS

Your Company has not accepted any deposits and, as such, no amount of principal or interest was outstanding as at the close of the Financial Year.

AUDITORS

M/s. DEVA & CO Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. The Statutory Auditors have intimated to the Company that the appointment, if made, would be within the prescribed limits under section 224 (1-B) of the Companies Act, 1956 and that they are not otherwise disqualified within the meaning of subsection (3) of section 226 to the Companies Act, 1956, for such appointment.

The notes to the accounts referred to in the Auditors' Report is self explanatory and therefore do not call for any further Comments.

PARTICULARS OF EMPLOYEES

During the year under review, there were no employees drawing remuneration in excess of the limits laid down in section 217(2A) of the Companies Act, 1956 read with (Particulars of Employees) Rules,1975.

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

The information required under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 are set out in Annexure III, attached hereto and forms part of this report.

EMPLOYEE STOCK OPTION PLANS

Company has offered Stock Options to the employees under Nettlinx Stock Option Plan 2007 aggregating to 2,45,000 options at a price of Rs. 11.20. For the year ending 31st March, 2012 there are 4,15,000 stock options outstanding, and vesting options to the extent of 50% will fall due on 16.08.2012

Disclosures Pursuant to Para 12 of the Securities Exchange Board of India (Employees Stock Options Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 are set out as Annexure IV to the report.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere appreciation for the services of the Department of Telecommunications (DOT), Bankers and the Software Technology Park of India (STPI). Your Directors also place on record their sincere appreciation and gratitude for the valuable assistance, support and co-operation from the Company's Customers, Employees and shareholders during the period under review.

For and on behalf of the Board

Sd/-

(Dr. Manohar Loka Reddy)

Chairman

Date : 16-08-2012

Place : Hyderabad


Mar 31, 2010

The Directors have pleasure in presenting the Seventeenth Annual Report together with the Audited Statements of Account for the year ended 31st March 2010.

1. Financial Results

Rs. In Lakhs

Particulars For the For the

Year ended year ended

31st March, 10 31st March, 09

Income from operations 549.94 560.08

Total Expenditure 482.08 385.82

Interest 66.93 78.36

Depreciation 71.59 83.41

Profit / (Loss)

Before Taxation (70.67) 115.11

Provision for Taxation

-Current Tax 0 10.34

- Deferred Tax (Asset) (5.30) (9.76)

- Fringe Benefit Tax 0 1.33

Profit / (Loss) after Tax (65.37) 9.60

MANAGEMENTS DISCUSSION AND ANALYSIS

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the Managements discussion and Analysis Report is enclosed as a part of this Report as Annexure -1.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Companys Articles of Association, Dr. Loka Narayan Reddy, and Sri M. Suresh Kumar Reddy retire by rotation at this Annual General Meeting and being eligible offer themselves for reappointment.

During the year, Sri. M. Vijaya Bahsker Reddy, Executive Director and Sri. Abraham Joy, Director

have resigned and Board wishes to place on record their appreciation for the services rendered by them during their tenure as Executive Director and Director of the Company respectively.

Dr. Loka Manohar Reddy and Mr. Chandra Sekhar Pogula were appointed as Managing Director and Directors & COO respectively. Board recommends their appointment and resolutions placed before you for approval.

Directors Responsibility Statement

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

A In preparation of Annual accounts, the applicable accounting standards have been followed and no material departures have been made 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 at the end of the financial year and of the profit of the company for the said period.

C. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956, for safeguarding the assets of your company and for preventing and detecting fraud and other irregularities.

D. The Directors have prepared the annual accounts on a going concern basis.

SUBSIDIARIES

Company has invested 100% of the paid up capital of Nettlinx Inc., Nettlinx Realty Pvt. Ltd., Nettlinx Channel Pvt. Ltd., Host Department LLC, and 67% in IADFAC Laboratories Pvt. Ltd.

Consolidated Financial performance has been given separately.

CORPORATE GOVERNANCE

Your Directors affirm their commitment to the Corporate Governance Standards prescribed by the Securities and Exchange Board of India (SEBI). A report on Corporate Governance with Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is Annexed to this report as Annexure-ll. Audit Committee has been reconstituted of the following members.

1. Sri K. Kameswara Rao, Chairman

2. Sri V. Harish Kumar

3. Sri J.V. Hanumanth Rao

FIXED DEPOSITS

Your Company has not accepted any deposits and, as such, no amount of principal or interest was outstanding as at the close of the Financial Year.

AUDITORS

M/s. DEVA& CO Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. The Statutory Auditors have intimated to the Company that the appointment, if made, would be within the prescribed limits under section 224 (1-B) of the Companies Act, 1956 and that they are not otherwise disqualified within the meaning of subsection (3) of section 226 to the Companies Act, 1956, for such appointment.

The notes to the accounts referred to in the Auditors Report is self explanatory and therefore do not call for any further Comments.

PARTICULARS OF EMPLOYEES

During the year under review, there were no employees drawing remuneration in excess of the limits laid down in section 217(2A) of the Companies Act, 1956 read with (Particulars of Employees) Rules, 1975.

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

The information required under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (disclosures of particulars in the Report of Board of Directors) Rules 1988 are set out in Annexure III, attached hereto and forms part of this report.

EMPLOYEE STOCK OPTION PLANS

Company has offered Stock Options to the employees under Nettlinx Stock Option Plan 2007 aggregating to 415000 options at a price of Rs. 11.20. For the year ending 31st March, 2010 there are 3,85,000 stock options outstanding, and vesting options to the extent of 50% will fall due on 30.8.2010.

Disclosures Pursuant to Para 12 of the Securities Exchange Board of India (Employees Stock Options Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 are set out as Annexure IV to the report.

ACKNOWLEDGEMENTS:

Your Directors place on record their sincere appreciation for the services of the Department of Telecommunications (DOT), Bankers and the Software Technology Park of India (STPI). Your Directors also place on record their sincere appreciation and gratitude for the valuable assistance, support and co-operation from the Companys Customers, Employees and Shareholders during the period under review,

For and on behalf of the Board

Sd/-

(Dr. Loka Manohar Reddy)

Managing Director

Sd/-

(K. KAMESWARA RAO)

Director

Date : 26th August, 2010

Place : Hyderabad

 
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