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Directors Report of Spice Mobility Ltd.

Mar 31, 2015

Dear Shareholders,

The Directors have pleasure in presenting the Twenty Seventh Annual Report together with the Audited Financial Statements and Accounts for the financial year ended on 31st March, 2015.

FINANCIAL RESULTS

The consolidated and standalone financial performance of the Company for the financial year ended 31st March, 2015 is summarized below:-

(Rs.'000)

PARTICULARS For the Nine months period ended 31.03.2015 Consolidated Standalone

Total revenue 16,042,829 229,368

Earnings before interest, tax, depreciation & (377,965) 20,566 amortization and exceptional items

Depreciation and amortization expense 214,369 38,799

Finance costs 12,442 264

Exceptional items 2,376,514 3,346,607

Profit/(Loss) before tax (2,981,290) (3,365,104)

Tax expenses

Current tax (Minimum Alternative Tax) 73,962 -

MAT Credit Entitlement for the current year (614) -

Deferred tax charge/ (credit) 2,373 -

Tax adjustment for earlier years 7,080 -

Profit/(Loss) for the Period (3,064,091) (3,365,104)

Share of Minority in profits / (losses) 10,370 -

Share in Profit of Associate companies 121

Profit / (Loss) for the year attributable to equity (3,074,340) (3,365,104) shareholders

Balance brought forward from previous year 1,621,412 1,202,048

Reversal of proposed dividend on - - equity shares

Reversal of corporate dividend tax - -

Profit available for appropriation (1,452,928) (2,163,056) Appropriations:

Interim dividend - -

Tax on Interim Dividend - -

Net Surplus in the Statement of Profit & Loss (1,452,928) (2,163,056)

PARTICULARS For the Financial year ended 30.06.2014 Consolidated Standalone

Total Revenue 21,273,407 1,017,357

Earnings before intrest,tax, depreciation& 331,962 89,943 amortaisation and exceptional items

Depreciation and amortaisation expenses 349,723 51,007

Finance costs 11,788 1,254

Exceptional items 203,401 13,890

Profit/(Loss) before tax (232,950) 23,792 Tax expenses

Current tax(Minimum Alternative Tax) 46,439 (23,500) MAT Credit Entitlement for the current year (1,051) -

Defferd tax charge/(credit) (2,673) -

Tax adjustment for earlier year 423 1,800

Profit/(Loss)for the period (276,088) 45,492

Share of monitery in profit/(loss) 5,410 -

Share in Profit of Associate companies - -

Profit/(Loss)for the year attributable to equity shareholders (281,498) 45,492

Balance brought forward from previous year 1,896,411 1,150,057

Reversal of proposal dividend on equity share 9,625 9,625

Reversal of corporate dividend tax 31,777 31,777

Profit Available for appropriation 1,656,314 1,236,951

Appropriation:

Interim dividend 29,833 29,833

Tax On Interim Dividend 5,070 5,070

Net Surplus in the Statement of Profit & Loss 1,621.412 1,202.048

PERFORMANCE REVIEW AND STATE OF THE COMPANY AFFAIRS

The Company has subsidiaries which are engaged in the following business:

- Sale of 'Spice' branded feature and smart phones. The focus during the year has been to launch a series of low to medium end smart phones.

- Organised retail business with shops under the Brand 'Spice Hotspot' which is engaged in sale of multi-brand mobile handset and accessories.

- Value Added Service (VAS) business involving providing managed services to mobile operators in India, Africa, Bangladesh and LATAM countries.

During the period, the Company achieved a revenue of Rs.229 million for the Nine months ended 31st March, 2015 as against Rs.1,017 million for the year ended 30th June, 2014.The Company has incurred a loss of approx. Rs. 3365 million during the period ended on 31st March, 2015 as against a profit of Rs.45 million in previous year.

At the consolidated level the Company achieved a revenue of Rs. 16,043 million for the nine months period ended 31st March 2015 as against Rs.21,273 million for the year ended 30th June 2014. The loss after tax for the period ended on 31st March 2015 is Rs. 3,074 Million as against loss of Rs.282 Million for year ended on 30th June, 2014.

DIVIDEND

In the absence of adequate profit during the year under review, your directors do not recommend any dividend to the shareholders.

LISTING OF SECURITIES

The Equity Shares of the Company are presently listed on BSE Limited (BSE) and National Stock Exchange of India Ltd (NSE).The Annual Listing Fee for the Year 2015-16 has been paid to both the stock exchanges.

DELISTING OF EQUITY SHARES OF THE COMPANY

The Company had received a letter of intent from Smart Ventures Private Limited (SVPL), the Holding Company and Promoters of the Company, to make a voluntary delisting offer in pursuance to SEBI (Delisting of Equity Shares) Regulations, 2009 ("Delisting Regulations") to the public shareholders of the Company for delisting the Equity Shares of the Company from BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) where the equity shares of the Company are presently listed.

The Board of Directors has, subject to the approval of the members of the Company and such other approvals/sanctions as may be required in this connection, approved the proposal received from SVPL to voluntary delist the Equity Shares of the Company from both the Stock Exchanges.

The Company obtained the shareholders' approval for Voluntary Delisting of the Equity Shares of the Company by way of special resolution which was duly approved with the requisite majority of shareholders as prescribed under Regulation 8(1)(b) of the Delisting Regulations. The Company also obtained the in principle approval for Voluntary delisting of the Equity shares of the Company from both the Stock Exchanges.

The Company has subsequently received a letter from SVPL communicating its decision to put on hold any step in the direction of delisting of the equity shares of the Company till further notice.

HOLDING COMPANY

During the year, the name of the Holding Company of your Company has been changed from Smart Venture Limited to Smart Ventures Private Limited as it got converted into a Private Company w.e.f. 21 st August, 2014. As at 31.03.2015, the holding Company held 74.36% of the issued share capital of the Company.

SUBSIDIARY COMPANIES, JOINT VENTURES OR ASSOCIATE COMPANIES

During the year, no Company has become or ceased to be a subsidiary of the Company. However, Spice Digital Limited, a subsidiary of the Company, has acquired 26% stake in Vavia Technologies Private Limited, 38.53% stake in Anytime Learning Private Limited and 26% stake in Creative Function apps Labs Private Limited. Consequent to the said acquisitions, these companies have become Associate Companies of Spice Digital Limited.

Pursuant to Section 129 (3) of the Companies Act, 2013 and Accounting Standard - 21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statement presented by the Company include the Financial Statements of its Subsidiaries and the associates.

The performance and financial position of the subsidiaries and associates are given in Form AOC-1 attached to the Consolidated Financial Statements for the year ended March 31,2015.

Upon receipt of request, the Annual Accounts of the Subsidiary Companies and the related information will be made available to the shareholders of the Company. These documents shall also be available for inspection at the registered office of the Company during business hours up to the date of ensuing Annual General Meeting.

PUBLIC DEPOSITS

During the year under review, the Company has neither accepted nor renewed any deposits in term of Chapter V of the Companies Act, 2013.

AUDITORS AND AUDITORS' REPORT

M/s. S.R. Batliboi & Co. LLP Chartered Accountants (Firm Registration No.: 301003E),who are the Statutory Auditors of the Company, holds office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules made thereunder, it is proposed to appoint M/s. S.R. Batliboi & Co. LLP as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting (AGM) until the conclusion of Twenty- Eight Annual General Meeting of the Company.

The Company has received a consent and confirmation from them to the effect that their reappointment, if made, would be within the prescribed limits under Section 141(3) (g) of the Companies Act, 2013 and that they are not disqualified for reappointment within the meaning of Section 141 of the said Act.

The Notes on Accounts referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

CASH FLOW STATEMENT

In conformity with the provisions of Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended on 31st March, 2015 is attached as a part of the Annual Accounts of the Company.

NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL yEAR

During the financial year ended on 31st March, 2015, four meetings of the Board of Directors were held on 27th August, 2014, 14th November, 2014, 2nd January, 2015 and 10th February, 2015. The details of number of meetings of the Board and its various committees attended by the Directors is given in Corporate Governance Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

On the recommendation of Nomination and Remuneration Committee, the Board has appointed Mr. Subramanian Murali, Mr. Suman Ghose Hazra and Mr. Umang Das as Additional Directors w.e.f May 7,2015.

Mr. Subramanian Murali has been appointed as Non-Executive Director and holds office up to the date of ensuing Annual General Meeting of the Company and is eligible for appointment as Director. The resolution for appointment of Mr. Subramanian Murali as a Director liable to retire by rotation is being placed for approval of members.

Mr. Suman Ghose Hazra and Mr. Umang Das were appointed as Additional Directors in the category of Independent Director. Pursuant to the provisions of Section 149 of the Companies Act, 2013, Independent Directors are not liable to retire by rotation. The resolutions for appointment of Mr. Suman Ghose Hazra and Mr. Umang Das as Independent Directors for a term of 5 (five) years are being placed for approval of the members.

As required under Clause 49 of Listing Agreement, brief resume, details of experience and other Directorships / Committee memberships/ Chairmanships held by the Directors in other Companies, whose appointment/re-appointment is due in the forthcoming Annual General Meeting (AGM) of the Company, forms part of the Notice convening AGM.

Mr. Saurabh Srivastava resigned as the Director of the Company w.e.f. 27th December, 2014. Subsequent to the year end, Mr. Subroto Chattopadhyay and Mr. Rajul Garg, resigned as Directors of the Company w.e.f. 15th May, 2015 and Mr. Kashi Nath Memani resigned from Directorship w.e.f 1st June, 2015.The Board of Directors places on record its sincere appreciation for guidance provided by them during their tenure as Directors of the Company.

Ms. Preeti Malhotra retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment.

As per the provisions of the Companies Act, 2013, Mr. Prashant Bindal has been appointed as Chief Executive Officer (CEO) of the Company w.e.f. August 27, 2014. Mr. Prashant Bindal, Chief Executive Officer, Mr. Madhusudan V, Chief Financial Officer and Mr. M.R. Bothra, Company Secretary are Key Managerial Personnel of the Company.

DECLARATION OF INDEPENDENCE

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company familirizes its directors about their role and responsibilities at the time of their appointment through a formal letter of appointment. Presentations are regularly made at the meetings of the Board and its various Committees on the relevant subjects.

The detail of programmes for familiarization of Independent directors with the Company, their roles, right, responsibility in the Company, nature of the industry in which the Company operates, business model of the Company and related matters can be accessed on the Company website at the link http://spicemobility.net/Familiarization_programme.pdf

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:

(i) in the preparation of annual accounts for the financial year ended 31st March, 2015 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(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 affairs of the Company as at 31st March, 2015 and of the loss of the Company for the period ended on that date;

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

(iv) the Directors have prepared the annual accounts on a going concern basis;

(v) the Directors have laid down proper internal financial controls to be followed by the Company and such internal financial control are adequate and were operating effectively; and

(vi) the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis (MDA) Report, as required under Clause 49 of the Listing Agreement, forms an integral part of this Report.

CORPORATE GOVERNANCE REPORT

A separate report on Corporate Governance is enclosed as a part of this Annual Report. The Company has appointed M/s. Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Corporate Governance Audit of the Company. A Certificate from them regarding compliance with Corporate Governance norms stipulated in Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

SECRETARIAL AUDIT

As required under Section 204 (1) of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit for the financial year 2014-15.The Secretarial Audit Report received from them forms part of this Annual Report. The Secretarial Audit Report does not contain any qualification, reservation and adverse remark.

AUDIT COMMITTEE

In compliance with the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors of the Company has reconstituted the Audit Committee. The reconstituted Committee comprises of the following Directors:

1. Mr. Suman Ghose Hazra - Chairman

2. Mr. Hanif Mohamed Dahya - Member

3. Mr. Subramanian Murali - Member

4. Mr. Umang Das - Member

All the member of the Committee are financially literate and having the requisite financial management expertise. Further, all recommendation of Audit Committee were accepted by the Board of Directors.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

During the year, the Board of Directors of the Company has reconstituted the Corporate Social Responsibility Committee. The reconstituted CSR Committee comprises of the following members:

1. Mr. Dilip Modi - Chairman

2. Mr. Subramanian Murali - Member

3. Mr. Umang Das - Member

The CSR Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy indicating the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, monitoring the implementation of the framework of the CSR Policy, recommending to Board the amount of expenditure to be incurred on CSR activities and ensuring that the implementation of the projects and programmes is in compliance with the Corporate Social Responsibility Policy of the Company.

Accordingly, the CSR Committee has formulated and recommended to the Board CSR Policy of the Company. The Board has approved the CSR policy and as per the CSR Policy, the Company has incurred requisite expenditure on the identified activities.

As required under Companies (Corporate Social Responsibility Policy) Rule, 2014, Annual Report on Corporate Social Responsibility Activities for the year 2014 -2015 is attached (Annexure- 1 ).

EXTRACT OF THE ANNUAL RETURN

In compliance with Section 134(3) of Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the annual return in Form MGT-9 is attached (Annexure – 2) as a part of this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The details of Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013 are provided in the Notes forming part of the standalone financial statement.

PARTICULAR OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year, the Company has entered into transactions with related parties.

All related party transactions are placed before the Audit Committee for its approval. The quarterly disclosures of transactions with related parties are made to the Audit Committee for its review.

The 'Policy on Related Party Transactions' dealing with such transactions and 'Policy on Material Subsidiaries' as recommended by the Audit Committee and approved by the Board of Directors are uploaded on the website of the Company-wwwspicemobility.in

All related party transactions entered during the financial year were in the ordinary course of business and were on arm's length basis. There were no material related party transactions entered by the Company with Directors, KMP's or other persons which may have a potential conflict with the interest of the Company.

The details of the transactions with related parties are provided in the notes to standalone financial statement.

Since all related party transactions entered into by the Company during the financial year were on arm's length basis and in the ordinary course of business and there was no material related party transaction entered by the Company during the year, no details are required to be provided in Form AOC – 2 prescribed under Section 134 (3) (h) of the Companies Act, 2013 read with Rules 8(2) of the Companies (Accounts) Rules, 2014.

VIGIL MECHANISM

The Company, as required under Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, has established "Vigil Mechanism /Whistle Blower Policy" for Directors and Employees of the Company.

This Policy has been established with a view to provide a tool to Directors and Employees of the Company to report to the management Genuine Concerns including unethical behavior, actual or suspected fraud or violation of the Code or the Policy.This Policy outlines the procedures for reporting, handling, investigating and deciding on the course of action to be taken in case inappropriate conduct is noticed or suspected.

This Policy also provides for adequate safeguards against victimization of Director(s)/employee(s) who avail of the mechanism and also provides for direct access to the chairman of the audit Committee in exceptional cases.

The whistle Blower Policy is available on the Company's website at the link: http://spicemobility.net/Vigil_Mechanism_Whistle_Blower_Policy.pdf

RISK MANAGEMENT POLICY

Your Directors have adopted a Risk Management Policy for the Company. The Audit Committee and the Board of Directors of the Company take appropriate measures to minimize risk. The Audit Committee ensures that the Policy for Risk Management is adopted across the Company in an inclusive manner.

DIRECTORS' NOMINATION AND APPOINTMENT POLICY AND REMUNERATION POLICY

The Board of Directors, on the recommendation of the Nomination and Remuneration Committee of the Company, framed a Policy for Nomination and Appointment of Directors.The Nomination and Remuneration Committee has also recommended to the Board a Remuneration Policy for remuneration to Directors, Key Managerial Personnel and Senior Management Personnel and other employees of the Company, which was duly approved by the Board.The Policy of the Company for appointment of Directors is attached (Annexure - 3) and Remuneration Policy for Directors, Key Managerial Personnel and other employees is attached (Annexure - 4) to this Report.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEE AND INDIVIDUAL DIRECTORS

Pursuant to applicable provisions of the Companies Act, 2013 and the Listing Agreement with Stock Exchanges, the Board, in consultation with its Nomination and Remuneration Committee, has formulated a framework containing, inter – alia, the criteria for performance evaluation of the entire Board of the Company, its Committee and individual Directors, including Independent Directors.

A structured questionnaire has been prepared, covering various aspects of the functioning of the Board and its Committee, such as, adequacy of the constitution and composition of the Board and its Committees, discharge of role and responsibility by the Board and its Committees , frequency of the meetings, regulatory compliances and Corporate Governance, etc. Similarly, for evaluation of Individual

Director's performance, the questionnaire covers various aspects like his/ her attendance at the meeting of Board and its Committee, contribution in Board and Committee meetings, execution and performance of specific duties, obligations, regulatory compliances and governance, etc.

Board members had submitted their response on a scale of 1 (outstanding) – 5 (poor) for evaluating the entire Board, respective Committees of which they are members and of their peer Board members, including Chairman of the Board.

The Independent Directors had met separately without the presence of Non-Independent Directors and the members of management and discussed, inter-alia, the performance of non - Independent Directors and Board as a whole and the performance of the Chairman of the Company after taking into consideration the views of executive and Non-Executive Directors.

The Nomination and Remuneration Committee has carried out evaluation of every Director's performance. The performance evaluation of all the Independent Directors have been done by the entire Board, excluding the Director being evaluated.

EMPLOYEES STOCK OPTIONS DETAILS

The Company does not have any employees' stock option schemes.

SEXUAL HARASSMENT POLICY

As required under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013, the Company has a Policy on Prevention of Sexual Harassment of women at workplace and matters connected therewith. During the year, no case of Sexual Harassment was reported pursuant to the said Act and Policy

ORDERS PASSED By THE REGULATIORS OR COURTS, IF ANy

No significant and material orders were passed by the Regulators, Courts or Tribunals impacting the going concern status and Company's operations in future.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in place an established internal control system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. Self-certification exercise is also conducted by which senior management certifies effectiveness of the internal control system of the company. Internal Audit has been conducted throughout the organization by qualified outside Internal Auditors. Findings of the Internal Audit Report are reviewed by the top Management and by the Audit Committee and Proper follow up actions are ensured wherever required. The Statutory Auditors have evaluated the system of Internal Controls of the Company and have reported that the same are adequate and commensurate with the size of the Company and nature of its business.

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

Pursuant to provisions of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 the details of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are attached (Annexure- 5) which forms part of this report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration etc. of directors, Key Managerial Personnel and employees is attached (Annexure- 6 ) which forms part of this report.

ACKNOWLEDGEMENTS

Yours Directors would like to express their grateful appreciation for assistance and cooperation received from the Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff and Workers of the Company at all levels.

For and on behalf of the Board of Directors of

Spice Mobility Limited

Date : 13th August, 2015 Dilip Modi

Place: Noida Chairman


Jun 30, 2014

Dear Shareholders,

The Directors have pleasure in presenting the Twenty Sixth Annual Report together with the Audited Financial Statements and Accounts for the financial year ended on 30th June 2014.

FINANCIAL RESULTS The consolidated and standalone financial performance of the Company for the financial year ended 30th June 2014, is summarized below:-

(Rs.''000)

PARTICULARS For the Financial year ended 30.06.2014 Consolidated Standalone

Total revenue 21,273,407 1,017,357

Earnings before interest, tax, depreciation & 128,561 76,053 amortization

Depreciation and amortization expense 349,723 51,007

Finance costs 11,788 1,254

Profit/(Loss) before tax (232,950) 23,792

Tax expenses

Current tax (Minimum Alternative Tax) 46,439 (23,500)

MAT Credit Entitlement for the current year (1,051) -

MAT credit entitlement written off - -

Deferred tax charge/ (credit) (2,673) -

Tax adjustment for earlier years 423 1800

Profit/(Loss) for the Period (276,088) 45,492

Share of Minority in profits / (losses) 5,410 -

Profit / (Loss) for the year attributable to (281,498) 45,492

equity shareholders

Balance brought forward from previous year 1,896,411 1,150,057

Reversal of proposed dividend on equity shares 9,625 9,625

Reversal of corporate dividend tax 31 777 31 777

Profit available for appropriation 1,656,315 1,236,951

Appropriations:

Proposed Equity Dividend - -

Interim dividend 29,833 29,833

Tax on Proposed Equity Dividend - -

Tax on Interim Dividend 5,070 5,070

Transfer to General Reserve

Net Surplus in the Statement of Profit & Loss 1,621,412 1,202,048



PARTICULARS For the Financial year ended 30.06.2013 Consolidated Standalone

Total revenue 18,844,928 7,439,140

Earnings before interest, tax, depreciation & 560,612 786,861 amortization

Depreciation and amortization expense 362,548 81,681

Finance costs 10,331 1,430

Profit/(Loss) before tax 187,733 703,750 Tax expenses

Current tax (Minimum Alternative Tax) 142,016 69,022

MAT Credit Entitlement for the current year (7,640) -

MAT credit entitlement written off 8,978 8,978

Deferred tax charge/ (credit) 2,449 -

Tax adjustment for earlier years (4,779) -

Profit/(Loss) for the Period 46,709 625,750

Share of Minority in profits / (losses) (7,821) -

Profit / (Loss) for the year attributable to 54,530 625,750 equity shareholders

Balance brought forward from previous year 2,257,130 909,415

Reversal of proposed dividend on equity shares - -

Reversal of corporate dividend tax 28,771 28,771

Profit available for appropriation 2,340,431 1,563,936

Appropriations:

Proposed Equity Dividend 300,273 300,273

Interim dividend - -

Tax on Proposed Equity Dividend 81.172 51.031

Tax on Interim Dividend - -

Transfer to General Reserve 62,575 62,575

Net Surplus in the Statement of Profit & Loss 1,896,411 1,150,057

During the year, the Company achieved a revenue of Rs. 1,017 million for the Financial year ended 30th June, 2014 as against Rs. 7,439 million for the year ended 30th June, 2013. The Company has earned a profit of approx. Rs.45 million during the financial year ended on 30th June, 2014 as against a profit of Rs. 626 million in previous year.

The Mobile Handset business of the Company has been transferred to Spice Retail Limited (SRL), a Wholly Owned Subsidiary of the Company, as a going concern w.e.f. 1st July, 2013 by way of slump sale and accordingly the financials of the financial year ended on 30th June, 2014 are excluding the figures of that business and are not comparable with the corresponding financial year.

The Consolidated Financial Statements of the Company have been prepared as per Accounting Standard (AS) 21 notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The Consolidated Financial Statements include the financial statements of the Company and its subsidiary Companies.

At the consolidated level the Company achieved a revenue of Rs.21,273 million for the financial year ended 30th June 2014 as against Rs. 18,845 million for the year ended 30th June 2013. The loss after tax for the financial year ended on 30th June, 2014 is Rs.282 Million as against profit of Rs.55 million for year ended on 30th June, 2013.

The Company, on the devices business, focused on the introduction of smart phones as part of its portfolio and further consolidated

its feature phone business and also invested in the second half in brand building through enhanced media spends and distribution infrastructure to grow the business. The company also launched Android Stores in a strategic partnership with Google and upgraded its Spice Hotspot Stores; continued focus on working capital management ensured that Cash Balance is maintained and operations remain healthy.

The VAS business has stabilized from the effect of TRAI Regulations and at the same time has diversified into the Enterprise Mobility Space.

BUY BACK OF EQUITY SHARES

With a view to enhance returns to investors and overall shareholders'' value by returning cash to shareholders in an efficient and investor friendly matter, the Board of Directors of your Company in its meeting held on 19th June, 2013 approved the Buy-back of Company''s fully paid-up equity shares of Rs.3/- each, at a price not exceeding Rs. 75/- per equity share, subject to a maximum of 1,10,00,000 (one crore ten lac) equity shares, up to an aggregate maximum amount of Rs.60 Crores which was within the limit of 10% of paid up equity capital and free reserves as prescribed under the Companies Act, 1956. The said buy back of equity shares was done from open market through stock exchange mechanism in accordance with the provisions contained in Section 77A and other applicable provisions of the Companies Act, 1956 and provisions contained in the SEBI (Buy Back of Securities) Regulations, 1998 as amended from time to time.

In pursuance to that, the Company commenced Buy back of its Equity Shares with effect from 10th July, 2013 and the same was closed on 13th May, 2014. The Company has bought back and extinguished 1,02,22,303 equity shares of Rs. 3/- each of the company pursuant to this buy-back offer. Accordingly, the issued and paid up share capital of the Company has reduced to Rs.68,35,91,946/- divided into 22,78,63,982 Equity Shares of Rs.3/- each as on 30.06.2014.

DIVIDEND

The Company has paid an interim dividend of 5% (i.e. Rs.0.15 per Equity share of face value of Rs.3/- each), declared by the Board of Directors of the Company at its meeting held on 1st November, 2013 on the paid-up Capital of the Company. Independent Non Promoter Trust which holds 35,301,215 equity shares of the Company had waived off its right to receive dividend on these equity shares held by them. Accordingly, interim dividend was not declared on these shares. With a view to drive business growth, your directors do not recommend any further dividend for the financial 2013-14 and place before you to confirm the interim dividend paid earlier.

CHANGE OF NAME OF THE COMPANY

With a view to further strengthen the "Spice" brand visibility in the minds of the consumers, the name of the Company has been changed from ''S Mobility Limited'' to ''Spice Mobility Limited'' with effect from 21st July, 2014. The Company is engaged in the business of trading and distribution of mobile handsets of "Spice" Brand through its subsidiaries. Spice is the registered trademark of the Company.

LISTING OF SECURITIES

The Equity Shares of the Company are presently listed on BSE Limited (BSE) and National Stock Exchange of India Ltd (NSE). The Annual Listing Fee for the Year 2014-15 has been paid to both the stock exchanges.

HOLDING COMPANY

During the year, the name of the Holding Company of your Company has been changed from S i2i Mobility Private Limited to Smart Ventures Private Limited w.e.f. 22nd July, 2013 which got converted into a Public limited Company w.e.f. 29th November, 2013.

As at 30.06.2014, Smart Ventures Limited (formerly S i2i Mobility Private Limited) held 74.36% of the issued share capital of the Company. The Holding Company has again got converted into a Private Limited Company w.e.f. 21 st August, 2014.

SUBSIDIARY COMPANIES

During the year, Spice VAS (Africa) Pte Ltd, a step down subsidiary of the Company has issued 2,18,610 and purchased its own 9,040 Ordinary Shares. Consequently the effective stake of the Company in this subsidiary Company has reduced from 65.25% to 62.09%.

During the year, Spice Digital Bangladesh Limited, a step down subsidiary of the Company has also issued 30,860 shares to Spice Digital Limited, a subsidiary of the Company. However, there is no change in the stake of the Company in this subsidiary Company as a result of the said issue of shares.

The Ministry of Corporate Affairs (MCA) vide its General Circular No. 2 dated 8th February, 2011 granted a general exemption under Section 212(8) of Companies Act, 1956 to companies from attaching the Accounts etc. of their subsidiary companies in the Annual Report subject to fulfillment of certain conditions prescribed therein. The necessary information relating to subsidiary companies have been disclosed in the consolidated balance sheet. The annual accounts of the subsidiary companies and the related detailed information shall be made available to the members of the Company seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept open for inspection by any member of the Company at the Registered Office of the Company on any working day during business hours.

The Statement relating to Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 is attached as a part of the Annual Accounts of the Company.

FIXED DEPOSITS

During the year under review, the Company has not accepted any Deposits from the public within the meaning of Section 58A of the Companies Act, 1956 or Section 73 of the Companies Act, 2013 as applicable.

AUDITORS AND AUDITORS'' REPORT

M/s. S.R. Batliboi & Co. LLP Chartered Accountants (Firm Registration No.: 301003E), who are the Statutory Auditors of the Company, holds office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules made thereunder, it is proposed to appoint M/s. S.R. Batliboi & Co. LLP as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting (AGM) until the conclusion of Twenty- seventh Annual General Meeting of the Company.

The Company has received a consent and confirmation from them to the effect that their reappointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for reappointment within the meaning of Section 141 of the said Act.

The Statutory Auditors in the Annexure to the Auditors'' Report has mentioned about a slight delay in deposit of statutory dues in a few cases. Steps have been taken to ensure that all such delays are eliminated in future.

The Notes on Accounts referred to in the Auditors'' Report are self explanatory and do not call for any further comments.

CASH FLOW STATEMENT

In conformity with the provisions of Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended on 30th June, 2014 is attached as a part of the Annual Accounts of the Company.

COST COMPLIANCE REPORT

Pursuant to the Companies (Cost Accounting Records) Rules, 2011 as notified by Ministry of Corporate Affairs on 3rd June, 2011 read with the relevant Circulars/ Notifications issued by the concerned statutory authorities, a Compliance Report for the financial year 2012-13, duly certified by a cost accountant, along with the Annexure as prescribed under the said Rules, was to be submitted to the Central Government. Accordingly, the Cost Compliance Report for the financial year 2012-13, certified by M/s Sanjay Gupta & Associates, Practicing Cost Accountants, was filed with the Central Government.

DIRECTORS

Dr. Bhupendra Kumar Modi resigned as Director and Chairman of the Company w.e.f. 18th February, 2014. The Board of Directors places on record its sincere and whole hearted appreciation for his excellent leadership during his tenure as Chairman of the Company which enabled the Company to achieve tremendous growth in its business and expand globally. As a part of succession planning within the group, Mr. Dilip Modi was appointed as the Chairman of the Company w.e.f. 18th February, 2014.

Mr. Dilip Modi retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

Pursuant to the provisions of the Companies Act, 2013, Independent Directors are required to be appointed in accordance with Section 149 of the said Act and that the requirement of retirement by rotation shall not be applicable to the Independent Directors. Accordingly, the resolutions for appointment of Mr. Subroto Chattopadhyay, Mr. Kashi Nath Memani, Mr. Saurabh Srivastava, Mr. Rajul Garg and Mr. Hanif Mohamed Dahya as Independent Directors for a term of 5 (five) years are being placed for approval of the members in the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement with the Stock Exchanges.

As required under Clause 49 of Listing Agreement, brief resume, details of experience and other Directorships / Committee memberships/ Chairmanships held by the Directors in other Companies, whose appointment/re-appointment is due in the forthcoming Annual General Meeting (AGM) of the Company, forms part of the Notice convening AGM.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, the Directors hereby confirm that:

(i) in the preparation of annual accounts for the financial year ended 30th June 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors had 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 30th June 2014 and of the profit of the Company for the period ended on that date;

(iii) the Directors had 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

(iv) the Directors had prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate report on Corporate Governance is enclosed as a part of this Annual Report. The Company has appointed M/s. Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Corporate Governance Audit of the Company. A Certificate from them regarding compliance with Corporate Governance norms stipulated in Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

SECRETARIAL AUDIT

As a measure towards good Corporate Governance Practice, the Company has appointed M/s Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit for the financial year 2013-14. The Secretarial Audit Report received from them forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

In compliance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of the Company at its Meeting held on 8th May, 2014 has constituted a Corporate Social Responsibility Committee (''CSR Committee''). The CSR Committee comprises of the following members:

1. Mr. Dilip Modi - Chairman

2. Ms. Preeti Malhotra - Member

3. Mr. Saurabh Srivastava - Member

The CSR Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy indicating the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013, monitoring the implementation of the framework of the CSR Policy, recommending to Board the amount of expenditure to be incurred on CSR activities and ensuring that the implementation of the projects and programmes is in compliance with the Corporate Social Responsibility Policy of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under Clause 49 of the Listing Agreement is given in Annexure-A and forms an integral part of this Report.

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

The particulars relating to conservation of energy, 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 annexed hereto in Annexure-B and forms an integral part of this Report.

PARTICULARS OF EMPLOYEES

In terms of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and particulars of employees as prescribed thereunder are required to be given in the Directors'' Report. However, pursuant to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all the members of the Company excluding the aforesaid information.The same would be made available for inspection at the Registered Office during working hours for a period of twenty one days before the date of Annual General Meeting. Any member interested in obtaining a copy of the same may write to the Company Secretary.

ACKNOWLEDGEMENT

Yours Directors would like to express their grateful appreciation for assistance and cooperation received from the Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff and Workers of the Company at all levels.

For and on behalf of the Board of Directors of Spice Mobility Limited

Date: 27th August, 2014 Dilip Modi Place: Noida Chairman


Jun 30, 2013

The Directors have pleasure in presenting the Twenty Fifth Annual Report together with the Audited Financial Statements and Accounts for the financial year ended on 30th June 2013.

FINANCIAL RESULTS

The financial performance of the Company for the financial year ended 30th June 2013, is summarized below:-

(Rs.Rs.000)

For the Financial year For the Financial year PARTICULARS ended 30.06.2013 ended 30.06.2012 (12 months) (15 months)

Total revenue 7,439,140 10,236,007

Earnings before interest, tax, depreciation & amortization 786,861 (376,236)

Depreciation and amortization expense 81,681 88,439

Finance costs 1,430 2,422

Profit/(Loss) before tax 703,750 (467,097) Tax expenses

Current tax (Minimum Alternative Tax) 69,022

Deferred tax charge/ (credit) 6,846

MAT credit entitlement written off 8,978

Profit/(Loss) for the Period 625,750 (473,943)

Balance brought forward from previous year 909,415 1,753,464

Reversal of proposed dividend on equity shares 52,952

Reversal of corporate dividend tax 28,771 8,590

Profit available for appropriation 1,563,936 1,341,063

Appropriations:

Proposed Equity Dividend 300,273 304,178

Tax on Proposed Equity Dividend 51,031 49,345

Transfer to General Reserve 62,575 78,125

Net Surplus in the Statement of Profit & Loss 1,150,057 909,415

During the year, the Company achieved a revenue of Rs.7,439 million for the Financial year (12 months) ended June, 2013 as against Rs.10,236 million for the 15 months period ended June, 2012. The Company has earned a profit of approx Rs.626 million during the financial year ended on 30th June, 2013 as against a loss of Rs.474 million in previous year showing a complete turnaround in the business of the Company.

The year witnessed strong improvement in Gross margin due to substantial cost reduction and well planned product portfolio.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company have been prepared as per Accounting Standard (AS) 21 notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The key financial highlights of the consolidated financial results for the year ended 30th June, 2013 is summarized below:

(Rs. Rs.000)

For the Financial year For the Financial year PARTICULARS ended 30.06.2013 ended 30.06.2012 (12 months) (15 months)

Total Revenue 18,844,928 27,628,622

Profit Before Tax 187,733 73,373

Profit/(Loss) for the period (after minority interest) 54,530 (97,098)

At the consolidated level the Company achieved a revenue of Rs.18,845 million for the financial year (12 months) ended June 2013 as against Rs.27,629 million for the 15 months period ended June 2012. The profit after tax for the financial year ended on 30th June, 2013 is Rs.55 Million as against loss of Rs.97 million for 15 months period ended on 30th June, 2012. Consolidated revenue is low but with better profitability due to higher margins and lower overheads.

On the devices business front, the Company has focused on profitability during the year. The Company undertook series of initiatives in cost rationalization, better product portfolio, expanding distribution network, opening of new format of Retail outlets etc. which helped improve profitability of the Company. Focused initiatives around inventories and overhead control led to healthier operation and better profitability.

The VAS business continued to be affected by stringent TRAI regulations which resulted into drop in domestic revenues by approx. 50%. However, significant efforts were made to get additional revenues in the same space outside India, notably in Africa. Growth in international revenues and cost optimization measures initiated earlier led to improved profitability.

BUY BACK OF EQUITY SHARES

With a view to enhance returns to investors and overall shareholders'' value by returning cash to shareholders in an efficient and investor friendly matter, the Board of Directors of your Company in its meeting held on 19th June, 2013 approved the Buy-back of Company''s fully paid-up equity shares of Rs.3/- each, at a price not exceeding Rs. 75/- per equity share, subject to a maximum of 1,10,00,000 (one crore ten lac) equity shares, up to an aggregate maximum amount of Rs.60 Crores which is within the limit of 10% of paid up equity capital and free reserves as prescribed under the Companies Act, 1956. The said buy back of equity shares is being done from open market through stock exchange mechanism in accordance with the provisions contained in Section 77A and other applicable provisions of the Companies Act, 1956 and provisions contained in the SEBI (Buy Back of Securities) Regulations, 1998 as amended from time to time.

In pursuance to that, the Company commenced Buy back of its Equity Shares with effect from 10th July, 2013. Till 31st December, 2013; 1,02,20,403 Equity Shares of Rs.3/- each have been bought back by the Company, out of which 1,02,20,203 equity shares have been duly extinguished. Accordingly, the issued and paid up share capital of the Company has reduced to Rs. 68,35,98,246/- divided into 22,78,66,082 Equity Shares of Rs.3/- each as on the said date.

SALE OF MOBILE HANDSET BUSINESS TO SPICE RETAIL LIMITED

Pursuant to the approval of the members of the Company obtained by way of Postal Ballot, the Board of Directors of your Company in its meeting held on 28th June, 2013 decided to sell/ transfer the Mobile Handset business of the Company as a going concern to Spice Retail Limited, a Wholly Owned Subsidiary of the Company, by way of slump sale w.e.f. 1st July, 2013. The Board of Directors of your Company is of the opinion that transferring the Mobile Handset Business of the Company to Spice Retail Limited, which is in the retail distribution of multi brand mobile handsets and accessories ("Retail Business") would enable the Company to synergise and consolidate its business of distribution of mobile handsets of Spice Brand with "Retail Business" of Spice Retail Limited in a single entity leading to cost efficiencies and also increased revenues and profitability.

CLOSURE OF UNITS AT BADDI, HIMACHAL PRADESH

The Company had two units at Baddi, Himachal Pradesh, predominantly for manufacturing feature phone handsets. With the fast changing technology scenario and shift to 3G Smart Phones in cellphones business, it was found unviable to manufacture phones in these units. Further, your Company is in the process of changing the business focus from mobile to mobile internet and in future the Company will be focusing on new technologies like 3G, 4G etc., which will enable the consumers to have rich mobile internet experience.

Keeping this in view, the Company has decided to close down/dispose off both the Units (i.e. Unit I and Unit II) in Baddi. It is believed that the same would not have any impact on the performance of the Company as the Company is engaged in the distribution of the mobile handsets under the brand name ''SPICE'' and 100% of the mobile handsets distributed are contract manufactured and customized as per the Indian market requirement before importing.

DIVIDEND

Your Directors are pleased to recommend a dividend @ 50 % on the paid-up Equity Share Capital of the Company (i.e. @ Rs.1.50 per share) for the financial year (12 months) ended on 30th June 2013. Independent Non- Promoter Trust which holds 35,301,215 Equity Shares of the Company has waived off its right to receive dividend on 34,100,000 equity shares held by them and accordingly no dividend has been recommended on these shares for the financial year ended on 30th June 2013.

Subsequent to year end, the Board of Directors of your Company has also declared interim dividend of 5% (i.e. Rs.0.15 per Equity share of face value of Rs. 3/- each) on the paid-up Capital of the Company for the financial year ending June 30, 2014. Independent Non Promoter Trust which holds 35,301,215 equity shares of the Company has waived off its right to receive dividend on these equity shares held by them. Accordingly, interim dividend has not been declared on these shares.

LISTING OF SECURITIES

The Equity Shares of the Company are presently listed on BSE Limited (BSE) and National Stock Exchange of India Ltd (NSE). The Annual Listing Fee for the Year 2013-14 has been paid to both the stock exchanges.

HOLDING COMPANY

Subsequent to year end, the name of the Holding Company of your Company has been changed from S i2i Mobility Private Limited to Smart Ventures Private Limited w.e.f. 22nd July, 2013 which got converted into a Public Limited Company w.e.f. 29th November, 2013.

As at 30.06.2013, Smart Ventures Private Limited (formerly S i2i Mobility Private Limited) held 71.17% of the issued share capital of the Company. Further, consequent to the extinguishment of equity shares bought back in pursuance to the on-going Buy-back Offer of equity shares by the Company, the shareholding of the Holding Company has increased to 74.36% as on 31.12.2013.

SUBSIDIARY COMPANIES

During the year, Spice Digital Limited, a Subsidiary of the Company, has subscribed for 100% equity (except one share) in Spice Digital Bangladesh Limited. Accordingly this Company has become a step down subsidiary of the Company. Further, during the year, Spice Digital Limited has bought back 3,118,701 equity shares from its shareholders resulting in increase in Company''s shareholding in the said subsidiary from 82.7% to 89.2%.

Spice VAS (Africa) Pte Ltd, a step down subsidiary of the Company has issued 32,770 Equity shares to eligible Employees and granted 91,530 share awards to be exercised over a period of three years in accordance with the share award scheme of that Company. The Share capital of S GIC Pte Ltd, a step down subsidiary of the Company, has been reduced by an amount of 3.2 million SGD from 18,935,600 SGD divided into 18,935,600 fully paid up ordinary shares to 15,735,600 SGD divided into 15,735,600 fully paid up ordinary shares.

The Ministry of Corporate Affairs (MCA) vide its General Circular No. 2 dated 8th February, 2011 granted a general exemption under Section 212(8) of Companies Act, 1956 to companies from attaching the Accounts etc. of their subsidiary companies in the Annual Report subject to fulfillment of certain conditions prescribed therein. The necessary information relating to subsidiary companies have been disclosed in the consolidated balance sheet. The annual accounts of the subsidiary companies and the related detailed information shall be made available to the members of the Company seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept open for inspection by any member of the Company at the Registered Office of the Company on any working day during business hours.

The Statement relating to Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 is attached as a part of the Annual Accounts of the Company.

FIXED DEPOSITS

During the year under review, the Company has not accepted any Deposits from the public within the meaning of Section 58A of the Companies Act, 1956.

AUDITORS AND AUDITORS'' REPORT

M/s. S.R. Batliboi & Co., Chartered Accountants (Firm Registration No.: 301003E), who are the Statutory Auditors of the Company has been converted into LLP and its name has been changed to S.R. Batliboi & Co. LLP. S.R. Batliboi & Co. LLP holds office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter from them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

The Statutory Auditors in the Annexure to the Auditors'' Report has mentioned about a slight delay in deposit of statutory dues in a few cases. Steps have been taken to ensure that all such delays are eliminated in future.

About the observation of the Statutory Auditors regarding non payment of Madhya Pradesh Entry Tax and Chattisgarh entry tax, the Company would like to inform that the Company is in discussion with tax authorities. Depending upon the outcome, the company will take appropriate action in this matter.

The Company had incurred cash losses in the immediately preceding financial period. However, no losses has been incurred during the current year. Losses of previous year pertain to demand challenge faced by the industry at large.

An accountant of the Company had misappropriated funds amounting to Rs.709 thousand during the year under audit. The Company is in process of recovering it from the employee and the concerned bank.

The Notes on Accounts referred to in the Auditors'' Report are self explanatory and do not call for any further comments.

CASH FLOW STATEMENT

In conformity with the provisions of Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended on 30th June, 2013 is attached as a part of the Annual Accounts of the Company.

COST COMPLIANCE REPORT

Pursuant to the Companies (Cost Accounting Records) Rules, 2011 as notified by Ministry of Corporate Affairs on 3rd June, 2011 read with the relevant Circulars/ Notifications issued by the concerned statutory authorities, a Compliance Report for the financial year 2011-12, duly certified by a cost accountant, along with the Annexure as prescribed under the said Rules, was to be submitted to the Central Government. Accordingly, the Cost Compliance Report for the financial year 2011-12, certified by M/s Sanjay Gupta & Associates, Practicing Cost Accountants, was filed with the Central Government.

DIRECTORS

Mr. Rajul Garg and Mr. Hanif Mohamed Dahya have been appointed as Additional Directors w.e.f. 26th August, 2013. The status of Ms. Preeti Malhotra has been changed from Executive Director to Non- Executive Director w.e.f. 13th February, 2013.

Mr. Kashi Nath Memani and Mr. Saurabh Srivastava retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

As required under Clause 49 of Listing Agreement, brief profile, details of experience and other Directorships / Committee memberships/ chairmanships held by the Directors in other Companies, whose appointment/re-appointment is due in the forthcoming Annual General Meeting (AGM) of the Company, forms part of the Notice convening AGM.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, the Directors hereby confirm that:

(i) in the preparation of annual accounts for the financial year ended 30th June 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors had selected such accounting policies and applied them consistently and made judgements 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 30th June 2013 and of the profit of the Company for the period ended on that date;

(iii) the Directors had 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

(iv) the Directors had prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate report on Corporate Governance is enclosed as a part of this Annual Report. The Company has appointed M/s. Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Corporate Governance Audit of the Company. A certificate from them regarding compliance with Corporate Governance norms stipulated in Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

SECRETARIAL AUDIT

As a measure towards good Corporate Governance Practice, the Company has appointed M/s Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit for the financial year 2012-13. The Secretarial Audit Report received from them forms part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under Clause 49 of the Listing Agreement is given in Annexure-A and forms an integral part of this report.

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

The particulars relating to conservation of energy, 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 annexed hereto in Annexure-B and forms an integral part of this report.

PARTICULARS OF EMPLOYEES

In terms of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and particulars of employees as prescribed there under are required to be given in the Directors'' Report. However, pursuant to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all the members of the Company excluding the aforesaid information. The same would be made available for inspection at the Registered Office during working hours for a period of twenty one days before the date of Annual General Meeting. Any member interested in obtaining a copy of the same may write to the Company Secretary.

ACKNOWLEDGEMENT

Yours Directors would like to express their grateful appreciation for assistance and cooperation received from the Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff and Workers of the Company.

For and on behalf of the Board of Directors of

S Mobility Limited

Date: 3rd January, 2014 Dr. B K Modi

Chairman


Jun 30, 2012

Dear Shareholders,

The Directors have pleasure in presenting the Twenty Fourth Annual Report together with the Audited Financial Statements and Accounts for the financial year (Fifteen Months) ended on 30th June 2012.

FINANCIAL RESULTS

The Board of Directors of the Company has extended the current financial year of the Company by 3 months with the current financial statements covering 15 months period from 1st April 2011 to 30th June 2012.The financial performance of the Company for the financial year ended 30th June 2012 is summarized below:-

(Rs.'000)

For the Financial For the Financial PARTICULARS year ended year ended 30.06.2012 31.03.2011 (15 months) (12 months)

Total revenue 10,236,007 9,708,400

earnings before interest, tax, depreciation & amortization (376,236) 958,067

Depreciation and amortization expense 88,439 16,743

Finance costs 2,422 6,763

(Loss)/Profit before tax (467,097) 934,561

Tax expenses

Current tax - 157,901

Fringe benefits tax credit for earlier years - (12)

Deferred tax charge/ (credit) 6,846 (4,582)

(Loss) / Profit for the Period (473,943) 781,254

Balance brought forward from previous year 1,753,464 673,612

Balance brought forward of Spice Televentures Private Ltd. pursuant to - 800,635

Scheme of Amalgamation

(Loss) after tax for the period 1st January 2010 to 31st March 2010 of Spice - (80,092)

Televentures Private Ltd. pursuant to Scheme of Amalgamation

Reversal of Dividend pursuant to Scheme of Amalgamation - 70,813

Reversal of proposed dividend on equity shares 52,952 -

Reversal on tax on proposed dividend reversed 8,590 -

Profit available for appropriation 1,341,063 2,246,222

Appropriations:

Proposed dividend 304,178 357,130

Tax on dividend 49,345 57,503

Transfer to General Reserve 78,125 78,125

Net Surplus in the Statement of Profit & Loss 909,415 1,753,464

During the year, the Company achieved a revenue of Rs. 10,236 million for the 15 months period ended June 2012 as against Rs.9,708 million for the 12 months period ended March 2011. The Company has incurred a loss of approx Rs. 474 million during the financial year ended on 30th June, 2012 as against the profit of Rs. 781 million in previous year.

With a view to switch as a leader in mobile internet space and to grab the opportunity in mobile handset market particularly to tap the new developments expected in mobile handset industry including 3G introduction, the Company made major investments in people and marketing resulting in higher Manpower and Administrative cost. During the year, the depreciation of Rupee against Dollar by more than 20% resulted in erosion of margins of the Company. Some high end models introduced by the Company also did not do well resulting in liquidation of stock at a reduced margin leading to losses during the year.

Your Company is taking a number of steps to improve its market position especially by constantly undertaking innovations towards enriching its product portfolio and rationalization of costs through reduction in manpower and other administrative cost and it is confident that these will yield positive results in the current fiscal.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company have been prepared as per Accounting Standard AS 21 notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The key financial highlights of the consolidated financial results for the year ended 30th June 2012 is summarized below:

(Rs '000)

PARTICULARS For the Financial For the Financial year ended year ended 30.06.2012 31.03.2011 (15 months) (12 months)

Total Revenue 27,670,847 20,506,770

Profit Before Tax 73,373 1,415,147

Profit/(Loss) for the period (97,098) 1,040,317

At the consolidated level the company achieved a revenue of Rs. 27,671 million for the 15 months period ended June 2012 as against Rs.20,507 million for the 12 months period ended March 2011. The loss after tax for the 15 months period ended on 30th June, 2012 is Rs 97 Million as against profit of Rs. 1,040 million for 12 months period ended on 31st March, 2011. The drop in margins during the year at the consolidated level is attributable to significant margin erosion in device business as mentioned above, failure of certain products at the high end of our range resulting in liquidation of stock and Reduction in revenue share and margin on the VAS segment due to market situation.

The multi brand retail business achieved an impressive revenue growth over the previous year. The retail business achieved turnaround at EBITDA level by earning EBITDA of Rs. 83 million this year against a loss of Rs. 126 million previous year. The loss (PAT) has further reduced to Rs. 46 million for fifteen months period ended on 30th June, 2012 as compared to loss of Rs. 327 million previous year. The number of stores have increased to 869 across 172 cities in India.

The VAS business witnessed decline in profits and margins due to the implementation of stringent Regulatory Guidelines and consistent rationalization on the revenue shares by the telecom operators. During the year, the VAS business has been further expanded in Africa region and the international revenue from the VAS business has continued to grow to 17% of the total VAS revenue as against 7% in the previous year.

DIVIDEND

Despite the losses incurred in the current financial year, your Directors are pleased to recommend a dividend @ 50 % on paid-up Equity Share Capital of the Company (i.e. @ Rs. 1.50 Per share) for the 15 months period ended on 30th June, 2012 to be paid out of the accumulated profits of the Company. Independent Non- Promoter Trust which holds 35,301,215 Equity Shares of the Company has waived off its right to receive dividend on the equity shares held by them and accordingly no dividend has been recommended on these shares for the financial year ended on 30th June 2012.

LISTING OF SECURITIES

The Equity Shares of the Company are presently listed on BSE Limited (BSE) and National Stock Exchange of India Ltd (NSE). The Annual Listing Fee for the Year 2012-13 has been paid to both the stock exchanges.

HOLDING COMPANY

During the year, Spice Global Investments Private Limited has transferred its entire shareholding in the Company to its wholly owned subsidiary Company "S i2i Mobility Private Limited" and accordingly "S i2i Mobility Private Limited" has become the holding Company of your Company. As at 30.06.2012, S i2i Mobility Private Limited holds 71.14% of the issued share capital of the Company.

SUBSIDIARY COMPANIES

During the year, the Company has incorporated a wholly owned subsidiary in the name of S Mobility Pte. Limited in Singapore. Spice VAS (Africa) Pte. Limited, a step down subsidiary of the Company, has acquired/established Spice VAS Zambia Limited, Spice VAS Tanzania Limited and Spice Digital South Africa Pty Limited as its subsidiaries and accordingly these three Companies have also became step down subsidiaries of the Company. Hindustan Retail Private Limited, a Subsidiary of the Company, has incorporated a wholly owned subsidiary in the name of S Retail Middle East FZE.

Subsequent to the end of financial year, the Company incorporated a wholly owned subsidiary in the name of "S Mobile Devices Limited" and has obtained an enabling approval of the members of the Company through Postal Ballot to sell or transfer the whole or part of the undertaking(s) pertaining to mobile handset business of the Company, as a going concern or otherwise to said Company. Further, Hindustan Retail Private Limited has acquired entire share capital of Spice Online Retail Private Limited and consequently this Company has become a step down subsidiary of your Company. Hon'ble High Court of Himachal Pradesh vide its order dated 10th July, 2012 approved the Scheme of Amalgamation of Spice Distribution Limited with Spice Retail Limited (both subsidiaries of the Company) and the said Scheme became effective w.e.f. 31st July, 2012. The appointed date of the said scheme is 1st April, 2011.

The Ministry of Corporate Affairs (MCA) vide its General Circular No. 2 dated 8th February, 2011 granted a general exemption under Section 212(8) of Companies Act, 1956 to companies from attaching the Accounts etc. of their subsidiary companies in the Annual Report subject to fulfillment of certain conditions prescribed therein. The necessary information relating to subsidiary companies have been disclosed in the consolidated balance sheet. The annual accounts of the subsidiary companies and the related detailed information shall be made available to the members of the Company seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any member of the Company at the Registered Office of the Company on any working day during business hours.

The Statement relating to Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 is attached as a part of the Annual Accounts of the Company.

FIXED DEPOSITS

During the year under review, the Company has not accepted any Deposits from the public within the meaning of Section 58A of the Companies Act, 1956.

AUDITORS AND AUDITORS' REPORT

M/s. S.R. Batliboi & Co., Chartered Accountants (Registration No.: 301003E), who are the Statutory Auditors of the Company, shall hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter from them to the effect that their reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

The Statutory Auditors in the Annexure to the Auditors' Report has mentioned about a slight delay in deposit of statutory dues in a few cases. Steps have been taken to ensure that all such delays are eliminated in future.

About the observation of the Statutory Auditors regarding non payment of Madhya Pradesh Entry Tax, the Company would like to inform that the matter is pending in a legal petition in the Hon'ble High Court of Madhya Pradesh. Depending upon the outcome of the Court case, the Company will take appropriate action in this matter.

The Company has incurred cash losses in the current period. The cash loss is primarily due to the demand challenge faced by the industry at large, foreign exchange loss due to depreciation of Indian Rupee vis-a-vis US$ and liquidation of slow/non moving models. This is seen as a temporary blip and the Company is taking adequate measures to address these issues effectively.

The Notes on Accounts referred to in the Auditors' Report are self explanatory and do not call for any further comments.

CASH FLOW STATEMENT

In conformity with the provisions of Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended on 30th June 2012 is attached as a part of the Annual Accounts of the Company.

DIRECTORS

During the year, Mr. Dilip Modi has resigned from the post of the Managing director of the Company w.e.f. 9th February, 2012. However, Mr. Modi continues to be a director on the Board of the Company. The Board of Directors places on record its sincere appreciation for the leadership provided by him in his capacity as Managing Director of the Company in achieving the tremendous growth in spite of difficult and challenging business and market scenario.

During the year, Mr. Rajiv Makhni was appointed as an additional Director of the Company w.e.f 9th February, 2012 who resigned from the Board w.e.f. 14th September, 2012. Mr. Thomas Henrik Zilliacus, Ms. Divya Modi, Mr. Devendra Raj Mehta and Mr. Krishan Lal Chugh have resigned from the post of the Director of the Company w.e.f 9th February, 2012; 17th July, 2012; 22nd October, 2012 and 5th November, 2012 respectively. The Board of Directors places on record its sincere appreciation for the guidance and contribution provided by them to the Company during their tenure as Directors of the Company.

Dr. Bhupendra Kumar Modi and Ms. Preeti Malhotra retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

As required under Clause 49 of Listing Agreement, brief profile, details of experience and other Directorships / Committee memberships held by the Directors in other Companies, whose re-appointment is due in the forthcoming Annual General Meeting (AGM) of the Company, forms part of the Notice convening AGM.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 2I7(2AA) of the Companies Act, 1956, with respect to the Directors' Responsibility Statement, the Directors hereby confirm that:

(i) in the preparation of annual accounts for the financial year ended 30th June 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors had selected such accounting policies and applied them consistently and made judgements 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 30th June 2012 and of the loss of the Company for the period ended on that date;

(iii) the Directors had 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

(iv) the Directors had prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

A separate report on Corporate Governance is enclosed as a part of this Annual Report. The Company has appointed M/s. Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Corporate Governance Audit of the Company. A certificate from them regarding compliance with Corporate Governance norms stipulated in Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

SECRETARIAL AUDIT

As a measure towards good Corporate Governance Practice, the Company has appointed M/s Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit for the financial year 2011-12. The Secretarial Audit Report received from them forms part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under Clause 49 of the Listing Agreement is given in Annexure-A and forms an integral part of this report.

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

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 2I7(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules I988, are annexed hereto in Annexure-B and forms an integral part of this report.

PARTICULARS OF EMPLOYEES

In terms of Section 2I7(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and particulars of employees as prescribed thereunder are required to be given in the Directors' Report. However, pursuant to the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all the members of the Company excluding the aforesaid information. The same would be made available for inspection at the Registered Office during working hours for a period of twenty one days before the date of Annual General Meeting. Any member interested in obtaining a copy of the same may write to the Company Secretary.

ACKNOWLEDGEMENT

Yours Directors would like to express their grateful appreciation for assistance and cooperation received from the Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff and Workers of the Company.

For and on behalf of the Board of Directors of

S Mobility Limited

Date: 5th November, 2012 Dr. B K Modi

Chairman

 
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