DIRECTORS' REPORT TO THE MEMBERS, The Directors have pleasure in presenting the Annual Report and Audited Accounts for the financial year ended 31st March, 2015. DIVIDEND During the year under review, the Board of Directors at its meeting held on 27th January, 2015 has declared and paid first Interim Dividend of Rs.3.25 per share on 80,50,000, 6.5% Cumulative Redeemable Preference Shares (CRPS) of Rs.100/- each. The Board of Directors at its meeting held on 18th May, 2015 also declared second Interim Dividend of Rs.3.25 per shares on above CRPS for financial year ended 31st March, 2015. The Company has made the payment of Rs.6.12 Crore towards interim dividend on CRPS for financial year 2014-15. MANAGEMENT DISCUSSIONS & ANALYSIS (MDA) Management Discussions and Analysis (MDA) Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the Companies Act, 2013 and Accounting Standard (AS) -21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS -27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report. The Board of Directors of the Company at its meeting held on 18th May, 2015 has approved Consolidated Financial Statements of the Company and its subsidiaries, associates etc. However due to non availability of financial statements of one of the Associates, the same could not be consolidated at that point of time. The financial statements of said Associate were made available subsequently and accordingly the Board of Directors of the Company at its meeting held on 17th August, 2015 has approved the revised Consolidated Financial Results after incorporating the financial statements of said Associates in accordance with Accounting Standard-23 on Accounting for Investments in Associates in Consolidated Financial Statements. The Auditors have therefore issued revised Auditors' Report on the revised Consolidated Financial Statements for the Financial Year ended 31st March, 2015 in supersession to their original Consolidated Auditors' Report dated 18th May, 2015, which hereby stands withdrawn for this purpose. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES M/s HTL Limited and M/s Moneta Finance Private Limited, continue to be the subsidiaries of your Company. During the year under review, M/s HFCL Advance Systems Private Limited became the wholly owned subsidiary of the Company w.e.f. 23rd February, 2015. A separate statement containing the salient features of financial statements of all subsidiaries of your Company forms part of consolidated financial statements in compliance with Section 129 and other applicable provisions, if any, of the Companies Act, 2013. The financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays up to the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. Any shareholder desirous of obtaining the Annual Accounts and related information of the above subsidiary companies may write to the Company Secretary at M/s Himachal Futuristic Communications Ltd. 8, Commercial Complex, Masjid Moth, Greater Kailash - II, New Delhi - 110048 and the same shall be sent by post. The financial statements including the consolidated financial statements, financial statements of subsidiaries and all other documents required to be attached to this report have been uploaded on the website of the Company i.e. www.hfcl.com A report on the performance and financial position of each of subsidiaries, associates and joint venture companies as per the Companies Act, 2013 is provided as "Annexure - A" to the consolidated financial statement and hence not repeated here for sake of brevity. The policy for determining material subsidiaries as approved by the Board of Directors may be accessed on the Company's website at the link: <http://www.hfcl.com/Policy%20for%20determining%252> <http://0> material%20subsidiaries.pdf FIXED DEPOSITS During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Section 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNELS AND PARTICULARS OF EMPLOYEES In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors of the Company at their meeting held on 27th January, 2015, formulated the Remuneration Policy on the recommendations of the Nomination and Remuneration Committee. The salient features covered in the Remuneration Policy have been outlined in the Corporate Governance Report which forms part of this Report. The Managing Director of your Company does not receive remuneration from any of the subsidiaries of the Company. The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of the Company is set out in "Annexure - A" to this Report and is available on the website of the Company. DIRECTORS & KEY MANAGERIAL PERSONNELS APPOINTMENTS/RE-APPOINTMENTS In compliance with the provisions of Section 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Shri M P Shukla was appointed as an Independent Director of your Company at 27th Annual General Meeting (AGM) held on 30th September, 2014 to hold office up to 2 (Two) consecutive years for a term up to the conclusion of the 29th AGM of the Company to be held in the calendar year 2016. At the aforementioned AGM, Shri Arvind Kharabanda, Director (Finance) was re-appointed for 2 (Two) years commencing from 1st June, 2014 to 31st May, 2016. During the financial year 2014-15, the Board of Directors appointed Shri Rajiv Sharma as Nominee Director of IDBI Bank Limited w.e.f. 17th November, 2014. Shri Rajiv Sharma is proposed to be appointed as Non-Executive Director liable to retire by rotation at the ensuing Annual General Meeting. Further, during the year under review the Board of Directors appointed Smt. Bela Banerjee as Additional/Non-Executive Independent Director w.e.f. 18th March, 2015 subject to the approval of shareholder at the ensuing AGM. Your directors recommend their appointments. Shri Arvind Kharabanda, Director (Finance) retires by rotation at this Annual General Meeting and being eligible offers himself for re-appointment. RESIGNATIONS During the year under review, the IDBI Bank Limited vide its letter No. CBG-SSCB.53/270/Nom.8 dated October 29, 2014 withdrew the nomination of Shri S G Nadkarni from the Board of the Company and accordingly he ceased to be a director of the Company w.e.f. 17th November, 2014. During the year under review, Shri Y L Agarwal resigned from the Board w.e.f. 19th March, 2015. The Board places on record its appreciation for their valuable contributions during their association with the Company. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company and related matters are put up on the website of the Company at the link <http://www.hfcl.com/FAMILIARIZATION%20> PROGRAM%20FOR%20INDEPENDENT%20DIRCTORS.pdf. ANNUAL EVALUATION OF BOARD PERFORMANCE In terms of the provisions of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors on recommendation of Nominations & Remuneration Committee have evaluated the effectiveness of the Board/Director(s) for financial year 2014-15. KEY MANAGERIAL PERSONNELS Shri Mahendra Nahata, Managing Director, Shri Arvind Kharabanda, Director (Finance), Shri V R Jain CFO and Shri Manoj Baid, Associate Vice-President (Corporate) & Company Secretary are the Key Managerial Personnel in accordance with the provisions of the Companies Act, 2013 and Rules made thereunder. PARTICULARS OF EMPLOYEES' AND RELATED DISCLOSURES In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in said rules are given in "Annexure - A" annexed herewith. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE The details of the number of Board and Audit Committee meetings of the Company are set out in the Corporate Governance Report which forms part of this Report. DECLARATAION OF INDEPENDENCE The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013, the Directors confirm that: (a) in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards and Schedule III of the Companies Act, 2013, have been followed and there are no material departures from the same; (b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the financial year ended 31st March, 2015; (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, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the Directors have prepared the annual accounts on a 'going concern' basis; (e) the Directors have laid down proper internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and (f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. AUDITORS AND AUDITORS' REPORT At the 27th Annual General Meeting (AGM) of the Company, Khandelwal Jain & Company, Chartered Accountants (Firm Registration No. 105049W) was appointed as the Statutory Auditors to hold office till the conclusion of the 28th AGM of the Company. Khandelwal Jain & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and having confirmed their eligibility, offer themselves for re-appointment. The Company has received necessary letter from them to the effect that their re-appointment, 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 re-appointment. The Audit Committee and the Board of Directors, therefore, recommended re-appointment of Khandelwal Jain & Co., Chartered Accountants as Auditors of the Company for the financial year 2015-16 till the conclusion of next AGM, for the approval of the Shareholders. The observations in the Standalone Auditors' Report are self explanatory and do not call for any further comments. The Statutory Auditors in the Annexure to the Auditors' Report has mentioned about a slight delay in deposit of statutory dues in few cases. In future, management will make all efforts to deposit the same within time. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Baldev Singh Kashtwal, Practicing Company Secretary having Membership No. F3616 to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure - B" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. EXTRACT OF ANNUAL RETURN The details forming part of the extracts of the Annual Return in Form MGT - 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014 are set out herewith as "Annexure - C" to this Report. RELATED PARTY TRANSACTIONS During the financial year 2014-15, Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary course of business and on arms' length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued there under and Clause 49 of the Listing Agreement. During the year under review, the Company has sold old fixed assets worth Rs.27 lacs to its Subsidiary M/s HTL Limited, a related Party under Section 2(76) of the Companies Act, 2013 with the requisite approval of Audit Committee and Board of Directors. During the financial year 2014-15, there were no transactions with related parties which qualify as material transactions under the Listing Agreement. The details of the related party transactions as required under Accounting Standard - 18 are set out in Note - 43 to the standalone financial statements forming part of this Annual Report. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link <http://www.hfcl>. com/HFCL-Related%20party%20transactions%20policy.pdf LOANS, GUARANTEES AND INVESTMENTS The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows: CORPORATE SOCIAL RESPONSIBILITY (CSR) The Board of Directors of the Company at its meeting held on 18th March, 2015 approved the Corporate Social Responsibility (CSR) Policy for your Company pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR Policy outlines the CSR vision of your Company. For more information please refer CSR Policy <http://www.hfcl.com/CSR%020Policy.pdf>%0 <http://www.hfcl.com/CSR%020Policy.pdf>20Policy.pdf The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out herewith as "Annexure - D" to this Report. The Company is undertaking CSR activities through its Registered Society i.e. HFCL Social Services Society ("HSSS") established by the Company in the year 1996. VIGIL MECHANISM The Board of Directors of the Company have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Company, through this policy envisages to encourage the Directors and Employees of the Company to report to the appropriate authorities any unethical behaviour, improper, illegal or questionable acts, deeds, actual or suspected frauds or violation of the Company's Code of Conduct for Directors and Senior Management Personnel. The Policy on Vigil Mechanism/ Whistle blower policy may be accessed on the Company's website at the link <http://www.hfcl.com/Whisle%020Blower%020Policy.pdf>%0 <http://www.hfcl.com/Whisle%020Blower%020Policy.pdf>20Blower <http://www.hfcl.com/Whisle%020Blower%020Policy.pdf>%0 DEPOSITORY SYSTEMS The Company's scrip has come under compulsory dematerialization w.e.f. 29th November, 1999 for Institutional Investors and w.e.f. 17th January, 2000 for all Investors. So far, 99.96% of the equity shares have been dematerialized. The ISIN allotted to the equity shares of the Company is INE548A01028. CHANGE IN REGISTRAR AND SHARE TRANSFER AGENT (RTA) During the year under review, the Board of Directors of the Company at its meeting held on 18th March, 2015 has decided to change its existing RTA M/s. MCS Limited to M/s. MCS Share Transfer Agent Ltd. having its office at F-65, First Floor, Okhla Industrial Area, Phase - I, New Delhi 110020. CORPORATE GOVERNANCE A separate Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement along with the Auditors' Certificate on its Compliance is given as a part of the Annual Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/ OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is set out herewith as "Annexure - E" to this Report. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future. GENERAL a) Your Company has not issued equity shares with differential rights as to dividend, voting or otherwise; b) Your Company does not have any ESOP scheme for its employees/directors. c) Neither the Managing Director nor the Wholetime Director of the Company receive any remuneration or commission from any of its subsidiaries. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. CAUTIONARY STATEMENT Statement in the Management Discussions and Analysis describing the Company's projections, estimates, expectations or predictions may be 'forward looking statements' within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that would make a difference to the Company's operations include demand supply conditions, raw material prices, changes in government regulations, tax regimes and economic developments within the country and abroad and such other factors. ACKNOWLEDGEMENTS The Directors thank the Central Government, Govt. of Himachal Pradesh, Govt. of Goa, IDBI Bank Limited, State Bank of India, Oriental Bank of Commerce, Punjab National Bank, Bank of Baroda, Union Bank of India and other Banks for all co-operations, facilities and encouragement they have extended to the Company. Your Directors acknowledge the continued trust and confidence you have reposed in this Company. The Directors also place on record their appreciation for the services rendered by the officers, staff & workers of the Company at all levels and for their dedication and loyalty. For and on behalf of the Board M P Shukla Chairman Date:17th August, 2015 Place: New Delhi
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