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DIRECTOR'S REPORT

DiGiSPICE Technologies Ltd.

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Market Cap. (₹) 143.58 Cr. P/BV 0.49 Book Value (₹) 12.84
52 Week High/Low (₹) 15/6 FV/ML 3/1 P/E(X) 23.73
Bookclosure 27/09/2019 EPS (₹) 0.27 Div Yield (%) 7.14
Year End :2018-03 

BOARD'S REPORT

Dear Shareholders,

Your Directors have pleasure in presenting the Thirtieth Annual Report together with the Audited Financial Statements for the financial year ended on 31st March, 2018.

FINANCIAL RESULTS

The consolidated and standalone financial performance of the Company for the financial year ended 31st March, 2018 is summarized below:-

(Amount In Rs. Lakhs)

PARTICULARS

For the Financial Year ended 31.03.2018

For the Financial Year ended 31.03.2017

Consolidated

Standalone

Consolidated

Standalone

Total revenue from continuing operations

29373.98

778.50

28840.25

17089.96

Earnings before finance costs, tax, depreciation & amortization and exceptional items from continuing operation

1887.55

(667.77)

4549.99

406.40

Share of (profit)/loss of associates and a joint venture

78.60

-

45.20

-

Depreciation and amortization expense

1697.16

494.32

2020.01

696.75

Finance costs

205.37

12.63

27.37

19.46

Exceptional items

6746.23

(807.89)

812.09

8453.93

Profit/(Loss) before tax from continuing operations

(6839.81)

(366.83)

1645.32

(8763.74)

Tax expenses

Current Income Tax

816.40

-

1320.03

-

MAT Credit Entitlement for the year

-

-

-

-

Income Tax adjustment for earlier years (net)

116.31

-

(61.03)

(13.34)

Deferred tax charge/ (credit)

(126.77)

-

(235.50)

Profit/(Loss) for the Year from continuing operation

(7645.75)

(366.83)

621.82

(8750.40)

Profit/(Loss) for the Year from discontinued operation

3176.04

-

(4471.77)

-

Total Profit/ (Loss) for the year

(4469.72)

(366.83)

(3849.95)

(8750.40)

Other comprehensive income for the year

131.38

2.87

(642.05)

3.19

Total comprehensive income for the year

(4338.33)

(363.96)

(4492.00)

(8747.21)

Share of Minority in profits / (losses)

(915.00)

-

(483.34)

-

Profit / (Loss) for the year attributable to equity shareholders

(3423.33)

(363.96)

(4008.66)

(8747.21)

PERFORMANCE REVIEW AND STATE OF THE COMPANY AFFAIRS

The Company, through its subsidiaries, is engaged in the following businesses:

a) Digital Technology services - offering managed services, Enterprise Messaging, Mobility Software Solutions, etc. with digital services being the central focus. The operations cover various countries including India, Africa, Bangladesh, South East Asia and Latin America. The Company is also working with various enterprises in developing and managing technology platforms connecting and managing their customers.

b) Digital financial services (Fintech) under the brand name "Spice Money", providing assisted financials services to the semi urban and rural population of India to drive financial inclusion in the country. Some of the services offered by the Company are domestic Money transfer, Bill payments, Ticketing etc. operating under licenses issued by RBI, UIADI, IRCTC etc.

Discontinuation of retail business: During the year, the Company, in line with its vision to transform into a Digital Technology services company, exited the hardware and multi brand retails business, which was operated under the brand "Spice Hotspot". The financial results of this business for the year is reported under "Discontinued Operations" in the consolidated financials.

The Company, at the standalone level, has achieved a total Income of Rs.778.50 lakhs for the year ended 31st March, 2018 (Previous year Rs.17089 lakhs). The Company has incurred a loss of Rs.367 lakhs for the year ended 31st March, 2018 as against a loss of Rs.8764 lakhs in the previous year ended 31st March, 2017.

The Company, at the consolidated level, achieved a total income of Rs.29374 lakhs for the year ended 31st March, 2018 as against Rs.28840 lakhs for the previous year ended 31 "March, 2017. The loss after tax at the consolidated level for the year ended 31st March, 2018 is Rs.7646 lakhs (Previous Year Profit of Rs.622 lakhs) which includes loss of Rs.6746 lakhs on account of exceptional items pertaining to "Discontinued Operations" and other one-time charges.

COMPREHENSIVE SCHEME OF ARRANGEMENT BETWEEN THE COMPANY AND ITS SUBSIDIARY COMPANIES

The Board of Directors of the Company in its meeting held on 22nd December, 2017 subject to necessary approvals, approved Comprehensive Scheme of Arrangement between Spice Mobility Limited, Spice Digital Limited, Spice IOT Solutions Private Limited, Mobisoc Technology Private Limited and Spice Labs Private Limited and their respective Shareholders and Creditors.

The said Scheme, inter alia, involves:

a. Demerger of Digital Technology Services (DTS) Business Undertaking of Spice Digital Limited into Spice Mobility Limited; and

b. Amalgamation of Spice IOT Solutions Private Limited, Mobisoc Technology Private Limited and Spice Labs Private Limited with Spice Mobility Limited.

The restructuring proposed under the said Scheme is expected to build a stronger and sustainable business and would result in consolidation of similar business under one entity and also enable the Company to achieve its ambition of becoming a leader in digital technologies in India and other emerging markets.

Further, the FinTech Business is at a nascent stage and has tremendous scope to grow in the future. It would also require significant investments in marketing, brand building, creating reach etc. The Restructuring proposal will help manage this business in a separate entity to enable getting growth capital and strategic investors into the business.

Pursuant to the directions of the Hon'ble NCLT, a meeting of the Equity Shareholders of the Company will be held on 15th October, 2018 for the purpose of approving the proposed Scheme.

SALE OF ENTIRE STAKE IN OMNIVENTURES PRIVATE LIMITED

Omniventures Private Limited (OVPL) was a wholly owned subsidiary of the Company and had two subsidiaries namely Spice Online Private Limited (SOPL) and Hotspot Sales & Solutions Private Limited (HSSPL) through which the Retail Business was being operated.

The Multi brand retail business of the Company had been continuously incurring losses and in spite of various steps taken by the management in the past, had not yielded desired results due to inherent challenges in the retail industry as a whole in terms of intense competition, falling margins, emergence of online channels etc. The Board of directors in its meeting held on 22nd December, 2017 had approved the sale of entire stake in OVPL and after obtaining the approval from the shareholders, the Company exited from Retail Business. Consequently, OVPL, SOPL and HSSPL ceased to be the subsidiaries of the Company.

SHIFTING OF REGISTERED OFFICE

The Board, subject to necessary approvals, had approved to shift the registered office of the Company from the State of Uttar Pradesh to the National Capital Territory (NCT) of Delhi. As required under the provisions of Companies Act, 2013, the Company obtained the approval of the shareholders through Postal Ballot. Subsequently, after getting the approval of Central Government (Power delegated to Regional Director), the Company has shifted its registered office to Delhi.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company, as of March 31, 2018, has 26 subsidiaries and 4 associates (including a joint venture) of its subsidiary Companies. The highlights of the principle subsidiaries are given below:

Spice Digital Ltd. - This Company is in the business of Digital Technology & Solutions and has a global presence, operating through its subsidiaries, both direct & step down subsidiaries. It achieved consolidated revenue of Rs .28115 Lakhs for the year ended 31st March, 2018 (31st Mar 2017- Rs. 25011 lakhs). It reported a consolidated Profit after Tax of before exceptional items Rs.59.6 lakhs vis-a-vis Rs.1340 lakhs in the previous year ended 31st March, 2017. The Consolidated PAT for the year ended 31st March, 2018 is loss of Rs.6136 lakhs (Previous year Profit of Rs.528 Lakhs).

Hotspot Sales & Solutions Pvt Ltd. -This Company is in the Multi Brand Handset Retail business operating through more than 100 retail stores across the company and was a step down subsidiary till 12th Feb 2018. Hotspot achieved revenue of Rs.33342 lakhs for the period ended 12th Feb, 2018 (till the day it was a subsidiary) and the loss aftertax is Rs.2310 lakhs.

Results of retail business through Hotspot Sales & Solutions Pvt Ltd. have been shown as part of "Discontinued Operations" in the consolidated financials of the Company.

The detailed performance and financial position of each of the subsidiaries and associate companies are given in Form AOC-I attached to the Consolidated Financial Statements for the year ended 31st March, 2018 which forms part of the Annual Report.

TRANSFER OF AMOUNT TO RESERVES

The Company has not transferred any amount to the Reserve during the Financial Year ended 31st March, 2018.

DIVIDEND

In view of losses during the year under review, your directors do not recommend any dividend to the shareholders.

TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of the Investors Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 notified by the Ministry of Corporate Affairs (MCA) as amended from time to time, all shares in respect of which dividend has not been paid or claimed by the Shareholders for seven consecutive years or more are liable to be transferred to the Investors Education and Protection Fund (IEPF) established by the Central Government.

Accordingly, the Company has transferred 5,38,257 equity shares pertaining to the Financial year ended 2008 - 09 and 37,562 shares pertaining to the Financial year ended 2009 - 10 to the IEPF. The unclaimed and unpaid dividend relating to the financial year 2010-11 is due for transfer to the IEPF in the month of November, 2018.

As required under the said Rules, the Company has sent individual letters to the shareholders who have not claimed or encashed their dividend for seven or more consecutive years. The detail of shares due for transfer to the IEPF is available on the website of the Company viz. www.spicemobility.in.

Once the aforesaid unclaimed dividend/ shares are transferred to IEPF, the concerned shareholders can claim both the unclaimed dividend as well as the shares transferred to IEPF from the IEPF Authority by making an application in the prescribed Form and manner under the applicable Rules.

LISTING OF SECURITIES

The Equity Shares of the Company are presently listed on BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Annual Listing Fee for the financial year 2018-19 has been paid to both the Stock Exchanges.

HOLDING COMPANY

As on 31.03.2018, Spice Connect Private Limited, the holding Company, holds 74.36% of the issued share capital of the Company.

SUBSIDIARY COMPANIES, JOINT VENTURES OR ASSOCIATE COMPANIES

During the year, the Company has acquired additional 10.78% stake in Spice Digital Limited (SDL), a subsidiary of the Company, taking its total stake to 99.98% in that Company. The entire stake in Kimaan Exports Private Limited (KEPL) has been sold to SDL, consequent to which KEPL has become a step down subsidiary of the Company.

During the year, SDL, a subsidiary of the Company, has acquired the balance 0.10% stake in Mobisoc Technology Private Limited, making it a 100% subsidiary of SDL and has also acquired 30% stake in Luharia Technologies Private Limited, which, subsequent to the closure of Financial Year has been sold by it. Further, during the year SDL has divested its entire stake in Sunstone Eduversity Private Limited and Spice Labs Private Limited, a step down subsidiary of the Company, has divested its entire stake in Exponentially I Mobility, a Limited Liability Partnership (LLP).

During the year, Omnia Pte. Limited, Singapore ('Omnia'), a step down foreign subsidiary of the Company, has purchased 100% stake in PT Spice Digital Indonesia, ('Indonesia'), another step down foreign subsidiary of the Company, from S Global Services Pte. Limited, Singapore ('SGS').

Further, during the year SGS and Spice VAS (Africa) Pte. Limited, ('SVA'), both step down foreign subsidiaries of the Company, incorporated and existing under the laws of Singapore, have entered into a Share Subscription and Purchase Agreement, whereby SGS transferred its entire shareholding in the Omnia Pte. Limited, another step down foreign subsidiary in Singapore to SVA against issue of SVA's shares to SGS, as agreed between SVA & SGS. Consequently, after allotment of shares as agreed between SVA & SGS, Omnia Pte. Limited and its subsidiary i.e. PT Spice Digital Indonesia, Indonesia has become subsidiaries of SVA and step down subsidiaries of SGS and will continue to be the step down subsidiaries of the Company, and SGS stake in SVA has increased from-70% to 80%.

The Memorandum of Understanding (MOU) entered in the previous year between that Spice VAS (Africa) Pte. Limited, Singapore ('SVA') and SVA (Mauritius) Pvt. Limited, Mauritius ('SM'), both step down foreign subsidiaries of the Company, for transfer of SVA entire stake in 7 foreign subsidiaries to SM was terminated. Accordingly, all the 7 subsidiaries continue to be the step down subsidiaries of the Company through SVA.

Pursuant to Section 129 (3) of the Companies Act, 2013 and Indian Accounting Standard - 110 issued by The Institute of Chartered Accountants of India, Consolidated Financial Statement presented by the Company include the Financial Statements of its Subsidiaries and Associates Companies.

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 the business hours up to the date of ensuing Annual General Meeting.

AUDITORS AND AUDITORS' REPORT

M/s. B S R & Co., LLP, (Firm Registration Number 10I248W/W-100022), Chartered Accountants, who was appointed as the Statutory Auditors of the Company in the 29th AGM held on 26th September, 2017, has resigned as the Statutory Auditors of the Company w.e.f. September 26, 2018 due to the reason that the cost estimated by them and the proposed fee is not commensurate with the efforts and time needed to carry out the audit, resulting a casual vacancy in the office of the Statutory Auditors of the Company. The Board of Directors, on the recommendation of the Audit Committee, has filled up the casual vacancy caused due to the aforesaid resignation by appointing M/s. Singhi & Co. (Firm Registration Number 302049E), Chartered Accountants, as the Statutory Auditors of the Company, to hold the office w.e.f. October 5, 2018 till the conclusion of the ensuing AGM of the Company. Since, the said casual vacancy in the office of Statutory Auditors was by way of resignation of Statutory Auditors, the appointment to fill the said vacancy by the Board also need approval of the shareholders of the Company.

On the recommendation of the Audit Committee, the Board, in its meeting held on October 5, 2018 has, also subject to the approval of the shareholders, recommended the appointment of M/s. Singhi & Co. having Firm Registration Number 302049E as the new Statutory Auditors of the Company for a term of five consecutive years commencing from the conclusion of ensuing 30th AGM till the conclusion of 35th AGM to be held in the year 2023. Accordingly, the requisite items relating to the appointment of M/s. Singhi & Co., Chartered Accountants, to fill the casual vacancies and also to appoint as the Company's Statutory Auditors, have been included in the Notice of AGM for approval of the members. The Company has received a confirmation from M/s. Singhi & Co., to the effect that their appointment, if made, would be in accordance with the provisions of the Companies Act, 2013 and they have also confirmed that they are not disqualified for appointment as Statutory Auditors of the Company.

The Auditors' Reports for the financial year 2017- 2018 do not contain any qualification or reservation. The Notes on Financial Statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

During the year, no incidence of fraud as defined under Section 143(12) of the Companies Act, 2013, which is required to be disclosed under Section 134(3) (ca) of the Companies Act, 2013, has been reported by the Auditors to the Board of directors of the Company.

CASH FLOW STATEMENT

In conformity with the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Cash Flow Statement for the year ended on 31st March, 2018 as prepared under the provisions of Indian Accounting Standard -7 as notified under Section 133 of the Companies Act, 2013 is attached as a part of the Financial Statement of the Company.

NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the financial year ended on 31st March, 2018, five meetings of the Board of Directors were held on 19th May 2017, 8th August 2017, 3rd November 2017, 22nd December 2017 and 14th February 2018. The details of number of meetings of the Board and its various committees attended by the directors are given in Corporate Governance Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Director in its meeting held on 17th May, 2018, on the recommendation of Nomination and Remuneration Committee, has appointed Mr. Shrenik M Khasgiwala, in the category of Non - Executive Non - Independent Director and Ms. Jayashree Vaidhyanthan in the category of Independent Director. Mr. Shrenik M Khasgiwala has been appointed as Additional 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 his appointment as a Director liable to retire by rotation is being placed for approval of members.

On the recommendation of Nomination and Remuneration Committee, the Board has, subject to the approval of shareholders, re-appointed Mr. Dilip Modi (DIN:00029062) as an Executive Director of the Company for a period of three year w.e.f. 30th November, 2018 and decided to continue him as Executive Chairman of the Company. Mr. Dilip Modi is also an Executive Director of Spice Connect Private Limited, the holding Company and receives remuneration from that Company. Mr. Dilip Modi retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. His re-appointment as Executive Director is also due for approval of the shareholders at the ensuing Annual General Meeting.

Ms. Preeti Malhotra resigned as the Director of the Company w.e.f. 21st February, 2018. Subsequent to the year end, Ms. Jayashree Vaidhyanthan, resigned as Independent Director of the Company w.e.f. 12th August, 20l8.The Board of Directors places on record its sincere appreciation for guidance provided by them during their tenure as Directors of the Company.

As required under Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a brief resume, details of experience and other Directorships / Committee memberships/ Chairmanships 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 the 30th AGM.

As per the provisions of Companies Act, 2013, Mr. Dilip Modi, Executive Director, Mr. Madhusudan V., Chief Financial Officer and Mr. M.R. Bothra, Company Secretary are the 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 Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

In terms of Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company familirises 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. All efforts are made to keep Independent Directors aware of major developments taking place in the industry, business the company operates in and relevant changes in the law governing the subject matter. The detail of programs for familiarisation of Independent directors can be accessed on the Company website at the link http://spicemobility.in/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, 2018, 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, 2018 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

As required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis (MDA) Report 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, Practising Company Secretaries, to conduct the Corporate Governance Audit of the Company. A Certificate from them regarding compliance with Corporate Governance conditions as stipulated under the relevant provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 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, Practising Company Secretaries, to conduct the Secretarial Audit for the financial year 2017-18. 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.

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

The Company has in place an established internal financial 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 invariably and proper follow up actions are ensured wherever required.

The Audit Committee ensures that the Company maintains effective risk management and internal control systems and processes. It provides its feedback and recommendation on the relevant matters to the Board. The Company has designated and implemented Risk And Control Matrix (RACMs) including therein the process wise controls. The Statutory Auditors and Internal Auditors evaluate the system of Internal Controls of the Company and report to the Audit Committee. Appropriate steps are taken to bridge the gaps observed by them. The Auditors have reported that the present systems and processes of internal controls are adequate and commensurate with the size of the Company and nature of its business.

CHANGE IN INTERNAL AUDITOR

During the year, M/s. Bansal Dalmia & Company, Chartered Accountants, resigned as Internal Auditors of the Company. The Board, on the recommendation of Audit Committee, in its meeting held on 14th February, 2018 has appointed M/s. GSA & Associates, Chartered Accountants, to act as Internal Auditors of the Company for the remaining part of the Financial year 2017-2018 (i.e. from 14th February, 2018 to 31st March, 2018) and for the Financial year 2018 - 2019.

AUDIT COMMITTEE

In compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company had constituted the Audit Committee. The Audit 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

The details of the terms of reference, meetings held during the year, attendance of directors at such meetings etc. are provided in Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The Board had constituted a Corporate Social Responsibility (CSR) Committee and on the recommendation of CSR Committee the Board approved the CSR Policy.

The CSR Committee has also been entrusted with the responsibility of monitoring the implementation of the framework of the CSR Policy, recommending to the Board the amount of expenditure to be incurred on CSR activities and ensuring that the implementation of the projects and programs is in compliance with the Corporate Social Responsibility Policy of the Company.

The Corporate Social Responsibility Committee comprises of the following members:

1.

Mr. Dilip Modi

- Chairman

2.

Mr. Subramanian Murali

- Member

3.

Mr. Umang Das

Member

During the year, the CSR Committee met once i.e. on 8th August, 2017. All three members attended the meetings. Though the Company was not required to spend any amount on CSR activities during the year 2017-18, as required under Companies (Corporate Social Responsibility Policy) Rule, 2014, Annual Report on Corporate Social Responsibility Activities for the year 2017 -18 is attached (Annexure- I).

BOARD FINANCE COMMITTEE

The Board had constituted a Board Finance Committee and entrusted the said Committee with the functions to approve the borrowings, making of loans, creation of charge on the assets of the Company etc. The said Committee is also advised to open, close and make changes in authorities for the operation of the bank accounts. The said Committee consists of Mr. Dilip Modi as Chairman and Mr. Subramanian Murali and Mr. Suman Ghose Hazra as members of the Committee. During the year, the said Committee met twice i.e. on 26th September, 2017 and on Ist November, 2017 and all the members of the Committee were present in the meeting.

SHARE AWARD AND WELFARE COMMITTEE

The Board, with a view to facilitate the disposal of equity shares held by the Independent Non Promoter Trust and Independent Non Promoter (Spice Employee Benefit) Trust and deal with other related matters, had constituted 'Share Award and Welfare Committee'. The said Committee consists of Mr. Umang Das as Chairman and Mr. Hanif Mohamed Dahya and Mr. Suman Ghose Hazra, Independent directors, as members of the Committee and during the year had a meeting on 19th May, 2017.

EXTRACT OF THE ANNUAL RETURN

In compliance with Section 92(3) of the 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 financial statements.

MAINTENANCE OF COST RECORDS

The Company is not required to maintain cost records as specified by the Central Government under sub-section (I) of Section 148 of the Companies Act, 2013.

PUBLIC DEPOSITS

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

PARTICULAR OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year, the Company has entered into various transactions with related parties. All related party transactions are undertaken in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations.

Al| 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. As required under the Companies Act, 2013 and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audit Committee has granted Omnibus approval for appropriate related-party transactions in accordance with the criteria laid down for the purpose.

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 viz. www.spicemobility.in

All related party transactions entered during the financial year were in the ordinary course of business except the sale of investment in Kimaan Exports Private Limited, a wholly owned subsidiary, to Spice Digital Limited, another subsidiary company 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 financial statements.

During the year, the Company has entered into a transaction which is on arm's length basis but not in the ordinary course of business, the details of which are given below in Form AOC - 2 as prescribed under Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014:

Details of material transaction at arm's length basis

S.No.

Particulars

Information

a

Name(s) of the related party and nature of relationship

Spice Digital Limited, a subsidiary company

b

Nature of transactions

Sale of investment in Subsidiary

c

Duration of the transactions

One time Transaction

d

Salient terms of the transactions including the value, if any:

Sale of shares of a subsidiary company, based on an independent valuation for a total consideration of Rs.6276 lakhs

e

Date(s) of approval by the Board, if any

16th March 2017

f

Amount paid as advance, if any

Full Consideration received

The above related party transaction was entered into after getting the approval of shareholders as required under Section 188 of the Companies Act, 2013.

VIGIL MECHANISM

The Company, as required under Section 177 of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 Audit Committee is authorized to oversee the Vigil Mechanism/ Whistle Blower Policy in the Company. The Company has not received any reference under the said policy during the year.

The Whistle Blower Policy is available on the Company's website at the link http://spicemobility.in/Vigil Mechanism Whistle Blower Policy.pdf

RISK MANAGEMENT POLICY

The Board of Directors, on the recommendation of Audit Committee, had adopted a Risk Management Policy for the Company to lay down the procedure to inform the Board members about the risk assessment and minimization. The Company is not mandatorily required to constitute a Risk Management Committee. As a good practice, the Company regularly reviews the existing risk management system and major risks associated with different businesses of the Company. The Audit Committee oversees the Risk Management function and reviews the prevailing risk management framework in the Company periodically. The Board of Directors of the Company, on the recommendation of the Audit Committee, takes appropriate measures, reviews the major risks associated with the Company and takes all requisite measures to minimize them.

REMUNERATION POLICY

The Board of Directors, on the recommendation of the Nomination and Remuneration Committee of the Company, had framed a Policy for Nomination and Appointment of Directors. As required under Section 178 of the Companies Act, 2013 read with the Rules made thereunder and the Listing Regulations, the Nomination and Remuneration Committee also recommended to the Board a Remuneration Policy for remuneration, including ESOP, to Directors, Key Managerial Personnel and Senior Management Personnel and other employees of the Company, which was duly approved by the Board. The Board on the recommendation of the Committee appoints the Senior Management Personnel from time to time. The Remuneration Policy for Directors, Key Managerial Personnel and other employees is attached (Annexure -3) to this Report.

EMPLOYEES STOCK OPTIONS

Keeping in mind the objectives of attracting key employees of the Company and inducing key employees to continue with the Company and encourage them to increase their efforts to make the Company's business more successful, the Nomination Remuneration Committee of the Company has recommended to the Board 'SML Employees Stock Option Plan- 2018' ("ESOP Plan"). The Board of Directors of the Company, subject to the approval of members of the Company and such other approval as may be necessary, has approved ESOP Plan and issuance of a maximum of 2,53,18,220 Equity shares of Rs. 3/- each of the Company under the said Plan.

The Company has obtained the requisite approvals of members of the Company by way of Postal Ballot on 12th February, 2018. The Company has also obtained the in- principle approval for the said Plan from both the Stock Exchanges i.e. BSE Limited and National Stock Exchange of India Limited. The Company has not granted any ESOP till 31st March, 2018.

Subsequent to the closure of Financial Year 2017- 2018, the Nomination and Remuneration Committee of the Company in its meeting held on 18th September, 2018 has approved the Grant of 2,13,81,000 stock options under ESOP Plan of the Company at an exercise price of Rs. 13.25 per share to the eligible employees as defined under the said Plan. Each option entitles the holder to apply for one equity share of Rs. 3 /- each as per the terms of the ESOP Plan.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEE AND INDIVIDUAL DIRECTORS

Pursuant to applicable provisions of the Companies Act, 2013 and the read with the Companies (Amendment) Act, 2017, the Nomination and Remuneration Committee has specified the manner for effective evaluation of performance of Board, its Committee and individual Director. The Board of Directors has carried out evalution of performance of each of them. The NRC reviews its implementation and ensure the compliances thereof. As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Nomination and Remuneration Committee, has also formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors. The Committee has selected certain additional criteria for evaluation of Executive Director.

A structured questionnaire has been prepared, covering various aspects of the functioning of the Board and its Committees, 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 Committees, 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 I (outstanding) to 5 (poor) for evaluating the entire Board, Committees of the Board 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 Board of Directors has carried out evaluation of every Director's performance including the Executive Director. The performance evaluation of the Independent Directors have been done by the entire Board, excluding the Director being evaluated.

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 and has also complied with the provisions relating to the Constitution of Internal Complaints Committee.

No case of Sexual Harassment was filed or registered during the year under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. Further, Company ensures that there is a healthy and safe environment for every women employee at the workplace and made the necessary policies for safe and secure environment for women employees.

ORDERS PASSED BY THE REGULATORS 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.

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- 4) 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 Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) thereof for the time being in force, the details of remuneration etc. of Directors, Key Managerial Personnel and employees covered under the said Rules is attached (Annexure- 5) which forms part of this report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the provisions of Secretarial Standard - I (Secretarial Standard on meetings of Board of Directors) and Secretarial Standard - 2 (Secretarial Standard on General Meetings) issued by the Institute of Company Secretaries of India.

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: 5th October, 2018

Dilip Modi

Place: Noida

Executive Chairman

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