DIRECTORS' REPORT

TO,

THE MEMBERS,

The Board of Directors of your Company take pleasure in presenting the Seventh Annual Report together with Balance Sheet and Statement of Profit and Loss for the financial year ended March 31, 2015.

2. State of Company's Affairs

Your company achieved an all-time high performance, both in terms of turnover and profit, during the financial year 2014-15. The standalone gross revenue increased by 28.25%, Rs.6,253.23 million as compared to Rs.4,875.84 million in the previous year. The standalone profit before tax stood at Rs.324.07 million as compared to Rs.203.65 million in the previous year.

The consolidated financial statements of your Company for the financial year 2014-15, are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and Listing Agreement as prescribed by the Securities and Exchange Board of India (SEBI). The audited consolidated financial statements are provided in the Annual Report.

The financial statements of subsidiary, TeamF1 Networks Private Limited will be made available upon request by any member of the Company interested in receiving this information. The same will also be available at the Registered Office of the Company for inspection during office hours

3. Reserves

The Board of Directors has decided to transfer an amount of Rs.25 million to the General Reserve, out of the profits made during the current financial year.

4. Dividend

Your Directors have recommended for your consideration the payment of dividend of Re. 0.70/- per share for the year ended March 31, 2015 (i.e. @ 35% on the paid-up equity capital) to be paid, if approved at the Seventh Annual General Meeting.

5. Share Capital

During the year under review, the total paid-up share capital of the Company stands increased from 30,004,850 equity shares to 35,504,850 equity shares aggregating to Rs.71,009,700/-, on account of allotment of 5,500,000 equity shares of Rs.2/- each on the preferential basis to the erstwhile promoters and shareholders of TeamF1 Networks Private Limited (TeamF1) for consideration other than cash by way of swap of shares of TeamF1.

6. Extract of the Annual Return

As mandated by Section 92 of the Companies Act, 2013 read with the rules made thereunder, extract of annual return for the financial year ended March 31, 2015 in Form No. MGT-9 is enclosed as Annexure - I to this report.

7. Directors and Key Managerial Personnel

a) Changes in Directors and Key Managerial Personnel (KMP)

During the year under review;

(i) Mr. C. M. Gaonkar who was Executive Director and Chief Financial Officer (CFO) relinquished the Office of Executive Director effective from August 23, 2014 and continues to be CFO of the Company.

(ii) Mr. Tushar Sighat was appointed as Additional Director on the Board, effective from September 30, 2014 and was subsequently appointed as the Executive Director and Chief Executive Officer of the Company effective from October 1, 2014.

(iii) Mr. Vinai Kolli was appointed as Additional Director on the Board, effective from September 30, 2014 and was subsequently appointed as Whole-time Director of the Company effective from December 18, 2014.

(iv) Ms. Sue-Fung Wang was appointed as Additional Director (woman director) on the Board, effective from September 30, 2014.

(v) At the Board Meeting held on May 19, 2014, Mr. Gary Yang - Managing Director, Mr. Tushar Sighat - Executive Director & CEO, Mr. C. M. Gaonkar - Chief Financial Officer and Mr. Shrinivas Adikesar - Company Secretary were designated as "Key Managerial Personnel" of the Company pursuant to Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

b) Details of Directors retiring at the ensuing Annual General Meeting (AGM)

(i) In pursuance of section 152 of the Companies Act, 2013, at-least two-third of the Directors (excluding Independent Directors) shall be subject to retirement by rotation. One-third of such Directors must retire from office at each AGM and a retiring director is eligible for re-election.

Accordingly, Mr. Gary Yang retires by rotation and being eligible, offers to be re-appointed at the ensuing AGM. The Board of Directors of your Company recommends his re-election.

The appointment of and payment of remuneration to Mr. Yang as Managing Director of the Company effective from March 1, 2014 for a period of five years was approved by the members of the Company vide passing a Special Resolution on May 7, 2014. The Board of Directors, upon the recommendation of the Nomination and Remuneration Committee, in its meeting held on May 19, 2015 varied the terms of remuneration payable to Mr. Gary Yang with effect from April 1, 2015 for the remaining period of his tenure as Managing Director. The enhancement of remuneration is subject to the approval of the members at General Meeting.

(ii) The Board of Directors appointed Mr. Tushar Sighat as an Additional Director with effect from September 30, 2014, pursuant to Section 161(1) of the Companies Act, 2013 and Articles of Association of the Company. Mr. Tushar Sighat will hold office up to the date of the ensuing AGM of the Company.

The Board, upon the recommendation of the Nomination and Remuneration Committee, appointed Mr. Sighat as Whole-time Director and designated as Executive Director & CEO for a period of five years with effect from October 1, 2014. His appointment as well as the payment of remuneration is subject to the approval of members at the ensuing AGM.

(iii) The Board of Directors had appointed Mr. Vinai Kolli as an Additional Director with effect from September 30, 2014, pursuant to Section 161(1) of the Companies Act, 2013 and Articles of Association of the Company. Mr. Kolli will hold office up to the date of the ensuing AGM of the Company.

The Board, upon the recommendation of the Nomination and Remuneration Committee, appointed Mr. Kolli as Whole-time Director for a period of five years with effect from December 18, 2014, without any remuneration. His appointment requires the approval of members at the ensuing AGM.

Presently, Mr. Kolli is the Managing Director in TeamF1 Networks Private Limited (TeamF1), the wholly owned subsidiary of the Company, and receives remuneration from TeamF1. As such no remuneration is being proposed by the Company.

(iv) Pursuant to the second proviso to sub-section (1) of section 149 of the Companies Act, 2013 read with the rules made thereunder and clause 49 (II) (A) (1) of the Listing agreement and based on the recommendation of the Nomination and Remuneration Committee, Ms. Sue-Fung Wang was appointed as an additional director on the Board with effect from September 30, 2014 and holds office up to the date of this AGM of the Company. Her appointment requires the approval of members at the ensuing AGM.

The Board has appointed Ms. Wang in the category of Independent Director (women director) and as such if appointed as Director at the ensuing AGM would hold office for a term upto September 29, 2019.

c) Declaration by Independent Directors

Pursuant to sub-section (7) of Section 149 of the Companies Act, 2013 read with the rules made thereunder, all the Independent Directors have given the declaration that they meet the criteria of independence as laid down in sub-section (6) of section 149 of the Act and the Board at its meeting held on May 19, 2015 has duly taken note of the same.

8. Number of meetings of Board of Directors

During the year under review, seven meetings of the Board of Directors were held. The details of the meetings of the Board are furnished in the Corporate Governance Report which is attached to this Report.

Pursuant to provisions of part VII of the Schedule IV of the Companies Act, 2013 read with Clause 49 (II) (B)(6) of the Listing Agreement, a Separate Meeting of Independent Directors was held on March 20, 2015 for transacting the business enumerated under the said provisions.

9. Annual Evaluation of Board

In pursuance of section 134 (3) (p) of the Companies Act, 2013 read with rules made thereunder, the Board of Directors carried out the performance evaluation of the Board as a whole, and of its Committees and individual directors, based on questionnaire and feedback received from all the Directors on the Board. Directors, who were designated, held separate discussions with each of the Directors of the Company and obtained their feedback on overall Board effectiveness as well as performance of each of the other Directors.

10.Audit Committee

In pursuance of Section 177 of the Companies Act, 2013 read with the rules made thereunder and clause 49 of the Listing Agreement, the Company has duly constituted the Audit Committee consisting of 4 Non-Executive Directors with majority being Independent Directors including the Chairman of the Committee. The terms of reference of Audit Committee are as mentioned in Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The detailed terms of reference, constitution and other relevant details of Audit Committee have been given in Corporate Governance Report forming part of this Annual Report.

Further, in terms of section 177 (8) of the Act, it is stated that there were no such instances where the Directors have not accepted the recommendations of the Audit Committee during the year 2014-15.

11. Nomination and Remuneration Committee, Policy and Disclosures on Managerial Remuneration

In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the rules issued there under and Clause 49 of the Listing Agreement, the Board of Directors at its meeting held on May 19, 2014 renamed the existing "Remuneration Committee" as "Nomination and Remuneration Committee" consisting of 4 Non-Executive Directors with majority being Independent Directors including the Chairman of the Committee.

Further, on the recommendation of the Nomination and Remuneration Committee, the Board of Directors has formulated the Nomination and Remuneration Policy of the Company at their meeting held on August 23, 2014.

The Company's remuneration policy is driven by the success and performance of the individual employees, senior management, executive directors of the Company and other relevant factors including the following criteria;

a) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company;

b) Relationship of remuneration to performance is clear and meets appropriate performance industry benchmarks; and

c) Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

It is affirmed that the remuneration paid to Directors, Key Managerial Personnels and all other employees is as per the Remuneration Policy 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 your Company is set out in "Annexure - II" to this Report.

12.Stakeholders Relationship Committee

Pursuant to Section 178 (5) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board at its Meeting held on May 19, 2014 renamed the existing "Investors Grievance Committee" as "Stakeholders Relationship Committee". The detailed terms of reference, constitution and other relevant details of Stakeholders Relationship Committee have been given in Corporate Governance Report forming part of this Annual Report.

13.Vigil Mechanism/Whistle Blower Policy

Pursuant to the provisions of Section 177 of the Companies Act, 2013 read with the rules made thereunder, the Company has formulated and implemented Vigil Mechanism/ Whistle Blower Policy for disclosing of any unethical behaviour, actual or suspected fraud or violation of Company's code of conduct and other improper practices or wrongful conduct by employees or directors of the Company. The salient features of the policy have been detailed in the Corporate Governance Report forming part of this Annual Report. The Vigil Mechanism/ Whistle Blower Policy has been posted and is available on the website of the Company at <http://www.dlink.co.in/pdf/Whistle%20Blower%20Policy.pdf>

During the year under review, the Company has not received any complaints relating to unethical behaviour, actual or suspected fraud or violation of Company's code of conduct from any employee or directors.

14.Risk Management Policy

Pursuant to Clause 49 (VI) of the Listing Agreement, the Company has formulated and implemented the Risk Management Policy and was approved by the Board of Directors at its meeting held on November 1, 2014. The Risk Management Committee has been authorized by the Board to monitor and review the Risk Management Policy. The objective of the Risk Management Committee is to identify the risks impacting the business and formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core Committee has also been formed to identify and assess key risks and formulate strategies for mitigation of risks identified in consultation with process owners.

15.Details of Subsidiary Company

During the year, the Company completed the acquisition process of TeamF1 Networks Private Limited (TeamF1) and with effect from May 29, 2014 TeamF1 became the wholly owned subsidiary of the Company. Further, the Company has made allotment of 5,500,000 equity shares of Rs.2/- each to the promoters, directors and other shareholders of TeamF1 for consideration other than cash by way of swap of shares.

TeamF1 is in the business of embedded software engineering and has R&D capabilities with expertise in Networking and Security and is expected to bring in positive value to D-Link in terms of enhancing its technological as well as its research and development capabilities with access to in house customization and development of new localized products.

TeamF1's standalone financial statements show positive signs of growth in terms of its revenues. It registered gross revenue of Rs.173.01 million as compared to Rs.120.78 million in the previous fiscal year, thereby resulting in an increase of 43.24%. The profit before tax stood at Rs.4.54 million as compared to Rs.10.21 million in the previous fiscal year.

The Company does not have any material unlisted Indian subsidiary. The Company has formulated a Policy on Material Subsidiary as required under Clause 49(V)(D) and the policy is posted on the website of the Company under the web link <http://www.dlink.co.in/pdf/Material%20Subsidiary%20Policy.pdf>.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's Subsidiary (in Form AOC-1) is enclosed as Annexure - III to this report.

16.Statutory Auditors

The members of the Company vide passing a resolution at the Sixth Annual General Meeting of the Company had appointed M/s Deloitte Haskins & Sells LLP Chartered Accountants (Registration no. 117366W/W-100018) as Auditors of the Company for a period of four years effective from financial year 2014-15, subject to ratification of their appointment at every Annual General Meeting. The Board recommends for the ratification of appointment of M/s Deloitte Haskins & Sells LLP Chartered Accountants as the Auditors of the Company for the financial year 2015-16.

17.Secretarial Audit Report

Pursuant to the provisions of section 204 of the Companies Act, 2013 read with rules made thereunder, the Board of Directors had appointed Mr. Shivaram Bhat, Practicing Company Secretary as Secretarial Auditor of the Company for the financial year 2014-15 for conducting the Secretarial Audit as required under the provisions of Companies Act, 2013.

The Secretarial Audit Report given by Mr. Shivaram Bhat in Form No. MR-3, is annexed as Annexure - IV to this report.

18.Deposits

Your Company has not accepted any Fixed Deposits during the year under review and, as such, no amount of principal or interest was outstanding as on date of Balance Sheet.

19. Particulars of loans, guarantees or investments

Particulars of loans and guarantee given, investments made and securities provided, covered under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to standalone financial statements (Please refer to Note 3(e), 13, 18 and 41 to the Standalone Financial Statements).

20.Particulars of contracts or arrangements with related parties

The Company is a subsidiary of D-Link Holding Mauritius Inc. and is a part of D-Link Corporation. The Company is primarily engaged in marketing and distribution of D-Link branded Networking products in India and neighbouring countries. The majority products are imported from D-Link Corporation and its Subsidiaries. All the transactions entered by the Company with Related Parties were in the Ordinary Course of Business and at Arm's Length Price basis. The Audit Committee and the Board of Directors reviewed the transactions (which are repetitive in nature) and the Audit Committee granted approval for such transactions.

The disclosures as required under AS-18 have been made in Note 32 of the Notes forming part of the standalone financial statements. The particulars of contracts or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 has been disclosed in Form No. AOC-2 which is annexed as Annexure -V.

The Policy on related party transactions as approved by the Board may be accessed on the Company's website at the link: <http://www.dlink.co.in/pdf/RELATED%20PARTY%20POLICY.pdf>.

21.Details on Internal Financial Controls related to Financial Statements

Your Company has put in place adequate internal financial controls with reference to the financial statements for the fiscal 2014-15. The Audit Committee of the Board has also approved revision in policy on internal controls relating to financial statements and adequacy for compliance. In the opinion of the Board, the existing internal control framework is adequate and commensurate to the size and nature of the business of the Company.

22. Material Changes and Commitments, if any, affecting the Financial Position of the Company

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year, to which this financial statement relate, and the date of this Report.

23.Prevention and Redressal of Sexual Harassment at Workplace

The Company has formulated and implemented a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with the rules made thereunder. The Company has also constituted Internal Committee as per requirements of the above Act.

During the financial year 2014-15, the committee has neither received any complaints nor there were any pending cases as at March 31, 2015.

24.Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

A) Conservation of energy

Your Company is primarily engaged in Marketing and Trading activities and has not consumed energy of any significant level and no additional investment is required to be made for reduction of energy consumption. However, the Company will continue with its efforts to conserve the energy.

B) Technology absorption

No comment is being made on technology absorption considering the nature of activities undertaken by your Company during the year under review.

C) Foreign exchange earnings and outgo

Total foreign exchange earnings and outgo is stated in Note 35 forming part of the Standalone Financial Statements.

25.Corporate Social Responsibility (CSR)

Pursuant to Section 135 of the Companies Act, 2013 read with rules made thereunder, your company has constituted a Corporate Social Responsibility Committee (CSR Committee) and has also formulated CSR Policy in accordance with the Act.

The CSR Committee is in the process of determining specific activities and identifying specific partners that would be aligned with the Company's CSR Policy. Hence, the Company could not spend the qualifying amount on CSR activities during the financial year 2014-15. The process would be completed in the current financial year and the CSR amount as stipulated by the Companies Act will be spent on qualifying activities accordingly.

The CSR Policy of the Company has been posted on the website of the Company at <http://www.dlink.co.in/pdf/CSR%20Policy.pdf>. The details of Corporate Social Responsibility (CSR) are set out in Annexure-VI.

26.Details of Significant and Material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future

There was no significant and material order passed by any regulator or court or tribunal impacting the going concern status of the Company and its future operations.

27.Management Discussion and Analysis Report

The Management Discussion and Analysis including the result of operations of the Company for the year, as required under Clause 49 of the Listing Agreement with the Stock Exchanges, is appended to this Annual Report.

28.Corporate Governance

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Corporate Governance as well as the Auditors' Certificate regarding compliance of conditions of Corporate Governance forms a part of the Annual Report.

29.Directors' Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

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

b) 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 31st March, 2015 and of the profit/loss of the Company for that period;

c) the directors had 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 had prepared the annual accounts on a going concern basis;

e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

30.Acknowledgements

The Directors wish to convey their appreciation to Business Associates, Business Distributors/Partners and Bankers for their support and contribution during the year. The Directors thank the Company's employees for their hard work and customers, vendors, investors, for their continued support.

For and on behalf of the Board of Directors

Gary Yang

Managing Director

Tushar Sighat

Executive Director & CEO

 Place : Mumbai,  

Dated: May 19, 2015