BOARD'S REPORT

Dear Shareholders,

Your 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.

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.

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(l)(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. 21st 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 Functionapps 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-l attached to the Consolidated Financial Statements for the year ended March 3l, 20l5.

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, 20l3.

AUDITORS AND AUDITORS' REPORT

M/s. S.R. Batliboi & Co. LLP Chartered Accountants (Firm Registration No.: 30I003E), 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 l39 of the Companies Act, 20l3 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 l4l(3) (g) of the Companies Act, 20l3 and that they are not disqualified for reappointment within the meaning of Section l4l 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 3l st March, 20l5 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, l4th November, 20l4, 2nd January, 20l5 and l0th February, 20l5. 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, 20l5.

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, 20l4. 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, 20l3, Mr. Prashant Bindal has been appointed as Chief Executive Officer (CEO) of the Company w.e.f. August 27, 20l4. 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 l34(5) of the Companies Act, 20l3, the Directors hereby confirm that:

(i) in the preparation of annual accounts for the financial year ended 3lst March, 20l5 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, 20l3 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 (l) of the Companies Act, 20l3 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 20l4 the Company has appointed M/s Sanjay Grover & Associates, Practicing Company Secretaries, to conduct the Secretarial Audit for the financial year 20l4-l5. 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 l77 of the Companies Act, 20l3 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, 20l3, 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, 20l4, Annual Report on Corporate Social Responsibility Activities for the year 20l4 -20l5 is attached (Annexure- l ).

EXTRACT OF THE ANNUAL RETURN

In compliance with Section l34(3) of Companies Act, 20l3 read with Rule l2 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 l86 of the Companies Act, 20l3 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-www.spicemobility.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, 20l4.

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

Dilip Modi

Chairman

Date: 13th August, 2015

Place: Noida