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3i Infotech Ltd.

BSE: 532628 Sector: IT
NSE: 3IINFOTECH ISIN Code: INE748C01020
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VOLUME 705757
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P/E 5.66
Mkt Cap.(Rs cr) 522
Buy Price 0.00
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Sell Price 4.19
Sell Qty 4500.00
OPEN 4.25
CLOSE 4.26
VOLUME 705757
52-Week high 7.20
52-Week low 4.16
P/E 5.66
Mkt Cap.(Rs cr) 522
Buy Price 0.00
Buy Qty 0.00
Sell Price 4.19
Sell Qty 4500.00

3i Infotech Ltd. (3IINFOTECH) - Director Report

Company director report

FOR THE FINANCIAL YEAR 2015-16

Dear Shareholders

Your Directors present the Twenty Third Annual Report (the “Report”) of theCompany along with the Audited Financial Statements for the year ended March 31 2016.

OVERVIEW

a) Performance of the Company

The year 2015-16 was a watershed year for the Company. The Company had approached CDRLenders Non-CDR Lenders and Lessors of the Company and lenders of its subsidiaries(“DRS Lenders) for restructuring of the debts of the Company. The Company was also indiscussion with its Foreign Currency Convertible Bonds (FCCBs) holders for restructuringof FCCBs. The Company received approval from Corporate Debt Restructuring (CDR) cell videits letter dated June 14 2016 for the Debt Realignment Scheme (DRS) proposal submitted toDRS Lenders. As per the restructuring terms agreed with DRS Lenders the DRS Lenders willbe issued equity shares to the extent of 40% of their outstanding debt exposurepreference shares to the extent of 35% of their outstanding debt exposure and balance 25%will be continued as debt in the books of the Company.

As part of the DRS Proposal the Company also approached its FCCB Holders with asimilar restructuring proposal. The Company also received consent from its bondholders forthe restructuring of the FCCBs of the Company and waivers of all existing defaults inrespect of the FCCBs. As a result of these restructurings the debt repayment pressure waseased out which will help the Company to focus on business growth. As a result of allthese efforts for past one year the Company reported a positive net worth as on March31 2016. Also for the first time in the last 5 years the Company posted a Net Profitafter Tax of ' 2017 lacs for the quarter ended June 30 2016.

The Board would like to place on record its appreciation for the support given by theDRS Lenders and the FCCB Holders for helping the Company achieve this milestone.

The Board would also like to thank all the shareholders of the Company who havesupported and stood by the Company and the management during this difficult journey.

The Board feels confident that with the debt crisis resolved the Company can now startthe recovery process and achieve growth in the coming quarters and years and therebyincrease shareholder value.

b) Financial Performance of the Company on Standalone and Consolidated basis:

Rs. in Crores
Particulars

Standalone

Consolidated

Year ended March 31 2016 Year ended March 31 2015 Year ended March 31 2016 Year ended March 31 2015
Total Income 376.70 403.81 1130.10 1348.43
Total Expenses 615.19 747.37 1379.92 1611.78
Profit/(Loss) before exceptional items and tax (238.49) (343.56) (249.82) (263.35)
Exceptional items 698.03 690.62 (656.15) 673.17
Profit / (Loss) before tax (936.52) (1034.18) (905.97) (936.52)
Tax expense - - 5.96 14.17
Deferred Tax Expense - - 0.35 (3.03)
Tax Expense from earlier years 127.15 23.57 146.99 28.40
Profit/(Loss) after tax (1063.67) (1057.75) (1059.27) (976.06)
Minority interest - - (2.87) (0.21)
Profit/(Loss) for the period (1063.67) (1057.75) (1056.40) (976.27)
Earnings Per Share (Basic in Rupees) (Before exceptional items) (5.87) (6.39) (16.96) (5.29)
Earnings per share (Basic in Rupees) (After exceptional items) (17.08) (18.25) (27.50) (16.85)

TRANSFER TO RESERVES

There is no amount proposed to be transferred to general reserve this year due tounavailability of profits.

DIVIDEND

In view of the current financial position of the Company the Board of Directors feelprudent to not recommend any dividend (equity or preference) for the year ended March 312016.

BUSINESS

Your Company has a comprehensive set of IP based software solutions (20+) coupled witha wide range of IT Services to address the dynamic requirements of a variety of industryverticals including Banking Insurance Capital Markets Asset & Wealth Management(BFSI). The Company also provides solutions for other verticals such as GovernmentManufacturing Distribution Telecom and Healthcare.

The business activities of the Company are broadly divided into two categories viz: ITSolutions and Transaction Services. IT Solutions business comprises of software productsand IT enabled services while the transaction services comprise of BPO and KPO services.The Company has a good product portfolio and has dominant presence in fast growingemerging economies. The Product Business of the Company has a wide base with more than 800active customers who are satisfactorily using the Company's products.

The contribution to the revenue for the year from IT Solutions was 94% and that ofTransaction Services was 6%.

Your Company has presence in 50 countries across six operational geographies viz.South Asia Asia Pacific (APAC) Middle East and Africa (MEA) Kingdom of Saudi Arabia(KSA) Western Europe (WE) and North America (US). Your Company has marketing networkaround the world including North America Western Europe Middle East and Africa and AsiaPacific. The business of your Company is largely divided into Emerging Markets andDeveloped Markets. The share of the Emerging Markets to total revenue of the Company isabout 68% while that of Developed Markets is about 32%. For detailed operations andbusiness performance and analysis kindly refer the Management Discussion & Analysiswhich forms a part of this Report.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

In terms of the CDR package the Company was given a mandate to identify its non corebusiness/ assets for sale and utilize the proceeds to deleverage its balance sheet. TheMaster Restructuring Agreement (MRA) signed with the Lenders had also identified certainassets. As per this mandate the following subsidiaries were divested during the year:

i. In November 2015 3i Infotech Trusteeship Services Limited was divested to UTPLCorporate Trustees Private Limited.

ii. In February 2016 3i Infotech - Framework Limited was sold to Framework LuxembourgSARL.

As on March 31 2016 the number of subsidiaries was reduced to 22 (twenty two).

As per the first proviso to Section 129(3) of the Companies Act 2013 (the“Act”) read with Rule 5 of Companies (Accounts) Rules 2014 the statementcontaining salient features of the financial statements of subsidiaries/associatecompanies/joint ventures in the prescribed Form AOC-1 is attached to the consolidatedfinancial statements.

Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

Particulars of loans guarantees or investments granted/made during the year are givenunder the notes to standalone financial statements forming part of the Annual Report.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered into by the Company during thefinancial year with related parties were in the ordinary course of business and on anarm's length basis. During the year the Company has not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of the Company on related party transactions. The said policycan be viewed on the Company's website by accessing the following link:http://www.3i-infotech.com/content/investors/investors.asp under “CorporateGovernance”

Details regarding related party disclosure are given under the notes to standalonefinancial statements which form part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

During the year the Shareholders approved the following Resolutions through PostalBallot concluded on March 18 2016:

1. Authorisation for restructuring of the Company's debts;

2. Issue of equity shares against conversion of a portion of the outstanding amountsdue to the Debt Realignment Scheme (DRS) Lenders;

3. Issue of non convertible redeemable preference shares against conversion of aportion of the outstanding amounts due to the DRS Lenders;

4. (i) Issue as part of the proposed restructuring of the outstanding US$ 125356000 5per cent. convertible bonds due 2017 (the “5% Bonds”) and US$ 2435000 4.75 percent. convertible bonds due 2017 (the “4.75% Bonds” and together with the 5%Bonds the “Existing Bonds”) new foreign currency convertible bonds to theholders of the Existing Bonds in exchange for the Existing Bonds and

(ii) amend the terms of the outstanding Existing Bonds (to the extent not exchanged)including extension of the maturity and reduction of the conversion price;

5. Increase in Authorised Share Capital by 90 crore equity shares of ' 10 each 150crore Class B preference shares of ' 5 each and 105 crore Class C preference shares of ' 1each and Amendment to Memorandum of Association of the Company and

6. Amendment to Articles of Association of the Company.

Further during the year the Shareholders approved the following Resolutions throughPostal Ballot concluded on May 13 2016:

1. Increase in Authorised Share Capital of the Company to the extent of 20 crore equityshares of ' 10 each and consequent amendment to the Memorandum of Association of theCompany;

2. Amendment to the Articles of Association of the Company;

3. (i) Issue as part of the proposed restructuring of the outstanding US$ 125356000 5per cent. convertible bonds due 2017 (the “5% Bonds”) and US$ 2435000 4.75 percent. convertible bonds due 2017 (the “4.75% Bonds” and together with the 5%Bonds the “Existing Bonds”) new foreign currency convertible bonds to theholders of the Existing Bonds in exchange for the Existing Bonds and

(ii) amend the terms of the outstanding Existing Bonds (to the extent not exchanged)including extension of the maturity and reduction of the rate of interest;

4. Issue of equity shares against conversion of a portion of the outstanding amountsdue to the Lenders.

The results of these Postal Ballots conducted during the year are given in CorporateGovernance Report.

REPORT ON CORPORATE GOVERNANCE

The Corporate Governance Report is appended herewith as Annexure I to thisReport.

EXTRACT OF ANNUAL RETURN

In terms of the requirements of Section 92 (3) of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return inthe prescribed form MGT- 9 is attached herewith as Annexure II and forms part ofthis Report.

CAPITAL

a) Preference Capital:

The Company has not allotted any preference shares during the year and therefore as onMarch 31 2016 the preference share capital remains unchanged at ' 650000000/-(130000000 Preference Shares of ' 5/- each). All the preference shares are held by IDBITrusteeship Services Limited (ICICI Strategic Investments Fund). However in terms of DebtRealignment Scheme (DRS) consent from IDBI Trusteeship Services Limited (ICICI StrategicInvestments Fund) existing preference shareholder was received to extend the tenure ofexisting Preference Shares upto March 15 2026.

b) Increase in Authorised Capital:

In order to issue additional share capital as required under DRS it was felt necessaryto increase the authorized share capital of the Company. Pursuant to the approval of theMembers obtained through Postal Ballot dated March 18 2016 the authorized share capitalof the Company was increased from '1200 Crores (Rupees One Thousand Two Hundred Croresonly) divided into 1100000000 (One Hundred and Ten Crore) equity shares of '10/- eachand 200000000 (Twenty Crore) preference shares of '5/- each to '2955 Crores (Rupees TwoThousand Nine Hundred Fifty Five Crores only) divided into 200 Crore (Two Hundred Crore)equity shares of '10/- each 20 Crore (Twenty Crore) preference shares of '5/- each(called Class A Preference Shares) 150 Crore (One Hundred Fifty Crore) preference sharesof '5/- each (called Class B Preference Shares) and 105 Crore (One Hundred Five Crore)preference shares of '1/- each (called Class C Preference Shares).

Pursuant to approval of the Members obtained through Postal Ballot dated May 13 2016the authorized share capital of the Company was further increased to '3155 Crores (RupeesThree Thousand One Hundred Fifty Five Crores only) divided into 220 Crore (Two HundredTwenty Crore) equity shares of '10/- each 20 Crore (Twenty Crore) preference shares of'5/- each (called Class A Preference Shares) 150 Crore (One Hundred Fifty Crore)preference shares of '5/- each (called Class B Preference Shares) and 105 Crore (OneHundred Five Crore) preference shares of '1/- each (called Class C Preference Shares).

c) Paid-up Equity Capital:

1) ESOS allotments:

The Company has not allotted any shares under the Employees Stock Option Schemes (ESOS)during the year.

2) Allotments against conversion of Foreign Currency Convertible Bonds (FCCBs):

During the year the Company had received conversion notices from FCCB holders againstwhich 20082363 Equity Shares of face value of '10/- each were allotted by the Companyat a premium of '6.50/- per share.

3) Allotments of Equity Shares under the Corporate Debt Restructuring (CDR) Package:

On October 7 2015 16970618 Equity Shares of face value of '10/- each at a premiumof '9.74/- per Equity Share were allotted to a CDR Lender as agreed under the CDR Package.

As a result of the aforesaid allotments the paid-up equity share capital of theCompany stands at '6408039280 as on March 31 2016.

The Company has neither issued equity shares with differential rights as to dividendvoting or otherwise nor any shares (including sweat equity shares) to the employees of theCompany under any Scheme.

EMPLOYEES STOCK OPTION SCHEMES

As per SEBI Circular (CIR/CFD/POLICY CELL/2/2015) dated June 16 2015 relating torequirements specified under the SEBI (Share Based Employee Benefits) Regulations 2014details of the Employee Stock Option Schemes (ESOS) of the Company are given in AnnexureIII to this Report.

PUBLIC DEPOSITS

During the year the Company has not invited/accepted any deposit under Section 73 ofthe Act.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

During the year Mr. Charanjit Attra (DIN- 05323757) resigned as Executive Director-New Business Initiatives Strategy and Finance with effect from May 28 2015 in order topursue opportunities in other professional areas.

Further on July 28 2015 Ms. Sarojini Dikhale (DIN: 02755309) a representative ofLIC was appointed as an Additional Director and her appointment as Independent Directorfor a period of 5 years was further approved by Members at the Annual General Meeting(AGM) held on September 23 2015. Later vide approval from the Board of Directors attheir Meeting held on October 23 2015 her designation was changed from Non-ExecutiveIndependent Director to Non-Executive Director liable to retire by rotation withimmediate effect.

At the AGM held on September 23 2015 the Members approved appointment of Dr. ShashankDesai (DIN-00143638) and Mr. Ashok Shah (DIN-01194846) as Independent Directors for aperiod of 5 years effective September 23 2015 and October 1 2015 respectively. The termsand conditions of appointment of Independent Directors are as per Schedule IV of the Act.They had submitted a declaration that each one of them meets the criteria of independenceas provided under Section 149 (6) of the Act and there has been no change in thecircumstances which may affect their status as Independent Director.

Mr. Hoshang N. Sinor (DIN- 00074905) who was on the Board for over 12 years retiredas Chairman of the Board of Directors of the Company after completion of his term as anIndependent Director on September 30 2015. On October 21 2015 Mr. K. M. Jayarao (DIN-01077289) resigned as Nominee Director due to withdrawal of nomination by ICICI BankLimited.

Further on May 18 2016 Mr. Padmanabhan Iyer (DIN- 05282942) was appointed as anExecutive Director for a period of 3 years. Later on June 7 2016 Mr. MadhivananBalakrishnan (DIN- 01426902) resigned as Managing Director & Global CEO of theCompany. Pursuant to resignation of Mr. Madhivanan Mr. Padmanabhan Iyer was designated asthe Chief Executive Officer of the Company.

Thereafter Mr. Padmanabhan Iyer was appointed as Managing Director & Global CEOfor 5 years effective August 112016.

During the year Mr. Ninad Kelkar resigned as Company Secretary and Compliance Officerof the Company effective the close of business hours on January 11 2016. Later Mr.Rajeev Limaye was appointed as Company Secretary and Compliance Officer of the Companyeffective July 5 2016.

The Directors place on record their sincere appreciation towards services rendered byMr. Hoshang N. Sinor Mr. Charanjit Attra Mr. K. M. Jayarao and Mr. MadhivananBalakrishnan during their respective tenures as Directors of the Company.

As on the date of this Report the Board of the Company consists of 5 Directors out ofwhich two are Independent Directors one is Nominee Director one is Non-ExecutiveDirector and one is Executive Director.

None of the Independent Directors have had any pecuniary relationship or transactionswith the Company during Financial Year 2015-16 except to the extent of theirdirectorship. None of the Directors or KMP of the Company is related inter-se.

Seven meetings of the Board of Directors were held during the year. The details of thesame are given on page no. 12 of the Annual Report.

Policies as per SEBI (Listing Obligations and Disclosure Requirements) Regulations2015

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBILODR") mandated all Listed Companies to formulate certain policies. The Company hasformulated all such policies the list of which is given below:

• Whistle Blower Policy;

• Policy relating to Remuneration of Directors Key Managerial Personnel and otherKey Employees;

• Corporate Social Responsibility Policy;

• Policy for determining Material Subsidiaries;

• Policy on materiality of related party transactions and dealing with RelatedParty Transactions;

• Policy for Board Diversity and

• Policy for Preservation of Documents.

Performance Evaluation of the Board of Directors

In terms of the provisions of the Act and SEBI LODR your Company has laid downcriteria for performance evaluation of Directors and Chairman of the Board and also theevaluation process for the same. Schedule IV of the Companies Act 2013 states that theperformance evaluation of Independent Directors shall be done by the entire Board ofDirectors excluding the Director being evaluated. The Company's policy relating toappointment and remuneration of Directors KMPs and other employees including criteriafor determining qualifications positive attributes and independence of a director arecovered under the Corporate Governance Report which forms a part of this Report.

It is a practice of the Board of Directors to annually evaluate its own performance andthat of its committees and individual directors. Accordingly the performances of themembers of the Board as a whole and of individual Directors were evaluated at the meetingof the Committee of the Independent Directors and the Board of Directors held on August11 2016.

Familiarization Programme for Independent Directors

As per provisions of SEBI LODR and the Act the Company has formulated FamiliarizationProgramme for Independent Directors. At the time of appointment of an IndependentDirector the Company issues a formal letter of appointment to an Independent Directoroutlining his/her role function duties responsibilities etc. The terms and conditionsfor appointment of Independent Directors are also available on the website of the Company.

COMMITTEES

As on date of this Report the Board has four committees-

i. Audit Committee

ii. Nomination and Remuneration Committee

iii. Stakeholders' Relationship Committee

iv. Corporate Social Responsibility Committee

The Company also has an internal committee comprising of the Head-HR and the ComplianceOfficer of the Company to address the functioning of the vigil mechanism as mandated bythe Act and assist the Audit Committee thereunder.

The detailed information regarding the committees of the Board including compositionof the Audit Committee has been given in the Corporate Governance Report which forms anintegral part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Act and Accounting Standard (AS) 21 on Consolidated FinancialStatements read with AS - 23 on Accounting for Investments in Associates and AS - 27 onFinancial Reporting of Interests in Joint Ventures the audited consolidated financialstatements presented by the Company include the financial results of its subsidiarycompanies associates and joint ventures and form part of the Annual Report.

AUDITORS

M/s. Lodha & Co. Chartered Accountants were appointed as the Statutory Auditors ofthe Company at the AGM held on September 16 2014 till the conclusion of the Twenty FourthAGM of the Company to be held in the year 2017. As per the provisions of Section 139 ofthe Act the appointment of Auditor is subject to ratification by members at every AGM.Accordingly the ratification of the appointment of Auditor has been taken up as an itemin the Notice of the forthcoming AGM for the approval of Members.

CONSERVATION OF ENERGY

Although the operations of the Company are not energy intensive the management ishighly conscious of the criticality of the conservation of energy at all operationallevels. The requirement of disclosure of particulars with respect to conservation ofenergy as prescribed in Section 134(3)(m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 is not applicable to the Company and hence are not provided.

TECHNOLOGY ABSORPTION ADOPTION AND INNOVATION

The Company continues to use the latest technologies for improving the productivity andquality of its services and products. During the year your Company has taken thefollowing technology initiatives:

• Certification for Information Security Management System based on the ISO27001:2013 standard.;

• Strengthened its IPRs through technology innovation and appropriate securitycontrols;

• Improved utilization and delivery productivity by use of LEAN IT techniques forproject delivery and

• Partnerships with major technology providers and publishers for win-winrelationships and go-to-market strategies. RESEARCH AND DEVELOPMENT (R & D)

The solutions offered by the Company for various market segments are continuouslydeveloped and upgraded through the Global Development Centers (GDCs).

The GDCs function as the product research and development arm of the Company and focuson developing and expanding the Company's products and IPRs. Besides this the Company isalso in the process of upgrading its varied product lines to standard and latesttechnological platforms.

With a focus to further enhance the Company's software products i.e. its IntellectualProperty based on market needs the GDCs work in line with the Company's strategy forgrowth.

Expenditure on R & D

Rs. in Crores
Particulars 2015-16 2014-15
Revenue Expenditure 2.28 5.83
Capital Expenditure - -
Total 2.28 5.83
Total R&D expenditure as a percentage of total standalone revenue 0.61% 1.44%

QUALITY

The Company is committed to providing innovative and high quality products and servicesthat meet or exceed customer expectations.

This includes-

• Maintaining a quality focus on continuous improvement to our Products Processand Services and

• Process adherence and governance ensuring lower defect & On Time delivery

The Company's Quality Management System (QMS) addresses process required for entireSoftware Development Cycle (SDLC) and Project Management Life Cycle (PMLC) supported withindustry standard templates and guidelines to ensure disciplined project executionthereby transforming business from taking corrective & preventive measures to thestate of predicting outcomes. This framework is designed based on the CMMi processframework to enhance productivity and to reduce inefficiencies.

The Company has achieved CMMi Level 3 certification and is also in the process ofachieving CMMi Level 5 certification to meet the Company's commitment towards quality& business process.

FOREIGN EXCHANGE EARNINGS AND OUTGO

a) Activities relating to exports initiatives taken to increase exports developmentof new export markets for products and services and export plans

More than 14.58% of the revenue of the Company is derived from exports.

b) Foreign Export earnings and expenditure

During the year 2015-16 the expenditure in foreign currencies amounted to '19.70crores on account of cost of outsourced services and bought out items travelling andother expenses and interest (excluding expenditure incurred by Dubai Branch). During thesame period the Company earned an amount equivalent to '48.14 crores in foreigncurrencies as income from its operations abroad (excluding income from Dubai Branch) and'39.84 crores in foreign currencies as income from dividend from 3i Infotech (UK) Limited.

PERSONNEL

The Company has continued to improve the quality of its Human Resources. The key facethas been better levels of productivity as compared to earlier years which has contributedin operating financial parameters showing a strong uplift. Regular interactions and careerenhancements by way of bigger roles to talented employees have helped in strengthening theconfidence of the employees in the tough financial scenario of the Company. The talentpipeline is looking healthy though attrition and retention remains a challenge for theindustry and more so for the Company.

Your Company will continue to focus and build the human potential which would help inimproving operating parameters in the coming years.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules is provided in a separate annexure formingpart of this Report. Having regard to the provisions of the first proviso to Section136(1) of the Act the Annual Report excluding the aforesaid information is being sent tothe Members. In terms of Section 136 the said annexure is open for inspection at theRegistered Office of the Company. Any shareholder interested in obtaining a copy of thesame may write to the Company Secretary.

Disclosures pertaining to the remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report as Annexure IV.

Prevention of Sexual Harassment at Workplace

The Company has in place a Policy aiming at prevention of Sexual Harassment at allCompany's workplaces in line with the requirements of The Sexual Harassment of Women atthe Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules thereunder.All employees (permanent contractual temporary trainees) are covered under this Policy.An internal Complaint Committee has been set up in the Company to consider and redresscomplaints received with respect to sexual harassment. During the year under review theComplaint Committee has not received any grievances or complaints of the nature coveredunder the said Act.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

3i Infotech website talks about CSR activities undertaken through 3i InfotechFoundation.

Owing to the losses incurred during the year the Company has not been able tocontribute monetarily towards CSR activities. However the Company has taken manyinitiatives to sensitise and encourage its employees to participate in CSR activities atan individual level in order to keep alive in them the noble spirit of giving back to thesociety.

The Company has reaffirmed its concurrence with the concept of CSR through formulationof a specific policy on CSR and constitution of a CSR Committee details of which arecovered under the Corporate Governance Report.

AUDITOR'S REPORT AND SECRETARIAL AUDITOR'S REPORT

The Auditor's Report and Secretarial Audit Report do not contain any qualificationsreservations or adverse remarks.

DISCLOSURE REQUIREMENTS

Disclosures required under Regulations of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 are shown under the Corporate Governance Report (CGR). TheCGR along with auditor's certificate thereon and the Management Discussion and Analysisform part of this Report.

FUTURE OUTLOOK

The Company will continue to technologically upgrade its products and concentrate onthe Software Products IT Services and IT enabled Services for its growth. The businessoutlook and the initiatives proposed by the management to address its financial risks havebeen discussed in detail in the Management Discussion and Analysis which forms a part ofthis Report.

FORWARD LOOKING STATEMENTS

This Report along with its annexures and Management Discussion & Analysis containsforward-looking statements that involve risks and uncertainties. When used in this Reportthe words 'anticipate' 'believe' 'estimate' 'expect' 'intend' 'will' and othersimilar expressions as they relate to the Company and/or its businesses are intended toidentify such forward looking statements. The Company undertakes no obligation to publiclyupdate or revise any forward- looking statements whether as a result of new informationfuture events or otherwise. Actual results performances or achievements could differmaterially from those expressed or implied in such forward-looking statements. Readers arecautioned not to place undue reliance on these forward-looking statements that speak onlyas of their dates. This Report should be read in conjunction with the financial statementsincluded herein and the notes thereto.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act 2013 your Directors herebyconfirm that:

a) in preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures;

b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2016 and of the loss of theCompany for the financial year ended on that date;

c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively and

f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and are operating effectively.

Based on the reviews of internal statutory and secretarial auditors externalconsultants the management and respective committees of the Board the Board is of theopinion that the Company's system of internal financial controls was adequate and theoperating effectiveness of such controls was satisfactory during the financial year2015-16.

ACKNOWLEDGEMENTS

The Directors are thankful to the Members for their confidence and continued support.The Directors are grateful to the Central and State Government Stock ExchangesSecurities & Exchange Board of India Reserve Bank of India Customs and othergovernment authorities Lenders CDR Cell FCCB holders and last but not the least itstrusted clients for their continued support.

The Directors would like to express their gratitude for the unstinted support andguidance received from alliance partners and vendors.

The Directors would also like to express their sincere thanks and appreciation to allthe employees for their commendable team work and professionalism.

For and on behalf of the Board
Ashok Shah Padmanabhan Iyer
October 21 2016 at Navi Mumbai Chairman Managing Director & Global CEO