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Cambridge Technology Enterprises Ltd.

BSE: 532801 Sector: IT
NSE: CTE ISIN Code: INE627H01017
BSE LIVE 15:19 | 09 Dec 99.90 -0.10
(-0.10%)
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100.00

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NSE LIVE 15:31 | 09 Dec 99.15 -1.35
(-1.34%)
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99.00

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OPEN 100.00
PREVIOUS CLOSE 100.00
VOLUME 7982
52-Week high 162.40
52-Week low 77.05
P/E 16.24
Mkt Cap.(Rs cr) 196.10
Buy Price 99.25
Buy Qty 50.00
Sell Price 99.90
Sell Qty 28.00
OPEN 100.00
CLOSE 100.00
VOLUME 7982
52-Week high 162.40
52-Week low 77.05
P/E 16.24
Mkt Cap.(Rs cr) 196.10
Buy Price 99.25
Buy Qty 50.00
Sell Price 99.90
Sell Qty 28.00

Cambridge Technology Enterprises Ltd. (CTE) - Director Report

Company director report

Directors

Dear Shareholders

We are happy to present on behalf of the Board of Directors the 15thDirectors’ Report along with the Balance Sheet and Profit and Loss Account for theyear ended 31st March 2014.

Financial Performance

Key elements of financial performance of Cambridge Technology Enterprises Limited(CTEL) on consolidated and standalone basis is as below: (Rs.in millions)

S.No. Particulars Consolidated Results Stand Alone Results
FY 2014 FY 2013 FY 2014 FY 2013
1 Revenue from operations 251.72 904.76 202.15 217.98
2 Expenses (176.05) (1059.91) (176.05) (427.03)
3 Depreciation & Amortization (7.12) (10.36) (6.87) (4.76)
4 Profit from operations before interest
other income and exceptional items 13.01 (166.39) 19.23 (213.81)
5 Finance Charges - (23.79) 0.00 (1.41)
6 Other Income 6.04 122.89 6.51 14.95
7 Impairment of intangible assets - - - -
8 Impairment of goodwill - - - -
9 Prior period expenses (0.16) (10.54) (16.74) (10.54)
10 Change in carrying value of investments - - - (272.90)
11 Profit from Ordinary Activities Before Tax 18.88 (76.94) 25.57 (483.71)
12 Extra-ordinary item - (52.30) - -
13 Tax Expense (7.81) (6.16) (7.65) (2.91)
14 Net Profit 11.07 (135.40) 17.92 (486.62)
15 Profit & Loss Account Balance Brought Forward (174.33) (38.93) (307.66) 178.95
16 Amount Available for Appropriation (163.26) (174.33) (289.74) (307.66)

Financial Results for FY 2013-14

CTEL has achieved a turnover of Rs. 202.15 Mn for the year ended 31st March 2014 asagainst a turnover of Rs. 217.98 Mn in the previous year. The Company posted an operatingprofit of Rs. 19.23 Mn for the year under review whereas there was a loss of Rs. 213.81Mn in the year ending 31st March 2013. Net profit for the year ended 31st March 2014 wasRs.17.92 Mn and there was a loss of Rs.486.62. Mn for the year ended 31st March 2013.Detailed analysis of financial statements is given in Management Discussion and AnalysisReport forming part of this Annual Report.

Dividend

Keeping in view the difficult operating environment that prevailed in the year gone byand the expected cash flow requirements for the future growth of the Company yourDirectors were not able to recommend any dividend for the financial year ended 31stMarch 2014.

Management Discussion and Analysis Report

A detailed Management Discussion and Analysis is provided in the annual report as aseparate report.

Subsidiary Companies

The Honorable High Court of Karnataka had approved for merger between the company andCambridge Technology India Private Limited (formerly Q-soft Systems & SolutionsPrivate Limited) Bangalore vide order no. 140 dated 7th August 2014. Themerger is effective 1st April 2012.

Your company had made an application on 10th May 2013 to Reserve Bank ofIndia for write off of trade receivables due from erstwhile foreign subsidiary smartShiftTechnologies Inc. (formerly Cambridge Technology Enterprises Inc.) and also forratification of the transaction involving the sale of shares of the overseas subsidiarysmartShift Group Limited (formerly Cambridge Technology Enterprises - Mauritius Limited).Company is waiting for disposal of these two applications by the Reserve Bank of India.

The members may note that statement under Section 212 of the Companies Act 1956 andinformation on the financials of subsidiaries is not applicable since the wholly ownedsubsidiary M/s. Cambridge Technology India Private Limited has been merged with companyeffective 1st April 2012. And the company does not have any subsidiarieswarranting to give information u/s 212 of the Companies Act 1956.

Internal Control Systems

Your company has necessary Internal Control Systems in place. Internal Audits areregularly conducted through an external Audit Firm. The reports are periodically discussedinternally. Significant audit observations are also placed before the meeting of the AuditCommittee and corrective measures are taken by the company.

Fixed Deposits

Your Company had not accepted any fixed deposits under Section 58A of the CompaniesAct 1956 and hence no amount of principal or interest was outstanding as on the BalanceSheet date.

Particulars of Employees

Pursuant to the provisions of Section 217(2A) of the Companies Act 1956 read withCompanies (Particulars of Employees) Rules 1975 the names and other particulars ofemployees are not applicable.

Employee Stock Option Scheme

The details of employee stock option as on 31st March 2014 are given asAnnexure-1 to this report as per Securities and Exchange Board of India (Employee StockOption Scheme and Employee Stock Purchase Scheme) Guidelines 1999.

Directors

Mr. Stefan Hetges retires by rotation and being eligible offers himself forre-appointment as Director pursuant to Section 152 of the Companies Act 2013 read withCompanies (Appointment and Qualification of Directors) Rules 2014. A brief profile of Mr.Stefan Hetges retiring director is given in the Corporate Governance section of thisAnnual Report.

Mr. Venkat Motaparthy is Director on the Board of the company w.e.f 13thFebruary 2012. He is proposed to be appointed by shareholders as an independent directorpursuant to Section 150 of the Companies Act 2013.

A brief profile of Mr. Venkat Motaparthy director is given in the Corporate Governancesection of this Annual Report.

Mr. B Muralidhar has been appointed as Additional Director on the Board of the companyw.e.f 14th August 2014 in terms of Section 149 and other applicableprovisions of the Companies Act 2013 read with Companies (Appointment and Qualificationof Directors) Rules 2014. A brief profile of Mr. B Muralidhar director is given in theCorporate Governance section of this Annual Report. He is proposed to be appointed byshareholders as an independent director pursuant to Section 150 of the Companies Act2013.

The company has received the requisite notice under Section 160 of the Companies Act2013 from members proposing their names of Mr. B Muralidhar and Mr. Venkat Motaparthy forbeing appointed as Independent directors of the Company.

The Company has received declarations from above mentioned Independent directors of theCompany confirming that they meet with the criteria of independence as prescribed undersub-section (6) of Section 149 of the Companies Act 2013.

Appropriate resolutions for the appointment/re-appointment of Directors are beingplaced for your approval at the ensuing Annual General Meeting.

Your Directors recommend the appointment/re-appointment of the aforesaid Directors bythe Members at the ensuing Annual General Meeting.

During the year under review Mr. Anand Mullapudi Director had resigned w.e.f. 4thFebruary 2014. The Board of Directors places on record its appreciation for the servicesrendered by him during his tenure as Director.

Appointment of Key Managerial Personnel

In accordance with the provisions of Section 203 of Companies Act 2013 the Board ofDirectors had appointed Mr. Stefan Hetges Director & CEO as Key Managerial Personnelon 14/11/2014 and Mr. V Ramana Reddy Chief Financial Officer and Company Secretary w.e.f.14th August 2014 respectively.

Auditors

M/s. P Murali & Co. Chartered Accountants Hyderabad statutory auditors of thecompany retire at the ensuing Annual General Meeting.

Pursuant to the provisions of the Section 139 of the Companies Act 2013 and Rulesframed thereunder it is proposed to appoint M/s. P Murali & Co. (ICAI Regn. No.007257S) as statutory auditors of the Company from the conclusion of the forthcoming AGMtill the conclusion of the 20th AGM to be held in the year 2019 subject toratification of their appointment at every AGM. M/s. P Murali & Co. CharteredAccountants have furnished the Certificate of their eligibility for appointment incompliance with Section 141 of the Companies Act 2013. The Board recommends theirappointment.

Listing

Your Company’s shares are listed with Bombay Stock Exchange and National StockExchange Mumbai. The listing fee have been paid for the financial year 2014-2015.

Corporate Governance Report

A detailed report on the Corporate Governance practices of the Company is given as aseparate section in this annual report.

Conservation of energy technology absorption foreign exchange earnings and outgo:

The particulars as prescribed under Section 217(1)(e) of the Companies Act 1956 readwith the Companies (Disclosure of particulars in the report of Board of Directors) Rule1988 are set out in Annexure – 2 to the Directors’ Report.

Directors’ Responsibility Statement

In terms of Section 217(2AA) of the Companies Act 1956 your Directors confirm asunder:

i. that In preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;

ii. We 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 fair viewof the state of affairs of the Company at the end of the financial year 2013-14 and of theprofit of the Company for that period;

iii. We have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; and

iv. We have prepared the annual accounts on an on-going concern basis.

Acknowledgement

Your Board places on record its sincere appreciation for the significant contributionmade by the employees through their dedication hard work and commitment and standing byus through the difficult times and for the trust reposed in us by our clients.

Your Directors also acknowledge the support and wise counsel extended to us by theanalysts bankers government agencies and shareholders at large. We look forward tohaving the same support in our endeavor to serve our clients better.

For Cambridge Technology Enterprises Limited
D.R.R. Swaroop Venkat Motaparthy
Whole-time Director Independent Director
Place: Hyderabad
Date: 22/11/2014

Annexure to the Director’s Report

Annexure - 1

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board ofIndia (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999as amended the details of stock options as on March 31 2014 under CTEL Employee StockOption Scheme 2006 and CTEL Employee Stock Option Scheme 2008 and CTEL ESOP Scheme 2011are as under:

Summary of status of ESOPs granted:

S.No. Particulars CTEL Employee Stock Option Scheme – 2006 CTEL Employee Stock Option Scheme - 2008 CTEL ESOP Scheme 2011
1 Approved options 1500000 1500000 1045000
2 Options Granted 1236542 1500000 644000
3 Options vested 95538 69620 70700
4 Options unvested Nil Nil 12300
5 Options exercised 20954 1025015 Nil
6 Options lapsed 1120050 405365 561000
7 Total number of options in force 95538 69620 83000
8 Variation in terms of ESOP Clause for Not Not
recovery of FBT from employees incorporated Applicable Applicable
9 Total number of shares arising as a result of exercise of options the ESOP Trust) Nil (exercised shares issued from from the ESOP Trust) Nil (exercised shares issued Not Applicable
10 Money realized by exercise of Nil Nil Nil
options (Rs)
11 Diluted EPS pursuant to issue of shares on exercise of option calculated in accordance with AS 20 Not Applicable Not Applicable Not Applicable

12 A description of the method and significant assumptions used during the year toestimate the fair values of the options:

Description Details
A description of the method and significant assumptions used during the year to estimate the fair values of the options including the following weighted average information: The Fair value of options was calculated using the Black Scholes option pricing model. The following assumptions have been used:
i. Risk free interest rate 6.73% - 7.85%
ii. Expected life
iii. Expected volatility 3 – 4 years
iv. Expected dividends 63.77% to 72.66%
v. The price of the underlying share in
market at the time of option grant. 0 %Market Price

A. Employee - wise details of options granted to:

a. Senior managerial personnel - Not Applicable

b. Any other employee who received a grant in any one year of options amounting to 5%or more options granted during the year – Not Applicable

c. Identified employees who were granted options during any one year equal to orexceeding 1% of issued capital (excluding outstanding warrants and conversions) of theCompany at the time of grant – Not Applicable

B. Weighted average exercise price fair value of options granted during the year whose:

1 Exercise price equals market price Yes
2 Exercise price is greater than market price Nil
3 Exercise price is less than market price Nil

C. The stock based compensation cost calculated as per the fair value method prescribedby SEBI to be recognized in the financial statements for the year 2013-14 would be Rs.Nil.

Annexure – 2

Conservation of energy technology absorption foreign exchange earnings and outgo

The particulars as prescribed under Section 217(1)(e) of the Companies Act 1956 readwith the Companies (Disclosure of particulars in the Report of Board of Directors) Rules1988 are as under:

1. Conservation of Energy:

Software Industry is not power intensive. However your company is working towardsbeing environment friendly and has taken adequate measures to conserve energy whereverpossible.

2. Technology Absorption:

Provision of state of the art communication facilities to all software developmentcenters and total technology solutions to its clients contribute to technology absorptionand innovation.

3. Foreign Exchange Earnings and Outgo:

(Rs. in millions)

Particulars 2013-14 2012-13
Foreign Exchange Earnings 177.66 195.94
Foreign Exchange Outgo Nil 21.75

 

For Cambridge Technology Enterprises Limited
D.R.R. Swaroop Venkat Motaparthy
Whole-time Director Independent Director
Place: Hyderabad
Date: 22/11/2014

 

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