Your Board is pleased to present the 31st Annual Report of Cranes SoftwareInternational Limited (CSIL) along with the audited financial statements for the fiscalyear ended 31st March 2016.
Macro - Economic Scenario
Indias economy continues to show good signs of GDP growth and the businessenvironment appears positive than ever before with a string of initiatives taken up byCentral Government with respect to ease of doing business which is expected to help theCompany directly in expanding its market within the country and abroad.
Consolidated / standalone financial performance
The consolidated annual revenue from operations has registered an increase of about 6%compared with the previous year. However the Company has posted loss from operationsbefore tax of Rs. 1492.06 million as compared to Rs. 675.13 million in the previous yearmainly on account of increase in cost of purchases and administrative expenses.
The standalone annual revenue from operations has registered a steep decrease by about62.33% compared with the previous year due to sluggish market conditions. The loss forthe period before tax stands at Rs. 1194.59 million as compared with Rs. 516.04 million inthe previous year.
Financial highlights (consolidated & standalone)
(Rs. in Crore)
|Particulars ||Consolidated ||Standalone |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Total revenue ||394.99 ||448.19 ||13.38 ||86.02 |
|Total expenses ||544.08 ||514.79 ||132.73 ||137.26 |
|Profit / (Loss) before extraordinary items & tax ||(149.09) ||(66.60) ||(119.35) ||(51.24) |
|Exceptional Items ||0.11 ||0.91 ||0.11 ||0.36 |
|Profit / (Loss) before tax ||(149.20) ||(67.51) ||(119.46) ||(51.60) |
|Tax expense ||(37.14) ||(27.91) ||(40.35) ||(28.22) |
|Profit / (Loss) for the period ||(112.06) ||(39.60) ||(79.11) ||(23.38) |
NEW INITIATIVES CORPORATE ACTION AND STATE OF COMPANYS AFFAIRS
In the year under review the Company has enhanced its position in the areas ofBusiness Intelligence Engineering Services and Vocational Training. The Company continuesto improve operational effectiveness optimize costs and increase market reach across allbusinesses. These initiatives have positively impacted the current year business revenuesand improved operating margins especially in our overseas subsidiaries.
Your directors do not recommend any dividend in the absence of distributable surplus.
Your directors do not recommend any transfers to reserves.
There is no change in the authorized or paid-up equity share capital of the Companyfor the period under report.
Material changes and commitments if any affecting financial position of the Companywhich have occurred between the end of the financial year and the date of the report
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year and the date of this report.
Change in the nature of business if any
There is no reportable change in the nature of business of the Company during thefinancial year ended 31st March 2016.
PARTICULARS OF LOANS GUARANTEE & INVESTMENT
Details of loans guarantees and investments under the provisions of section 186 aregiven in notes to financial statements. Further separate resolution under section 186 ofthe Companies Act 2013 is being proposed for approval of the shareholders at the ensuingAnnual General Meeting.
Your Company is committed to adoption of good corporate governance practices andcompliance with the same in accordance with listing agreement guidelines prescribed bySEBI. Your Company is reviewing the present guidelines and will take steps to become fullycompliant shortly. The report on corporate governance as stipulated by SEBI forms part ofthe annual report and the statutory auditors certificate of compliance is attachedto this report as per Annexure - I & II.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
In terms of the provisions of regulation 34(2) of the SEBI (Listing and disclosurerequirements) Regulations the management discussion and analysis report is set outseparately and forms an integral part of this report as per Annexure - III.
SUBSIDIARIES JOINT VENTURES & ASSOCIATES
During the year there have been no substantial or material business related changesthat have taken place in the subsidiary / associate companies.
EXTRACT OF ANNUAL RETURN
As required under the provisions of section 92(3) of the Companies Act 2013 read withthe Companies (Management and administration) Rules 2014 an extract of the Annual Returnof your Company in prescribed form MGT-9 for the fiscal year ended 31st March2016 is annexed to and forms part of this report as per Annexure - IV.
RELATED PARTY TRANSACTIONS
During the year under report your Company has entered into related party transactionswhich were on arms length basis and in the ordinary course of business. Certainmaterial transactions as defined under section 188 of the Companies Act 2013 read withthe companies (Meetings of Board and its powers) Rules 2014 are reported. All thesetransactions were previously approved by the audit committee and the Board of Directorsand are being reviewed on a regular basis. Your Company will shortly propose the policy onrelated party transactions for approval by the Board. Further details of contracts andarrangements with related parties for the fiscal year ended 31st March 2016are provided under note no. 3.39 to the audited financial statements and added herewith asper Annexure - VIII. Separate resolution for specific approval of these transactions asrequired under the provisions of section 188 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is being proposed for approvalof the shareholders at the ensuing Annual General Meeting.
Your directors have entrusted the risk management functions to the audit andremuneration committee as the number of directors on the Board is five only. Your Companywill take steps to expand its Board if advised and found warranted in the future.
PARTICULARS OF EMPLOYEES
The ratio of the median remuneration of the employees to the remuneration of the eachof the whole-time directors is 1: 4.5 The percentage increase in remuneration paid to eachof the whole-time directors in this financial year is NIL due to no profits and nosurplus funds.
Disclosures pertaining to remuneration and other details as required under section197(12) of the act read with companies (appointment and remuneration of managerialpersonnel) Rules 2014 are attached to this report as per Annexure - V.
INTERNAL FINANCIAL CONTROL & ADEQUACY
Your Company has in place adequate internal control systems commensurate with the sizeof its operations to ensure sound management of operations safe keeping of its assetsincluding in tangible assets and utilization of resources. However further steps as maybe advised will be implemented if found necessary.
DIRECTORS RESPONSIBILITY STATEMENT
As required under clause (c) of sub-section (3) of section 134 of Companies Act 2013directors to the best of their knowledge and belief state that:-
in preparation of the Annual Accounts the applicable accounting standards havebeen duly followed along with proper explanation relating to material departures.
the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and are prudent so asto give a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company for that period.
the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the company and preventing and detecting fraud and otherirregularities.
the directors had prepared the annual accounts on a going concern basis.
the directors had laid down internal financial controls to be followed by theCompany and that they are adequate and were operating effectively.
the directors devised proper systems to ensure compliance with the provisions ofall applicable loss and that such systems were adequate and operating effectively.
DETAILS OF DIRECTORS / KEY MANAGERIAL PERSONNEL
The composition of the Board is as follows:
PROMOTER GROUP (EXECUTIVE WHOLE-TIME DIRECTORS):
Asif Khader Mukkaram Jan Mueed Khader
NON- EXECUTIVE DIRECTORS:
Richard Gall Dr. Peter Ryser
During the year under report Mrs. Akthar Begum was appointed as Additional Director on12th August 2016 and she is proposed to be re-appointed as a regularIndependent Director at the ensuing Annual General Meeting. Necessary formalities asprescribed have been complied with. Your directors recommend her appointment.
In terms of the provisions of section 203 of the Companies Act 2013 Mr. Asif KhaderManaging Director Mr. Mueed Khader Whole-time Director and Mr. P. Phaneendra CompanySecretary are the key managerial personnel of your Company.
Declaration by Independent Directors
The independent directors have submitted disclosures that they fulfill all stipulatedrequirements as per section 149(6) of the Companies Act 2013.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Even though the operations of your Company are not energy-intensive adequate measureshave been taken to reduce energy consumption by using efficient equipment. Since it is asoftware Company primarily dealing with scientific and engineering software products andproduct related projects energy cost forms a very small part of total cost and its impacton total cost is not material.
(a) Research & Development Activities
The Management of your Company has been committed to building a strong R&D culturefrom day one and has set clear R&D goals. In order to achieve these goals the Companyhas focused on furthering the efficacies of R&D activities as well as buildingsynergies among multiple-impact technologies.
(b) Foreign exchange earnings and Outgo
During the year the total foreign exchange used was Rs. 1482.57 lakh and the totalforeign exchange earned was Rs. 679.99 lakh.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The provisions of section 135 of the act read with companies (corporate socialresponsibility policy) Rules 2014 are not applicable to the Company and therefore noreport is attached under this head.
MEETINGS OF THE BOARD
During the year under report your Board of Directors met on the following dates:
|During the quarter ended 30th June 2015 ||29th May 2015 |
|During the quarter ended 30th September 2015 ||14th August 2015 |
|During the quarter ended 31st December 2015 ||13th November 2015 |
|During the quarter ended 31st March 2016 ||12th February 2016 |
COMPOSITION OF THE AUDIT COMMITTEE
The Company has constituted an audit and remuneration committee consisting of threemember directors in each committee. The committee meets regularly to review its functions.
The Committee consists of the following Directors:
|Mr. Richard Gall ||Chairman |
|Mr. Asif Khader ||Member |
|Dr. Peter Ryser ||Member |
The Committee met four times during the year. The dates of the meetings with details ofattendance of the directors is given below:
|Name of the Director ||29th May 2015 ||14th August 2015 ||13th November 2015 ||12th February 2016 |
|Richard Gall ||Yes ||Yes ||Yes ||Yes |
|Asif Khader ||Yes ||Yes ||Yes ||Yes |
|Dr. Peter Ryser ||Yes ||Yes ||Yes ||Yes |
The committee consists of Mr. Asif Khader Mr. Richard Gall and Mr. Mueed Khader. Thecommittee met on 14th August 2015 to consider terms to the Whole-time Directors andManaging Director. All the committee members were present for the meeting and no changeswere proposed to the terms of remuneration. The Company pays remuneration by way ofsalary perquisites and allowances and a commission to the Whole-time Directors andManaging Director.
FOR NON-EXECUTIVE DIRECTORS:
No fixed remuneration is paid to the Non-executive Directors they are paid commissionas a percentage of the net profits as decided by the Board but within the limits setunder the provisions of the Section 198 of the Companies Act 2013. The payment ofcommission was approved by the shareholders at the AGM held on September 11 2006. Thebasis of determining the specific amount of commission payable to these directors isrelated to their attendance at meetings contribution at meetings as perceived by theBoard and the extent of consultations with them outside the meetings.
No commission was paid out to the Non-executive Directors for the year under review.The Non Executive Directors do not hold any shares of the company in their names.
SHARE HOLDER GRIEVANCE COMMITTEE
The Company has a Shareholder Grievance Committee constituted as per Section 178 of theCompanies Act 2013 and as per requirements under Clause 49 of the Listing Agreement tolook into the grievances of investors. This Committee consists of Mr. Asif Khader and Mr.Mukkaram Jan. There were no unresolved grievances from the investors / shareholders as onMarch 31 2016.
The Company has designated an email id exclusively for redressal of InvestorGrievances viz. email@example.com in compliance with clause 47(f)of the Listing Agreement for speedy redressal of investor grievances.
In terms of the provisions of section 139 of the Companies Act 2013 read with theCompanies (Audit and auditors) Rules 2014 an audit firm can hold office as statutoryauditor for two terms of five consecutive years i.e. for a maximum term of ten years. Suchaudit firm can be re-appointed after a "cooling-off" period of five years. Incomputing the period of ten years the period for which the auditor has held office beforethe commencement of the Companies Act 2013 i.e. before 1st April 2014 is tobe considered.
Your Company has appointed M/s. S Janardhan & Associates Chartered AccountantsBangalore (Firm Registration No 005310S) as statutory auditors and they willcontinue in office till the forth coming Annual General Meeting and being eligible theyare seeking re-appointment at the same AGM to audit the books of account of your Companyfor fiscal year ending 2016-2017 i.e. from the conclusion of the forth coming AnnualGeneral Meeting until conclusion of the next Annual General Meeting of your Company.
M/s. S Janardhan & Associates Chartered Accountants Bangalore have given theirconsent to act as auditors and have submitted a certificate to the effect that theirre-appointment if made would be in conformity with the provisions of section 139(1) ofthe act and that it will meet with the criteria prescribed under section 141 of the act.Your directors recommend their re-appointment at the ensuing Annual General Meeting.
AUDITORS QUALIFICATIONS AND BOARDS REPLY
The statutory auditors have qualified their report on various matters pertaining to theCompany and the Board has replied to these qualifications. A detailed list containing theaudit qualifications and the Boards replies thereto have been provided as anannexure to this report marked Annex No - VI Statement of Impact of Audit Qualificationsfor the Financial Year ended 31st March 2016.
SECRETARIAL AUDITOR AND BOARDS REPLY TO SECRETARIAL AUDIT QUALIFICATIONS
Secretarial audit in prescribed Form MR-3 and the Boards reply to secretarialauditors qualifications are attached to this report marked Annex No - VII.
FORMAL ANNUAL EVALUATION OF THE BOARD
The guidelines for evaluating and assessing the performance of the directors are beingmodified due to the expansion of the board. Generally such assessment would include thedecision making abilities of individual directors strategic and value additioncontributions at the meetings charting your companys policy and growth andintroducing risk management policies.
As per listing regulations the directors have to carry out an annual performanceevaluation of the Board independent directors whole-time and non-whole-time directorscommittees of the Board and chairman of the Board. Necessary guidelines are beingre-framed in this regard.
Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and companys operations in future
There was no significant and material order passed by the regulators or courts /tribunals impacting the going concern status and operations of the Company in future.
HEALTH SAFETY AND ENVIRONMENT
Your Board is committed to highest standards of providing healthy environment forsafety of its employees and your Board reviews the same from time to time.
Disclosure under sexual harassment of women at work place prevention prohibitionand redressal Act 2013
During the year under report your Company has not received any complaint under thecaptioned act.
In compliance with the provisions of section 177(10) of the Companies Act 2013 andregulation 4(2)(d) of the SEBI(Listing and disclosure requirements) Regulations yourCompany has created and established a vigil mechanism for the directors and employees toreport concerns about unethical behavior actual or suspected fraud or violation ofcompanys code of conduct. Your Company has not received any concerns about unethicalbehavior of any type in the year under consideration.
| ||By Order of the Board of Directors |
| ||For Cranes Software International Limited |
|Bengaluru ||CS P Phaneendra |
|12th August 2016 ||Company Secretary |