Your Company Cybermate Infotek Limited was listed under 331 suspected shell companiesidentified by SEBI in consultation with the Ministry of Corporate affairs vide its letterto SEBI dated 09th June 2017. Subsequent to which the Companys trading wassuspended for a brief period on 08th August 2017 thereafter the Company was shifted toStage VI of graded surveillance measure as identified by SEBI.
Here We bring to your notice and also affirm that Cybermate Infotek Limited has beenmaintaining its track record of ensuring compliance in both letter and spirit and theCompany has also obtained various approvals from regulatory authorities in the recent pastwhich includes the approval in process of reduction of share capital of the Company fromthe Honourable High Court of Telangana The Stock Exchange and the Registrar of Companiesand approvals in the process of current issue of FCCBs. We understand that the regulatoryauthorities have taken due care in such process of granting approvals. Further thepromoters have invested their funds in the Company in the recent process of allotment of11400000 equity share warrants by the Company.
This warrants the fact that the Company is not a shell Company and works in the bestinterest and enhancement of the value of its stakeholders.
Your Company has received instructions from the Bombay Stock Exchange for submission ofvarious documents filed with the Stock Exchange the Registrar of Companies and such otherdocuments filed during the preceding three financial years along with certificate from theAuditor. Cybermate Infotek Limited is cooperating with the regulatory authorities inmaking our position clear.
The Board of your Company with conviction hopes that CIL will have an ease in getting aclean chit from SEBI soon upon submission of the documents called for by the Bombay StockExchange.
Now We have pleasure in presenting the report on our business and operations for theyear ended 31st March 2017.
1. Financial Results
The Companys financial performance for the year under review along with previousyears figures is given hereunder:
|Particulars ||For the year ended 31-03-2017 ||For the year ended 31-03-2016 |
|Net Sales/Income from Business Operations ||534878 ||134957 |
|Other Income ||2 ||5 |
|Total Income ||534880 ||134962 |
|Less Interest ||- ||- |
|Profit/(Loss) before Depreciation & Exceptional Items ||44906 ||(399 42) |
|Less Exceptional Items ||- ||59 7043 |
|Profit before Depreciation ||44906 ||(636985) |
|Less Depreciation ||21012 ||35778 |
|Profit after Depreciation and Interest ||23 894 ||(672763) |
|Less Current Income Tax ||56 98 ||- |
|Less Previous Year Adjustment of Income Tax ||- ||- |
|Less Deferred tax ||(5025) ||( 6 8 2 ) |
|Net Profit after Tax ||23221 ||(672081) |
|Dividend ||- ||- |
|Net Profit after dividend and Tax ||23221 ||(672081) |
|Amount transferred to General Reserve ||- ||- |
|Balance Carried to Balance Sheet ||23221 ||(672081) |
|Earning per Share(Basic) ||0.32 ||(9.28) |
|Earning per Share(Diluted) ||0.32 ||( 9 . 2 8) |
Financial highlights Revenues-Standalone
Revenue for the year ended 31st March 2017 is Rs 5348.79 lacs as compared to 1349.57lacs the same period last year. The Companys earnings improved by about 296 % overthe previous year.
The subsidiary of the company at USA is dormant hence on account of consolidation thereis no addition of revenues.
The Company had earned a net profit of Rs. 238.94 Lakhs as against a loss of Rs.6727.62 in the previous year.
There are no additions to the Profits of the company on consolidated results as therewere no operations in the Subsidiary.
Capital Expenditure on Tangible Assets-Standalone
During the year additions to fixed assets were marginal i.e Rs. 6.36 lacs as againstNIL in the previous year.
The working capital position of the company showed signs of improvement due to increasein business activity and improved realisations.
However to improve service offerings and to position the company better the companyneeds infusion of funds both in terms of marketing and also new platform rollout.
The shareholders of the company have approved raising of additional funds by way ofADR/GDR/FCCB at the Extra-ordinary General Meeting held on the 14th November 2016.
The Company has also received the Inprinciple approval from BSE vide Letter NoDCS/FCCB/AC/FIP/2061/2016-17 Dated July 18 2017 for an amount of USD 10.5 Million.Thecompany is confident is completing the fund raising during the year.
Further the company has also raised additional funds by way of Preferential Allotmentof Share Warrants to Promoters and Others. The promoters have subscribed to their sharewarrants in full on the 13th June 2017.
2. Review of Business Operations and Future Prospects.
Your Directors wish to present the details of Business operations pursued by theCompany during the year under review:
a. Services and emerging offerings
The company continued its services operations in IT and BPO segments.
The company is in the process of packaging its cloud based offerings for emergingsolutions areas.
The company is working with partners to set up the supply chain for rolling out theservices of logistics platform
The company is also tying up with channel partners to rollout the personal healthrecords platform Cyber1health.
The company has also partnered with start-ups to roll out IOT offerings in multipledomains.
b. Marketing and Market environment.
Platforms: The market place has shifted from conventional methods to use of high-endtools and analytics to understand customer preferences and priorities. Technology hasdisrupted the selling methods and has paved way for social media mobile and analyticaltools to market goods and services to customers.
Products and services are bought and sold online after comparing with competitors.Social media is the largest platform to promote products and services.
Referrals loyalty programs feedbacks reviews have been driving the sales engine forservice providers.
We at Cybermate have deployed teams to work on social media to engage with customersand prospects to provide services and support for enabling better customer experience andsupport.
Services: The Company continues to improve upon its service offerings across domains inthe following segments.
Network and Surveillance
The company provides services in custom built application development systemintegration testing maintenance network surveillance IT support consulting andBPO.
Products are now converting to platforms. Platforms are being built across domains toprovide services on the Cloud hence products which were sold as licences renewable year onyear are being replaced by platform subscriptions. Keeping abreast with this trend aspart of its "Rebuild. Reform. Reinvent" move CIL commenced work on multipleplatforms which facilitate e-commerce in new segments such as logistics healthcare andarts. Our solutions are Software as Service for day to day issues that thecommon man faces.
Logistics Platform: www.bharatcargo.in
Logistics apart from Communication and Information technology is one of the fastestmoving segments in the modern economy. Its importance to business cannot be understated asit is integral to operations. CILs focusses on optimising logistics management withrespect to road transportation.
Healthcare Platform: www.cyber1health.com
Keeping the humane touch to its operations CIL ventured in Electronic Health Recordsinspired by a true incident. An elderly gentleman was admitted into reputed hospital fortreatment. After discharge from the hospital due to some medical complications he had togo to the hospitals branch in another part of the city. The doctors in this branchinsisted that he undergo the same tests conducted in the main hospital in the recent pastas the hospital did not have any system of sharing medical records with its branchessituated in different locations!
Healthcare Platform: www.healsoft.in
As a comprehensive outlook towards healthcare CIL has developed an inclusive hospitalmanagement software system namely Healsoft which addresses and seamlessly manages allareas of hospital operations. With the view of ensuring and complementing efficientfunctioning HealSoft is a customized integrated healthcare solution that enableshospitals to manage the immeasurable data constantly generated round the clock IPD andOPD pharmacy laboratory wards online appointments scheduling billing accountingHR/Payroll and many other aspects of hospital functioning.
HealSoft eliminates the possibility of human error improves monitoring of variousprocesses provides a broad view of hospital growth eases information availabilitythrough Cloud or servers facilitates financial administration supports importantdecision making and formulation of strategies for growth.
Marketplace for arts and crafts: www.indycrafts.in
CIL has built a platform to provide a market place to reconnect people with the richheritage of Indian handicrafts and handlooms which are unique in their tradition and make.
Indycrafts is not a run of the mill e-commerce platform. It is expected that withIndycrafts the unique skills passed down several generations of artisans will beavailable to the connoisseur and the novice. With the boost in sales it is expected thatartisans will be benefitted in manifold ways such as capacity enhancement skilldevelopment marketing of their products and employment opportunities to name a few. Sucha platform will boost the morale of small entrepreneurs and the natural corollary to suchdevelopments would be innovation in product design.
In order to differentiate our service and solution offerings our strategy will be tobring in concepts of automation analytics improving productivity to gain higher accuracyand to reduce the total costs to clients. We continue to leverage the advantage of opensource technologies in providing innovative and cost-effective performance solutions.
Products: The company continues to enhance its products in health care domain and istargeting to get identified as a key player.
Heal soft (HMS): A complete Enterprise Hospital Management Software Suite (18 modules)for Clinics Small Medium and Large Hospitals at multi locations in multiple technologieswhich can be integrated to an ERP.
Our Other Platforms include
Purchases and Contract
Document Management System
Content Management System
Corporate Information System
Infrastructure: The company proposes to set up infrastructure for a securitiesoperation centre data centre to provide cost effective infrastructure solutions forstorage business continuity disaster recovery for its own and third-party applicationsand data.
The Company proposes to tie-up/set up hardware device manufacturing for IOT andemerging IT Solutions.
Strategic Alliances: We propose to market our platforms through partners/stake holdersin healthcare domain. We propose to align with start-ups either as partners or assubsidiaries in creating deploying integrating and operating business solutions. Wepropose to deploy our resources in making selective business acquisitions that augment ourexpertise complement our presence in certain market segments and accelerate the executionof our strategies.
c. Future Prospects including constraints affecting due to Government policies
The future of IT Services business is providing several open source softwarecomponents and or proprietary software products all of which can be deployed on publicor private cloud or at the customers premise. These platforms are intended toaddress the key challenges that businesses have in effectively storing managing andanalyzing the increasing amounts of data available to them.
CILs objective is to enable customers to find an improved way to packagedevelop administer and monitor their enterprise data.
No Dividend is being proposed for the current financial year to conserve resources.
4. Subsidiaries Joint Ventures and Associate Companies.
Statement pursuant to Section 129 Subsection (3)(I) of the Companies Act 2013 readwith Rule 5 of Companies Accounts Rules 2014 relating to financial statements ofsubsidiary companies as formatted in AOC 1 form has been attached as Annexure- 1 to thisreport.
The Company is evaluating revival of the US Subsidiary and acquire control of ITServices Company in the analytics space to position its service and consulting offeringsin distinct entities.
5. Directors and Key Managerial Personnel.
Profile of the Directors:
(i) Mr. Chenchaiah Pantulu Pattapurathi (DIN: 01583136)
He is Seventy One (71) years old. He is a commerce graduate and a member of Instituteof Chartered Accountants of India (qualified in the year 1971). He has forty-six (46)years of experience in industries such as Electrical Appliances Food Processing ShipBuilding Cement Cement Products Textiles
Pharmaceuticals etc. to his credit. His experience has been in the area of FinancialManagement Management Accounting and Taxation.
He promoted CIL in the year 1994 and has led the company since its inception and hasbeen instrumental in shaping and executing strategy and financial structuring. At presenthe is Managing Director and Chief Executive Officer of CIL. He is a Trustee ofChennarayudu Public Charitable Trust. He is a promoter of the company and holds 93 15820shares of the company in his name as on March 31 2017.
(ii) Mr.Satya Shiva Kumar Kanakadandi (DIN: 02103299)
He is Fifty One (51) years old. He is a science graduate. He has more than twenty-six(26) years of experience in Software Development Training and Heading MIS Departments. Hehas been instrumental in launching various corporate training programs for Universitiesbanks and other training establishments. He promoted CIL in the year 1994.
He has made significant contribution in setting up of the operations of the companysince inception and has also been instrumental in providing a marketing base to thecompany and for delivering solutions in emerging technologies in yester years.
At present he is Director Operations and Chief Operating Officer of CIL. He is apromoter of the company and holds 953010 shares of the company in his name as on March31 2017.
(iii) Mr. Chandra Sekhar Pattapurathi (DIN: 01647212)
He is forty-two (42) years old. He is a commerce graduate and a member of the Instituteof Cost and Works Accountants of India (qualified in the year 1998). He began his careerwith CIL as an Executive in Finance & Account. He has worked with a large retail chainin international markets as a Senior Financial Analyst before joining the Board of CIL Hehas experience in Finance Accounts Corporate Strategy Financial Management TaxationSecretarial and International Trade Practices.
He has been appointed a director of CIL since 30th June 2006 .At present he is Director- Finance and Chief Financial Officer of the Company.
He is a promoter of the company and holds 3 03100 shares of the company in his nameas on March 31 2017.
(iv) Mr. Koteswara Rao Kanamarlapudi (DIN: 06401491)
He is seventy (70) years old. He is a commerce graduate and a member of the Instituteof Chartered Accountants of India (qualified in the year 1972). He has worked with largelogistics Food Processing industries in India before setting up of a Construction andContracting company in Doha Qatar
He joined the Board of CIL on 30th September 1996 as a non executive promoter director
He is a promoter of the company and holds 31000 shares of the company in his name ason March 31 2017.He is a member of the Stake holders relationship committee.
(v) Dr. Devarapalli Jayarami Reddy (DIN: 02079731)
He is seventy-one (71) years old. He is a medical practioner by profession. He is wellexperienced in business of health care and is presently an investor in midsized hospitals.
He is an independent director on the board of Cybermate Infotek Limited and holds 1000shares the company. He is a member of Audit Committee and Stakeholders relationshipcommittee.
(vi) Callepalli Kamakshi Bharathi (DIN: 07144611)
She is forty-one(41) years old. She is a post graduate in Electronics. She has richexperience in telecommunications and signalling. She is presently mentoring researchtrainees on telecom engineering. She is an independent director on the board of CybermateInfotek Limited and is not a shareholder of the company.
She joined the board on 27th March 2015 as an independent(woman) director.
She is the chairperson of Nomination and Remuneration committee and a member of AuditCommittee.
(vii) Vegunta Sai Roop Kumar (DIN: 05317482)
He is forty-two (42) years old a commerce graduate and a fellow member of theInstitute of Chartered Accountants of India (qualified in the year 2003) and graduatemember of the institute of Cost Accountants of India.(qualified in the year 1998)
He started his career working with an audit firm and later moved into heading financefunction for a diversified group viz Hospitality Real Estate and Technology beforesetting up his professional practice as a Chartered Accountant.
Mr. Vegunta Sai Roop Kumar joined the board on 07th March 2016 as a Non-ExecutiveIndependent Director and is not a shareholder of the company. He is the Chairperson ofAudit Committee and a member of Nomination and remuneration committee.
(viii) Mr. Bade Srinivasa Reddy (DIN: 01384074)
He is forty-eight (48) years old He is a M.B.A (Finance) Certified InvestmentAdviser National Stock Exchange of India Certified Market Professional (NCMP Level 5 -Highest Level) He is pursuing Ph.D. in Investment Management (part time).
He has more than 22 years of Hands on Experience in Financial Markets and ServicesSector as Financial Analyst Head of the firm with Stock Exchange Membership InvestmentAdvisory Private Equity and other Businesses.
He is an Empanelled Corporate Trainer for SEBI Promoted NISM American Academy ofFinancial Management (AAFM) National Stock Exchange of India (NSE) and others.
Mr. Bade Srinivasa Reddy joined the board on 07th March 2016 as a Non-ExecutiveIndependent Director and is not a shareholder of the company. He is the chairperson ofStakeholders relationship committee and a member of nomination and remuneration committee.
Independence of directors
The Board has received statement of disclosures from all the Independent Directorshighlighting the fulfilment of all the requirements as stipulated in Section 149(6) of theCompanies Act 2013 to qualify themselves to be appointed as Independent Directors underthe provisions of the Companies Act 2013 and the relevant rules. Every such statementsubmitted by the independents directors has been taken note of by the board.
During the year there were no resignations at the board.
Mr. P.C.Pantulu Managing Director was re-appointed and Chairman Managing Director& CEO of the Company with effect from 10th May 2017 up to conclusion of the AnnualGeneral Meeting of the company for the year 2017-18 in the meeting of the Board ofDirectors held on the 29th May 2017.
Mr. K.S.Shiva Kumar Director was re-appointed as Director-Operations and COO of theCompany with effect from 1st April 2017 upto conclusion of the Annual General Meeting ofthe company for the year 2017-18 in the meeting of the Board of Directors held on the 29thMay 2017.
Mr. P. Chandra Sekhar Director was re-appointed as Director and CFO of the company fora period of five years with effect from 07th September 2017 at the Annual General Meetingof the company.
Disclosures about receipt of any commission by MD /WTD from company or any commission /remuneration from the subsidiaries
The Managing Director or Whole-time directors are not in receipt of any commissionfrom the company or any remuneration or commission from the subsidiaries.
6. Remuneration Policy
Your Directors has on the recommendation of the Nomination & RemunerationCommittee framed a policy for selection and appointment of Directors Senior ManagementPersonnel and their remuneration in accordance with Section 197 of the Companies Act 2013and Regulation 19 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirement) Regulations 2015 (including any statutory modification(s) orre-enactment(s) for the time being in force).
The salient aspects covered in the Nomination and Remuneration Policy have beenoutlined in the Corporate Governance Report which forms part of this report.
The remuneration paid to your Directors and Managerial Personnel is in accordance withthe Nomination and Remuneration Policy thus formulated.
The information required under Section 197 (12) of the Act read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed asAnnexure-II.
7. Declaration by Independent Directors
Pursuant to sub section (6) of Section 149 of the Companies Act 2013 and Regulation16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirement) Regulations 2015 all the Independent Directors of your Company have givendeclaration that they have met the criteria of independence as required under the Act andthe regulations.
8. Formal Annual Evaluation of Performance of the Board and its Committees
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates thatthe Board shall monitor and review the board evaluation framework.
The framework includes evaluation of directors on parameters such as
Analysis of Information
Board Dynamics & Relationships
Participation at Board Committees
The Companies Act 2013 states that a formal evaluation needs to be made by the board ofits own performance and that of its committees and individual directors. Schedule IV tothe Companies Act States that the performance evaluation of independent directors shall bedone by the entire board of directors excluding the director being evaluated.
The evaluation process has been explained in Corporate Governance Report.
9. Board Committees
Detailed composition of the mandatory Board committees namely Audit CommitteeNomination and Remuneration Committee Stakeholders Grievances Committee number ofmeetings held during the year under review and other related details are set out in theCorporate Governance Report which forms a part of this Report.
The Company has neither accepted nor renewed any deposits during the year under review.
11. Particulars of Loans Guarantees or Investments made under section 186 of theCompanies Act 2013.
There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review.
12. Disclosures under Sexual Harassment of Women at Workplace
In accordance with the provisions of the Sexual Harassment of Women at the workplace(Prevention Prohibition and Redressal) Act 2013 the company is required to have anAnti- sexual harassment policy though which an Internal Complaints Committee isconstituted. The said committee meets at regular intervals to redress any complaintsreceived by the committee in these lines and after due deliberation aims at disposing offthe complaints. However there has been no such complaint filed within the company tilldate.
13. Significant and material orders passed by the regulators or court
There are no significant and material orders passed by the Regulators/ Courts thatwould impact the going concern status of the Company and its future operations.
14. Material changes and commitments if any affecting the financial position of thecompany occurred between the end of the financial year to which these financial statementsrelate and the date of the report
(a) Allotment of Share warrants to Promoters and investors.
The company has allotted Equity Share Warrants to Promoters and Investors on apreferential basis on the 29th May 2017 at Rs. 4.40 per share.
Mr. P.C. Pantulu promoter and Mr. K. Bhujanga Rao belonging to the promoter group ofthe company have also subscribed the share warrants in full.
(b) Exit from STPI Scheme.
The company was registered as a 100 % EOU under the STPI Scheme. The company hassatisfied export obligations and other the terms and conditions under the scheme arisingout of duty free purchase of imported and indigenous goods.
The company has now de-bonded such goods and surrendered the CPWB Warehouse License tothe Deputy Commissioner of Customs and Central Excise.
Thus the bank guarantee issued in favour of the Customs Authorities is discharged.
The company has also received approval for Exit from STP-Scheme on 27th June 2017.
(c) Change of Objects Clause.
The company reviewed the objects clause of memorandum of association and felt that theemerging IT & ITES business requires a broader scope of objects clause.
Hence the company has issued a notice of postal ballot between 15th June to 14th July2017 to the members of the company to rationalise the main objects and other objects ofthe company.
(d) Application for allotment of land to Department of Industries Government of AndhraPradesh.
The Company is in the process of finalising its expansion plans for which the companyis seeking to set up a hardware/software and Securities Operations Centre Data CentreFacility. In the process the company has approached the Department of IndustriesGovernment of Andhra Pradesh for providing suitable facilities for infrastructure. In viewof the opportunities available in and around the capital city being set up near Amaravatithe company feels that adequate opportunities do exist for setting up of a developmentcentre which can also be utilised as a skill development centre in the region.
15. Particulars of Contracts or Arrangements made with Related Parties.
All Contracts/arrangements/transactions entered by the company during the financialyear 2016-17 with related parties were in the ordinary course of business and on anarms length basis.
In this regard we draw your attention to Note 28 containing a Statement Pursuant toClause (h) of sub section 134 of the companies Act 2013 and Rule 8(2) of the Companies(Accounts) Rules 2014 to the financial statements which sets out related partydisclosures.
16. Number of Board meetings conducted during the year under review.
The directors of the company have met nine (9) times during the financial year underreview for the purposes of discussing the affairs of the company and its business thedetails of which are listed below:
|Date of the Meeting ||Time ||Place ||Meeting No ||For the Quarter |
|21-May-16 ||10.00 am ||Regd & Corp Off ||01/2016-17 ||Apr-Jun |
|20-Jun-16 ||11.00 am ||Regd & Corp Off ||02/2016-17 ||Apr-Jun |
|05-Jul-16 ||11.00 am ||Regd & Corp Off ||03/2016-17 ||Jul-Sep |
|12-Aug-16 ||10.00 am ||Regd & Corp Off ||04/2016-17 ||Jul-Sep |
|07-Sep-16 ||11.00 am ||Regd & Corp Off ||05/2016-17 ||Jul-Sep |
|08-Oct-16 ||10.30 am ||Regd & Corp Off ||06/2016-17 ||Oct-Dec |
|14-Nov-16 ||10.30 am ||Regd & Corp Off ||07/2016-17 ||Oct-Dec |
|20-Dec-16 ||10.00 am ||Regd & Corp Off ||08/2016-17 ||Oct-Dec |
|09-Feb-17 ||10.00 am ||Regd & Corp Off ||09/2016-17 ||Jan-Mar |
17. Vigil Mechanism
The Company has established a vigil mechanism and oversees through the committee thegenuine concerns expressed by the employees and other Directors. The Company has alsoprovided adequate safeguards against victimization of employees and Directors who expresstheir concerns. The Company has also provided direct access to the chairman of the AuditCommittee on reporting issues concerning the interests of co employees and the Company.The company has also set out a whistle blower policy in terms of the SEBI (ListingObligation and Disclosure Requirements) Regulations 2015 so as to ensure that thebusiness is conducted with integrity and the companys financial information isaccurate.
The Policy on Vigil Mechanism and whistle blower policy may be accessed on thecompanys website.
18. Training of independent directors
Whenever new Non-executive and Independent Directors are inducted in the Board theyare introduced to our Companys culture through appropriate orientation session andthey are also introduced to our organization structure our business constitution Boardprocedures our major risks and management strategy.
19. Directors Responsibility Statement
Pursuant to the requirement under Section 134 (3) (c) of the Companies Act 2013 withrespect to Directors Responsibility Statement it is hereby confirmed.
i. That in the preparation of the Annual Accounts for the financial year ended March31 2017 the applicable accounting standards had been followed along with properexplanation relating to material departures.
ii. The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at the end of the financial year andof the profit and loss of the Company for that period.
iii. That the Directors had taken proper and sufficient care towards the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
iv. That the Directors had prepared the accounts for the financial year ended March 312017 on a 'going concern' basis.
v. That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively
vi. That systems to ensure compliance with the provision of all applicable laws were inplace and were adequate and operating effectively.
20. Extract of Annual Return
Form MGT 9 containing details forming part of the extract of the Annual return isannexed to this report as Annexure III [pursuant to the provisions of Section 92 read withRule 12 of the Companies (Management and Administration) Rules 2014].
21. Statement concerning development and implementation of Risk Management Policy ofthe company.
The Company has constituted a Risk Management Committee in the meeting of the Directorson Board held on the 28th May 2015 and the details of the risk management framework underthe purview of the Risk Management Committee of the Company has been discussed under theManagement Discussion and Analysis Report which forms a part of this report.
22. Details of Policy developed and implemented by the company on its Corporate SocialResponsibility initiatives.
Pursuant to Section 134 of the Companies Act 2013 every company having
Net worth of rupees five hundred crore or more or
Turnover of rupees one thousand crore or more or
Net profit of rupees five crore or more during any financial year shallconstitute a Corporate Social Responsibility Committee of the Board consisting of three ormore directors out of which at least one director shall be an independent director.
As the said provisions are not applicable to the company it has not developed andimplemented any Corporate Social Responsibility initiatives.
23. Transfer of Unclaimed Dividend to Investor Protection Fund.
The provisions of Section 125(2) of the Companies Act 2013 do not apply as there wasno dividend declared and paid last year.
24. Adequacy of Internal Financial Controls
The Company has established and is maintaining internal controls and procedures. TheBoard of Directors have evaluated the effectiveness of the Companys internalcontrols and procedures and confirm that they are adequate based on the size and thenature of its business.
25. Internal Audit
The Company has a well-established system of Internal Audit which carries out audit onRisk Management framework covering all the functions.
26. Auditors and Auditors report Statutory Auditors
M/s P. Murali & Co Chartered Accountants were appointed as Statutory Auditorsfrom the conclusion of previous Annual General meeting until the upcoming annual generalmeeting. It is now proposed to re-appoint them as Statutory Auditors from the commencementof the ensuing Annual General Meeting till the conclusion of the next Annual GeneralMeeting. The Company has received a certificate from M/s P Murali & Co. to the effectthat if reappointed it would be in accordance with the provisions of Section 141 of theCompanies Act 2013.
As required above the Board has after considering the recommendations of the AuditCommittee incorporated a suitable resolution for your consideration and approval in thenotice calling the ensuing Annual General Meeting of the Company.
The Board has now appointed M/s CAS & Associates Practising Company SecretariesHyderabad to conduct Secretarial Audit for the financial year 2017-18. The SecretarialAudit report as issued by Mr. Y. Koteswara Rao for the financial year ended March 31 2017is annexed herewith in Annexure-IV
27. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo.
The detailed information as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished underAnnexure V as attached to this report.
28. Management Discussion and Analysis
Management Discussion and Analysis Report forms a part of the Annual Report as perAnnexure VII.
29. Explanation or comments on qualifications reservations or adverse remarks ordisclaimers made by the auditors and the practicing company secretary in their reports
The Auditors Report does not contain any qualification. The Notes/Remarks on financialstatements referred to in the Auditors Report are self explanatory.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
Buy back of Securities
The Company has not bought back any of its securities during the financial year underreview.
The Company has not issued any Sweat Equity Shares during the financial year underreview.
No Bonus Shares were issued during the financial year under review.
Employees Stock Option Plan
The Company has not provided for any Stock Options to its employees during thefinancial year under review.
Companys Property and Litigation
The Company has its own commercial space which was leased out to another IT Servicescompany for 10 years in 2004.The Lease rentals were discounted with a housing financecompany to augment working capital for the company. The tenant had terminated the leaseand vacated the property of the company in 2009. Owing to Political conditions in thestate the property could not be leased out and thereby the account became irregular. Thecompany approached the lender to restructure the loan but they initiated proceedings underSARFAESI Act to recover their dues. The Lender took possession of the property. Thecompany approached the Debts recovery tribunal. However as on the balance sheet date theproperty continues to be registered in the name of the company and the lender is yet tomake his submissions before the debts recovery tribunal.
Changes in Board & Board Committees
During the year there were no changes in the composition of the board.
Disclosures pertaining to the mandatory committees constituted by the Board forspecific purposes has been included in the Corporate Governance Report which forms a partof the Annual report. Thus the information pertaining to the composition of the board andnumber of meetings held by the committees such as Audit Committee Nomination &Remuneration Committee Stakeholders Relationship Committee are covered in there.
The nomination and remuneration committee has reviewed the provisions of Section 197read along with Schedule V to the Companies Act 2013 on the Remuneration payable bycompanies having profits.
The Committee has clarified and recommended the Board of Directors that an approvalfrom the Central government is required as the remuneration payable to the managerialpersonnel is exceeding the limits as specified under Section 197 i.e. the remuneration ofthe Managing Director shall not exceed 5% of the net profits as calculated pursuant toSection 198 of the Companies Act 2013 and the overall remuneration of the Directors onBoard excluding the Independent Directors (who are eligible for sitting fees only) shallnot exceed 11% of the net profits as calculated pursuant to Section 198 of the CompaniesAct 2013.
Based on the recommendation from the Nomination and Remuneration Committee The Boardsubject to the approval of shareholders shall make an application to the CentralGovernment for grant of approval in connection with the remuneration payable exceeding thelimits as prescribed under Section 197 of Companies Act 2013.
32. Corporate Governance
Pursuant to Regulation 27 of the SEBI (Listing Obligation and Disclosure Requirement)Regulations 2015 a separate report on corporate governance has been included in thisAnnual Report in Annexure-VI together with a certificate from the Practicing CompanySecretary regarding compliance of conditions of Corporate Governance.
All Board members and senior management personnel have affirmed compliance with theCode of Conduct for the year 2016-17. A declaration to this effect signed by the ManagingDirector of the Company is contained in this Annual Report.
Your Directors place on record their sincere thanks to their employees bankersbusiness associates consultants Legal Advisors and various government authorities fortheir continued support extended to your Companys activities during the financialyear under review. Your Directors also acknowledge gratefully for your support and for theconfidence reposed on this Company.
| ||For and on behalf of the Board of Directors || |
|Date : 11th August 2017 ||P.C.Pantulu ||P.Chandra Sekhar |
|Place : Secunderabad ||Managing Director ||Whole time director |
| ||Chairman CEO ||CFO |