Your Directors are pleased to present the Twentieth Annual Report together with theAudited Financial Statements of the Company for the year ended March 31 2015. This reportincludes both standalone results of the Company (CyberTech Systems and Software Ltd.) aswell as the consolidated results of the Company and its subsidiary CyberTech Systems andSoftware Inc. USA.
| || || |
(Rs in million)
| || |
| ||2014-15 ||2013-14 ||2014-15 ||2013-14 |
|Gross Revenue ||440.00 ||459.51 ||669.03 ||730.83 |
|Profit before Interest & Depreciation ||77.45 ||125.86 ||55.13 ||125.48 |
|Interest ||5.76 ||4.76 ||5.76 ||4.76 |
|Depreciation ||23.00 ||14.48 ||30.88 ||24.64 |
|Profit before Exceptional Items and tax ||48.69 ||106.62 ||18.49 ||96.08 |
|Exceptional items ||(56.19) ||Nil ||(56.19) ||Nil |
|Profit before tax ||104.88 ||106.62 ||74.68 ||96.08 |
|Provision for tax ||22.17 ||19.74 ||22.17 ||19.74 |
|Income Tax adjustments from earlier years ||1.00 ||Nil ||1.00 ||Nil |
|Profit after tax ||81.71 ||86.88 ||51.51 ||76.34 |
|Accumulated profit brought forward from previous year ||263.57 ||207.66 ||158.31 ||112.94 |
|Provision for Dividend (includes dividend tax of Rs4.50 million) ||32.25 ||30.97 ||32.25 ||30.97 |
|Balance to be carried forward ||313.03 ||263.57 ||178.07 ||158.31 |
Your Directors have the pleasure of recommending Dividend @10% (Re.1/-) per EquityShare of Rs10/- each for the Financial Year ended March 31 2015 amounting toRs32251448/- (inclusive of tax of Rs5455105) subject to approval of members at theensuing Annual General Meeting.
The dividend will be paid to members whose names appear in Register of Members on September18 2015 and in respect of shares held in dematerialized form it will be paid tomembers whose names that may be furnished by the National Securities Depository Limited(NSDL) and Central Depository Services (India) Limited (CDSL) as the beneficial owners ason that date.
No amount was transferred to Reserves for the year under review.
RESULTS OF OPERATIONS AND THE STATE OF COMPANYS AFFAIRS
The Companys primary focus continues to be delivering ofshore development andsupport services in the Companys core technology areas. We are happy to inform thatduring the year the Company has made an e-ort to develop a product suite that is usefulfor all Municipalities requirements. There was a slight reduction in the OFshore andDomestic revenue compared to the previous year. The Company continued to receive incomefrom surplus ofce premises that earned rental income. The Companys performance forthe year on standalone basis is as follows:
Total revenue during the year 2014-15 amounted to Rs440.00 million as comparedto Rs459.51 million during the previous year. Total revenue is comprised of revenue fromoperations and other income as follows:
Revenue from operations for the year ended March 31 2015 amounted to Rs396.95 millionas against Rs406.57 million for the previous year. Operating revenue includes bothsoftware support and development activities. Revenue is reduced by 2.37% due to marginalreduction in domestic business as well as ofshore business.
Other Income amounted to Rs43.05 million as against Rs52.94 million in theprevious year.
CyberTech continues to strive for growth. The Company has grown its GIS Businesssubstantially over the past few years. Many of the Application Maintenance projects aretransformed into long term annuity projects. To allow the Company to continue thisevolution the top management of the Company has realigned the organization establishedautonomy in a few new business units and streamlined the business model.
The consolidated group continues to focus on delivering services to its identifiedmarket segments in its core technology areas. It continues to align its sales and deliveryorganizations to an ofshore centric model as well as sustainable entry in to Domestic GISmarket.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company including its wholly owned USsubsidiary are prepared in accordance with Accounting Standard 21 (Consolidation ofAccounts) as prescribed by the Institute of Chartered Accountants of India and incompliance with the terms of the listing agreement with the Stock Exchanges. Togetherthese comprise part of the Annual Report and Accounts. The summarized consolidated resultsare given alongside the financial results of your Company.
WHOLLY OWNED SUBSIDIARY IN USA
The Company owns 100% interest in CyberTech Systems and Software Inc. USA (CSSI) whichwas formed on June 12 2003 in the State of Delaware in the United States of Americawhose results are consolidated herein.
During the year CyberTech Systems and Software Inc. (USA) reported an operating lossof Rs22.32 million before interest and depreciation on total revenue of Rs565.42millionThe net loss of the subsidiary for F.Y. 2014-15 aggregated to Rs30.19 million. The Companyis taking steps to increase the revenue of CyberTech Systems and Software Inc. (USA) andthe Board is of the opinion that it will be able to wipe of the accumulated losses ofCyberTech Systems and Software Inc. (USA) gradually.
The Statement in form AOC-1 containing salient features of the financial statements ofCompanys Subsidiary is attached to the Boards Report as Annexure 1.
BUSINESS OPERATIONS OVERVIEW AND OUTLOOK
During the year GeoCivic Property Tax Management solution was considered fordevelopment stabilization and product maturity. This decision is based on the initialmarket study and ongoing mission mode projects of Government of India like Smart citiesand Amrut (formerly known as JNNURM) and exposure to the domain area. GeoCivic is underimplementation with some of the Municipal Corporations and GeoCivic specifications arepart of many tenders floating across many municipal corporations . The development andevolution of GeoCivic is almost in last stages and based on the initial demonstrationsmany Municipal corporations have shown interest in implementation of this application toleverage their geographic intelligence and to optimize civic planning and development.Considering the amount of interest shown by these Local Civic Bodies your Company expectsto grow its business in this area considerably in the next few years.
On March 5 2014 CyberTechs India Business Unit announced the launch of CyberTechRisk Center that ofers advanced Risk Visibility Solutions dedicated to theIndian Public and Corporate sector. The risk center has been formed under an MOU betweenCyberTech and NC4 - the world leader in risk management and situational awarenesssolutions. CyberTech Risk Center provides Indian organizations with geo-coded informationon incidents that are likely to impact them in near-real time thus helping Indianorganizations ensure business continuity while safeguarding their employees and physicalassets.
Risk Centre business has already seized first customer in India which is the IT Giantnamely Infosys. There are many more customers in the pipelines. Also India Risk centrefeed are used by several customers in U.S.A. which has started generating recurringrevenue for the Company.
AWARDS AND RECOGNITIONS Awards
CyberTech received the "Skoch Order of Merit" in the 37th Skoch Summit on"Minimum Government Maximum Governance" held at the India Habitat Centre NewDelhi on 19-20th September 2014. CyberTech has received this prestigious recognition as"Indias best governance projects 2014" for the excellent projectconceptualized and delivered for the city of Bangalore. The project has been awarded thisappreciation in two categories: Smart Governance & AdvancedTechnology.
The Skoch Digital Inclusion awards is a highly renowned and prestigious platforminstituting Indias highest independent civilian honors in the -eld of GovernanceFinance Technology Economics and the Social Sector. CyberTechs selection has comeafter a fierce competition among more than 1000 entries from across the country includingleading national and international IT and technology companies. CyberTechs selectionfor this Order of Merit speaks volumes for the customer acceptance and qualityof its GeoCivic solution. It is a refection of the success that CyberTech has had atbuilding market-driven solutions on leading ESRI technologies.
This achievement will not only help in creating a stronger GeoCivic brand but willalso create better opportunities for CyberTech to reach out to its target market anddeliver better value to its customers.
Recognition CMMI Recognition
CyberTech has been assessed for CMMI for Software Development and has been successfullyappraised for Level 3.
CMMI is an Internationally recognised and accepted model by IT industry for thesoftware development. It assures process oriented approach for delivering Quality Productand timeliness in delivery. Through CMMI CyberTech now has detailed processes to guidethe product lifecycle from its conception to final delivery. CMMI Institute USA has nowofcially published on its website about CyberTech achieving this prestigious status ofCMMI Level 3.
During the year under review the Company received Occupancy Certi-cate from the ThaneMunicipal Corporation for the construction of the 4th -oor which has expanded anadditional capacity of 35000 sq.ft. and can accommodate around 250 IT professionals.
The paid up share capital of the company as on March 31 2015 was Rs267963430. Duringthe year under review the Company has issued 325000 equity shares under Employee StockOption Scheme.
The Company has not accepted any public deposit and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of Balance Sheet.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
The particulars of contracts or arrangements with related parties referred to inSection 188(1) of the Companies Act 2013 in the prescribed form AOC-2 is appended as Annexure2 to the Boards Report. Further in terms of the requirement under AS-18 thedetail of the Transactions with the Related Parties are provided under Note No. 26 of theAudited Financial Statements for the Financial Year ended March 31 2015. The Directorsfurther report that there are no materially significant related party transactions made bythe Company with the Promoters Directors Key Managerial Personnel or other designatedpersons which may have a potential con-ict with the interest of the Company at large. Allrelated party transactions that were entered into during the financial year were made onan arms length basis and were in the ordinary course of business. The policy onRelated Party Transactions as approved by the Board is uploaded on the Companyswebsite: www.cybertech.com.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not granted any loan guarantee investment to any person other thanits wholly owned subsidiary. The detail or given in the Notes to Financial Statement.
RISK MANAGEMENT POLICY
Pursuant to the requirements of Clause 49 of the Listing Agreement the Company hasconstituted a Risk Management Committee. The Company has in place a mechanism to identifyassess monitor and mitigate various risks to key business objectives.Major risksidentified by the businesses and functions are systematically addressed through mitigatingactions on a continuing basis. These are discussed at the meetings of the Audit Committeeand the Board of Directors of the Company.
The Companys internal control systems with reference to the Financial Statementsare adequate and commensurate with the nature of its business and the size and complexityof its operations. These are routinely tested by Statutory as well as Internal Auditors.Significant audit observations if any and follow up actions thereon are reported to theAudit Committee.
The policy on Risk Management as approved by the Board is uploaded on theCompanys website www.cybertech.com.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 are given in Annexure-3 and areforming part of this Report.
MANAGERIAL REMUNERATION & PARTICULARS OF EMPLOYEES
The information required under section 197 of the Companies Act 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are given below:
a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
|Non-Executive Directors ||Ratio to median remuneration |
|Mr. Viswanath Tadimety ||0.47 |
|Mr. Steven Jeske ||0.21 |
|Ms. Amogha Tadimety ||0.05 |
|Mr. M. P. Bharucha ||0.85 |
|Mr. Sudhir Joshi ||1.17 |
|Dr. N.L. Sarda ||1.17 |
|Mr. Prakash Kenjale ||0.52 |
|Dr. Shreepad Karmalkar ||0.36 |
|Executive Director || |
|Mr. Ramasubramanian Sankaran ||8.10 |
b. The percentage increase in remuneration of each director chief executive ofcerchief financial ofcer company secretary in the financial year:
|Directors Chief Financial OFcer and Company Secretary ||% increase in remuneration in the financial year |
|Mr. Viswanath Tadimety -Chairman ||200.00 |
|Mr. Steven Jeske- Director ||33.33 |
|Ms. Amogha Tadimety-Director ||- |
|Mr. M. P. Bharucha-Director ||725.00 |
|Mr. Sudhir Joshi-Director ||28.57 |
|Dr. N.L. Sarda-Director ||50.00 |
|Mr. Prakash Kenjale-Director ||42.86 |
|Dr. Shreepad Karmalkar - Director ||-12.50 |
|Mr. Ramasubramanian Sankaran -Executive Director and CFO ||13.15 |
|Mr. Sateesh Wadagbalkar-Company Secretary ||10.46 |
c. The percentage increase in the median remuneration of employees in financial year:22%
d. The number of permanent employees on the rolls of company: 428
e. The explanation on the relationship between average increase in remuneration andCompany performance
On an average employees received an annual increase of 15% in India. The individualincrements varied from 8% to 15% based on individual performance. The increase inremuneration is in line with the market trends . In order to ensure that remunerationrefects Company performance the performance pay is also linked to organizationperformance apart from an individuals performance.
|f.Comparison of the remuneration of the key managerial personnel against the performance of the Company ||( Rs Million) |
|Aggregate remuneration of key managerial personnel (KMP) in FY15 ||5.92 |
|Revenue ||396.95 |
|Remuneration of KMPs (as % of revenue) ||1% |
|Profit before Tax (PBT) ||104.88 |
|Remuneration of KMP (as % of PBT) ||5.64% |
g. Variations in the market capitalisation of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year
| ||Rs ||Rs || |
|Particulars ||31-Mar-15 ||31-Mar-14 ||% change |
|Market capitalisation ||747617970 ||627370829 ||19.17 |
|Price Earnings Ratio ||9.09 ||7.23 ||25.77 |
h. Percentage increase over decrease in market quotations of shares of the company incomparison to the rate at which the Company came out with the last public ofer. Notapplicable.
i. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 15%. However during the course of the year thetotal increase is approximately 15% after accounting for promotions and other event basedcompensation revisions. Increase in the managerial remuneration for the year was 11%.
j. Comparison of each remuneration of the key managerial personnel against theperformance of the Company:
| ||Ramasubramanian Shankaran Executive Director & CFO ||Sateesh Wadagbalkar GM & Company Secretary |
| ||( Rs Million) ||( Rs Million) |
|Remuneration in FY15 ||3 ||1 |
|Revenue (Rs) ||397 ||397 |
|Remuneration (as % of revenue) ||0.79% ||0.24% |
|Profit before Tax (PBT) ||105 ||105 |
|Remuneration (as % of PBT) ||2.98% ||0.90% |
k. The key parameters for any variable component of remuneration availed by thedirectors:
The members have at the AGM of the Company on September 30 2014 approved payment ofcommission to the non-executive directors within the ceiling of 1% of the net profits ofthe Company as computed under the applicable provisions of the Act. The said commission isdecided each year by the board of directors and distributed amongst the non-executivedirectors based on their attendance and contribution at the board and certain committeemeetings as well as the time spent on operational matters other than at meetings.
l. The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year.
|Name of the Employee ||Ratio |
|Mr. Anirban Biswas ||1.05 |
|Mr. Vishal Bargat ||1.13 |
|Mr. Ambadas Bhore ||1.48 |
m. Afirmation that the remuneration is as per the remuneration policy of the Company.
The Company afirms remuneration is as per the remuneration policy of the Company.
n. There were no employees in receipt of remuneration during the year requiringdisclosure under section 197(2) read with Rule 5 ( 2 ) of the companies Appointment andremuneration of Managerial Personnel) Rules 2014.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013
Your Company is committed to creating and maintaining a secure work environment whereits employees agents vendors and partners can work and pursue business together in anatmosphere free of harassment exploitation and intimidation. To empower women and protectwomen against sexual harassment a policy for prevention of sexual harassment has beenrolled out and Internal Complaints Committee as per legal guidelines has been set up. Thispolicy allows employees to report sexual harassment at the workplace. The InternalCommittee is empowered to look into all complaints of sexual harassment and facilitatefree and fair enquiry process with clear timelines.
During the year 2014-15 no complaints were received regarding Sexual harassment.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report appearing in this Annual Report reviewthe operations of the Company in more detail and forms part of this Report.
As per the Listing Agreement with the Stock Exchange(s) the Company has complied withthe requirements of the Corporate Governance provisions of the Listing Agreement. A reporton Corporate Governance is attached to this report.
In compliance with the provisions of Sections 149 152 Schedule IV and otherapplicable provisions if any of the Companies Act 2013 read with Companies (Appointmentand Qualification of Directors) Rules 2014 Mr. Prakash Kenjale Mr. Sudhir Joshi Dr.Shreepad Karmalkar Dr. N.L. Sarda were appointed as Independent Directors on the Board ofDirectors of your Company at the 19th AGM held on September 30 2014 to hold ofce up tofive (5) consecutive years upto September 29 2019. Ms. Amogha Tadimety was appointed as aWoman Director retiring by rotation at the 19th Annual General Meeting held on September30 2014 to comply with provision of Section 149 of the Companies Act 2013 read with Rule3 of Companies (Appointment and Qualification of directors) Rules 2014.
The Board at its meeting held on March 30 2015 appointed Mr. A.V. Rajwade as anAdditional Director of the Company who holds ofce upto the date of the ensuing AnnualGeneral Meeting. The Nomination and Remuneration Committee has recommended his appointmentas an Independent Director of the Company for period of -ve years. Mr. M.P. Bharucha thesolicitor of the Company was appointed as a Director liable to retire by rotation. As thetotal payment made by the Company to his firm M/s. Bharucha and Partners is less than 10%of the gross turnover of his firm during last three years the Board of Directorsappointed him as an Independent Director for a period of 5 years ending on September 302019. Mr. Steven Jeske Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible ofers himself for reappointment. On the recommendationof the Nomination & Remuneration Committee Mr. Ramasubramanian Sankaran wasreappointed as the Executive Director with efect from 4th August 2015 for a period ofthree years subject to the approval of shareholders in ensuing Annual General Meeting.
The brief resume of the Directors seeking appointment or re-appointment and otherrelated information has been detailed in the Notice convening 20th Annual General Meeting.Necessary resolution seeking the approval of the members for appointment / re-appointmentof above Directors have been proposed in the Notice convening the ensuing Annual GeneralMeeting.
Your Directors recommend their appointments .
NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE
The details of the number of Board and Audit Committee meetings of your Company are setout in the Corporate Governance Report which forms part of this Report.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each independent director undersection 149(7) of the Companies Act 2013 that he meets the criteria of independence laiddown in section 149(6) of the Companies Act 2013 and clause 49 of the Listing Agreement.
Clause 49 of the Listing Agreement mandates that the Board shall monitor and review theBoard evaluation framework. The Companies Act 2013 states that a formal evaluation needsto be made by the Board of its own performance and that of its committees and individualdirectors. Schedule IV of the Companies Act 2013 states that the performance evaluationof independent directors shall be done by the entire Board of Directors excluding thedirector being evaluated.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The Board approved the evaluation results ascollated by the Nomination and Remuneration Committee.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Every new independent director of the board attends an orientation program. Tofamiliarize the new inductees with the strategy operations and functions of our Companythe Chairman makes presentation to the inductees about the companys strategyoperations product and service oferings markets software delivery organizationstructure finance human resources technology quality facilities. Further at thetime of appointment of an Independent Director the Company issues a formal letter ofappointment outlying his role functions duties and responsibilities as an independentdirector. The format of the letter of appointment is available on the website of theCompany www.cybertech.com.
COMMITTEES OF THE BOARD
Currently the Board has -ve committees: the Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility Committee StakeholdersRelationship Committee and Executive Committee.
A detailed note on the Board and its committees is provided under the CorporateGovernance Report section in this Annual Report. The composition of the committees andcompliances as per the applicable provisions of the Act and the Rules are as follows:-
|Name of the Committee ||Composition of the Committee ||Highlights of duties responsibilities and the activities |
|Audit Committee ||Mr. Sudhir Joshi Dr. N.L. Sarda Dr. Shreepad Karmalkar and Mr. Anant V. Rajwade ||All recommendations made by the Audit Committee were accepted by Board. |
| || ||The company has adopted Vigil Mechanism Policy for directors and employees to report concerns about unethical behavior actual or suspected fraud or violation of the companys Code of conduct and ethics. The Vigil Mechanism Policy has also been placed on the website of the Company www.cybertech.com. |
| || ||In accordance with the requirements of the Listing Agreement the company has formulated policies on related party transactions . This policy is available on the website of the company. |
|Nomination and Remuneration Committee ||Mr. Sudhir Joshi Dr. N.L. Sarda Dr. Shreepad Karmalkar and Mr. Viswanath Tadimety ||The committee oversees and administers executive compensation operating under a written charter adopted by the Board of Directors. The Committee reviews the compensation of Executive Director and Senior Executives to align both short term and long term compensation with business objectives and to link compensation with the achievement of measurable goals. |
| || ||The Nomination and Remuneration Committee has framed the nomination and remuneration policy. A copy of the policy is available on the Website of the Company www.cybertech.com. |
|Corporate Social Responsibility Committee ||Mr. Sudhir Joshi Dr. N.L. Sarda Mr. Viswanath Tadimety and Mr. Ramasubramanian Sankaran ||The Board has laid out the companys policy on Corporate Social Responsibility. |
| || ||During the year the company has not spent any amount on corporate Social Responsibility due to reduction in profit on Consolidation basis and to conserve cash. |
| || ||The CSR Policy is available on the website of the Company www.cybertech.com. |
|Stakeholders Relationship Committee ||Mr. Anant V. Rajwade Mr. Sudhir Joshi and Mr. Ramasubramanian Sankaran ||The Committee reviews and ensures redressal of investors grievances. |
| || ||The Committee noted that all the grievances of the investors have been resolved during the year. |
|Executive Committee ||Mr. Viswanath Tadimety Mr. Anant V. Rajwade Mr. Sudhir Joshi Mr. Ramasubramanian Sankaran ||BudgetsFinancials and other administrative matters. |
DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 (3) (C) ANDSECTION 134 (5) OF THE COMPANIES ACT 2013
The financial statements are prepared in accordance with the Generally AcceptedAccounting Principles (GAAP) under the historical cost convention on accrual basis exceptfor certain financial instruments which are measured at fair values. GAAP comprisesmandatory accounting standards as prescribed under Section 133 of the Companies Act 2013(the Act) read with Rule 7 of the Companies (Accounts) Rules 2014 theprovision of the Act ( to the extent noti-ed) and guidelines issued by Securities andExchange Board of India (SEBI). There are no material departures from the prescribedaccounting standards in adoption of these standards.
The Directors confirm that:
i) in the preparation of the annual accounts for the financial year ended March 312015 the applicable accounting standards have been followed alongwith proper explanationrelating to material departures if any;
ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of a-airs of the Company at the end of the financial year and ofthe profit of the Company for that period;
iii) the Directors have taken proper and suficient 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 frauds and otherirregularities;
iv) the Directors have prepared the annual accounts on a going concern basis;
v) The Directors have laid down internal financial controls which are adequate and areoperating efectively; and
vi) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating efectively.
AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE
As required by clause 49 of the Listing agreement the auditors certi-cate oncorporate governance is enclosed as to the Boards report.
At the 19th Annual General Meeting held on September 30 2014 M/s. Lodha & Co.(ICAI Firm Registration No. 301051E) Chartered Accountants (CAs) Mumbai were appointedas the statutory auditors of the Company to hold ofce up to the conclusion of TwentySecond Annual General Meeting to be held in the year 2017. In terms of the first provisoto section 139 of the Companies Act 2013 the appointment of the auditors shall be placedfor the ratification at every annual general meeting. Accordingly appointment of M/s.Lodha & Co. Chartered Accountants as Statutory Auditors of the Company is placed forratification by the shareholders. In this regard the Company has received a certi-catefrom the auditors to the efect that their appointment is in accordance with the provisionsof section 141 of the Companies Act 2013.
There are no adverse remark or disclaimer Qualification or reservation in theAuditors Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed M/s. S. Anantha & Co. Practising Company Secretary to conduct theSecretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure-3" to this Report.
Necessary explanation to the observations made in the Secretarial Audit Report is asgiven below:
a) Non-Filing of E-Form-MGT10 i.e. Return to be filed with Ministry of CorporateA-airs whenever there is an increase or decrease of two percent or more in theshareholding of the Promoters and top ten shareholders within 15 days of such change bythe Company: Reply: The Company is required to file e-form MGT-10 in case of any changeof increase / decrease of 2% or more in the shareholding of the Promoters and the top tenshareholders and the 2% or more is calculated on the paid-up share capital of theCompany. During the year the change (increase) in the shareholding of the promoters isless than 2% of the paid-up share capital and the change if any in the shareholding ofthe top ten shareholders 2% or more of the paid-up share capital of the Company have beenfiled.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and the Companys operation in future.
EXTRACT OF ANNUAL RETURN
In accordance with Section 92(3)(a) read with section 134(3)(a) of the CompaniesAct2013 an Extract of the Annual Return in the prescribed format is attached as Annexure4 to the Boards Report.
INTERNAL FINANCIAL CONTROL
The Board has adopted policies and procedures for ensuring the orderly and e-cientconduct of business including adherence to the companys policies safeguarding ofits assets prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial disclosures.
INFORMATION PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013
There were no employees in receipt of remuneration during the year requiring disclosureunder section 197(12) of the Companies Act 2013.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed pursuant to Section 134(m) of theCompanies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are given inAnnexure 5.
EMPLOYEES STOCK OPTION PLAN
The position of ESOPs granted and exercised during the year is as under:
|Number of options granted: ||200000 |
|Pricing formula: ||Not Applicable |
|Options vested: ||A total of 256250 options vested during the year. |
|Options exercised and number of shares arising out of such exercise: ||325000 |
|Options lapsed: ||During the year 50000 options lapsed out of options granted. |
|Variations in terms of options: ||There was no variation in the terms of options. |
|Money realized on exercise of options: ||Nil |
|Total Number of options in force: ||Total number of 1025000 options were in force as on 31.3.2015 |
|ESOPs granted to senior managerial personnel: ||For the year ended 31.3.2015 the Company granted 325000 options to Senior Managerial Personnel. Further for the year ended 31.3.2015 the Company did not grant more than 1% of the issued capital of the Company to any one person as of the date of grant. |
Method of Accounting
The Company has elected to use the intrinsic value method to account for thecompensation cost of stock options to employees of the Company. Intrinsic value is theamount by which the quoted market price of the underlying share as on the date of grantexceeds the exercise price of the option.
Summary of the options outstanding under the Employees Stock Option Plan(ESOP):
| ||As at March 31 2015 ||As at March 31 2014 |
| ||Options ||Weighted Average Exercise Price (Rs) ||Options ||Weighted Average Exercise Price (Rs) |
|Options outstanding at beginning of the year ||1200000 ||15.75 ||1517500 ||15.57 |
|Granted during the year ||200000 ||44.30 ||375000 ||11.34 |
|Exercised during the year ||325 000 ||17.29 ||0 ||0 |
|Forfeited/lapsed during the year ||50000 ||17.95 ||692500 ||12.95 |
|Options outstanding at end of year ||1025000 ||20.73 ||1200000 ||15.75 |
|Vested options pending exercise ||550000 ||16.86 ||668750 ||17.77 |
The following summarizes information about stock options outstanding:
As at March 31 2015
|Range of Exercise price ||Number of Shares arising out of options ||Weighted life (Years)average remaining ||Weighted average Exercise Price (Rs) |
|Rs10 to Rs15 ||350000 ||6 ||11.34 |
|Rs15 to Rs45 ||675000 ||5 ||25.60 |
|As at March 31 2014 || || || |
|Rs10 to Rs15 ||375000 ||6 ||11.34 |
|Rs15 to Rs23 ||825500 ||5 ||17.76 |
Fair Value methodology for the option:
The fair value of options used to compute net income and earnings per equity share havebeen estimated on the dates of each grant within the range of Rs10 to Rs45 using theBlack-Scholes pricing model. The Company estimated the volatility based on the historicalshare prices. The various assumptions considered in the pricing model for the optionsgranted under ESOP are:
| ||As at March 31 2015 ||As at March 31 2014 |
|Dividend yield ||0-10% ||0-10% |
|Expected volatility ||10%-20% ||10%-20% |
|Risk-free interest rate ||6.46% - 6.65% ||6.46% - 6.65% |
|Expected life of option ||0 - 7 yrs ||0 - 7 yrs |
Had the compensation cost for the Companys Stock Option Plan outstanding beendetermined based on the fair value approach the Companys net profit income andearnings per share would have been as indicated below:
| ||As at March 31 2015 Rs ||As at March 31 2014 Rs |
|Profit attributable to Equity Shareholders ||81711516 ||86884875 |
|Less: Stock-based compensation expense determined under fair value based method ||4428463 ||177868 |
|Net Profit ||77283053 ||86707007 |
|Basic and diluted earnings per share (as reported) ||2.90 ||3.27 |
|Basic and diluted earnings per share (under fair value method) ||2.85 ||3.27 |
Section 134(3) (l)
There have been no material changes and commitments which can a-ect the financialposition of the Company between the end of the financial year of the Company and date ofthis report.
| || ||For and on behalf of the Board of Directors |
| || ||Viswanath Tadimety |
|Place ||Trevose PA USA ||Chairman |
|Date ||August 13 2015 ||DIN : (00008106) |
ANNEXURE -1 TO THE BOARDS REPORT
Statement pursuant to first proviso to sub-section (3) of section 129 of the CompaniesAct 2013 read with rule 5 of the Companies (Accounts) Rules 2014 in the prescribed FormAOC-1 relating to subsidiary companies
|Name of the subsidiary ||CyberTech Systems and Software Inc. USA |
|Reporting period of subsidiary ||April14 to Mar15 |
|Reporting Currency ||USD |
|Exchange Rate ||Rs62.00 |
|- ||- |
|- ||(Amount in Rs) |
|Share Capital ||93982700 |
|Reserves and Surplus ||(78294159) |
|Total Assets ||204960343 |
|Total Liabilities ||204960343 |
|Investments ||- |
|Turnover ||565425155 |
|Profit before Tax ||(30199101) |
|Provision for Taxation ||- |
|Profit after taxation ||(30199101) |
|- ||- |
|% of shareholding ||100% |
|Country ||USA |
ANNEXURE-2 TO BOARDS REPORT
FORM NO. AOC -2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014.
Form for Disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub section (1) of section 188 of theCompanies Act 2013 including certain arms length transaction under third proviso thereto.
1. Details of contracts or arrangements or transactions not at Arms length basis: Not Applicable
2. Details of contracts or arrangements or transactions at Arms length basis
|SL. No. ||Particulars ||Details |
|a) ||Name (s) of the related party & nature of relationship ||CyberTech Systems and Software Inc. USA Wholly owned subsidiary |
|b) ||Nature of contracts/arrangements/transaction ||Sale of services |
|c) ||Duration of the contracts/arrangements/transaction ||Ongoing |
|d) ||Salient terms of the contracts or arrangements or transaction including the value if any ||Rs336394042/- |
|e) ||Date of approval by the Board ||26.5.2015 |
|f) ||Amount paid as advances if any ||NA |
ANNEXURE-3 Form No. MR-3 SECRETARIAL AUDIT REPORT
[Pursuant to Section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration Personnel) Rules 2014]
FOR THE FINANCIAL YEAR ENDED MARCH 31 2015
CyberTech Systems and Software Limited
B-63-64-65-MIDC Wagle Estate J.B Sawant Marg Thane - 400 604
I have conducted the Secretarial Audit of the Compliance of Applicable Statutoryprovisions and the adherence to good corporate practices by CyberTech Systems andSoftware Limited (hereinafter called the Company). Secretarial Audit wasconducted in a manner that provided me a reasonable basis for evaluating the CorporateConducts/Statutory Compliances and expressing my opinion thereon.
Based on my veri-cation of the Companys books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company its ofcers agents and authorized representatives during theconduct of Secretarial Audit I hereby report that in my opinion the Company has duringthe audit period covering the financial year ended on March 31 2015 complied with thestatutory provisions listed hereunder and also that the Company has proper Board-processesand compliance-mechanism in place to the extent in the manner and subject to thereporting made hereinafter: I further report that compliance with applicable laws is theresponsibility of the Company and our report constitutes an independent opinion. Ourreport is neither an assurance for future viability of the Company nor a confirmation ofe-cient management by the company.
I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on March 31 2015 accordingto the provisions of:
(i) The Companies Act 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act 1956 (SCRA) and the rulesmade thereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment and Overseas Direct Investment(There were Overseas Direct Investment made by the Company in its existing Wholly ownedsubsidiary company abroad and complied with requirements thereof and there were noinstances of Foreign Direct Investment received by the Company during the year. TheCompany has complied with the requirements of -ling returns on annual basis with respectto the Foreign Direct Investments and Overseas Direct Investment relating to the earlierperiod. There were no External Commercial Borrowing hence compliance requirements forthe same are Not Applicable for the year under review); and
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (SEBI Act):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009
(Not Applicable for the year under review);
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999;
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008; (Not Applicable for the year under review);
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client (NotApplicable for the year under review);
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 (Not Applicable for the year under review); and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998 (Not Applicable for the year under review).
vi. Other laws applicable speci-cally to the Company viz.:
a) The Trade Marks Act 1999; and
b) The Information Technology Act 2000.
I have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India; (NotApplicable for the year under review); and
(ii) The Listing Agreements entered into by the Company with BSE Limited and theNational Stock Exchange of India Limited.
During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above subject to the followingobservations:
Non--ling of E-Form-MGT10 i.e. Return to be filed with Ministry of Corporate A-airswhenever there is an increase or decrease of two percent or more in the shareholding ofthe Promoters and top ten shareholders within 15 days of such change by the Company.
With respect to delay in -lings of E-forms with the Ministry of Corporate A-airs theCompany paid the additional fee and complied with the requirements.
I further report that:-
Based on the information provided by the Company its ofcers and authorizedrepresentatives during the conduct of the audit and also on the review of compliancereports by the respective Department Heads / Company Secretary / CEO / KMP taken on recordby the Board of Directors of the Company in my opinion adequate systems and processesand control mechanism exist in the Company to monitor and ensure compliance withapplicable general laws like labour laws competition law environmental laws and allother applicable laws rules regulations and guidelines. The Company has responded tocompliance requirements notices for demands claims penalties etc. levied by variousstatutory / regulatory authorities and initiated actions for corrective measures andcompliance thereof.
I further report that the compliance by the Company of applicable financial lawslike direct and indirect tax laws and Labour Law Compliances have not been reviewed inthis Audit since the same have been subject to review by statutory financial audit andother designated professionals.
I further report that
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Director Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.
Adequate notice along with agenda was given seven days in advance to all directors toschedule the Board Meetings and detailed notes on agenda were generally sent in advanceand a system exists for seeking and obtaining further information and clari-cations on theagenda items before the meeting and for meaningful participation at the meeting.
Majority decision is carried through while the dissenting members views if anyare captured and recorded as part of the minutes.
I further report that during the audit period there were no events viz.:
(i) Public/Right/sweat equity shares (except allotment of 325000 Equity sharesunder Employee Stock Option Scheme 2007 on 06th August 2014 and 13th November 2014);
(ii) Redemption / Buy-back of securities;
(iii) Major decisions taken by the members pursuant to Section 180 of the CompaniesAct 2013; (iv) Merger / amalgamation / reconstruction etc; and (v) Foreign technicalcollaborations; or such other speci-c events / actions in pursuance of the above referredlaws rules regulations guidelines etc. having any bearing on the Companysa-airs.
| || ||For S. Anantha & Co. |
| || ||Company Secretaries |
| || ||S. Anantha Rama Subramanian |
| || ||Proprietor |
|Place ||: Mumbai ||FCS: 4443 |
|Date ||: August 13 2015 ||CP No.: 1925 |
ANNEXURE-5 TO BOARDS REPORT
Information under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of thecompanies (Accounts) Rules 2014 are given as under:
CONSERVATION OF ENERGY:
Since the Company is engaged in the manufacture of Computer Software Development andother related activities furnishing of details pertaining to conservation of energy arenot applicable.
|a. Energy conservation measures taken: ||The computer systems installed are designed for low power consumption. |
|b. Additional investments and proposals if any being implemented for reduction of energy: ||Nil |
|c. Impact of measure in (a) and (b) for reduction of energy consumption and consequent impact on the cost of production: ||Not Applicable |
|d. Total energy consumption and energy Consumption per unit of production: ||Not Applicable |
|TECHNOLOGY ABSORPTION: || |
|e. E-orts made in technology absorption: ||Not Applicable |
|FOREIGN EXCHANGE EARNINGS AND OUTGO: ||For the year ended March 31 2015 ||For the year ended March 31 2014 |
|f. Activities relating to exports initiative taken to increase exports development of new exports development of new export market for products services and export plans: ||As detailed in the Report ||As detailed in the Report |
|Statement of expenditure/earnings incurred in Foreign Currency: || || |
|Outgo || || |
|Dividend ||Rs9285539/- ||Rs9284389/- |
|Travel Expenses and other Expenses ||Rs6899595/- ||Rs3920679/- |
|Income || || |
|Income from sale of Software Development services ||Rs339967104/- ||Rs341261518/- |
|Consideration Claim on Settlement of Dispute with CyberTech Middle East || || |
|- Debtors ||Rs1476405/- ||Nil |
|- Investments ||Rs54714245/- ||Nil |
| || ||For and on behalf of the Board of Directors |
| || ||Viswanath Tadimety |
|Place ||Trevose PA USA ||Chairman |
|Date ||August 13 2015 ||DIN : (00008106) |