You are here » Home » Companies » Company Overview » DSQ Software Ltd

DSQ Software Ltd.

BSE: 523864 Sector: IT
NSE: SQRDSFWARE ISIN Code: INE286A01017
BSE LIVE 05:30 | 01 Jan Stock Is Not Traded.
NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN
PREVIOUS CLOSE
VOLUME
52-Week high 0.00
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 0
Buy Price
Buy Qty
Sell Price
Sell Qty
OPEN
CLOSE
VOLUME
52-Week high 0.00
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 0
Buy Price
Buy Qty
Sell Price
Sell Qty

DSQ Software Ltd. (SQRDSFWARE) - Director Report

Company director report

DSQ SOFTWARE LIMITED ANNUAL REPORT 2003-2004 DIRECTOR'S REPORT To the Members of DSQ Software Limited Your Directors have pleasure in presenting the Eleventh Annual Report of your Company together with the audited accounts for the period ended September 30, 2004. Financial Result Rs. Crores 2003-2004 2002-2003 (15 Months) (12 Months) Sales, Service and Other Income 11.39 61.09 Profit / (Loss) before Interest, Depreciation and Income Tax (9.43) (22.84) Interest 4.36 9.41 Depreciation 61.60 65.18 Profit / (Loss) before Tax 75.39 (97.43) Provision for Taxation - - Profit / (Loss) After Tax (143.38) (97.43) Add: Balance brought forward from last year - 5.36 Balance Transferred from General Reserve - 43.70 Less: Provision for diminution in value of investments 89.90 94.80 Prior Period Expenses 0.14 0.21 Proposed Dividend - - Balance carried in Profit & Loss Account 308.81 (143.38) Reserves and Surplus 295.52 295.52 Review of Operations Your Company has achieved a total income of Rs.11.39 crores for the period ended September 30, 2004 compared to Rs.61.09 crores for the year ended June 30, 2003. As members are aware, the global melt down in IT sector had an adverse impact on the Indian Software Companies to a great extent. Besides the terrorist attack in US and the ban on travel to India affected the industry to a great extent. Your Company is no exception to this general slow down. This has resulted in decline in turnover, reduction in operating profit and adverse cash flow situation of your Company. Besides the deliberate adverse publicity about the Company in the media has also hurt the Company as some of the old customers had, left the Company. To combat the situation, your Company has taken various economy measures during the period to improve the operating margins. Despite best efforts, the Company has not been able to improve its client base/orders. The loss of Senior Executives has also affected its performance. Dividend In view of the loss incurred during the period, your Directors do not recommend any dividend for the period ended 30th September, 2004. Fixed Deposits The Company has not accepted any Fixed Deposits under Section 58-A of the Companies Act, 1956. Directors Mr. Shiw Kumar Agarwal retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment. The tenure of office of Mr. Dinesh Dalmia as Managing Director was over during the course of this financial year and Mr. S. Govind Rajan was appointed as Whole-time Director of the Company for a period of 2 years from 1st January, 2004. Subsidiary Company The Company has a wholly owned subsidiary, Total Infosystems Inc. (Formerly DSQ Software Corp.), USA. The accounts of the subsidiary company together with the Auditors Report for the year ending 31st December, 2003 are attached with this report, as required under Section 212 (1) of the Companies Act, 1956 and the figures in respect of the Sudsidiary Company are disclosed in INR. Disclosure pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Matters required under Section 217 (1)(e) of the Companies Act, 1956 regarding conservation of energy and technology are given in an Annexure 'A' which forms part of this report. Other Disclosures The disclosures required to be made under the guidelines on Employees Stock Option Scheme are given in Annexure 'B'. Pursuant to Clause 49 of the Listing Agreement, a report on Corporate Governance is given in Annexure 'C'. A Management Discussion and Analysis Report is given as addition to this report. Particulars of Employees No employee is drawing more than Rupees two lakhs per month and hence the statement to be disclosed in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 is not annexed. Directors' Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 Your Directors confirm i) that in the preparation of accounts for the year ended June 30, 2003, the applicable Accounting Standards had been followed and there are no material departures; ii) that the selected accounting policies are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the year end and of the profit or loss of the Company for that year and applied them consistently; iii) that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities; iv) that the accounts for the period ended September 33, 2004 are on a 'going concern basis'. Auditors' Report In regard to reservations / qualifications in the Auditors' Report, the relevant notes on the accounts are self explanatory. However, your Directors wish to offer the following additional information / explanations: The observations in Paragraph 2 of the Auditors' Report are more in the nature of clarifications of the basis on which the audit was conducted, which do not have any bearing on the accounts of the Company. In respect of Paragraph 3, the Company has already applied with Reserve Bank of India for write off of the overdue exports receivables amounting to Rs.470,638 thousands and the approval is awaited. In respect of Paragraph 4.1, the clarification in the Note No.2 ( i ) is self explanatory and the matter is subjudice before the Honarable DRT, Chennai. In respect of Paragraph 4.2, the Note No.3 is self explanatory. In respect of Paragraph 4.3 of the Auditors' Report, as mentioned in Note No.5, the Securities and Exchange Board of India carried out an investigation into the acquisition of M/s. Fortuna Technologies Inc., USA and had advised the Company to cancel this acquisition done on share swap basis. The Department of Company Affairs directed the Company to extinguish the liability in respect of the shares allotted for the above purpose. The Company is in the process of complying with the directions of the Department of Company Affairs. In respect of Paragraph 4.4 of the Auditors' Report, as mentioned in Note No.6, the Enforcement Directorate conducted an investigation into certain alleged FERA violations and had also taken certain records including the statutory records. The Company is contesting the allegations made by the Directorate and the matter is sub-judice. In respect of Paragraph 4.5 of the Auditors' Report; as mentioned in Note No. 17, the Company had made strategic long term investments in certain unlisted companies which have become Associates as defined in Accounting Standards 18 on account of such investments. As a matter of abundant caution, the Company has also made adequate provision for the diminution in the carrying value of such investments. In respect of Paragraph 4.6 of the Auditors' Report, as mentioned in Note No.8, these practices have been consistently followed by the Company from its inception and there is no change. The Reserve Bank of India permits Indian companies executing software contracts to retain and utilize overseas a maximum of 70% of the contract value for project related expenses and the balance income of at least 30% should be repatriated to India. The Company is complying with these requirements. In respect of Paragraph 4.7 of the Auditors' Report, the Note No.11 is self explanatory. In respect of Paragraph 4.8 of the Auditors' Report, the Note No.17 is self explanatory. In respect of observation in point Nos. ii (b) & ii (c) of the Annexure to the Auditors' Report, your Directors wish to clarify that these amounts were given in the normal course of business and substantial amounts were recovered during the year. In respect of point No. (vi) of the Annexure to the Auditors' Report, your Company will take appropriate action. In respect of point No. (viii) of the Annexure to the Auditors' Report, your Directors wish to clarify that because of the terrorist attacks in the US and slow down of economy, there were delays in collecting the amounts from our overseas customers and the Company's cash flows were affected. Also, the Company's liquidity was badly affected because of the opening losses and the Company did not have adequate liquid resources to meet the commitments on the due dates. Consequently, there was a delay in depositing the Provident Fund and tax dues. However, the Provident Fund amount have since been paid and the Company is making necessary arrangements to clear the balance income tax amount due at the earliest. Auditors The Company's Auditors, M/s. Ramani & Ramanujam and R. Padmanabhan, retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. Letters have been received from them stating that if the appointed, the appointment will be in accordance with the provisions of the Companies Act, 1956. Acknowledgement Your Directors take this opportunity to place on record their gratitude for the confidence reposed and the co-operation extended to the Company by Governmental agencies, banks, financial institutions, institutional and Individual investors, mutual funds and equity funds. Your Directors also wish to place on record their appreciation of the dedicated services of the employees of the Company at all levels and their gratitude to the members for their continued support. For and on behalf of the Board Place : Chennai S. Govind Rajan Date : March 4, 2005 Chairman ANNEXURE - `A' TO THE DIRECTORS' REPORT Statement of Particulars of Conservation of Energy, Technology Absorption Foreign exchange earnings and outgo pursuant to Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. Energy Conservation The Company is in the services sector and is not a power intensive one. These rules are not applicable for this industry. However, it still lays emphasis on conservation of energy and the Company's facilities have been designed in such a way so as to minimise the use of energy. Technology Absorption, Adaptation and Innovation The Company being engaged in fast growth IT Sector, continuously adapts itself to changing technologies so as to meet customer expectations. Foreign Exchange The Foreign Exchange earnings / outgo are as under: Rs. Crores Particulars Current period Previous year Foreign Exchange earned 10.34 32.06 Foreign Exchange outgo 7.14 22.19 For and on behalf of the Board Chennai S. Govind Rajan March 4, 2005 Chairman ANNEXURE - `B' TO THE DIRECTORS' REPORT Information required to be disclosed under SEBI (ESOS & ESPS) guidelines, 1999 The Company pursuant to the shareholders approval on 22nd July, 1998 and 29th March, 2001 has established two schemes of Employee Stock Option namely DSQ ESOS (I) and DSQ ESOS (II). The Compensation Committee of Directors approved the grant of the option to the employees on the basis of the performance and other eligibility criteria. The details of various Employees Stock Option Schemes are summarised below: (a) DSQ ESOS (1) (i) Total number of option granted to the employees 6,00,500 (ii) Exercise price Rs.260/- per share (iii) Total number of equity shares issued under the scheme during 2001-2002 24,825 (iv) Total amount paid-up Rs.64,54,500/- (b) DSQ ESOS (ii) Under this scheme, the grant size of 13,00,000 equity shares has been approved at an exercise price of Rs.870/- per share. The scheme has not yet been implemented. Auditors' Report on Employees Stock Option Schemes We have examined the books of account and other relevant records and based on the information and explanations given to us, certify that, in our opinion, the Company has not issued any employee stock options during the year under the Employees Stock Option Scheme in accordance with SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999 and the resolutions of the Company in General Meeting held on 28th July, 1998 and 29th March, 2001. R. Padmanabhan For Ramani & Ramanujam Chartered Accountant Chartered Accountants Chennai P. Ranga Ramanujam March 4, 2005 Partner