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Goldstone Technologies Ltd.

BSE: 531439 Sector: IT
NSE: GOLDTECH ISIN Code: INE805A01014
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VOLUME 710
52-Week high 19.65
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Mkt Cap.(Rs cr) 20
Buy Price 0.00
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OPEN 10.36
CLOSE 10.89
VOLUME 710
52-Week high 19.65
52-Week low 7.20
P/E
Mkt Cap.(Rs cr) 20
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Goldstone Technologies Ltd. (GOLDTECH) - Director Report

Company director report

Directors' Report

To

The Members

Goldstone Technologies Limited

Your Directors have pleasure in presenting the Twenty Third Annual Report of yourCompany and the Audited Financial Accounts for the year ended on March 31 2017.

( Rs. in Millions)

Standalone Consolidated
Particulars 2016-17 2015-16 2016-17 2015-16
Net Sales/Income from Operations 215.12 237.44 371.70 519.83
Total Expenses 213.48 237.60 382.63 523.56
Profit from Operations before Other
Income Interest Depreciation & 1.64 (0.16) (10.93) (3.73)
Exceptional Items
Other Income 3.68 2.34 3.71 2.60
Profit before Interest Depreciation &
5.32 2.18 (7.22) (1.13)
Exceptional Items
Interest 0.80 2.49 0.84 2.53
Depreciation 45.51 46.04 45.53 46.04
Profit after Interest but before Exceptional Items (40.99) (46.35) (53.59) (49.70)
Exceptional Items - - - -
Profit before Tax (40.99) (46.35) (53.59) (49.70)
Tax expenses 10.01 (37.84) 10.37 (37.89)
Net Profit/(Loss) after Tax (51.00) (8.51) (63.96) (11.81)
Extraordinary Items (Net of Tax) - 0.14 - 0.14
Net Profit for the period (51.00) (8.65) (63.96) (11.95)
Equity Share Capital (18782066 Shares of Rs 10/- each; Previous year 18782066 Shares of Rs 10/- each) 187.82 187.82 187.82 187.82
E.P.S (After Prior Period Items) (Rupees) (2.72) (0.46) (3.41) (0.64)
Net Worth 450.64 484.86 577.48 624.66
Book Value (Face Value of Rs. 10/- each) 23.99 25.82 30.75 33.26

Review of Operations

During the year under review your Company has reached a consolidated turnover of Rs.371.70

Million as compared to Rs. 519.83 Million for the previous financial year. TheStandalone turnover was Rs. 215.12 Million as against a turnover of Rs. 237.44 Millionduring the previous year. The Consolidated Net Profit/(Loss) for the year 2016-17 was (Rs. 63.96) Million in comparison with Net Profit / (Loss) ( Rs. 11.95) Million during theprevious year and the Standalone Net Profit/ (Loss) is ( Rs. 51.00) Million during theyear and in comparison with Net Profit / (Loss) ( Rs. 8.65) Million during the previousyear. However the consolidated Cash Profit / (Loss) for the FY 2016-17 has been reportedat ( Rs. 30.94) Million as compared to Cash Profit / (Loss) of ( Rs. 3.19) Million in theprevious year and Standalone Cash Profit / (Loss) has been reported at ( Rs. 18.00)Million as compared to Cash Profit / (Loss) of Rs. 0.11 Million during the previous year.

Dividend

During the year the Company does not have adequate profits and hence your Board hasnot recommended any dividend for the financial year 2016-17.

Share Capital;

The Paid-up capital as on 31st March 2017 was Rs. 187820660 (having 18782066Equity Shares @Rs 10/- each). During the year under review the company has not issued anyshares either to the public or to the promoter. During the year under review the

Company has not issued shares with differential voting rights nor granted stock optionsnor sweat equity. 31st March 2017 except Mr. L.P. Sashikumar having 757 sharesnone of the other Directors of the Company hold shares or convertible instruments of theCompany.

Finance :

Cash and cash equivalents as at 31st March 2017 was Consolidated Rs. 147.27Million

& Standalone Rs. 6.30 Million. The Company continues to focus on judiciousmanagement of its working capital receivables inventories and other working capitalparameters were kept under strict check through continuous monitoring.

Directors:

As per the recommendations of Nomination and Remuneration Committee subject to yourapproval/ratification of the Shareholders the following appointments were made:

Name of the Appointee DIN Appointed as Board Meeting date w.e.f
Mr. C. Sudhakar Reddy 02191226 Additional Director 07.04.2017 07.04.2017
Mr. C. Sudhakar Reddy 02191226 Managing Director 25.05.2017 27.05.2017

The following Directors have tendered their resignation:

Name of the Director Designation Date on which the resignation/ unwillingness was tendered w.e.f
Ms. Janaki Kondapi Independent Director 30th May 2017 30th May 2017
Mr. P.S. Parthasarthy Managing Director 24th May 2017 26th May 2017
Mr. P.S. Parthasarthy Non-Executive Director 31st August 2017 31st August 2017

Mr. L.P. Sashikumar Director who retires by rotation at the 23rd Annual GeneralMeeting and being eligible offer himself for re-appointment. Mr. K.S. Sarma Mr. VedulaVenkata Ramana have been appointed as Independent Directors of the Company for a term of 5(Five) years from 27th September 2014 to 26th September 2019 not liable to retire byrotation.

All Independent Directors have given their declarations that they meet the criteria of

Independence as laid down under section 149(6) of the Companies Act 2013 and theapplicable regulations of Securities and Exchange Board of India (Listing Obligations andDisclosure

Requirements) Regulations 2015.

Board Evaluation:

Pursuant to the provisions of the Companies Act 2013 and the applicable regulations ofSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board has carried out an evaluation of its own performance thedirectors individually as well as the evaluation of the working of its Audit Nomination& Remuneration Committees. The manner in which the evaluation has been carried out hasbeen explained in the Corporate

Governance Report.

Remuneration Policy:

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings:

During the year Six Board Meetings Four

Audit Committee and Stakeholder Relationship

Committee Meetings and Two Nomination and Remuneration Committee Meetings were convenedand held. The details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the limits prescribed under the Companies

Act 2013.

Meeting of Independent Directors:

The details on the separate meeting of Independent Directors is reported in the

Corporate Governance Report.

Familiarization Programme for Independent Directors:

The details on the familiarization programme for Independent Directors is reported inthe

Corporate Governance Report.

DIRECTOR'S RESPONSIBILITY STATEMENT:

In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:

i) in the preparation of the annual accounts the applicable accounting standards havebeen followed.

ii) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit or loss of the Company for the year under review.

iii) the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv) the directors have prepared the annual accounts on a going concern basis.

v) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

vi) the directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.

Consolidated Financial Statements:

During the year the Board of Directors (‘the Board') reviewed the affairs of theSubsidiaries. In accordance with Section 129 (3) of the Companies Act 2013 and applicableAccounting Standards we have prepared consolidated financial statements of the Company andits subsidiaries which will form part of the Annual

Report. Further a statement containing the salient features of the financial statementsof our subsidiaries in the prescribed format AOC-1 are appended to the Board's Report.

In accordance with Section 136 of the Companies Act 2013 the Audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of its subsidiaries are available on websiteof the Company www.goldstonetech.com. These documents will also be available forinspection during the business hours at the registered office of the Company.

Subsidiaries and Associates:

As on 31st March 2017 we are having two wholly owned subsidiaries namely StaytopSystems Inc and Staytop Systems and Software

Pvt Ltd. Till date Staytop Systems And Software Pvt Ltd has no business operations.Further the Company does not have any other Associates or

Joint Ventures.

Further as per the applicable regulations of Securities and Exchange Board of India(Listing

Obligations and Disclosure Requirements) Regulations 2015 the Company has framed apolicy on Material Subsidiaries as approved by the Board and the same has been uploaded onthe Company's website www.goldstonetech.com

During the year no further investments were made in the subsidiaries.

Statement containing salient features of financial statements of subsidiaries

Pursuant to sub-section (3) of section 129 of the Act the statement containing thesalient feature of the financial statement of a company's subsidiary or subsidiariesassociate company or companies and joint venture or ventures is in the prescribed formatAOC-1 are appended as “Annexure 1" to the Board's Report.

Report on the performance of Subsidiaries Joint Ventures and associates:

Further brief about the business of the each of the

Subsidiaries and Associates is given hereunder:

1. Performance of the Staytop Systems Inc;

Staytop Systems Inc. (a foreign wholly owned subsidiary company of GoldstoneTechnologies Limited) is engaged in business of IT Consulting and Staffing across USA.

The following is the brief summary of the financial performance during the year;

($ in Millions)

Particulars 2016-17 2015-16
Turnover 2.35 4.31
Profit before Tax (0.19) (0.05)
Net Profit/(Loss)
(0.19) (0.05)
after Tax

Till date the Staytop Systems and Software Pvt

Ltd has no business operations and the Company has no associates as well as JointVentures.

Internal control systems and their adequacy:

The Company has an Internal Audit and Internal Control System commensurate with thesize scale and complexity of its operations. To maintain its objectivity andindependence the

Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit function monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations alongwith corrective actions thereon are presented to the Audit Committee of the Board.

Insurance:

All the properties of your Company including its building plant & machinery andstocks have been adequately insured.

Statutory Auditors:

M/s. P. Murali & Company (FRN: 007257S)

Chartered Accountants Hyderabad Statutory Auditors of the Company hold office inaccordance with the provisions of the Companies Act 2013 up to the conclusion offorth-coming Annual General Meeting Pursuant to the provisions of the Section 139 (2) andother applicable provisions of the Companies Act 2013 they have completed two terms ofFive Consecutive years (i.e from 2006 to 2017) and hence Company shall appoint newauditors in the place of M/s. P. Murali & Company. Based on recommendations of theAudit Committee Board of Directors of the Company in their meeting held on 31st August2017 have appointed

M/s. Chandra Babu Naidu & Co. as Statutory Auditors of the Company for a period of

5 (Five) years i.e from the conclusion of this Annual General Meeting (AGM) until theconclusion of the 28th AGM of the

Company. M/s. Chandra Babu Naidu & Co. have furnished their Consent letter and acertificate stating that their appointment if made will be within the limits laid downunder

Section 141 (3) (g) of the Companies Act 2013 read with Companies (Audit and Auditors)Rules 2014.

The Audit Committee of your Company meets periodically with Statutory Auditors andInternal

Auditors to review the performance of the

Internal Audit to discuss the nature and scope of statutory auditors functions and todiscuss auditing internal control and financial reporting issues. To ensure completeindependence the statutory auditor and the internal auditor have full access to theMembers of the Audit Committee to discuss any matter of substance.

Particulars of Loans Guarantees or Investments:

During the year under review the following loans guarantees has been given orinvestments were made by the Company under sec 186 of Companies Act 2013 is as follows:

Your Company has provided Collateral security by creating Mortgage of its land situatedat Cherlapally Village Ghatkesar and as well given the Corporate Guarantee for the creditfacilities availed by the M/s Goldstone Infratech Limited from the

State Bank of Hyderabad (Now State Bank of India) Hyderabad Branch and for the samerelevant forms has been filed with Registrar of Companies Telangana well within the time.

Related Party Transactions:

There are no related party transactions entered into by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.

The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website www.goldstonetech.com. None of the Directors have any pecuniaryrelationships or transactions vis-a-vis the

Company.

The details of contacts or arrangements with related parties made by the company duringthe year 2016-17 is enclosed in form AOC-2 as "Annexure-2" to the Board'sReport.

Secretarial audit:

Pursuant to provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the companyhas appointed M/s. VCSR & Associates a firm of company Secretaries in practice toundertake the Secretarial Audit of the Company. The Secretarial Audit report is annexedherewith as

"Annexure-3" to the Board Report.

Risk Management Policy:

In terms of the requirement Section 134 (3) (n) and Regulation 21 of Securities andExchange

Board of India (Listing Obligations and

Disclosure Requirements) Regulations 2015 read with relevant provisions of theCompanies Act 2013the Company has developed and implemented the Risk Management Policy.The details of the Policy are reported in the Report on Corporate Governance which formspart of the Directors' Report.

Code of Conduct:

All the Independent Directors and senior management confirmed the compliance of code ofconduct. The Company believes in “Zero Tolerance” against bribery corruptionand unethical dealings / behaviors of any form and the Board has laid down the directivesto counter such acts. The Code laid down by the

Board is known as “Code of Business Conduct” which forms an Appendix to theCode. The Code has been posted on the Company's website www.goldstonetech.com.

Prevention of Insider Trading:

In Pursuance of SEBI (Prohibition of Insider

Trading) Regulations 2015 the Company has framed adopted the following policies forregulating monitoring and reporting of trading by Insiders and uploaded in website of theCompany.

i) Code of Internal Procedures And Conduct

For Regulating Monitoring And Reporting of Trading By Insiders; ii) Code of Practices& Procedures for Fair

Disclolsure of Unpublished Price Sensitive

Information;

The Board is responsible for implementation of the Code. The Board of Directors and thedesignated employees have confirmed compliance with the

Code.

Policies under SEBI (LODR) Regulations 2015:

The Board adopted the Securities and Exchange Board of India (Listing Obligations andDisclosure

Requirements) Regulations 2015 which came into force on 2nd December 2015.

Further pursuant to the said regulations the Company adopted the following policies

1. Archival Policy

2. Determination of Materiality of Events

3. Preservation of Documents Policy All the above policies are hosted on the website ofthe Company www.goldstonetech.com

Vigil mechanism/whistle blower policy:

As per the provisions of the Section 177 (9)

& (10) of the Companies Act 2013 read with amended Clause 49 of the erstwhile

Listing Agreement the Board adopted a Vigil

Mechanism called Rs. Whistle Blower Policy' for directors and employees to report themanagement /Audit Committee instances of unethical behavior actual or suspected fraud orviolation of company's code of conduct or ethics policy. The Vigil Mechanism also providedadequate safeguards against victimization of employees who avail of the mechanism and alsoprovides for direct access to the Chairman of the Audit committee in exceptional casesfurther it has also been uploaded in the Company's web site; www.goldstonetech.com.

Policy on Prevention Prohibition and Redressal of Sexual Harassment at Work place:

Your Company strongly supports the rights of all its employees to work in anenvironment free from all forms of harassment. The Company has adopted a Policy onPrevention Prohibition and Redressal of Sexual Harassment at workplace as per theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules made thereunder. The policy aims to provide protectionto Employees at the workplace and prevent and redress complaints of sexual harassment andfor matters connected or incidental thereto with the objective of providing a safeworking environment where employees feel secure. The Company has not received anycomplaint on sexual harassment during the year.

Extract of Annual Return:

The details forming part of the extract of the

Annual Return in form MGT-9 is annexed herewith as "Annexure 4" to theBoard Report.

Stock Exchange Listing:

Presently the Equity Shares of the Company are listed on National Stock Exchange ofIndia

(NSE) and the BSE Limited (BSE). The Company confirms that it has paid Annual ListingFees due to all the Stock Exchanges where the Company's securities are listed for the year2017-18.

Corporate Governance and Management Discussion & Analysis Reports

As per the Regulation 34(3) read with Schedule

V of the Securities and Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations 2015 the Corporate Governance and Management Discussion& Analysis Report which form an integral part of this Report are set out as separateAnnexures together with the Certificate from the auditors of the Company regardingcompliance with the requirements of Corporate Governance.

Managing Director and CFO Certification:

As required under the SEBI Guidelines the

Managing Director and the CFO Certification is attached to Corporate Governance Report.

Material changes and commitments affecting the financial position of the company whichhave occurred between the end of the financial year i.e.31.3.2017 to which financialstatements relate and the date of the Board's Report: NIL

Particulars of Conservation of energy / technology absorption foreign exchangeearnings and outgoings

Particulars in respect of Conservation of Energy

Technology Absorption and Foreign Exchange

Earnings and Outgo required under Rule 8(3) of the Companies (Accounts) Rules 2014 areas follows:

A. CONSERVATION OF ENERGY:

Your company's operations involve low energy consumption. However adequate measureshave been taken to conserve and reduce the energy consumption.

B. TECHNOLOGY ABSORPTION:

Your Company continues to use state-of-the-art technology for improving theproductivity and quality of its products and services. To create adequate infrastructureyour company continues to invest in the latest hardware and software.

C. FOREIGN EXCHANGE EARNINGS AND OUT GO: ( Rs. in Millions)

Particulars 2016-17 2015-16
Foreign Exchange 29.29 29.77
Earnings
Foreign Exchange 29.93 54.94
Outgo

Particulars of employees:

The information required pursuant to Section 197 read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel)

Rules 2014 in respect of employees of the

Company is enclosed as "Annexure-5" to the

Board's Report.

Personnel:

Personnel relations have remained very cordial during the period.

Acknowledgements

Your Directors convey their sincere thanks to

CITI Bank and Central Bank of India for their support guidance and assistance.

Your Directors thank all the Employees of your company for their dedicated servicewhich enabled your company to achieve satisfactory results and performance during theyear. Your

Directors thank the shareholders for their support and confidence reposed in thecompany and the management and look forward to their continued co-operation and support.

For and on behalf of the Board

Sd/- Sd/-
C.Sudhakar Reddy L P Sashikumar
Managing Director Director
DIN: 02191226 DIN: 00016679
Place: Secunderabad
Date : 31.08.2017