We are delighted to present the report on our business and operations for the financialyear ended March 31 2016.
The Companys Financial results (standalone & consolidated) for the year ended31st March 2016 is provided in the Annual Report.
| || || || ||( Rs in Lakhs) |
|Particulars ||Consoliodated ||Standalone |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Net sales/income from operations ||21372.71 ||24289.34 ||2982.82 ||3534.80 |
|Less: Direct cost ||7459.56 ||9485.26 ||220.04 ||408.67 |
|Indirect Cost ||13508.58 ||13881.08 ||2379.05 ||2217.87 |
|Profit / (Loss) from operations before other income finance costs and exceptional items || |
|Other income ||226.29 ||251.58 ||222.37 ||44.34 |
|Profit / (Loss) from ordinary activities before finance costs and exceptional items || |
|Finance costs ||217.52 ||366.21 ||139.57 ||128.90 |
|Profit / (Loss) from ordinary activities after finance costs but before exceptional items ||413.34 ||808.36 ||466.53 ||823.70 |
|Exceptional items* ||- ||19331.25 ||- ||13492.99 |
|Profit / (Loss) from ordinary activities before tax || |
|Tax expense ||43.30 ||845.30 ||25.84 ||808.49 |
|Net Profit / (Loss) from ordinary activities after tax || |
|Net Profit / (Loss) for the period || |
*In the Financial Year 2014-15 the Company had provided for Rs. 13492.99 lakhstowards diminution in the value of Companys Investment in Wholly owned foreignsubsidiaries consequent upon losses in the WOS due to impairment of goodwill in the stepdown subsidiaries as per the audited financials of WOS.
There are no material changes and commitments affecting the financial position of yourCompany which have occurred between the end of the financial year ended 2015-16 and thedate of this report.
I. STATE OF COMPANYS AFFAIRS
GSS primary focus is in the ADMS (Application Development and Maintenance Services)IMS (Infrastructure Management Services) and Healthcare services while our major revenuecontributor has been Professional Services. We continue to execute our business operationsunder the same units as last year. As we continue to meet customers we remain convincedof the huge potential our company has given the services we offer today. We not onlyintend to leverage on our existing customer base to drive growth we will also be focusingon emerging technologies in the Business Intelligence and Analytics areas which will bedriving transformation and be within the demand circle.
II. CONSOLIDATED ACCOUNTS
The consolidated financial statements of your Company for the financial year 2015-16are prepared in compliance with applicable provisions of the Companies Act 2013Accounting Standards and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as prescribed by the Securities and Exchange Board of India (SEBI). Theconsolidated financial statements have been prepared on the basis of audited financialstatements of the Company its subsidiary companies as approved by their respective Boardof Directors.
A separate statement (Form No. AOC-1) containing the salient features of financialstatements of all subsidiaries of your Company forms part of consolidated financialstatements in compliance with Section 129 and other applicable provisions if any of theCompanies Act 2013. The financial statements of the subsidiary companies and relatedinformation are available for inspection by the members at the Registered Office of yourCompany during business hours on all days except Saturdays Sundays and public holidays upto the date of the Annual General Meeting (AGM) as required under Section 136 of theCompanies Act 2013. Any member desirous of obtaining a copy of the said financialstatements may write to the Company Secretary at the Registered Office of your Company.The financial statements including the consolidated financial statements of subsidiariesand all other documents required to be attached to this report have been uploaded on thewebsite of your Company www.gssinfotech.com
IV. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis forms an integral part of this Report and givesdetail of the overall industry structure developments performance and state of affairsof the Companys various businesses during the financial year ended 31stMarch 2016 is enclosed as Annexure [F] to this report.
V. CORPORATE GOVERNANCE REPORT
In compliance with the Regulations 34 of Listing Regulations a separate report onCorporate Governance along with a certificate from the Auditors on its compliance forms anintegral part of this Report and is enclosed as Annexure [G] to this report.
The Board of Directors did not recommend dividend for the financial year ended 31stMarch 2016.
VII. PUBLIC DEPOSITS
During the financial year 2015-16 your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read together with the Companies(Acceptance of Deposits) Rules 2014.
VIII. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Mark Silgardo Non-Executive Director and Nominee Director is liable to retire byrotation at the ensuing AGM pursuant to the provisions of Section 152 of the CompaniesAct 2013 read with the Companies (Appointment and Qualification of Directors) Rules 2014and the resolution passed in the Annual General Meeting held on 30th December2011 and being eligible have offered himself for re-appointment. Appropriate resolutionsfor his re-appointment are being placed for your approval at the ensuing AGM. YourDirectors recommend the re-appointment of Mr. Mark Silgardo as Non-Executive Director andNominee Director of your Company.
The Independent Directors Mr. Keerthy Jaya Tilak and Mrs. Nagajayanthi Das JutturRagavendra hold office up to 30th September 2020 and are not liable to retireby rotation.
Key Managerial Personnel:
The Board of Directors of the Company in its meeting held on 30thMay 2016 re-appointed Mr. Bhargav Marepally as the Managing Director of the Companywithout remuneration for a period of 5 years from 01st June 2016 to 31stMay 2021 as recommended by the Nomination and Remuneration Committee of the Board ofDirectors.
Mr. Sanjay Heda is the Chief Financial Officer of the Company.
Mrs. Esha Sinha Company Secretary and Compliance Officer of the Company wasappointed at the Board Meeting held on 13th August 2016
Mr. Lalit Kumar Tiwari due to his personnel reasons resigned as CompanySecretary and Compliance Officer of the Company with effect from 5th August2016.
The Key Managerial Personnel have been appointed in accordance with the provisions ofsection 2(51) 203 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
Mr. Bhargav Marepally Managing Director Mr. Sanjay Heda CFO and Mrs. Esha SinhaCompany Secretary are the Key Managerial Personnel of your Company in accordance with theprovisions of Sections 2(51) 203 of the Companies Act 2013 read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (including anystatutory modification(s) or re-enactment(s) for the time being in force).
Annual Evaluation of Boards Performance:
In terms of the provisions of the Companies Act 2013 read with Rules issued thereunderand the Listing Regulations the Board of Directors on recommendation of the Nominationand Remuneration Committee have annually evaluated the effectiveness of theBoard/Director(s) for the financial year 2015-16.
IX. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDPARTICULARS OF EMPLOYEES:
The remuneration paid to the Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Listing Regulations (including any statutory modification(s) orre-enactment(s) for the time being in force). The salient aspects covered in theNomination and Remuneration Policy have been outlined in the Corporate Governance Reportwhich forms part of this report. None of the Directors draw remuneration from the Companyother than sitting fees paid to the eligible directors.
The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/ employees of your Company is set out in Annexure [B] to this report andis also available on the website of your Company (www.gssinfotech.com).
X. 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 an integral part of this Report
XI. DECLARATION OF INDEPENDENCE
Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions ofCompanies Act 2013 read with the Schedules and Rules issued thereunder as well asListing Regulations.
XII. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) (c) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment(s) for the time being in force) the Directors of yourCompany confirm that:
(a) In the preparation of the annual accounts for the financial year ended 31stMarch 2016 the applicable Accounting standards and Schedule III of the Companies Act2013 (including any statutory modification(s) or re-enactment(s) for the time being inforce) have been followed and there are no material departures from the same;
(b) 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 your Company as at 31st March 2016 and ofthe profit and loss of the Company for the financial year ended 31st March2016;
(c) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the Provisions of the Companies Act 2013(including any statutory modification(s) or re-enactment(s) for the time being in force)for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(d) The annual accounts have been prepared on a going concern basis;
(e) Proper internal financial controls laid down by the Directors were followed by theCompany and that such internal Financial controls are adequate and were operatingeffectively; and
(f) Proper systems to ensure compliance with the provisions of all applicable laws werein place and that such systems were adequate and operating effectively.
XIII. AUDITORS AND AUDITORS REPORT
At the 12th AGM of your Company M/s. Sarath and Associates CharteredAccountants (Firm Registration No. 005120S) were appointed as the Auditors to hold officetill the conclusion of the 13th AGM of your Company.
The Audit Committee and Board of Directors at the meetings held on 13thAugust 2016 recommended the appointment of M/s. Sarath and Associates CharteredAccountants (Firm Registration No. 005120S) retiring Auditor to continue to act as theStatutory Auditors of your Company for a period of 3 years till the conclusion of the 16thAGM of your Company. M/s. Sarath and Associates Chartered Accountants (Firm RegistrationNo. 005120S) who retire at the ensuing AGM of your Company are eligible forre-appointment for a period of 3 years. Your Company has received written consent and acertificate stating that they satisfy the criteria provided under Section 141 of theCompanies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 and that theappointment if made shall be in accordance with the applicable provisions of theCompanies Act 2013 and rules issued thereunder. As required under the ListingRegulations M/s. Sarath and Associates Chartered Accountants have also confirmed thatthey hold a valid certificate issued by the Peer Review Board of ICAI.
The Audit Committee and the Board of Directors recommend the appointment of M/s. Sarathand Associates Chartered Accountants (Firm Registration No. 005120S) as the Auditors ofyour Company for a period of 3 years from the conclusion of 13th AGM till theconclusion of the 16th AGM of your Company to be held in the year 2019.
The Auditors Report for the financial year 2015-16 does not contain any Auditqualification for which the reply of Directors is required.
The Statutory Auditors of the Company have not reported any fraud as specified underthe second proviso of Section 143(12) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment(s) for the time being in force).
XIV. SECRETARIAL AUDIT
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 Ms. V. Sravani Practicing Company Secretary to conduct the SecretarialAudit of your Company. The Secretarial Audit Report is annexed herewith as Annexure [C]to this Report. The Board of Directors reply to the comments/qualifications/observationsby the Secretarial Auditor is as follows:
The Composition of the Board was not in order for the period 1st April 2015to 31st March 2016 in violation of section 149 of the Companies Act 2013 andRegulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Reply: Due to change in the Independent Status of Mr. Patri VenkataRamakrishnaPrasad from Independent Director to Non- Independent Director of the Company thecomposition of the board is not in order. The Company is making utmost efforts to bringthe composition in order to have an appropriate mix of Independent and Non-IndependentDirectors and to ensure Compliance with section 149 of the Companies Act 2013 andRegulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
XV. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as Annexure [D]to this Report.
XVI. RELATED PARTY TRANSACTIONS
During the financial year 2015-16 your Company has entered into transactions withrelated parties as defined under Section 2(76) of the Companies Act 2013 read withCompanies (Specification of Definitions Details) Rules 2014 which were in the ordinarycourse of business and on arms length basis and in accordance with the provisions ofthe Companies Act 2013 Rules issued thereunder and Listing Regulations. During thefinancial year 2015-16 there were no transactions with related parties which qualify asmaterial transactions under the Listing Agreement.
The details of the related party transactions as required under Accounting Standard -18 are set out in point 17 of the notes to the standalone financial statements formingpart of this Annual Report.
The Form AOC-2 pursuant to Section 134 (3) (h) of the Companies Act 2013 read withRule 8(2) of the Companies (Accounts) Rules 2014 is set out as Annexure [E] tothis Report.
XVII. LOANS AND INVESTMENTS
The details of loans guarantees and investments under Section 186 of the CompaniesAct 2013 read with the Companies (Meetings of Board and its Powers) Rules 2014 are asfollows:
A. Details of investments made by the Company.
(i) Investments in Equity Instruments in wholly owned Subsidiaries as at 31stMarch 2016:
| || ||(In Indian Rs ) |
|Particulars ||31st March 2016 ||31st March 2015 |
|GSS Infotech Inc (Delaware) || || |
|1500 (31-March-2015: 1500) equity shares of $ 1 each fully paid up in GSS Infotech Inc (Delaware) ||873480744 ||873480744 |
|GSS Healthcare IT Solutions Private Limited || || |
|9990 (31- March-2015: 9990) Equity Shares of Rs. 10/- Each fully paid up in GSS Healthcare IT Solutions Private Limited. ||99900 ||99900 |
|GSS IT Solutions Private Limited || || |
|9990 (31- March-2015: 9990) Equity Shares of Rs. 10/- Each fully paid up in GSS IT Solutions Private Limited. ||99900 ||99900 |
(ii) Investments in Debt Instruments by the Company as at 31st March 2016:Nil
B. Details of Amounts advanced to Subsidiary Companies by the Company pursuant toclause 32 of the Listing Agreement as at 31st March 2016:
| || ||(In Indian Rs ) |
|Name of Subsidiary ||Balance as at 31.03.2016 ||Balance as at 31.03.2015 |
|GSS Infotech Inc (Delware) ||149385955 ||140962864 |
|GSS IT Solutions Pvt Ltd ||1850000 ||1850000 |
|GSS Healthcare IT Solutions Pvt Ltd ||14811532 ||98418115 |
These amounts are advanced to fully owned subsidiaries towards carrying out theprincipal business activities of the subsidiaries. These funds are utilized in the regularcourse of business by the subsidiaries and shall be received back. Interest is not chargedsince these amounts are advanced to subsidiaries for the purpose of overall growth of thebusiness of the GSS Group.
C. There are no guarantees issued by your Company in accordance with Section 186 ofthe Companies Act 2013 read with the Rules issued thereunder.
XVIII. EMPLOYEE STOCK OPTION SCHEME:
The Stock exchanges accorded in-principal approval for listing of 2000000 sharesunder the GSS Infotech Limited Restricted Employee Stock Option Plan 2013. However noshares were granted to the eligible employees during the financial year ended 31stMarch 2016.
XIX. VIGIL MECHANISM
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated a Whistle Blower Policy whichis in compliance with the provisions of Section 177 (10) of the Companies Act 2013 andRegulation 22 of the Listing Regulation. The policy provides for a framework and processwhereby concerns can be raised by its employees against any kind of discriminationharassment victimization or any other unfair practice being adopted against them. Moredetails on the vigil mechanism and the Whistle Blower Policy of your Company have beenoutlined in the Corporate Governance report which forms part of this report.
XX. INTERNAL FINANCIAL CONTROLS
Your Company has put in place adequate internal financial controls with reference tothe financial statements some of which are outlined below:
Your Company has adopted accounting policies which are in line with the AccountingStandards prescribed in the Companies (Accounting Standards) Rules 2006 that continue toapply under Section 133 and other applicable provisions if any of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and relevant provisions ofthe Companies Act 1956 to the extent applicable. These are in accordance with generallyaccepted accounting principles in India. Changes in policies if any are approved by theAudit Committee in consultation with the Auditors.
The policies to ensure uniform accounting treatment are prescribed to the subsidiariesof your Company. The accounts of the subsidiary companies are audited and certified bytheir respective Auditors for consolidation. Your Company in preparing its financialstatements makes judgments and estimates based on sound policies and uses externalagencies to verify/validate them as and when appropriate. The basis of such judgements andestimates are also approved by the Auditors and Audit Committee.
The Management periodically reviews the financial performance of your Company againstthe approved plans across various parameters and takes necessary action wherevernecessary.
Your Company has a code of conduct applicable to all its employees along with a WhistleBlower Policy which requires employees to update accounting information accurately and ina timely manner. Any non-compliance noticed is to be reported and actioned upon in linewith the Whistle Blower Policy. Your Company gets its standalone accounts audited everyquarter by its Auditors.
XXI. RISK MANAGEMENT
The Board regularly discusses the significant business risks identified by theManagement and the mitigation process to be adopted by the Company. At present thereexists no element of risk which threaten the existence of the Company.
XXII. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant/material orders passed by the Regulators or Courts orTribunals impacting the going concern status of your Company and its operations in future.
XXIII. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR provisions under Section 135 of the Companies Act 2013 are not applicable toyour Company.
XXIV. REPORTING UNDER SEXUAL HARRASEMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place Sexual Harassment Policy in line with the requirements of theSexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act2013. Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.
XXV. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
i. Details of Conversation of Energy:
Your Companys operations consume very low levels of energy. It is pleasure toannounce that your Companys technology center has latest technology energymanagement system based on human occupancy. As the cost of energy consumed by the Companyforms a very small portion of the total costs the impact of changes in energy cost ontotal costs is insignificant.
ii. Technology absorption adaptation and innovation
Your Company is a technology driven organization and understands the importance oftechnical expertise from time to time. It has successfully built such expertise over aperiod of years and shall continue to with emerging technologies to be on a leading edgeto offer its customers the state of art solutions.
Your Companys quality systems are ISO 9001:2008 and ISO 27001:2005 certifiedwhich reflects a high degree of technology absorption adoption and innovation acrossvarious operating layers within the Company. During the year technology absorptionactivities have mainly created on:
Network Operations Center
Disaster Recovery Center
IT Infrastructure Management
Offshore Development Center using BOT delivery model
Software Testing Service using SaaS Model
Wholly owned subsidiary rendering BPO healthcare services in India.
iii. Foreign Exchange Earnings and Outgo
a. Activities relating to Exports:
The Company is in the business of software exports. All efforts of the Company aregeared to increase the business of software exports in different products and markets.
b. Total Foreign Exchange Earnings used and earned:
|Particulars ||2015-16 ( Rs ) ||2014-15 ( Rs ) |
|Foreign Exchange expenditure (on Accrual basis) ||100003383 ||116485201 |
|Foreign Exchange earned (on Accrual basis) ||196140299 ||252282815 |
Your Directors wish to convey their gratitude and place on record their appreciationfor all the employees at all levels for their hard work solidarity cooperation anddedication during the year.
Your Directors sincerely convey their appreciation to customers shareholders vendorsbankers business associates regulatory and government authorities for their continuedsupport.
|Place: Hyderabad ||Keerthy Jaya Tilak ||Bhargav Marepally |
|Date: 13th August 2016 ||Chairman ||CEO & Managing Director |