Your Directors are happy to present 34th Annual Report and the Financial Results forthe year ended on 31st March 2017.
|1. Financial Results: || || |
| || ||(Rs. in Lacs) |
|Particulars ||2016-2017 ||2015-2016 |
|Income from operations ||192.91 ||286.81 |
|Other Income ||19.57 ||23.38 |
|Total Income ||212.48 ||310.19 |
|Total Expenditure excluding depreciation ||206.89 ||303.62 |
|Depreciation ||3.84 ||3.84 |
|Total Expenditure ||210.73 ||307.46 |
|Net Profit / (Loss) before Taxation ||1.75 ||2.73 |
|Provision for Taxation ||(0.32) ||(0.52) |
|Deferred Tax ||(0.09) ||0.43 |
|Net Profit / (Loss) after Taxation ||1.34 ||2.64 |
2. Management Discussion & Analysis (M D &A): Industry Structure anddevelopments:
The mobile app revolution is taking place and with India having the second largest userbase behind China it is reckoned that the consumer interest in mobile apps is growing ata rapid pace.
With the exponential growth of apps and the Make in India programme of the Governmentof India it is estimated that of the 500 million Indians on the Internet a large portionof them will be mobile-only.
A study published by Indian Council for Research on International Economic Relations(ICRIER) and Internet and Mobile Association of India (IAMAI) titled "An InquiryInto The Impact Of India's App Economy" estimates the size of India's app economy atRs 1964 crore by 2016. As per estimates there are roughly three lakh app developers inIndia.
Business Wire ( A Berkshire Hathaway Company ) expects the Global Mobile ApplicationsMarket is poised to grow at a CAGR of around 29.2% over the next decade to reachapproximately $1.3 trillion by 2025.
Opportunities and Threats:
Most of the mobile app market is tuned to the free app model or aps which cost betweenRs. 50 and Rs. 100. In the Commercial market place there are very few apps that are tunedto Business and Industry. A huge opportunity exists in this space.
Absence of skilled manpower high cost of development high cost of user acquisitionhyper competition driven by independent and freelance developers and the high cost ofmarketing are major impediments to growth.
With the evolution of our new mobile products we expect the market to accept ourproducts more readily and with online advertising which we have introduced the responsehas been up to the mark.
We have made significant investments in the mobile app sphere and expect them to bearfruit within the coming few months.
The projects with UID Authority of India are working as per the expectations of theCompany and are expected to be on similar lines as the previous year.
Risk and Concerns:
1. The first major problem developed in recent times subject to added different legallaws and norms.
2. Another major problem the need to develop the optimum mix of employees. A bigdilemma is to get the balance correct in terms of recruitment..
Internal control systems and their adequacy:
The Company has a proper and adequate system of internal controls. This ensures thatall transactions are authorized recorded and reported correctly and assets aresafeguarded and protected against loss from unauthorized use or disposition. In additionthere are operational controls and fraud risk controls covering the entire spectrum ofinternal financial controls. The Company has an Internal Control System commensurate withthe size scale and complexity of its operations.
Discussion on financial performance with respect to operational performance:
During the year under review your Company made a Turnover of Rs. 212.48 Lakhs asagainst Rs.310.19 Lakhs for the previous year and incurred a profit of Rs. 1.34 Lakhs asagainst a profit of Rs. 2.64 Lakhs for the previous year the Company anticipates moreprofits in the coming years.
Material development in Human Resource & Industrial Relations:
There are no significant developments in human resources and number of people employed.However all our efforts were made to retain the talent and improve the productivity.
3. Change in the nature of business
There were no changes in the nature of business of the Company during the financialyear 2016-17.
The Company has not accepted any deposits from the public during the year in pursuantto Section 73 of the Companies Act 2013.
5. Material Changes and Commitments
There are no significant material changes and commitments affecting financial positionof the company between 31st March 2017 and the date of this report.
6. Number of meetings of the Board
The Board of Directors met 6 (Six) times during this financial year on 6th April 201627th May 2016 27th July 2016 28th October 2016 30th January 2017 and 16th February2017.
7. Extract of Annual Return
As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in MGT9 as a part of this Annual Report (Annexure-I).
8. Policy on directors' appointment and remuneration
The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the Board and they demark their functions of governanceand management. As on March 31 2017 the Board consists of 4 (four) members one of whomis executive one is non-executive and two are independent directors. The Boardperiodically evaluates the need for change in its composition and size. The policy of theCompany on directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedunder Sub-Section (3) of Section 178 of the Companies Act 2013 adopted by the Board isappended as Annexure-II to the Board's report. We affirm that the remuneration paidto the directors is as per the terms laid out in the nomination and remuneration policy ofthe Company.
9. Directors and Key Managerial Personnel
The following changes took place in the composition of the Board of Directors for theFinancial Year 2016-17:
1) Appointment of Mr. Aashay Harshe as Additional Director (Independent) of the Companyw.e.f. 30th January 2017.
2) Resignation of Mr. K.S. Hanumaiah as a Whole time Director of the Company w.e.f.30th January 2017.
3) Resignation of Mr. Gowrishankar Narayanaswamy as Independent Director of the Companyw.e.f. 30th January 2017.
4) Resignation of Ms. Khushboo Joshi as Whole-time Company Secretary of the Companyw.e.f. 30th January 2017.
5) Appointment of Ms. Gumpena Naga Jyothi s Whole-time Company Secretary of the Companyw.e.f.16th February 2017.
The following changes took place in the composition of the Board of Directors after theclosure of financial year 2016-2017:
6) Appointment of Mr. Premanshu Rana as Additional Director (Independent) of theCompany w.e.f. 10th August 2017.
7) Resignation of Mr. Aashay Harshe as Independent Director of the Company w.e.f. 10thAugust 2017.
10. Declaration given by Independent Directors:
The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that they meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirement) Regulations 2015.
11. Contracts and arrangements with Related Parties under Section 188
The Company has not entered into any contracts or arrangements with related partiesduring the financial year. Therefore AOC-2 is not required to be enclosed to this report.
12. Particulars of loans guarantees or investments under Section 186
The Company has not made any investments and has not given any loan or guarantee undersection 186 of the companies Act 2013.
13. Risk Management
The Company has developed and implemented a risk management framework that includesidentification of elements of risk if any which in the opinion of the Board may threatenthe existence of the Company.
The following broad categories of risks to the business objectives have been consideredin our risk management framework:
Strategy: Risks to the successful execution of the Company's articulatedstrategies. These originate from the choices we make on markets business mix resourcesand delivery models that can potentially impact our competitive advantage in the mediumand long term. Risks related to scalability and sustainability of our business might alsohave an impact on our business.
Industry: Risks relating to the inherent characteristics of our industrysuch as competitive structure emergence of new business models technological landscapeextent of linkage to economic environment and regulatory structure.
Counterparty: Risks arising from our association with entities forconducting business. The counterparties include clients vendors alliance partners andtheir respective industries. Counterparty risks include those relating to litigation andloss of reputation.
Resources: Risks arising from inappropriate sourcing or sub-optimalutilization of key organizational resources such as financial capital talent andinfrastructure.
Operations: Risks inherent to business operations including thoserelating to client acquisition service delivery to clients business support activitiesinformation security intellectual property physical security and business activitydisruptions. Operational risks are assessed primarily on three dimensions businessprocess effectiveness compliance to policies and procedures and strength of underlyingcontrols.
Regulatory environment: Risks due to adverse developments in theregulatory environment that could potentially impact our business objectives and lead toloss of reputation.
Societal: Risks and opportunities relating to our focus on theenvironment and society at large. Environmental focus includes conservation of essentialresources such as water and energy disposal of waste minimizing emissions etc. Socialfocus includes projects to impact the communities in the regions where we operate.
14. Subsidiaries Associate Companies and Joint Ventures
The Company does not have any subsidiaries Associate Companies or Joint Ventures.
15. Annual Evaluation of Board's Performance
The Nomination and Remuneration Committee of the Company approved an Evaluation Policyduring the year 2014-2015 which was adopted by the Board of Directors. The policyprovides for evaluation of the Board the Committees of the Board and individualDirectors including the Chairman of the Board. The Policy provides that evaluation of theperformance of the Board and Committees of Board shall be carried out on an annual basis.
The Evaluation process focused on various aspects of the Board and Committeesfunctioning such as composition of the Board and Committees experience and competenciesperformance of specific duties and obligations governance issues etc. A separate exercisewas carried out to evaluate the performance of individual Directors on parameters such asattendance contribution and independent judgment.
The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of ManagingDirector and Non-Executive Director was carried out by the Independent Directors who alsoreviewed the performance of the Board as a whole. The Nomination and RemunerationCommittee (NRC) also reviewed the performance of the Board its Committees and of theDirectors.
The Chairman of the Board provided feedback to the Directors on an individual basis asappropriate. Significant highlights learning and action points with respect to theevaluation were presented to the Board.
16. Transfers to reserves
The Company has not transferred any amount to the reserves in the financial year.
In view of the accumulated losses the Directors express their inability to recommenddividend during the year.
M/s. Ramanatham & Rao Chartered Accountants (Firm Registration Number 002934S)have completed a term of ten years and cooling period of three years from the commencementof Companies Act 2013. Their term as auditors is up to the conclusion of the forthcomingAGM. In accordance with the provisions of Section 139 of the Act Grandhy & CoChartered Accountants (Firm Registration No. 001007S) are proposed to be appointed asStatutory auditors for a period of 5 years commencing from the conclusion of this AGM tillthe conclusion of the 39th AGM subject to ratification of their appointment at every AGMif so required under the Act.
Grandhy & Co Chartered Accountants have consented to their appointment asStatutory Auditors and have confirmed that their appointment if made will be inaccordance with Section 139 read with Section 141 of the Act. Members are requested toapprove the appointment of Grandhy & Co Chartered Accountants and authorize the Boardof Directors to fix their remuneration.
R & A Associates Practicing Company Secretaries was appointed to conduct thesecretarial audit of the Company for the financial year 2016-17 as required under Section204 of the Companies Act 2013 and Rules thereunder.
The secretarial audit report for financial year 2016-17 forms part of the Annual Reportas Annexure-III to the Board's report.
19. Corporate Governance:
A report on the Corporate Governance which inter alia includes the composition andconstruction of Audit Committee is featuring as a part of Annual Report. Your Companywill continue to adhere in letter and spirit to the good corporate governance policies.Pursuant to the relevant provisions of Securities Exchange Board of India (ListingObligations And Disclosure Requirements) Regulations 2015 ("ListingRegulations") as referred to in Regulation 15 (2) of the Listing Regulations for theperiod 1st April 2016 to 31st March 2017 a certificate from the auditors of the Companyis enclosed.
20. Managing Director's Declaration:
Pursuant to the provisions of Listing Regulations a declaration by the ManagingDirector of the Company declaring that all the members of the Board and the SeniorManagement Personnel of the Company have affirmed compliance with the Code of Conduct ofthe Company is enclosed. The same can be viewed on the website of the Company atwww.hypersoftindia.com
21. Directors' Responsibility Statement:
In accordance with the provisions of the section 134(c) of the Companies Act 2013 andbased on the information provided by the management your directors state that:
a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures; b. Thedirectors had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;
c. The directors had taken proper and sufficient 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 fraud and otherirregularities;
d. The directors had prepard the annual accounts on a going concern basis.
e. The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
22. Corporate Social Responsibility Not Applicable
23. Significant and material orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
24. Secretarial Standards
The Company is in compliance of Secretarial Standards during the Financial Year2016-2017.
25. Internal Financial Controls
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.
26. Whistle Blower Policy/ Vigil Mechanism
To create enduring value for all stakeholders and ensure the highest level of honestyintegrity and ethical behavior in all its operations the Company has formulated a VigilMechanism/Whistle Blower Policy that governs the actions of its employees. ThisWhistleblower Policy/Vigil Mechanism aspires to encourage all employees to reportsuspected or actual occurrence(s) of illegal unethical or inappropriate events (behaviorsor practices) that affect Company's interest / image.
A copy of the Policy is available on the website of the Company.
27. Disclosures Under Sexual Harassment Of Women At Workplace (Prevention Prohibition& Redressal) Act 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and
Redressal) Act 2013 and the rules thereunder for prevention and redressal ofcomplaints of sexual harassment at workplace. During the financial year 2016-17 theCompany has not received any complaints on sexual harassment.
28. Conservation of Energy & Technology Absorption Foreign Exchange Earnings andOutgo:
A. Conservation of Energy:
(a) Energy Conservation measures taken: Your Company's operations are softwareoriented and not energy intensive. Adequate measures have been taken to conserve energywherever possible by using energy-efficient computers and equipment.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy: Exchanging legacy CRT monitors with LCD power saving monitors.
(c) Impact of the measures (a) and (b) above for energy consumption and consequentimpact on the cost of production of goods: As energy conservation is very meager andenergy cost forms a small part of total costs the impact of costs is not material.
B. Technology Absorption:
Research and Development (R & D):
1. Specific areas in which R & D carried out by the Company:
The Company continues to focus and invest in R & D activities for developing andimproving the quality and enhancing the benefits of its software products. The Company isa product oriented Company and the continuous development of new products and the existingproducts is an ongoing exercise.
2. Benefits derived as a result of the R & D:
Research and development of new products & processes will continue to be ofimportance to your Company. Products although have a longer gestation are of higherbenefit to the Company and its profitability in the long run.
3. Future plan of Action:
The Company continues to strive for development and innovation of new products andimproving the existing ones in order to meet the changing requirements and to cater tocustomer needs.
4. Expenditure on R & D: NIL
Adaptation and Innovation:
As a result of new partnerships the Company now has absorbed new technologies and willresult in better adaptation to Indian customer needs.
C. Foreign Exchange Earnings & Outgo:
|Particulars ||2016-2017 (in Rs.) ||2015-2016 (in Rs.) |
|Foreign Exchange Earnings ||807000 ||- |
|Foreign Exchange Outgo: ||- ||- |
|Purchase ||- ||- |
|Expenses ||- ||- |
Your Directors place on record their appreciation of the continued assistance andcooperation extended by the shareholders customers bankers and the dedicated employeesand the business associates.
|Place: Secunderabad ||For and on behalf of Board of Directors |
|Date: 10th August 2017 || || |
| ||(F.R. Bhote) ||(Vinay Vir) |
| ||Managing Director ||Director |
| ||DIN: 00156590 ||DIN: 02378210 |
Statement of Disclosure of Remuneration Under Section 197 of Companies Act 2013 andRule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014
1. The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year 2016-2017
|Sl. No. ||Name of Director ||Designation ||Ratio of remuneration of each Director to median remuneration of Employees |
|1. ||Mr. F.R.Bhote ||Managing Director ||1.89 |
|2. ||Mr. K .S. Hanumaiah ||Whole Time Director ||0.73 |
2. Percentage increase in remuneration of each director and CFO in the financial year2016-2017
|Sl. No. ||Name of Director / CFO ||Designation ||% increase in Remuneration in the Financial Year 2016-2017 |
|1. ||Mr. F.R.Bhote ||Managing Director ||Nil |
|2. ||Mr. K .S.Hanumaiah ||Whole Time Director ||Nil |
|3. ||Mr. S. Khudaventh ||CFO ||6 |
|4. ||Ms. Khushboo Joshi (Upto 30th January 2017) ||Company Secretary ||Nil |
|5. ||Ms. Gumpena Nagajyothi (From 16th February 2017) ||Company Secretary ||NA |
3. The percentage increase in the median remuneration of employees in the financialyear 2016-2017 was 6%
4. There are 12 (Twelve) permanent employees on the rolls of company
5. Relationship between average increase in remuneration and company performance:
The reward philosophy of the Company is to provide market competitive total rewardopportunity that has a strong linkage to and drives performance culture. Every year thesalary increases for the Company are decided on the basis of a benchmarking exercise thatis undertaken with similar profile organizations. The final salary increases given are afunction of Company's market competitiveness in this comparator group as well as overallbusiness affordability. During the year similar approach was followed to establish theremuneration increases to the Employees. Variable compensation is an integral part of ourtotal reward package and is directly linked to an individual performance rating andbusiness performance. Salary increases during the year were in line with Company'sperformance as well as per Company's market competitiveness.
6. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company:
7. Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the salaries of the Company incomparison to the rate at which the company came out with the last public offer thevariations in the net worth of the Company as at the close of the current financial yearand previous financial year N.A
8. Average percentage increase made in the salaries of Employees other than themanagerial personnel in the financial year was 6.00% whereas the increase in themanagerial remuneration was NIL
9. Comparison of each remuneration of the KMP against the performance of the company:
|Particulars ||Managing Director ||Whole time Director ||CFO ||CS |
|Remuneration of Key Managerial Personnel in FY 2016-17 ||636000 ||245800 ||508800 ||357400 |
|Total Revenue of the Company in FY 2016-17 ||21248357 ||21248357 ||21248357 ||21248357 |
|Remuneration of KMP (as % of revenue) ||2.99 ||1.16 ||2.39 ||1.68 |
10. The key parameters of any variable component of remuneration availed by thedirectors - Nil
11. 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 - Nil
12. It is hereby affirmed that the remuneration paid is as per the remuneration policyof the Company.
|Place: Secunderabad ||For and on behalf of Board of Directors |
|Date: 10th August 2017 || || |
| ||(F.R. Bhote) ||(Vinay Vir) |
| ||Managing Director ||Director |
| ||DIN: 00156590 ||DIN: 02378210 |
Annexure II to Director's Report Nomination and Remuneration Policy
The Board of Directors are collectively responsible for selection of a member on theBoard. The Nomination and Remuneration Committee of the Company follows a defined criteriafor identifying screening recruiting and recommending candidates for election as aDirector on the Board. The criteria for appointment to the Board include:
? Composition of the Board which is commensurate with the size of the Company itsportfolio geographical spread and its status as a listed Company;
? Desired age and diversity on the Board;
? Size of the Board with optimal balance of skills and experience and balance ofExecutive and Non-Executive Directors consistent with the requirements of law;
? Professional qualifications expertise and experience in specific area of business;
The guiding principles for Company's reward policies / practices are as follows:
1. Open Fair Consistent and Explainable: increase transparency and ensurefairness and consistency in Reward framework.
2. Insight and Engagement: make Reward truly relevant to the employees byusing leading edge tools that helps the Company hear' how employees feel about theirReward.
3. Innovation: continuously improve Company's Reward through innovationsbased on insight analytics expertise.
4. Simplicity Speed and Accuracy: simplify reward plans and processes anddeliver the information employees need quickly clearly and efficiently.
5. Business Results: Company's business results are the ultimate test ofwhether Reward solutions are effective and sustainable.
The appointment of Executive Directors Key Managerial Personnel Management Committeemembers and other employees is by virtue of their employment with the Company asmanagement employees and therefore their terms of employment vis--vis salary variablepay service contract notice period and severance fee if any are governed by theapplicable policies at the relevant point in time. The total reward for ExecutiveDirectors Key Managerial Personnel and Management Committee members is reviewed andapproved by the Nomination and Remuneration Committee annually taking into accountexternal benchmarks.