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Kellton Tech Solutions Ltd.

BSE: 519602 Sector: IT
NSE: KELLTONTEC ISIN Code: INE164B01022
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OPEN 105.10
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VOLUME 12058
52-Week high 149.45
52-Week low 80.00
P/E 61.02
Mkt Cap.(Rs cr) 483
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 105.10
CLOSE 100.10
VOLUME 12058
52-Week high 149.45
52-Week low 80.00
P/E 61.02
Mkt Cap.(Rs cr) 483
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kellton Tech Solutions Ltd. (KELLTONTEC) - Director Report

Company director report

DIRECTORS' REPORT

Dear Members

Your Directors have pleasure in presenting their 22nd Annual Report on thebusiness and operations of your company for the financial year ended March 31st 2016.

Financial Results

The standalone financial performance of the Company for the financial year ended March31 2016 is summarized below: (Rs In Lac)

particulars 2015-16 2014-15
Revenue from operations 4877.79 3990.03
Other Income 33.85 51.52
total Revenue 4911.64 4041.55
Total Expenditure 4001.72 3329.09
Profit/(Loss) before taxes 909.93 712.45
Tax Expense/(Benefit) 236.94 96.2
Profit/(Loss) after Tax 672.99 616.24
earnings per equity shares in Rs. 1.51 1.47

Consolidated

particulars 2015-16 2014-15
Revenue from operations 35868.04 23790.07
Other Income 97.99 174.22
total Revenue 35966.03 23964.29
Total Expenditure 32056.73 21403.8
Profit/(Loss) before taxes 3909.30 2560.49
Tax Expense/(Benefit) 812.01 582.79
Profit/(Loss) after Tax 3097.29 2207.39
earnings per equity shares in Rs. 6.96 5.26

Review of performance and state of the company's affairs

During the year under review the overall performance of the Company was reasonableconsidering to the sector/market conditions.

During the year under review Members will notice that the gross revenues haveincreased to Rs. 4877.79 lacs from Rs. 3990.03 lacs while the Profit before Tax alsoincreased from Rs. 389.43 lacs to Rs. 712.45

The profit after tax also increased to Rs. 672.99 Lacs from Rs. 616.24 Lacs reported inthe previous year. The earnings per share is Rs. 1.51 as compared to Rs. 1.47 in theprevious year.

The Consolidated revenue of your Company for the year ended 31st March 2016 is Rs.35966.03 Lacs as against previous year revenue of Rs. 23964.29 lacs. The consolidated NetProfit for the year stood at Rs. 3097.29 Lacs as against previous year consolidated netprofit of Rs. 2207.39 lacs.

NOTE : This is a 9 month FY 2015-16 comparison with a 12-month FY 2014-15 hence thesevalues do not reflect the full extent of Kellton Tech's solid performance during thisyear. Kellton Tech had a truncated 9-month FY 2015-16 due to change in fiscal year-end.

Dividend and Transfer to Reserves

Although your Company has earned profits during the year the Board of Directors havedecided to plough back the Profits into the Company. Therefore your Directors have notrecommended any dividend for the financial year 2015-16.

There were no transfers to Reserves during the financial year 2015-2016.

Share Capital

The Authorized Share Capital of the Company stands at Rs. 310000000/- (Rupees ThirtyOne Crore only) divided into 62000000 (Six Crore Twenty Lac) Equity Shares of Rs. 5/-(Rupees Five) each.

The Paid up Share Capital has increased to Rs. 234131300/- (Rupees Twenty ThreeCrore Forty-One Lac Thirty One Thousand and Three Hundred) divided into 46826260 (FourCrore Sixty Eight Lac Twenty Six Thousand Two Hundred and Sixty)equity shares of Rs. 5/-each.

As on date of this report the Paid up Share Capital stands at Rs. 235081205/-(Rupees Twenty Three Crore Fifty Lac Eighty One Thousand Two Hundred and Five only)divided into 47016241 (Four Crore Seventy Lac Sixteen Thousand Two Hundred and FortyOne) equity shares of Rs. 5/- each.

The Company has not issued any shares with differential rights and hence no informationas per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies(Share Capital and Debenture) Rules 2014 is furnished.

Kellton Tech Solutions Employees Stock Option Plan 2013 ("Plan"/"Esop"/ "Esop 2013")

I) The shareholders of the company has vide resolution passed at the 19 th AnnualGeneral Meeting approved ESOP 2013 and has granted options to the employees .

Disclosure regarding Employees Stock Option Plan and forming part of the Directors'Report for the year ended 31st March2016 is as follows:

S.NO Particulars Description
1. Date of Share holder's approval 27/12/2013
Total number of options granted 2527500
Vesting requirements 3 Years
The pricing formula Closing price of equity shares on the stock exchange where the shares are listed from vesting date
Maximum term of options granted Employees to exercise options within 3 years
Source of shares Primary
Method used to account for ESOS Fair Value

Option movement during the year (For each ESOS):

particulars Details
Number of options outstanding at the beginning of he period 286396
Number of options granted during the year 205000
Number of options forfeited / lapsed during the year 16667
Number of options vested during the year 430000
Number of options exercised during the year 344661
Number of shares arising as a result of exercise of options 344661
Money realized by exercise of options (INR) if scheme is implemented directly by the company 3458677/-
Loan repaid by the Trust during the year from exercise price received Nil
Number of options outstanding at the end of the year 282076
Number of options exercisable at the end of the year 22835

Note: Details of disclosures pursuant to ESOP required under SEBI (Share Based EmployeeBenefits) Regulations 2009 are available at the website www.kelltontech.com

Listing

The Securities Exchange Board of India (SEBI) on 2nd September 2015 hasissued SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 with anaim to consolidate and streamline the provisions of Listing agreement for differentsegments of capital market to ensure better enforceability. The said regulations wereeffective from 1st December 2015. Accordingly all listed entities wererequired to enter into the Listing Agreement within 6 months from the effective date. TheCompany entered into Listing agreement with the National Stock Exchange limited and BSELimited.

The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 toNSE and BSE where the Company's Shares are listed.

Directors & its board meetings:

The Board of directors of your company is duly constituted.

Proposed Appointments:

The following appointments to the Board are proposed:

Approval of the shareholders is being sought for the appointment of Mr. SrinivasPotluri (DIN: 03412700) as Director (Non Executive) of the Company who retire by rotationat the ensuing Annual General Meeting of the Company and being eligible offer himself forre-appointment in accordance with the provisions of the Companies Act and pursuant toArticles of Association of the Company.

Ms. Jhansi Lakshmi Gorla and Mr. P Srinivasa Rao were appointed as an AdditionalDirector of the Company with effect from 16th December2015 and 16th February 2016respectively who being eligible for appointment and in respect of whom the Company hasreceived a notice in writing under Section 160(1) of the Act proposing their candidaturefor the office of Director.

The Board had at its meeting held on 16.12.2015 subject to approval of members in nextgeneral meeting re-appointed Mr. Krishan Chintam as Managing Director for a furthertenure of 3 years w.e.f 09.04.2015.

The Board had at its meeting held on 16.12.2015 subject to approval of members in nextgeneral meeting re-appointed Mr. Niranjan Chintam as Executive Chairman and Whole TimeDirector for a further tenure of 3 years w.e.f 01.11.2015.

Appropriate resolutions for the appointment/ re-appointment of Directors are beingplaced before you for your approval at the ensuing Annual General Meeting. The briefresume of the aforesaid Directors and other information have been detailed in the Notice.Your Directors recommend their appointment/reap- pointment as Directors of your Company.

Number of meetings of the board:

Twenty Two Board Meetings were held on 21.07.2015 29.07.2015 24.08.2015 29.08.201502.09.2015

07.09.2015 28.09.2015 07.10.2015 12.10.2015 16.10.2015 14.11.2015 25.11.201516.12.2015 30.12.15

04.01.2016 05.01.2016 23.01.2016 30.01.2016 05.02.2016 16.02.2016 24.02.2016 and09.03.2016 during the year ended on 31st March 2016. The gap between any two BoardMeetings is within the period prescribed by the Companies Act 2013 and Listing Agreement.

Declarations by Independent Directors:

The Company has received declarations from the Independent Director under Section149(6) of the Companies Act 2013 confirming their independence vis-a-vis the Company.

Board evaluation and assessment:

The company believes formal evaluation of the board and of the individual directors onan annual basis is a potentially effective way to respond to the demand for greater boardaccountability and effectiveness. For the company evaluation provides an ongoing meansfor directors to assess their individual and collective performance and effectiveness. Inaddition to greater board accountability evaluation of board members helps in;

a. More effective board process

b. Better collaboration and communication

c. Greater clarity with regard to members roles and responsibilities

d. Improved chairman - managing directors and board relations The evaluation processcovers the following aspects

- Self evaluation of directors

- Evaluation of the performance and effectiveness of the board

- Evaluation of the performance and effectiveness of the committees

- Feedback from the non executive directors to the chairman

- Feedback on management support to the board.

Familiarisation programme for Independent Directors

The Company shall through its Senior Managerial personnel familiarise the IndependentDirectors with the strategy operations and functions of the Company. The IndependentDirectors will also be familiarised with their roles rights and responsibilities andorientation on Statutory Compliances as a Board Member.

On appointment of the Independent Directors they will be asked to get familiarisedabout the Company's operations and businesses. An Interaction with the key executives ofthe Company is also facilitated to make them more familiar with the operations carried bythe company. Detailed presentations on the business of the company are also made to theDirectors. Direct meetings with the Chairman and the Managing Director are furtherfacilitated for the new appointee to familiarize him/her about the Company/its businessesand the group practices as the case may be and link is available at the website www.kelltontech.com.

Directors' Responsibility Statement

Pursuant to the requirement under section 134 (3) and (5) of the Companies Act 2013with respect to Directors' Responsibility Statement your board of directors to the bestof their knowledge and ability confirm that:

a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March 2016 and ofthe profit/loss of the Company for that year;

c. proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively;

Constitution and Composition of Audit Committee

The Audit Committee of the company is duly constituted as per section 177 of thecompanies act 2013. Composition and Scope of Audit Committee is provided under theCorporate Governance report annexed herewith.

Management Discussion & Analysis

The Management Discussion and Analysis Report highlighting the industry structure anddevelopments opportunities and threats future outlook risks and concerns etc. isfurnished separately and forms part of this report.

subsidiary Companies

Following are the Subsidiary and Step down Subsidiaries of the Company

Name of the Entity Status
Kellton Dbydx Software Private Limited Wholly Owned Subsidiary
Kellton Tech Inc Wholly Owned Subsidiary
Kellton Tech Solution Inc Wholly Owned Subsidiary
Kellton Tech Limited (Ireland) Wholly Owned Subsidiary
Evantage Solution Inc Step Down Subsidiary(Wholly Owned Subsidiary of Kellton Tech Inc)
Supremesoft Global Inc Step Down Subsidiary(Wholly Owned Subsidiary of Kellton Tech Inc)
Vivos Professional LLS Step Down Subsidiary(Wholly Owned Subsidiary of Kellton Tech Inc)
Prosoft Technology Group Inc Step Down Subsidiary(Wholly Owned Subsidiary of Kellton Tech Solutions Inc)
Cyberworld Solutions Inc Step Down Subsidiary(Wholly Owned Subsidiary of Prosoft Technology Group)
Intellipeople Inc Step Down Subsidiary(Wholly Owned Subsidiary of Kellton Tech Solutions Inc)
Kellton Tech (UK) Limited Step Down Subsidiary(Wholly Owned Subsidiary of Kellton Tech Limited)
Bokanyi Consulting Inc Step Down Subsidiary(Wholly Owned Subsidiary of Kellton Tech Inc)

A statement showing the salient features of the financial statements of thesubsidiaries for the financial year ended March 31 2016 is enclosed as an Annexure I tothis Report.

Material Subsidiary Policy

The Company has adopted a policy for determining material subsidiary in line with therequirements of the Listing Agreement. The Policy on Material Subsidiary is available onthe website of the Company at www. kelltontech.com.

Consolidation of Accounts

In accordance with Regulation 34(2) of the listing agreement and in compliance with theprovisions of companies act 2013 and the Accounting Standard AS-21 on ConsolidatedFinancial Statements read with Accounting standard AS-23 on Accounting for Investments inAssociates and Accounting Standard AS-27 on Financial Reporting of Interests in JointVentures your Directors have pleasure in attaching the Consolidated Financial Statementsas part of the Annual Report.

A statement containing brief financial details of the subsidiaries for the financialyear ended March 31 2016 is annexed. The annual accounts of these subsidiaries and therelated detailed information will be made available to any member of the Company/itssubsidiaries seeking such information at any point of time and are also available forinspection by any member of the Company/its subsidiaries at the registered office of theCompany. The annual accounts of the subsidiaries will also be available for inspection asabove at registered office of the respective subsidiary companies.

Particulars of Contracts or arrangements with related parties

All the related party transactions that were entered during the financial years were inthe ordinary course of business of the company and were on arm length basis. There were nomaterially significant related party transactions entered by the company during the yearwith the promoters directors key managerial personnel or other persons which may have apotential conflict with the interest of the company.

The policy on related party transactions as approved by the board of directors ishosted on the website of the company viz. www.kelltontech.com.

Particulars of every contract or arrangements entered into by the Company with relatedparties referred to in sub-section (1) of section 188 of the Companies Act 2013 includingcertain arm's length transactions under third proviso thereto shall be disclosed in FormNo. AOC-2 as Annexure II to this report.

Particulars of Employees

A table containing the particulars in accordance with the provisions of Section 197(12)of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is appended as 'Annexure III' to this Report.

In terms of Section 136 of the Companies Act 2013 the same is open for inspection atthe Registered Office of the Company.

Copies of this statement may be obtained by the members by writing to the CompanySecretary at the Registered Office of the Company.

The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of Section 197(12) of the Companies Act 2013 read with Rule 5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areenclosed in Annexure - III and forms part of this Report

Corporate Governance

In pursuance of Regulation 17 to 27 read with Schedule V of SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 entered into with the Stock Exchanges aseparate Report on Corporate Governance along with a certificate from a Practicing CompanySecretary regarding its compliance is annexed as Annexure IV and forms part of thisReport. Your company will continue to adhere in letter and spirit to good corporategovernance policies.

Statutory Auditors

M/s. Mahesh Virender & Sriram Chartered Accountants Hyderabad who retire atthis Annual General Meeting have signified their willingness for reappointment andaccordingly Directors have recommended the reappointment of M/s Mahesh Virender &Sriram Chartered Accountants Hyderabad who confirmed their eligibility under Section139(1) of the Companies Act 2013.

The Audit Committee and the Board recommends the appointment of M/s. Mahesh Virender& Sriram Chartered Accountants as statutory Auditors of the company.

Management Replies To Auditors Report - Standalone And Consolidated Financial Reports:

With reference to observations made in Auditor's Report the notes of account isself-explanatory and therefore do not call for any further comments.

Cost Audit Report

The provisions of Section 148 of the Companies Act 2013 does not apply to the Companyand hence no cost auditors are appointed.

Secretarial Audit Report

Pursuant to the provisions of Section 204 read with Section 134(3) of the CompaniesAct 2013 the company is required to obtain Secretarial Audit Report from PracticingCompany Secretary. Mr. Manoj Kumar Koyalkar Practising company secretary was appointed toissue Secretarial Audit Report for the financial year 2015-16.

Secretarial Audit Report issued by Mr. Manoj Kumar Koyalkar Practising companysecretary in Form MR-3 for the financial year 2015-16 forms part to this report as AnnexureV.

Management Replies To secretarial Audit Report

With reference to observations made in the said report pertaining to Form AOC-4 westate as follows:

The Company is unable to file Form AOC-4 for the financial year 2014-2015 as the sameis under revision and not available on the website of the Ministry of Corporate affairs ason date of the said report. The form would be filed as soon as it is available on the MCAportal.

All other observations are self explanatory and therefore do not call for any furthercomments.

Business Responsibility Report (BRR)

Securities Exchange Board of India (SEBI) vide circular CIR/CFD/DIL/8/2012 dated August13 2012 has mandated the inclusion of BRR as part of the Annual Report for the top 100listed entities based on their market capitalization on Bombay Stock Exchange Ltd andNational Stock Exchange of India Ltd as at 31 March 2012. In view of the requirementsspecified the company is not mandated for the providing the BRR and hence do not formpart of this Report.

Extract of the Annual Return

In accordance with Section 134 (3) (a) of the Act an extract of the Annual Return inthe prescribed format is appended as Annexure VI to this Report.

Corporate social Responsibility

Kellton Tech believes in balancing growth priorities with social responsibility.Indeed even in its commercial undertakings it attaches special weightage to thoseprojects concerning the welfare of masses. With healthcare child education and destitutecare as its focus areas Kellton Tech has contributed to its bit to the society throughvarious initiatives in these arenas. Kellton Tech is providing scholarship to the needydeserving students for further education.

In collaboration with Aashritha Samaj it has sponsored the education of many childrenwith single parent. In healthcare it has worked closely with Deep Trust and donated agenerous amount towards disease- eradication by educating people on prevention.

Through REACH OUT initiative the Gurgaon-based employees helped poor families strandedin the icy North cold wave by handing them woollen blankets. This has been an ongoingcommitment from Gurgaon office and by dint of their efforts they have been able to makesome lives happier and filled with warmth. A Report on Corporate Social Responsibility(CSR) Policy and Activities as per Rule 8 of Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is appended to this annual report as Annexure VII and link tothe CSR policy is available at the website www.kelltontech.com..

Particulars of Loans Guarantees and Investments

Details of loans and guarantees given and investments made under Section 186 of the Actare provided in the Notes to the Financial Statements.

Whistle Blower Policy/Vigil Mechanism

Pursuant to the provisions of section 177 of the companies act 2013 and the rulesframed there under and pursuant to the applicable provision of clause 49 of the listingagreement entered with stock exchanges the company has established a mechanism throughwhich all stake holders can report the suspected frauds and genuine grievances to theappropriate authority. The Whistle blower policy which has been approved by the board ofdirectors of the company has been hosted on the website of the company viz. www.kell- tontech.com.

Risk Management policy

The board of directors has formed a risk management committee to identify evaluatemitigate and monitor the risks associated with the business carried by the company. Thecommittee reviews the risk management plan and ensures its effectiveness. A mechanism hasbeen put in place which will be reviewed on regular intervals.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. During the financial year ended 31st March 2016 the Companyhas not received any complaints pertaining to Sexual Harassment.

Material changes and commitments if any affecting the financial position of thecompany

There are no material changes and commitments affecting the financial position of thecompany which occurred between the end of the financial year to which the financialstatements relate and the date of the report.

Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future

No significant and material order has been passed by the regulators courts tribunalsimpacting the going concern status and Company's operations in future

Public Deposits

Your Company has not accepted any deposits from the public. As such there was noprincipal or interest outstanding on the date of the Balance Sheet.

Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and outgo

Conservation of Energy which is not furnished as the relative rule is not applicable toyour company.

There is no information to be furnished regarding Technology Absorption as your companyhas not undertaken any research and development activity in any manufacturing activity norany specific technology is obtained from any external sources which needs to be absorbedor adapted.

Foreign exchange earnings and outgo

In accordance with the provisions of Section 134 of the Companies Act 2013 read withthe Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988the information relating to foreign exchange earnings and outgo is provided under Notes tothe Balance Sheet and Profit and Loss Account.

Internal Audit & Controls

The Company has a proper and adequate system of internal control to ensure all theassets are safeguarded and protected against loss from unauthorized use or disposition andthe transactions are authorized regarded and reported correctly. The internal control issupplemented by an extensive program of internal audits review by management andprocedures. It is designed to ensure that the financial and other records are reliable forpreparing financial statements and other data and for maintaining accountability ofassets. The Company's Internal Audit Department is regularly carrying out the Audit in allareas. Normal foreseeable risks of the Company's Assets are adequately covered bycomprehensive insurances.

The Company has adequate Internal Financial Controls consistent with the nature ofbusiness and size of the operations to effectively provide for safety of its assetsreliability of financial transactions with adequate checks and balances adherence toapplicable statues accounting policies approval procedures and to ensure optimum use ofavailable resources. These systems are reviewed and improved on a regular basis. It has acomprehensive budgetary control system to monitor revenue and expenditure against approvedbudget on an ongoing basis.

Internal Financial Control Systems

The Company has adequate Internal Financial Controls consistent with the nature ofbusiness and size of the operations to effectively provide for safety of its assetsreliability of financial transactions with adequate checks and balances adherence toapplicable statues accounting policies approval procedures and to ensure optimum use ofavailable resources. These systems are reviewed and improved on a regular basis. It has acomprehensive budgetary control system to monitor revenue and expenditure against approvedbudget on an ongoing basis.

Industrial Relations

The company enjoyed cordial relations with its employees during the year under reviewand the Board appreciates the employees across the cadres for their dedicated service tothe Company and looks forward to their continued support and higher level of productivityfor achieving the targets set for the future.

Human Resources

Your Company treats its "human resources" as one of its most importantassets.

Your Company continuously invests in attraction retention and development of talent onan ongoing basis. A number of programs that provide focused people attention are currentlyunderway. Your Company thrust is on the promotion of talent internally through jobrotation and job enlargement

Acknowledgements

Your Directors wish to express their appreciation of the support and co-operation ofthe Central and the State Government bankers financial institutions businessassociates employees shareholders customers suppliers and alliance partners and seekstheir continued patronage in future as well.

For and on behalf of the Board of
Kellton Tech solutions Limited
Sd/- Sd/-
Krishna Chintam Niranjan Chintam
Managing Director Whole Time Director
DIN:01658145 DIN:01658591

Place : Hyderabad

Date : 2nd September 2016