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Kellton Tech Solutions Ltd.

BSE: 519602 Sector: IT
NSE: KELLTONTEC ISIN Code: INE164B01022
BSE 15:43 | 23 Feb 119.85 0.70
(0.59%)
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119.20

HIGH

122.05

LOW

119.10

NSE 15:51 | 23 Feb 120.15 1.40
(1.18%)
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121.95

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122.65

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OPEN 119.20
PREVIOUS CLOSE 119.15
VOLUME 5307
52-Week high 149.45
52-Week low 80.00
P/E 64.44
Mkt Cap.(Rs cr) 571
Buy Price 0.00
Buy Qty 0.00
Sell Price 119.85
Sell Qty 174.00
OPEN 119.20
CLOSE 119.15
VOLUME 5307
52-Week high 149.45
52-Week low 80.00
P/E 64.44
Mkt Cap.(Rs cr) 571
Buy Price 0.00
Buy Qty 0.00
Sell Price 119.85
Sell Qty 174.00

Kellton Tech Solutions Ltd. (KELLTONTEC) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting their 23rd Annual Report on the business andoperations of your company for the financial year ended March 31st 2017.

Financial Results

The standalone financial performance of the Company for the financial year ended March31 2017 is sum -marized below :

Standalone (Rs. in Lacs)
Particulars 2016-17 2015-16
Revenue from operations 7649.69 4877.79
Other Income 15.73 33.85
Total Revenue 7665.43 4911.64
Total Expenditure 6392.47 4001.72
Profit/(Loss) 1272.95 909.93
Tax Expense/(Benefit) 432.36 236.94
Profit/(Loss) after Tax 840.59 672.99
Earnings per equity shares in Rs. 1.79 1.51

Consolidated

Particulars 2016-17 2015-16
Revenue from operations 61476.98 35868.04
Other Income 97.53 97.99
Total Revenue 61574.52 35966.03
Total Expenditure 54350.63 32056.73
Profit/(Loss) 7223.88 3909.30
Tax Expense/(Benefit) 1848.45 812.01
Profit/(Loss) after Tax 5375.43 3097.29
Earnings per equity shares in Rs. 11.43 6.96

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. 7665.43 lacs from Rs. 4911.64 lacs while the Profit before Tax alsoincreased from Rs. 909.93 lacs to Rs. 1272.95 Lacs

The profit after tax also increased to Rs. 840.59 Lacs from Rs. 672.99 Lacs reported inthe previous year. The earnings per share is Rs. 1.79 as compared to Rs. 1.51 in theprevious year.

The Consolidated revenue of your Company for the year ended 31st March 2017 is Rs.61574.52 as against previous year revenue of Rs. 35966.03 Lacs. The consolidated NetProfit for the year stood at Rs. 5375.43 as against previous year consolidated net profitof Rs. 3097.29 Lacs.

Change in the nature of business if any :

There is no change in the nature of business of the Company or any of its subsidiariesor joint venture during the year under review.

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 2016-17.

There were no transfers to Reserves during the financial year 2016-17.

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. 235722865/- (Rupees Twenty ThreeCrore Fifty Seven Lac Twenty Two Thousand Eight Hundred and Sixty Five) divided into47144573 (Four Crore Seventy One Lac Forty Four Thousand Five Hundred and Seventy Three)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.

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

Disclosure regarding Employees Stock Option Plan and forming part of theDirectors’ Report for the year ended 31st March2017 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 ex- change 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 the period 2026672
Number of options granted during the year 153000
Number of options forfeited / lapsed during the year 50000
Number of options vested during the year 830140
Number of options exercised during the year 318313
Number of shares arising as a result of exercise of options 318313
Money realized by exercise of options (INR) if scheme is implemented directly by the company 11037038
Loan repaid by the Trust during the year from exercise price received Nil
Number of options outstanding at the end of the year 1811359
Number of options exercisable at the end of the year 621328

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

Listing

The Equity Shares of your Company are listed on Bombay Stock Exchange Limited andNational Stock Exchange of India Limited..

The Company confirms that it has paid the Annual Listing Fees for the year 2016-17 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/re-appointments:

The following appointments to the Board are proposed:

In accordance with the Companies Act 2013 read with the Articles of Association of theCompany Mr. Karanjit Singh and Mr. Krishna Chintam Directors retire by rotation at theensuing Annual General Meeting of the Company and being eligible offered themselves forre-appointment.

Mr. Krishna Chintam who was appointed as the Managing Director of the Company on09.04.2015 for a period of three years is liable to retire by rotation at the ensuingAnnual General Meeting and offers himself for re-appointment.

Mr. Karanjit Singh who was appointed on 30.03.2015 as the Director of the Company isalso liable to retire by rotation at the ensuing Annual General Meeting and offers himselffor re-appointment.

Ms. Kunda Kalpana was appointed as an Additional Independent Director of the Companywith effect from March 7th 2017 respectively who being eligible for appointment and inrespect of whom the Company has received a notice in writing under Section 160(1) of theAct from members proposing their candidature for the office of Director.

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/reappointment as Directors of your Company.

Resignation by Director:

During the year Ms. Jhansi Lakshmi Gorla has resigned from the position of IndependentDirector of the Company. She tendered her resignation letter on March 7th 2017 which wasaccepted by the Board of Directors at a duly convened meeting.

Number of meetings of the board:

Twenty Three Board Meetings were held on 11.04.2016 28.04.2016 16.05.201630.05.2016 08.06.2016 16.06.2016 11.07.2016 01.08.2016 06.08.2016 02.09.201626.09.2016 01.11.2016 17.11.2016 16.12.2016 05.01.2017 03.02.2017 07.02.201714.02.2017 20.02.2017 02.03.2017 07.03.2017 14.03.2017 and 27.03.2017 during the yearended on 31st March 2017. The gap between any two Board Meetings is within the periodprescribed by the Companies Act 2013 and Listing Agreement.

Declarations by Independent Directors:

The Company has received declarations form 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 process covers 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 executivesof the Company is also facilitated to make them more familiar with the operations carriedby the 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 websitewww.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 yourboardofdirectorstothebestoftheirknowledgeandabilityconfirm that:

• in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

• 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 ofaffairs of the Company for that year;theCompanyasat31stMarch2017and theprofit/loss

• 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;

• the annual accounts of the Company have been prepared on a going concern basis;by the Company and that such internal

• internal financial financial controls are adequate and were operatingeffectively;

• 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 and Regulation 18 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Composition and Scope of Audit Committee is provided underthe Corporate Governance report annexed herewith.

Nomination and Remuneration cum Compensation Committee:

Nomination and Remuneration cum Compensation Committee meets the requirements ofsection 178 of the Companies Act 2013 and Regulation 19 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The details of the composition of theNomination and Remuneration cum Compensation Committee as required under the provisions ofSection 178 of the Companies Act 2013 is given in the Corporate Governance Reportfurnished as part of the Annual Report.

Remuneration Policy

The remuneration paid to the Directors is as per the terms laid out in the Nomination& Remuneration policy of the Company. The Nomination & Remuneration policy isadopted by the Board is placed on the Company’s website at www.kelltontech.com

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 and forms part of this Report. Your companywill continue to adhere in letter and spirit to good corporate governance policies.

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 Solutions Inc Wholly Owned Subsidiary
Kellton Tech Limited (Ireland) Wholly Owned Subsidiary
Kellton Tech Solutions Pte. Ltd. Wholly Owned Subsidiary
Evantage Solutions 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 Professionals 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 Solutions Inc)
Lenmar Consulting Inc. Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Inc)
SID Computer Group Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Inc)
Talent Partners Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Inc)

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 in Associates and AccountingStandard AS-27 on Financial Reporting of Interests in Joint Ventures your Directors havepleasure in attaching the Consolidated Financial Statements as part of the Annual Report.

A statement containing brief financial details of the subsidiaries for the financialyear ended March 31

2017 is annexed. The annual accounts of these subsidiaries and the related detailedinformation will be made available to any member of the Company/its subsidiaries seekingsuch information at any point of time and are also available for inspection by any memberof the Company/its subsidiaries at the registered office of the Company. The annualaccounts of the subsidiaries will also be available for inspection as above atregistered office of the respective subsidiary companies.

Statutory Auditors

M/s. Mahesh Virender & Sriram Chartered Accountants Hyderabad the auditors ofthe Company have completed their term under section 139(2) of the Companies Act 2013 andtherefore Directors have recommended the appointment of M/s Sastri & Shah CharteredAccountants Hyderabad as Statutory Auditors of the Company .

M/s. Sastri & Shah confirmed their eligibility under Section 139(1) of theCompanies Act 2013

The Audit Committee and the Board recommends the appointment of M/s. Sastri & ShahChartered Accountants as statutory Auditors of the company.

Management Replies To Auditors Report – Standalone And Consolidated FinancialReports:

With reference to the auditor’s comment on non-payment of Rs. 4.28 Cores ofOutstanding Income-tax deducted at Source and Rs. 2.38 Crores of Service Tax for more thansix months the management would like to clarify that the above mentioned amounts havebeen paid since.

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 requirements specified the company is not mandated for the providingthe BRR and hence do not form part of 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 a generous amounttowards 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.

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 2016-17 Secretarial Audit Reportissued by Mr. Manoj Kumar Koyalkar Practising company secretary in Form MR-3 for thefinancial year 2016-17 forms part to this report as ‘Annexure – V’.

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 Regulation 22 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the company hasestablished a mechanism through which all stake holders can report the suspected fraudsand genuine grievances to the appropriate authority. The Whistle blower policy which hasbeen approved by the board of directors of the company has been hosted on the website ofthe company viz. www.kelltontech.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 2017 the Companyhas not received any complaints pertaining to Sexual Harassment.

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 transactions entered by the company during the year with thepromoters directors key managerial personnel or other persons which may have a potentialconflict 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 inForm No. AOC-2 as ‘Annexure II’ to this report.

Material changes and commitments if any affecting the financial position

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

Details of significant and material orders passed by the going concern status andcompany’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.

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.

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 thisReport.

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’sremuneration and other details in terms of Section 197(12) of the Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are enclosed in Annexure –and forms part 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.

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 ad -equate 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 ad -equate 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 : 01/09/2017