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Objectone Information Systems Ltd.

BSE: 535657 Sector: IT
NSE: N.A. ISIN Code: INE860E01011
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VOLUME 100
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P/E
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Buy Price 1.59
Buy Qty 900.00
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OPEN 1.59
CLOSE 1.52
VOLUME 100
52-Week high 3.50
52-Week low 1.51
P/E
Mkt Cap.(Rs cr) 2
Buy Price 1.59
Buy Qty 900.00
Sell Price 0.00
Sell Qty 0.00

Objectone Information Systems Ltd. (OBJECTONEINFORM) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 20th Annual Report on the operations ofObjectOne Information Systems Limited together with the audited financial statements forthe year ended March 312016. The financial results of the Company are as follows:

(In lakhs)

Particulars

Consolidated

Standalone

2015-16 2014-15 2015-16 2014-15
Revenue 1779.06 2943.37 703.16 581.38
Capital Gains 177.83 0.00 177.83 0.00
Total Income 1956.89 2943.37 880.99 581.38
Operating profit (PBIDT) 203.72 95.44 178.02 69.58
Profit before tax (PBT) 166.35 21.26 141.64 15.18
Income Tax and Deferred Tax 20.47 6.52 16.95 4.69
Profit after tax (PAT) 145.88 14.74 124.69 10.49
Profit brought forward from previous year 344.62 329.88 31.88 21.39
Surplus available for appropriation 490.50 344.62 156.57 31.88
Appropriations
Dividend 0 0 0 0
Corporate tax on proposed dividend 0 0 0 0
Transfer to General Reserve 0 0 0 0
Transfer to Capital Redemption Reserve 0 0 0 0
Balance of profit carried to Balance Sheet 490.50 344.62 156.57 31.88

2. STATE OF AFFAIRS OF COMPANY

The consolidated income of Rs. 1956.89 lakhs during the year against previous yearincome of Rs. 2943.37 lakhs and Net Profit of Rs. 145.88 lakhs during the year againstprevious year Net Profit of Rs. 14.74 lakhs

The Company has earned the income of Rs.880.99 lakhs during the year against previousyear income of Rs. 581.38 lakhs and Net Profit of Rs. 124.69 lakhs during the year againstprevious year Net Profit of Rs. 10.49 lakhs.

BUSINESS OVERVIEW:

Your Company is a leading Internet Media & Entertainment company in India YourCompany offers Internet video and Audio services across different countries on the globe.

India is on the verge of a huge expansion in Internet usage. If it manages its onlineengagement intelligently GDP could soar. India has about 460 million people onlinetoday— around 35 percentage of its population. That expansion offers your company anopportunity to transform its current business profile to expand usage even beyond currentprojections and to boost revenue growth substantially.

Despite India’s large current and future base of users the Internet nowcontributes only modestly to GDP. Its citizens like their peers in other developingcountries spend little money on mobile data or Internet. To capitalize this gap yourCompany has developed new initiatives using Intranet.

TeluguOne channel on YouTube ranks number One in South India with over Billion VideoViews and over 1.7mn subscribers. Some of the in-house productions of your company haveperformed excellently on the digital media space.

The exploded adoption of smartphones due to declining Selling Price is resulting in anenormous surge in the number of mobile internet users in India. According to the latestreport from IAMAI titled Mobile Internet In India 2016 the country is estimated to have371 million mobile internet users by June 2016. India attracted over 65 million new mobileinternet users coming on-board during the period of six months ending June 2016.

When we put these growth figures of mobile internet users in India along-side the totalnumber of internet users in India mobile emerges as the clear winner with an estimated56% YoY growth in the number of mobile internet users in India.

Mobile Internet Users In India: Urban vs Rural

The latest IAMAI report further highlights that 71% of the estimated 371 million mobileinternet users in India will belong to urban area. However the rural area still holds anenormous potential to drive the future growth of mobile internet in India. In 2015 thenumber of mobile internet users from rural area doubled from 2014 and in 2016 the growthpercentage is estimated to outclass all the previous figures.

This is throwing open enormous opportunities to your company as a Digital media player.

Your company has launched a new service initiative - "ToneFlix"

ToneFlix provides a WORLD CLASS mobile on-board infotainment system for trains andbuses. ToneFlix’s"BYOD Wi-Fi server" is an innovative concept and a greaton-board entertainment system. Passengers of train s and buses can access in offline modea rich variety of passenger service systems & entertainment content (movies musicshort films e-books cartoons gossip clips news) by using their own device(smart-phone tablet laptop). Bring your own device (BYOD) technology is now accessiblefor trains and buses thanks to ToneFlix. Your Company’s creation is:

• A world class Mobile on-board infotainment for travellers on buses and Trains.

• Travellers can watch movies with zero bandwidth consumption/charges with hasslefree download speed.

• Surpass your epitome more than in-flight entertainment.

• Intelligent Mobile Application is designed to make travelling in Trains andbuses more enjoyable and profitable. Along with mobile application travellers can accesscontent through Wi-Fi enabled web.

• Travellers can read e-Books and devotional content.

• Traveller’s children can get the entertainment as well as edutainment onthe go with exclusive Kids content.

• This service will be a revenue generator as well as differentiator from privatecompetition.

• Videos of Govt. programs/schemes advertisements etc. can also be provided tocaptive audience.

• Notification pushups on important alerts.

This is will reduce the problem with unstable Wi-Fi internet connection in the train orbus. Our BYOD system for trains and buses provide rich and valuable content for"offline" mode usage while the existing Wi-Fi connection will get more capacity.

Your company will deploy an infotainment system with all components! With contentserver mobile & Wi-Fi router the system has its own hotspot in the trains or bus.Train and bus passengers bring their own device and easily access the infotainment portalhosted in our rugged mobile system.

Your company has a huge repository of content catering to various genre’s and agegroups which will be monetized through advertisements on BYOD service

loT TORi Device

One more feather in your company’s hat is loT (Internet of Things) TORi device.TORi device is a new generation Internet Radio device has been developed in-house by yourcompany .This "loT TORi Device" can be utilized in Public Transportation publicplaces etc. This device is developed to play the TORi through GSM/Wi-Fi/Edge connections.This device is configured in such a way that TORi is automatically connected to theinternet and start playing. It is acting as a Mobile-OnBoard audio entertainment fortravellers and public listeners. This is having its own amplifier to boost the sound andconnect to the speakers. The developed device is having special features like ruggedmechanism effective power supply management support DC input load dump protectionshock and vibration resistance fan less operations etc. This will boost the TORilistener base tremendously and get the huge traction.

3. Material Changes and Commitments If any affecting the financial position of thecompany which have occured between the end of the financial year of the company to whichthe financial statements relate and the date of the report

There are no material changes and commitments affecting the financial position of theCompany.

4. Transfer To Reserves

The company had transferred an amount of Rs. 145 lakhs in the General Reserve. Duringthe financial year 2015-16.

5. Dividend

The Board of directors not proposed/declared any dividend for the year ended31.03.2016.

6. Particulars of Loans Guarantees or Investments

The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013 (Act). The details of the investments made by thecompany are given in the notes to the financial statements.

7. Internal Financial Control Systems and Their Adequacy

The Company has adequate system of internal controls to safeguard and protect fromloss unauthorised use or disposition of its assets. All the transactions are properlyauthorised recorded and reported to the Management. The Company is following all theapplicable Accounting Standards for proper maintenance of books of accounts and forfinancial reporting

8. Related Party Transactions

All the transactions with related parties are at arm’s length and they falloutside the scope of Section 188(1) of the Act. Information on transactions with relatedparties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies(Accounts) Rules 2014 is given in Annexure-1 in Form AOC-2 and the same forms part ofthis report.

9. Fixed Deposits

Your Company has not accepted any deposits and as such no amount of principal orinterest was outstanding as of the Balance Sheet date.

10. Change In The Nature Of Business If Any

There is no material change in the nature of business affecting the financial positionof the Company for the year ended March 312016.

11. Joint Venture

Information on Joint Venture pursuant to Section 129(3) of the Act read with rule 5 ofthe Companies (Accounts) Rules 2014 is not applicable to the Company as the Company doesnot entered any Joint Venture contracts. Hence Form AOC-1 is not applicable.

12. Subsidiary Company

The Company has sold its 100% Subsidiary (ObjectNet Technologies Inc USA) during theFirst Quarter of 2015-16 and gained an amount of Rs. 177.83 lac towards Capital Gain(Before Tax).

The Company has acquired M/s. Stiaos Technologies Inc. during the Second Quarter of FY2015-16. The details is subsidiary provided in form AOC-1

Form No. AOC - 1

(Pursuant to the first provision to sub-section 3 of Section 129 read with Rule 5 ofCompanies (Accounts) Rules 2014); Salient Features of Financial Statements of Subsidiary/associate companies/joint ventures as per Companies Act 2013

Part "A": Subsidiaries

Amount in Rs. Lakhs

1. Name of Subsidiary Stiaos Technologies Inc. USA
2. Reporting period for the subsidiary concerned if different from the holding company’s reporting period Accounting year of the Subsidiary Company - Calender Year
Following data related to FY 2015-16
3. Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries USD @ Rs.66/-
4. Share Capital 1.00
5. Reserves & Surplus 92.54
6. Total Assets 522.48
7. Total Liabilities 429.27
8. Investments 0.00
9. Turnover 1075.89
10. Profit Before Taxation 23.51
11. Provision for Taxation 3.53
12. Profit after Taxation 19.98
13. Proposed Dividend 0
14. % of Shareholding 100

13. Directors and Key Managerial Personnel

Mr. K. Mallikarjuna Rao who retires by rotation and being eligible offer himself forreappointment. Your Board recommends his appointment.

Mr. K. Ravi Shankar is re-appointed as Managing Director of the Company on 12.02.2016.Your Board recommends his appointment.

The Company has Appointed Smt. E. Kavitha as Additional Non-Executive IndependentDirector on 30.07.2016.

The Company has also appointed Mr. V. Jaya Prakash Narayana as Additional NonExecutiveIndependent Director on 30.07.2016.

During the Year Mr. Viswanadh Dasari resigned as Director on 27.05. 2015 and Mr. SanaSatish Babu resigned on 30.07.2016 as Directors of the Company.

Pursuant to the provisions of Clause 49 of the Listing Agreement brief particulars ofthe directors who are proposed to be appointed/re-appointed are provided as an annexure tothe notice convening the Annual General Meeting.

The Company has received declarations from the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both undersubsection^) of Section 149 of the Companies Act 2013 and under Clause 49 of the ListingAgreement with the Stock Exchanges.

Statement on The Declaration Given By The Independent Directors As Per Section 149(6)

The company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he /she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

14. Policy on Directors’ Appointment And Remuneration And Other Details

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and fixingtheir remuneration pursuant to the provisions of Section 178 of the Act and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 . The Salient features of theRemuneration Policy are set out in the Corporate Governance Report.

15. Number of Meetings of the Board

Six meetings of the Board were held during the year. The details pertaining to boardmeetings are included in the Corporate Governance Report which forms part of this report.

16. Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI(Listing ObligationsAndDisclosure Requirements) Regulations2015 the Board carried out an annual performanceevaluation of its own performance the directors as well as the evaluation of the workingof its Audit Nomination and Remuneration and Stakeholders’ Relationship Committees.Independent Directors carried out a separate evaluation on the performance of Chairman andnon Independent directors. The manner in which the evaluation has been carried out hasbeen explained in the Corporate Governance Report.

17. Audit Committee

The details pertaining to composition of audit committee are included in the CorporateGovernance Report which forms part of this report.

18. Auditors Statutory Auditors

At the Annual General Meeting (AGM) held on September 30 2014 M/s. P. Murali &Co. Chartered Accountants Hyderabad were appointed as Statutory Auditors of the companyto hold office till conclusion of the AGM to be held in the calendar year 2019. In termsof the first proviso to Section 139 of the Companies Act 2013 the appointment of theauditors shall be placed for ratification at every AGM. Accordingly as the appointment ofM/s. P. Murali & Co. Chartered Accountants Hyderabad as Statutory Auditors of thecompany is placed for ratification by the shareholders.

There were no qualifications reservation or adverse remark in the Audit Report for theFinancial Year ended 31st March 2016.

Secretarial Audit

Mr. S Chidambaram Company Secretary in Practice Hyderabad was appointed to undertakethe Secretarial Audit of the Company for the Financial Year 2015-16. The Secretarial AuditReport is given in Annexure- II.

19. Directors’ Responsibility Statement

eeIn terms of Section 134(5) of the Companies Act 2013 your Directors would like tostate that:

a. In the preparation of the Annual Accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

b. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year endedMarch 312016 and the profit of the Company for that financial year;

c. The Directors have 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 have prepared 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 operating effectively.

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.

20. Conservation Of Energy Technology Absorption Foreign Exchange Earnings and Outgo

Conservation of Energy:

The nature of the Company’s operations requires a low level of energy consumption.Research and Development (R&D):

The Company continues to look at opportunities in the areas of research and developmentin its present range of activities.

Technology Absorption:

The Company continues to use the latest technologies for improving the productivity andquality of its services and products. The Company has not imported any technology duringthe year.

Foreign Exchange Earnings and Outgo:

S.No. Purpose of 2015-16 Amount in Rs 2014-15 Amount in Rs.
1 Inflow - against IT IT enabled Services and other income Rs.37782529/- Rs.32721638/-
2 Inflow - Against sale of Foreign Subsidiary Rs. 28488500/- 0
3 Outflow - Acquiring of Foreign Subsidiary Rs. 18806096/- 0

21. Particulars of Employees

(a) The information required under section 197 of the Companies Act 2013 read withrule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are given in Annexure-3.

b) Pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 during the year under review none of the employees of the Companyemployed throughout the financial year was in receipt of remuneration for the year whichin the aggregate was not less than sixty lakh rupees; none of the employees of theCompany employed for a part of the financial year was in receipt of remuneration for anypart of the year at a rate which in the aggregate was not less than five lakh rupeesper month; none of the employees of the Company employed throughout the financial year orpart thereof was in receipt of remuneration in the year which in the aggregate or asthe case may be at a rate which in the aggregate

is in excess of that drawn by the managing director or whole-time director or managerand holds by himself or along with his spouse and dependent children not less than twopercent of the equity shares of the company.

22. Extract Of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 are given inAnnexure-IV.

23. Risk Management

Pursuant to section 134 (3) (n) of the Companies Act 2013 and SEBI (ListingObligations And Disclosure Requirements) Regulations 2015 the company has formulated apolicy on risk management. At present the company has not identified any element of riskwhich may threaten the existence of the company.

24. Vigil Mechanism / Whistle Blower Policy

Pursuant to Section 177 of the Companies Act 2013 read with Rule 7 of Companies(Meetings of Board and its Powers) Rules 2014 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has established a Whistle BlowerPolicy to deal with instance of fraud and mismanagement if any. The details of theWhistle Blower Policy are explained in the Corporate Governance Report and also posted onthe website of the Company.

25. Corporate Social Responsibility(CSR)

The provisions relating to Corporate Social Responsibility under the Companies Act2013 do not apply to the company.

26. Disclosure under the Sexual Harassment of Women At Workplace (PreventionProhibition And Redressal) Act 2013

The Company has in place a Policy on Prevention of Sexual Harassment in line with therequirements of The Sexual Harassment of Women at the Workplace (Prevention Prohibition&Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.

Your Directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

27. The details of significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status and company’s operations in future

In terms of sub rule 5(vii) of Rule 8 of Companies (Accounts) Rules 2014 there are nosignificant material orders passed by the Regulators / Courts which would impact the goingconcern status of the Company and its future operations.

28. Management Discussion & Analysis And Corporate Governance

The "Management Discussion and Analysis Report" highlighting the industrystructure and developments opportunities and threats future outlook risks and concernsetc. is furnished separately and forms part of this Board’s Report.

As per the requirements of the Listing Agreement with Stock Exchange a Report onCorporate Governance duly audited is annexed for information of the Members.

29. Acknowledgments

Your Directors thank the investors bankers clients and vendors for their continuedsupport. Your Directors place on record their appreciation of the valuable contributionmade by the employees at all levels.

By Order of the Board
for O BJECTONE INFORMATION SYSTEMS LIMITED
Sd/-
Place : Hyderabad K. RAVI SHANKAR
Date : 16.08.2016 Managing Director