Your Directors are pleased to present their 20th Annual Report of thecompany along with the audited financial statements for the financial year ended March 312016.
| ||Year ended |
|Particulars || || |
| ||31st March 2016 ||31st March 2015 |
|Income from operations ||1424.12 ||1142.78 |
|Other Income ||16.04 ||20.01 |
|Total Income ||1440.16 ||1162.79 |
|Total Expenditure ||1268.07 ||1073.11 |
|Profit before depreciation interest and tax ||172.09 ||89.68 |
|Depreciation ||71.25 ||76.33 |
|Interest ||- ||- |
|Profit before tax ||100.84 ||13.35 |
|Provision for Tax ||19.92 ||2.54 |
|Deferred Tax Asset / (liability) for the year ||27.57 ||9.41 |
|MAT credit entitlement ||-14.96 ||-2.54 |
|Tax adjustments for earlier years ||- ||2.68 |
|Net Profit ||68.31 ||1.26 |
In view of the inadequate profit for the year under review your Directors regret theirinability to recommend any dividend for the year 2015-16.
TRANSFER TO RESERVES
No transfer to reserves is proposed and accordingly the entire balance available in theProfit and Loss Account is retained in it.
Software and computing technology are transforming businesses in every industry aroundthe world in a very profound and fundamental way. The continued reduction in the unit costof hardware the explosion of network bandwidth advanced software technologies andtechnology enabled services are fueling the rapid digitization of business processes andinformation. Traditional business models are being disrupted in every industry withdigital and software based business models.
Information Technology Sector witnessed rapid evolution expansion of verticals andgeographic markets attracting new customer segments and offering a considerably widerspectrum of solutions. The Indian IT sector continues to be one of the largest employersin the country. The future looks exciting and positive as the IT industry is evolvingdramatically in terms of scale and complexity. The sector will leverage collaborationinnovation technology shifts and build a transformational agenda for India. It willcreate a market not only in India but globally that will serve as technologydifferentiator for customers shifting from cost to innovation. The sector will continue toimpact India through job creation foreign exchange exports and position India as aglobal partner in Information Technology.
Your Company with its aggressive marketing is poised to grab the opportunity availablein this scenario. Taking an overall view of the above your Board is cautiously optimisticabout the future outlook for your company.
STATE OF THE COMPANY'S AFFAIRS
Discussion on state of Company's affairs has been covered in the Management Discussionand Analysis Report which forms part of Directors Report.
There was no change in the share capital of your company during the year under report.
VARIATIONS IN NET WORTH
The Net worth of the Company as at the Financial Year ending on March 31 2016 is Rs.10.28 Crores as compared to Rs.9.59 Cores as at the end of previous financial year endedon March 31 2015.
LISTING STATUS OF THE COMPANY
Following the voluntary de-recognition of Madras Stock Exchange your company ceased tobe a listed company with the said Exchange and the shares of the company have since beenplaced on the Dissemination Board of National Stock Exchange of India Limited which hasallowed buying and selling of your company's shares on the said platform with effect from27th March 2015.
Your directors wish to inform that the company has since submitted an application toBSE Limited Mumbai seeking direct listing of its equity shares on the said stock exchangeand the same is under active consideration by BSE Limited.
The Board of the Company has formed a risk management policy to implement and monitorthe risk management plan for the Company. The audit committee has additional oversight inthe area of financial risks and controls. Major risks identified by the businesses andfunctions are systematically addressed through mitigating actions on a continuing basis.
The development and implementation of risk management policy has been covered in themanagement discussion and analysis which forms part of this report.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The Board of Directors are satisfied with the adequacy of the internal control systemin force in all its major areas of operations of the Company. The Company has an externalfirm of Chartered Accountants as Internal Auditors to observe the Internal Controlswhether the work flows of organization is being done through the approved policies of theCompany and similar matters. Internal Auditors present its report to the Audit Committee.The audit committee assists the board of directors in monitoring the integrity of thefinancial statements and the reservations if any expressed by the company's auditorsincluding the financial internal and secretarial auditors and based on their inputs theboard is of the opinion that the company's internal controls are adequate and effective.
SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES
The company has no subsidiaries joint ventures or associate companies. During theFinancial Year no company ceased as Subsidiary joint venture or associate of thecompany.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 (5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm that:
(i) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(ii) The directors had selected such accounting policies and applied them consistentlyand made judgement and estimates that were 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 and ofthe profit of the company for the period; (iii) The directors had taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (iv) The directors had preparedthe annual accounts on a going concern basis; (v) The directors had laid down internalfinancial controls to be followed by the Company and such internal financial controls areadequate and operating effectively; (vi) The directors had devised proper systems toensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The terms of office of Shri.M Jagadeesh and Shri.K.Pradeep Kumar Reddy as ManagingDirector and Executive Director of the company expired during the year 2015-16 and theyhave been re-appointed in the respective capacities by your Board based on therecommendation of its Nomination and Remuneration Committee. Shri K.Pradeep Kumar Reddy isalso CFO of the Company.
In accordance with the provisions of Section 152 of the Companies Act 2013Shri.S.Sreekanth Reddy and Shri.K.Satish Chander Reddy will be retiring by rotation at theensuing Annual General Meeting and are eligible for re-appointment.
In accordance with the provisions of Section 161 of the Companies Act 2013Smt.Neelima Kaushik was appointed as additional director of the company with effect fromNovember 12 2015 and she will hold office up to date of the ensuing AGM. The company hasreceived a notice in writing under the provisions of Section of 160 of the Companies Act2013 from a member proposing her candidature for the office of the independent director tobe appointed as such under the provisions of Section of 149 of the Companies Act 2013.
Accordingly the resolutions seeking the approval of the members for the above saidreappointments have been incorporated in the notice of the annual general meeting of thecompany.
Excepting Shri.S.Sreekanth Reddy who is a director in Sagar Cements Limited and BMMCements Limited whose transactions with the company have been reported under the relatedparties disclosure under notes to the accounts and to the extent of shares held by him andShri Hari Mohan none of the other non-executive directors has had any pecuniaryrelationship or transactions with the company other than the receipt of sitting fee forthe meetings of the Board and Committees thereof attended by them.
INDEPENDENT DIRECTORS DECLARATION
The company has received the necessary declaration from each Independent Director inaccordance with Section 149 (7) of the Companies Act 2013 that they meets the criteria ofindependence as laid out in sub-section (6) of Section 149 of the Companies Act 2013.
MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met on 30th January 2016 without the attendanceof Non-Independent Directors and members of the Management. The Independent Directorsreviewed the performance of Non-Independent Directors and the Board as a whole; theperformance of the Chairman of the Company taking into account the views of ExecutiveDirector and Non-Executive Directors and assessed the quality quantity and timeliness offlow of information between the Company Management and the Board that is necessary for theBoard to effectively and reasonably perform their duties.
NUMBER OF MEETINGS OF THE BOARD
Five Board meetings were held during the financial year 2015-16 and the gap between twoconsecutive meetings did not exceed one hundred and twenty days. These meetings were heldon the following dates: 23rd May 2015 10th August 2015 26thOctober 2015 12th November 2015 and 30th January 2016.
Attendance of directors during financial year 2015-2016
|Name of the Director ||Number of board meetings during the year 2015-16 |
| ||Held ||Attended |
|S Sreekanth Reddy ||5 ||5 |
|M Jagadeesh ||5 ||5 |
|K Pradeep Kumar Reddy ||5 ||5 |
|N Hari Mohan ||5 ||5 |
|K Rakesh Rao ||5 ||5 |
|K Satish Chander Reddy ||5 ||1 |
|K Prasad ||5 ||5 |
|K Ganesh ||5 ||5 |
|K Neelima* ||2 ||2 |
*for the period from 12-11-2015 to 31-03-2016
SUB COMMITTEES OF THE BOARD
The Board has Audit Committee Nomination and Remuneration Committee and Stake HoldersRelationship Committee.
Composition of Audit Committee
(1) K.Prasad - Chairman (2) K.Ganesh - Member (3) M.Jagadeesh - Member
The Audit Committee which met four time during the year 2015-16 held its meetings on23rd May 2015 10th August 2015 12th November 2015and 30th January 2016.
Attendance of members during financial year 2015-2016
|Name of the Member ||Number of Audit Committee meetings during the year 2015-16 |
| ||Held ||Attended |
|K Prasad ||4 ||4 |
|K Ganesh ||2 ||2 |
|M Jagadeesh ||4 ||4 |
|NOMINATION AND REMUNERATION COMMITTEE || |
The Nomination and Remuneration Committee which met once on 26th October2015 during the year 2015-16.
Attendance of members during financial year 2015-2016
|Name of the Member ||Number of Nomination & Remuneration Committee meetings during the year 2015-16 |
| ||Held ||Attended |
|K Prasad ||1 ||1 |
|N Hari Mohan ||1 ||1 |
|K Ganesh ||1 ||1 |
STAKE HOLDERS RELATIONSHIP COMMITTEE
The need for convening a meeting of the Committee was not felt during the year 2015-16.
Composition of Committee
(1) K.Prasad - Chairman (2) N.Hari Mohan - Member (3) K.Rakesh Rao - Member
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AND OTHER DETAILS
Under Section 178 (3) of the Companies Act 2013 the Nomination and RemunerationCommittee of the board has adopted a policy for nomination remuneration and other relatedmatters for directors and senior management personnel.
The Board adopted a formal mechanism for evaluating its performance as well as that ofits Committees and individual Directors including the Chairman of the Board. The exercisewas carried out through a structured evaluation process covering various aspects of theBoard functioning such as composition of the Board & committees experience &competencies performance of specific duties & obligations contribution at themeetings and otherwise independent judgment governance issues etc.
Pursuant to the provisions of Section 139 142 and other applicable provisions of theCompanies Act 2013 and the Companies (Audit and Auditors) Rules 2014 M/s.C.Ramachandram & Co. Chartered Accountants were appointed as statutory auditors ofthe company from the conclusion of 18th Annual General Meeting of the companyheld on 24th September 2014 till the conclusion of the 21st Annual GeneralMeeting to be held in the year 2017 subject to ratification of their appointment at everyAnnual General Meeting. Accordingly Shareholders approval is sought at the ensuing AnnualGeneral Meeting to enable the said audit firm to hold their office from the conclusion ofthe ensuing Annual General Meeting up to the conclusion of the next Annual GeneralMeeting.
AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT
The auditors' report does not contain any qualifications reservations or adverseremarks.
SECRETARIAL AUDITORS' REPORT
In accordance with Section 204 (1) of the Companies Act 2013 the report furnished bythe Secretarial Auditors who carried out the secretarial audit of the company under thesaid Section is given in the Annexure-1 which forms part of this report. The Secretarialauditors' report does not contain any qualifications reservations or adverse remarks.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
TRANSACTIONS WITH RELATED PARTIES
None of the transactions with related parties falls under the scope of Section 188 (1)of the Act. Information on transactions with related parties pursuant to Section 134 (3)(h) of the Act read with rule 8 (2) of the Companies (Accounts) Rules 2014 are given inAnnexure-2 in Form AOC-2 and the same forms part of this report.
All related party transactions that are entered into during the financial year were onarm's length basis and in the ordinary course of business. There were no materiallysignificant related party transactions made by the company with promoters key managementpersonnel or other designated persons that may have potential conflict with the interestsof the company at large. All related party transactions were placed before the AuditCommittee and Board which approved the same.
EXTRACT OF ANNUAL RETURN
As provided under Section 92 (3) of the Act an extract of annual return is given inAnnexure-3 in the prescribed Form MGT-9 which forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY
Provisions of Section 135 of the Companies Act 2013 relating to Corporate SocialResponsibility are presently not applicable to the Company.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of business of the Company. There are no significantand material orders passed by the regulators or courts or tribunals impacting the goingconcern status and Company's operations in future.
MATERIAL CHANGES AND COMMITMENTS
There are no Material Changes and Commitments impacting the going concern status andCompany's operations in future.
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with Rule 5 (1) and 5 (2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules are given inthe Annexure 4 which forms part of this report:
a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
|Particulars ||Ratio to Median Remuneration |
|Non-Executive Directors* ||- |
|Executive Directors || |
|Shri M.Jagadeesh Managing Director ||4.44 |
|Shri K.Pradeep Kumar Reddy Director (Operations) ||7.40 |
*Non-Executive Directors are not paid any remuneration other than sitting fee.
b. The percentage increase in remuneration of each director chief executive officerchief financial officer company secretary in the financial year:
|Director Chief Executive Officer Chief ||% increase in remuneration |
|Financial Officer and Company Secretary ||in the financial year |
|Shri. S.Sreekanth Reddy || |
|Shri. K.Satish Chander Reddy || |
|Shri.K.Prasad ||These Directors were not paid any Remuneration other than sitting fee. |
|Shri.N.Hari Mohan || |
|Shri.K.Rakesh Rao || |
|Shri.K.Ganesh || |
|Smt.Neelima Kaushik || |
|Shri. M.Jagadeesh Managing Director ||Nil |
|Shri. K.Pradeep Kumar Reddy ||Nil |
|Director (Operations) & CFO. || |
|Shri.J.Raja Reddy Company Secretary ||8% |
c. The percentage increase in the median remuneration of employees in the financialyear: 7.29%. d. The number of permanent employees on the rolls of Company: 137.
e. The explanation on the relationship between average increase in remuneration andCompany performance: On an average employees received an annual increase of around 10% inIndia.
In order to ensure that remuneration reflects Company performance the performance ofthe company is also one of the parameter for fixing the remuneration to the employees. f.Comparison of the remuneration of the key managerial personnel against the performance ofthe Company:
|Aggregate remuneration of key managerial personnel (KMP) ||78.26 |
|in FY16 (Lakhs) || |
|Revenue (Lakhs) ||1440.16 |
|Remuneration of KMPs (as % of revenue) ||5.43 |
|Profit before Tax (PBT) (Lakhs) ||100.84 |
|Remuneration of KMP (as % of PBT) ||77.60 |
g. Variations in the market capitalization of the company price earnings ratio as atthe closing date of the current financial year and previous financial year: The Shares ofthe company are currently placed on the Dissemination Board of National Stock Exchange ofIndia Limited and not listed on any Stock Exchange. h. Percentage increase over decreasein the market quotations of the shares of the company comparison to the rate at which thecompany came out with the last public offer: The Shares of the company are currentlyplaced on the Dissemination Board of National Stock Exchange of India Limited and notlisted on any Stock Exchange. i. Average percentage increase already made in the salariesof employees other than the managerial personnel in the last financial year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and point out if there are any exceptional circumstances for increase in themanagerial remuneration: The average annual increase was around 10% for personnel otherthan managerial personnel.
Increase in the managerial remuneration for the year was Nil.
j. Comparison of each remuneration of the key managerial personnel against theperformance of the Company:
|Particulars ||Managing ||Chief Financial ||Company |
| ||Director ||Officer ||Secretary |
|Remuneration in FY16 (Lakhs) ||24.00 ||40.00 ||14.26 |
|Revenue (Lakhs) || ||1440.16 || |
|Remuneration as % of revenue ||1.67 ||2.78 ||0.99 |
|Profit before Tax (PBT) (Lakhs) || ||100.84 || |
|Remuneration (as % of PBT) ||23.80 ||39.67 ||14.14 |
k. The key parameters for any variable component of remuneration availed by thedirectors: Nil.
l. 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: None.
m. Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms that the remuneration is as per the remuneration policy of theCompany.
The company has formulated a Whistle Blower Policy to provide Vigil Mechanism foremployees of the company to report genuine concerns. The provisions of this policy are inline with the provisions of the Section 177 (9) of the Act.
DEPOSITS FROM PUBLIC
The company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.
All properties and insurable interests of the Company have been adequately insured atthe reinstatement values.
Industrial relations continued to be cordial throughout the year under review.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act 2013 readwith rule 8 of the Companies (Accounts) Rules 2014:
Conservation of Energy
The Company makes conscious efforts to reduce its energy consumption though its natureof operations are not energy-intensive. Some of the measures undertaken by the Company ona continuous basis including during the year are stated below:
i. Rationalization of usage of electrical equipments air-conditioning systemoffice illumination desktops.
ii. Regular monitoring of temperature inside the buildings and controlling theair-conditioning System.
iii. Usage of energy efficient illumination fixtures.
|Research and Development ||None || |
|Technology absorption Adoption and Innovation ||Nil || |
|Foreign Exchange Earning and Outgo ||2015-16 ||2014-15 |
|Foreign Exchange earned ||1229.96 ||1036.27 |
|Foreign Exchange outflow ||13.82 ||11.24 |
INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
Your Company has put in place adequate internal financial controls with reference tothe financial statements. The Company has appointed an external professional firm asInternal Auditor. The Internal Audit of the Company is regularly carried out to review theinternal control systems and processes. The internal Audit Reports along withimplementation and recommendations contained therein are periodically reviewed by AuditCommittee of the Board.
Your Directors appreciate and value the contributions made by the employees at alllevels.
Your Directors also take this opportunity to express the gratitude to all theInvestors Clients / Customers Vendors Bankers Regulatory and Government Authoritiesand Business associates for their continuous support and cooperation extended to theCompany.
| ||For and on behalf of the Board |
| ||Sd/- |
|Hyderabad ||S.Sreekanth Reddy |
|August 05 2016 ||Chairman |