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Cadsys (India) Ltd.

BSE: 535011 Sector: IT
NSE: CADSYS ISIN Code: INE090Y01013
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Cadsys (India) Ltd. (CADSYS) - Director Report

Company director report

To

The Members

Cadsys (India) Limited

Dear Members

Your Directors are pleased to present the 27th Annual Report of your Companyon the business and operations of the Company together with the Audited FinancialStatements for the financial year ended on 31 st March 2019 the Board'sReport and the Auditor's Report thereon. The summary of financial performance of theCompany and its Subsidiaries for the year under review is given hereunder:

DISCLOSURES AS PER RULE 8(5) OF COMPANIES (ACCOUNTS) RULES 2014:

FINANCIAL HIGHLIGHTS

(Rs in Lakhs)

Particulars Standalone Consolidated
For the financial year 2018-19 For the financial year 2017-18 For the financial year 2018-19 For the financial year 2017-18
Total Revenue 2152.08 3280.83 5338.32 4554.88
Total Expenses 1748.17 2805.21 3826.13 3667.77
Finance Cost 24.59 161.16 55.44 193.63
Depreciation 140.88 115.33 292.05 377.13
Profit before Tax 403.90 475.62 1512.19 887.11
Tax Expense 126.21 122.47 274.03 142.38
Profit afterTax 277.69 353.15 1241.89 739.76
Earnings per share (Basic & Diluted) 3.70 5.47 16.55 11.46

FINANCIAL PERFORMANCE

Your Company has performed excellently during the period under review showing atremendous growth in terms of revenue that has been generated from its projects in Indiaand abroad. On a Consolidated basis the revenue for the year under review was Rs5338.32Lakhs higher by 17.20% over the previous year's revenue of Rs4554.88 Lakhs. The PATattributable to the members was Rs1241.89 Lakhs registering a growth of 67.88% over thePAT of Rs739.76 Lakhs for the previous year.

On an Unconsolidated basis the revenue for the year under review was Rs2152.08 Lakhsagainst the previous year's revenue of Rs3280.83 Lakhs. The PAT attributable to themembers was Rs277.69 Lakhs against the PAT of Rs353.15 Lakhs for the previous year.

Your Directors are continuously making effort for the future growth and expansion ofthe Company by exploring all possible avenues in the market both in India and abroad.

Further during the year under review there were no changes in the Nature of Businessof the Company.

EXPORTS

The exports of the Company continue to be a major chunk of revenue accounting for avolume of Rs 2033.76 Lakhs representing 98.62% of the total revenue of Rs2062.26 Lakhsduring the year under review.

TRANSFER TO RESERVES IN TERMS OF SECTION 134(3)(J) OF THE COMPANIES ACT 2013

For the financial year ended on 31st March 2019 the Company has nottransferred any amount to Reserves.

DIVIDEND

Your Board of Directors has recommended a Final Dividend for the Financial Year endedon 31st March 2019 at the rate of 12.5% i.e. Rs1.25/- per Equity Sharehaving Face Value of Rs 10/- each subject to approval of the Members at the ensuing 27thAnnual General Meeting (AGM) of the Company.

The Dividend will be paid to the Members whose names appear in the Register of Membersof the Company as on the Record Date.

TRANSFER OF UNPAID & UNCLAIMED DIVIDEND TO

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of the Companies Act 2013 read with IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 as amended declared dividends alongwith underlying equity shares which remained unpaid or unclaimed for a period of sevenyears are supposed to be transferred to IEPF. Presently there is no amount which isrequired to be transferred to IEPF by the Company as there is no unpaid/unclaimeddividend pending.

SHARE CAPITAL

During the year under review there has been no change in the Share Capital of theCompany. Your Company has one Class of Shares i.e. Equity Shares of face value Rs10/-each. The Authorized Share Capital of your Company is Rs850 Lakhs comprising of 85 LakhsEquity Shares of Rs10/- each.

Further the issued subscribed and the Paid-up Share Capital of your Company as on 31stMarch 2019 is Rs750.25 Lakhs.

EXTRACT OF ANNUAL RETURN

The Extracts of Annual Return in Form No. MGT-9 pursuant to provisions of sections 92(3) and 134(3)(a) of the Companies Act 2013 read with Rule 12 of the Companies(Management & Administration) Rules 2014 forms part of this report as "ANNEXURE-I"and also been placed on the website of the Company the web address for which is http://www.cadsystech.com/investor/.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

The Board represents an optimum mix of professionalism knowledge and experience. TheCompany's policy is to maintain optimum combination of Executive Non-Executive Directorsand Independent Directors.

Following were the Directors and Key Managerial Personnel of the Company as on 31stMarch 2019:

Sr. No. Name of the Directors Designation DIN/PAN
1. Nallani Chakravarthi Venkata Rangacharya Managing Director 01067596
2. Nallani Chakravarthi Padmaja Whole-Time Director and Chief Finance Officer 01173673
3. Nallani Chakravarthi Madhavi Non-Executive Director 01067690
4. Sri Padarajan Nagarajan Non-Executive Director 05262644
5. Sai Sridhar Sangineni Independent & Non-Executive Director 03274134
6. Appalacharyulu Chilakamarri Independent & Non-Executive Director 01601712
7. Babladi Shailaja Company Secretary and Compliance Officer ARXPB4192L

Changes during the Financial Year ended 31st March 2019:

I. Cessation:

During the year under review Mr. Nandachary Mudumbi who was Independent &Non-Executive Director of the Company ceased to be so from the month of July 2018 due tohis sudden demise. The Board noted with profound regrets the tragic demise of Mr.Nandachary and his matchless energy vision and business acumen that helped to buildvarious aspects to build the Company. The Board expressed its condolences to his familyand resolved to lend its support and expressed full confidence in the Company's Managementteam.

II. Appointment of Director/KMP

During the year under review Mr. Appalacharyulu Chilakamarri was appointed asIndependent & Non-Executive Director on the Board of the Company to take over theposition vacated by Mr. Nandachary due to his demise pursuant to the applicableprovisions of the Companies Act 2013 and rules made thereunder. The Company has alsoreceived declaration from the Independent Director confirming that he meets the criteriaof independence as laid down under the Companies Act 2013 and SEBI (LODR) Regulations2015.

III. Retire by Rotation:

In accordance with the provisions of the Companies Act 2013 Mrs Nallani ChakravarthiMadhavi Director of the company retires by rotation at the ensuing AGM of the Company andbeing eligible offers herself for re-appointment. The brief profile of the Director ispresented in this Annual Report.

DECLARATION BY INDEPENDENT DIRECTORS AND STATEMENT ON COMPLIANCE OF CODE OF CONDUCT

During the year under review necessary declarations with respect to independence hasbeen received from all the Independent Directors of the Company and the IndependentDirectors have complied with the Code for Independent Directors prescribed in Schedule IVto the Act and the Code of Conduct for Directors and senior management personnel.

COMPOSITION OF VARIOUS COMMITTEES OF BOARD OF

DIRECTORS OF THE COMPANY & ITS MEETINGS

The Board had constituted various Committees as required under the provisions ofCompanies Act 2013 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015. The provisions of Companies Act 2013 readwith Secretarial Standard – 1 issued by the Institute of Company Secretaries of India(ICSI) and SEBI (LODR) Regulations 2015 were adhered while conducting Committee Meetings.The details of various committees constituted by the Board are covered hereunder:

I. AUDIT COMMITTEE:

Audit Committee was constituted to monitor oversee and provide effective supervisionof the management's financial reporting process with a view to ensuring accurate timelyand proper disclosure and transparency integrity and quality of financial reporting.

The Committee adheres to the compliance with the applicable provisions under theCompanies Act 2013 and rules made thereunder. The committee policy is available on thewebsite at http://www.cadsystech. com/investor/.

During the year under review the Composition of the Audit Committee was changed due tocessation of Mr. Nandachary Mudumbi and he was then replaced by new Independent Directori.e. Mr. Charyulu Chilakamarri. As such the post re-composition members of the Committeeare as shown below.

Composition of Audit Committee:

Sr. No. Name of the Director Designation in the Committee
1. Nallani Chakravarthi Chairman
Venkata Rangacharya
2. Sai Sridhar Sangineni Member
3. Appalacharyulu Member
Chilakamarri

Details of Audit Committee Meetings:

The Audit Committee met 4 times during the year under review on 9th May2018 30th May 2018 9th November 2018 and 15th February2019. The necessary quorum was present for all the meetings held during such year. Thedetails of attendance of each Member at the Audit Committee meetings held during the yearare as under:

Name of the Director

Number wise meetings attendance

No. of Meetings Attended
1 2 3 4
Nallani Chakravarthi Venkata Rangacharya ? ? ? ? 4
Sai Sridhar Sangineni ? ? ? ? 3
Appalacharyulu Chilakamarri NA NA NA ? 1
Nandachary Mudumbi* ? ? NA NA 1

* Associated until 30th June 2018

II. NOMINATION AND REMUNERATION COMMITTEE:

The Committee was constituted to screen and review individuals qualified to serve asexecutive directors non-executive directors and independent directors consistent withcriteria approved by the Board and to recommend for approval by the Board nominees forelection at the General Meeting. The Committee also designs benchmarks and continuouslyreviews the compensation program for the Board and senior management against theachievement of measurable performance goals. The Committee adheres to the compliance withthe provisions of Section 178 of the Companies Act 2013 and rules made thereunder. Thecommittee also regularly reviews from time to time the policy for selection andappointment of Directors Key Managerial Personnel and senior management employees andtheir remuneration. The committee policy is available on our website at http://www.cadsystech.com/investor/.

During the year under review the Composition of the Nomination and RemunerationCommittee was also changed due to cessation of Mr. Nandachary and he was then replaced bynew Independent Director i.e. Mr. Appalacharyulu Chilakamarri. As such the postre-composition members of the Committee are as shown below.

Composition of Nomination and Remuneration Committee:

Name of the Directors Designation in the Committee
Sai Sridhar Sangineni Chairman
Sripadarajan Nagarajan Member
Appalacharyulu Chilakamarri Member

Details of Nomination and Remuneration Committee Meetings:

The Nomination and Remuneration Committee met 3 times during the year under review on 9thMay 2018 30th August 2018 and 9th November 2018. The necessaryquorum was present for both the meetings. The details of attendance of each Member at theNomination & Remuneration Committee meetings held during the year are as under:

Name of the Director Number wise meetings attendance No. of Meetings Attended
1 2 3
Sai Sridhar Sangineni ? ? ? 3
Sripadarajan Nagarajan ? ? ? 3
Appalacharyulu Chilakamarri NA NA NA 0
Nandachary Mudumbi* ? NA NA 1

* Associated until 30th June 2018

III. STAKEHOLDER'S RELATIONSHIP COMMITTEE:

The Stakeholder's Relationship Committee was constituted to review matters related togrievances of Shareholders and Investors The committee primarily focuses on review ofinvestor complaints its redressal and queries received from investors i.e. transfer ofShares issue of Duplicate Share Certificates non-receipt of Annual ReportsDematerialization/

Re-materialization etc. and also reviews the reports presented by the Share TransferAgents of the Company. The Committee adheres to the compliance with the applicableprovisions of Companies Act 2013 and rules made thereunder.

Composition of the Stakeholder's Relationship Committee:

Name of the Directors Designation in the Committee
Nallani Chakravarthi Madhavi Chairperson
Nallani Chakravarthi Padmaja Member
Nallani Chakravarthi Venkata Rangacharya Member

IV. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

The Corporate Social Responsibility Committee (CSR) of the Board of Directors meets thecriteria laid down under Section 135 of the Companies Act 2013 and Rules made therein.Formulate and recommend to the Board a CSR Policy indicating the activities to beundertaken by the Company as specified in Schedule VII of the Act. Recommend the amount ofexpenditure to be incurred on the activities mentioned in the CSR Policy. Monitor the CSRPolicy.

Composition of the Corporate Social Responsibility Committee:

Name of the Directors Designation in the Committee
Nallani Chakravarthi Venkata Rangacharya Chairman
Nallani Chakravarthi Padmaja Member
Sai Sridhar Sangineni Member

Details of Corporate Social Responsibility Committee Meetings:

CSR Committee met once during the year under review on 30th March 2019. Thedetails of attendance of each Member at the CSR meetings held during the year are asunder:

Name of the Directors Number wise meetings attendance No. of Meetings Attended
1
Nallani Chakravarthi Venkata Rangacharya ? 1
Nallani Chakravarthi Padmaja ? 1
Sai Sridhar Sangineni ? 1

BOARD MEETINGS

The provisions of Companies Act 2013 read with Secretarial Standards issued by theInstitute of Company Secretaries of India (ICSI) and SEBI (LODR) Regulations 2015 wereadhered while conducting Board Meetings. The details of the Board Meetings are coveredhereunder:

Details of Board Meetings:

During the FY 2018-19 the Board of Directors met 5 times on 10th May 201830th May 2018 1st September 2018 9th November 2018and 15th February 2019.

Name of the Directors Number wise meetings attendance No. of Board Meetings Attended
1 2 3 4 5
Nallani Chakravarthi Venkata Rangacharya ? ? ? ? ? 4
Nallani Chakravarthi Padmaja ? ? ? ? ? 5
Nallani Chakravarthi Madhavi ? ? ? ? ? 4
Sripadarajan Nagarajan ? ? ? ? ? 5
Sai Sridhar Sangineni ? ? ? ? ? 4
Appalacharyulu Chilakamarri NA NA NA NA ? 1
Nandachary Mudumbi* ? ? NA NA NA 1

* Associated until 30th June 2018

POSTAL BALLOT

During the year under review the Company had sought the approval of the membersthrough notice of postal ballot dated 9th November 2018 pursuant to theprovisions of Sections 108 and 110 and other applicable provisions of the Companies Act2013 read with the Rules framed thereunder. Resolutions passed under Postal Ballot are asfollows:

Appointment of Mr. Appalacharyulu Chilakamarri as an Independent Director ofthe Company and

Increasing the limits of Loans Investments and Guarantee.

Both the aforementioned resolutions were duly passed and the results of which wereannounced and submitted on 21st December 2018 with the NSE Emerge.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review the provisions of the Secretarial Standards applicable tothe Company i.e. Secretarial Standard-1 (SS-1) for Board and Committee Meetings andSecretarial Standards – 2 (SS-2) for General Meetings issued by the Institute ofCompany Secretaries of India (ICSI) were adhered to while conducting the respectiveMeetings.

POLICY ON DIRECTORS' APPOINTMENT AND

REMUNERATION

The Board of Directors of the Company has framed a policy on the appointment andremuneration to Directors and senior management personnel. The objective of the policy isto formulate the criteria for determining qualifications competencies positiveattributes and recommend to the Board policies relating to the remuneration of DirectorsKey Managerial Personnel and Senior Management personnel. The details of remuneration paidduring the Financial Year ended 31st March 2019 are mentioned under the FormNo. MGT – 9 which is forming part of this Boards' Report.

PERFORMANCE EVALUATION OF THE BOARD

The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Companies Act2013 and rules made thereunder.

The performance of the Board and the committees was evaluated by the Board afterseeking inputs from all the Directors and the members of the Committees on the basis ofthe criteria such as the composition and structure effectiveness of Board and Committeeprocesses information and functioning etc. The Board and the Nomination and RemunerationCommittee reviewed the performance of the individual Directors on the basis of thecriteria such as the contribution of the individual Director to the Board and CommitteeMeetings.

Separate meeting of Independent Directors was held to evaluate the performance ofnon-independent Directors performance of the Board as a whole taking into account theviews of Executive Directors and Non-Executive Directors.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors state that:

(i) For the preparation of the annual financial statements for the year ended 31stMarch 2019 the applicable accounting standards have been adopted and followed; (ii) Theapplicable accounting policies are applied consistently to make judgements and estimatesthat are reasonable and prudent so as to give a true and fair view of the state ofaffairsandprofitsof the company as at the end of the financial year under review; (iii)Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;(iv) The Directors have prepared the annual accounts on a "going concern basis";

(v) Proper internal financial controls were in place and followed by the Company andthat such internal financial controls are adequate for effective operations; and (vi)Proper systems are devised by the Company to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.