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CG-VAK Software & Exports Ltd.

BSE: 531489 Sector: IT
NSE: N.A. ISIN Code: INE084D01010
BSE 15:41 | 02 Jul 40.15 -1.65
(-3.95%)
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40.10

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NSE 05:30 | 01 Jan CG-VAK Software & Exports Ltd
OPEN 40.10
PREVIOUS CLOSE 41.80
VOLUME 228
52-Week high 45.90
52-Week low 22.30
P/E 5.43
Mkt Cap.(Rs cr) 20
Buy Price 40.15
Buy Qty 300.00
Sell Price 42.00
Sell Qty 129.00
OPEN 40.10
CLOSE 41.80
VOLUME 228
52-Week high 45.90
52-Week low 22.30
P/E 5.43
Mkt Cap.(Rs cr) 20
Buy Price 40.15
Buy Qty 300.00
Sell Price 42.00
Sell Qty 129.00

CG-VAK Software & Exports Ltd. (CGVAKSOFTWARE) - Director Report

Company director report

To the Members

The Board of Directors of your Company take pleasure in presenting the 24th AnnualReport on the business and operations of your Company and the Audited Financial Accountsfor the year ended 31st March 2019.

FINANCIAL RESULTS 2018-19

During the year under review your Company has achieved a turnover of Rs.2035.24 lakhsas against Rs.1425.81 lakhs in the previous year. There is a net Profit of Rs.343.68 lakhsas against the net profit of Rs.108.29 lakhs in the previous year. The company hasachieved significant growth in the Turnover and Profits earned.

GLOBAL REVENUE

The global revenues for the Company including the business done by the Wholly OwnedSubsidiary for the year under review is Rs.3670 lakhs as compared to Rs.3042 lakhs in theprevious year.

STATE OF AFFAIRS OF THE COMPANY

In the financial year 2018-19 despite challenging business environment your companyhas achieved a growth of 43% in the total revenue and the net profit has increasedsignificantly to Rs. 343.68 lakhs from Rs.108.29 lakhs.

The contribution of business from various Geographical areas were:

North America contributed 78% and Rest of the World 22% of the business.

During the year under review Business from Offshore Software Services is Rs.1971.50lakhs as against Rs.1302.11 lakhs in the previous year. The increase has been at51% as compared to previous year. Significant growth has been achieved in the offshorecomponent of the business.

FUTURE PLANS

Global business scenario is undergoing rapid change and disruption due to new businessmodels adopted by corporations which use latest technology as their backbone of theiroperations. This provides opportunities for IT service providers like us. More and morecompanies from almost every part of the world are using offshore service providers to meettheir software needs.

The company has been growing positively in the offshore software services business andthis momentum is likely to continue this year.

Our client retention and client satisfaction levels have been growing steadily. We havereceived many client appreciations and significant amount of repeat business. In additionto North America our business and customer base from Australia Africa and Europe is alsoexpanding as planned.

Out-sourced Product development (OPD) market space continues to be the focus area forthe Company as we have achieved a significant success. The performance in Cloud practicehas been very good and it is expected to grow at the same pace. Apart from strengtheningthe presence in the markets the company operates now plans are in place to penetrate intonewer geographies globally.

We expect a positive growth this year and the Company should perform better in theensuing year Financial Year 2019-20.

QUALITY

Your company has a strict quality assurance and control programs to ensure that highlevel of Quality service is delivered to the customers. Matured and proven qualitymanagement systems are in place based on the requirements of ISO 9001:2015 standards.

DIVIDEND

Your Directors recommended a dividend of Rs. 0.75 per equity share (i.e. 7.5% on eachequity share having Face value of Rs. 10 each) subject to the approval by theshareholders at the ensuing Annual General Meeting. The total dividend payout will be ofRs.45.67 lakhs inclusive of tax amount of Rs.7.79 lakhs. During the previous yearended 2017-2018 your Company has paid a dividend of Rs.25.25 lakhs.

As per Companies (Accounting Standards) Amendment Rules 2016 dividend and tax thereonwill be recognized as liability on approval of shareholders at the ensuing Annual GeneralMeeting.

The dividend if approved by the shareholders will be paid to those members whosenames appear in the Register of Members as on the date of the Annual General Meeting

TRANSFER TO RESERVES

No amount has been transferred to the general reserve.

TRANSFER TO INVESTORS EDUCATION AND PROTECTION FUND

During the financial year 2018-19 the Company is not liable to transfer any amounts toInvestor Education and Protection Fund. The Company has uploaded the details of unpaid andunclaimed amounts lying with the Company as on 24th September 2018 (being date of lastAnnual General Meeting) on the website of the Company (www.cgvak.com) as also on theMinistry of Corporate Affairs website. Efforts are also made to co-ordinate with theRegistrar and Share Transfer Agents to locate shareholders who have not claimed theirdues.

SHARE CAPITAL

The Paid-up share capital of the Company as at 31st March 2019 aggregates to Rs.50502000/- comprising of 5050200 equity shares of Rs. 10/- each fully paid up.

STATEMENT ON COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

The Directors have devised proper system to ensure compliance with the applicableSecretarial Standards and that such systems are adequate and operating effectively. TheCompany has duly complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on the Meeting of the Board of Directors (SS-1) and General Meeting(SS-2).

HUMAN RESOURCE

Your Company firmly believes that employees are its most valued resource and theirefficiency play a key role in achieving defined goals and building a competitive workenvironment. Many initiatives have been taken to enhance their Technical managerialskills. Also various employee engagement programs have helped the organization to achievehigher productivity levels. In its pursuit to attract retain and develop best availabletalents several programs are regularly conducted at various levels across the Company.Employee relations continued to be cardinal and harmonious across all levels of theCompany.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these financial statements relateand on the date of this report.

DEPOSITORY SYSTEM

The trading in the Equity Shares of your Company is under compulsory dematerializationmode. As on 31st March 2019 Equity Shares representing 91.945% of the equity sharecapital are in dematerialized form. As the depository system offers numerous advantagesmembers are requested to take advantage of the same and avail of the facility ofdematerialization of the Company's shares.

LISTING OF SHARES

The Equity Shares of your Company continue to remain listed with BSE Limited. Thelisting fees for the year 2019-20 have been paid to the Stock Exchange. The Shares of thecompanies are compulsorily tradable in dematerialized form.

INSURANCE

The assets of the Company are adequately insured against fire and such other risks asare considered necessary by the Management.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with theapplicable Accounting Standards forms a part of this Annual Report.

CORPORATE GOVERNANCE

At CG-VAK Corporate Governance is not just a legal obligation the frame work ensuresthat all the disclosures and information's provided are precise and time bound.Transparency Accountability Integrity and Independence are the bottom-line of ourGovernance. The Company will continue to uphold the true spirit of Corporate Governanceand implement best governance practices.

A detailed report on Corporate Governance pursuant to the requirements of SEBI (LODR)is available as a separate section in this Annual Report. The Auditor's report onCorporate Governance confirming the compliance of conditions of Corporate Governance asstipulated is annexed as a part of this report.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Regulation 34 of SEBI (LODR) Regulations 2015 the Management Discussionand Analysis Report for the year under review is presented in a separate section formingpart of this Annual Report.

NUMBER OF MEETINGS OF THE BOARD

The board met Five times during the financial yearthe details of which are given inthe Corporate Governance Report that forms part of this Annual Report. The intervening gapbetween any two meetings was within the periods prescribed by the Companies Act2013.

AUDIT COMMITTEE

The Audit committee comprised of Independent Directors namely Mr.S.Muthukumar(Chairman) Mr.S.Mohan and Mr.A.Sankar as other Members. All the recommendations made bythe Audit Committee were accepted by the Board.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

As per the requirement of Section 134 (3)(m) of the Companies Act 2013 read with Rule8 (3) of the Companies (Accounts) Rules 2014 the information regarding conservation ofenergy technology absorption and foreign exchange earnings and outgo are given below.

Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningsand Outgo as required under Companies (Accounts) Rules 2014: A) CONSERVATION OF ENERGY

Your Company uses electrical energy for its equipment such as air-conditionerscomputer terminals lighting and utilities at work places. As an ongoing process thecompany continued to undertake various measures to conserve energy

B) TECHNOLOGY ABSORPTION

a) Research & Development

The nature of the business of software development involves inbuilt constant Researchand Development as a part of its process of manufacturing (development). The Company isdeveloping applications engines re-usable codes and libraries as a part of its R&Dactivities.

b) Technology Absorption

The Company has not absorbed technology from outside. c) Information regarding importedtechnology (Imported during last three years)

Details of Technology imported Technology imported from Year of Import Status Implementation/absorption
NIL NA NA NA

C) FOREIGN EXCHANGE EARNING AND OUTGO

(Rs.)
Foreign Exchange Earnings 203524055
Foreign Exchange Outgo 1332021
Foreign Travel 881295
Others 450726

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In term of the provisions of Section 197(12) of Act read with rules 5(2) and 5(3) ofthe Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are provided in the Annual Report.

Disclosures pertaining to remuneration and other details as required under section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annexure -1.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THECOMPANY

The Company has adopted a Risk Management Policy for identifying and managing risk atthe strategic operational and tactical level. The Risk Management policy has been placedon the website of the Company. At present the Company has not identified any element ofrisk which may threaten the existence of the Company.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013

There were no loans and guarantees given or investments made by the Company underSection 186 of the Companies Act 2013 during the year under review.

EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualifications reservations or adverse remarks made either by theStatutory Auditors or by the Practicing Company Secretary in their respective reports.Your Directors have provided explanation in Annexure - 2 for the matter of emphasisin the Auditor's Report.

CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. All Related Party Transactions are placed before theAudit Committee as also in the Board for approval.

The disclosure on related party is annexed herewith as Annexure - 3.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION

The current Policy is to have an appropriate mix of executive and independent directorsto maintain the Independence of the Board and separate its functions of the governance andmanagement. As on 31 March2019the Board consists of 7st members two of whom areexecutive or whole time directors one of whom is Non executive Women Director and Fourare independent directors. The Board periodically evaluates the need for change in itscomposition and size.

The policy of the Company on Directors' appointment and remuneration includingCriteria for determining Qualification positive attributes independence of a directorand other matters provided under Sub-Section(3) of Section 178 of the Companies Act2013adopted by the Board is appended as Annexure 4 to the Board's Report. We affirmthat the remuneration paid to the Directors is as per the terms laid out in the nominationand remuneration policy of the company.

WHOLLY OWNED SUBSIDIARY: CG-VAK SOFTWARE USA INC.

As on 31st March 2019 your Company has only one wholly owned subsidiary. YourCompany's Wholly Owned Subsidiary at USA CG-VAK Software USA Inc. has made a SalesTurnover of US$ 2.50 million during this year compared to the US$ 2.53 millionduring the previous year. There has been a drop of revenue by 1% over the previousfinancial year. The drop is mainly due to the difficulty in obtaining visas for theengineers to travel to the USA and work in the subsidiary.

During the year the Board of Directors reviewed the affairs of the wholly ownedsubsidiary. In accordance with Section 129(3) of the Companies Act 2013 we have preparedconsolidated financial statements of the Company and the wholly owned subsidiary whichforms part of the Annual Report. Further a statement containing the salient features ofthe financial statement of our wholly owned subsidiary in the prescribed format AOC-1 isappended as Annexure 5 to the Board's Report. The statement also provides thedetails of performance financial positions of the wholly owned subsidiary.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatement including the Consolidated Financial Statements and related information of theCompany and the wholly owned subsidiary are available on our website. These documents willalso be available for inspection during the business hours at our Registered Office.

The Company has no other subsidiary/Joint ventures/associates other than the abovementioned.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act2013an extract of annualreturn in the prescribed format is appended as Annexure -6 to Board's Report.

A copy of which is placed at the website of the Company (www.cgvak.com).

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Section 135 of Companies Act 2013 is not applicable to our Company.

DIRECTOR'S RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3) (C) OF THECOMPANIES ACT 2013

In accordance with the provisions of Section 134(3)(c) of the Companies Act 2013 theDirectors would like to state that:

1 In preparation of annual accounts for the financial year ended 31st March 2019 theapplicable accounting standards have been followed.

2 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 and ofthe profit and loss of the Company for that period.

3 The Directors have taken proper and sufficient care towards the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

4 The Directors have prepared the annual accounts on a going concern basis.

5 The Directors have laid down internal financial controlswhich are adequate and areoperating effectively.

6 The Directors have devised proper systems to ensure compliance with the provisions ofall applicable laws and such systems are adequate and operating effectively.

SIGNIFICANT AND MATERIAL ORDERS

The Joint Director Directorate of Enforcement vide their order dated 29.11.2017imposed a Penalty amounting to Rs. 1400000/- on the Company for certain procedurallapses under FEMA 1999. The Company had paid the said penalty amount on 11th January2018. The said penalty was paid by the Company in order to buy peace with the department.

PUBLIC DEPOSIT

During the year your Company has not accepted/renewed any Deposits.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (A )DIRECTORS

Director liable to retirement by rotation

As per the provisions of the Companies Act 2013 Mr. C. Ganapathy retires from officeby rotation and being eligible offer himself for re-appointment at the ensuing AnnualGeneral Meeting of the Company. The Board of Directors recommends his re-appointment.

Appointment of Independent Directors

Mr. R. Jayaraman (DIN: 0008467922) and Mr. S. Padmanabhan (DIN: 0008467788) have beenappointed as Additional Directors with effect from 09 August 2019 and they hold officeupto this Annual General Meeting. Mr. R. Jayaraman and Mr. S. Padmanabhan are proposed tobe appointed as Independent Directors at this Annual General Meeting and have given theirconsent and declaration that they fulfill the criteria of independence as prescribed underSection 149(6) of the Companies Act 2013 as well as Regulation 16(1)(b) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (including statutoryre-enactment thereof for the time being in force).

Dr. S. Thamburaj (DIN: 0008467884) is proposed to be as an Independent Director at thisAnnual General Meeting and has given his consent and declaration that he fulfill thecriteria of independence as prescribed under Section 149(6) of the Companies Act 2013 aswell as Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (including statutory re-enactment thereof for the time being in force).

The resolutions for their appointment is set out in the Notice along with the necessaryexplanatory statement. The Board of Directors recommends the appointment of theIndependent Directors.

Re-appointment of Executive Directors as Non-executive Director

Mr. C. Ganapathy's held the office as Executive Director (Designated as ExecutiveChairman) upto 30th June 2019. The Board of Directors on the approval of the Nominationand Remuneration Committee have reappointed him as an Non Executive Director.

The resolutions for his appointment is set out in the Notice along with the necessaryexplanatory statement. The Board of Directors recommends the appointment of Mr. C.Ganapathy's as a Non Executive Non Independent Director(Designated as Non ExecutiveChairman).

Re-appointment of Managing Director and CEO

The Board of Directors had on the approval of the Nomination and RemunerationCommittee and approval of Audit Committee have re-appointed Mr. G. Suresh (DIN: 00600906)as Managing Director and CEO of the Company for a further period of 3 (three) years witheffect from 01st September 2019. The terms and conditions of his appointment includinghis remuneration are subject to the approval of the shareholders in this ensuring AnnualGeneral Meeting.

The resolutions for his appointment is set out in the Notice along with the necessaryexplanatory statement The Board recommends the re-appointment of the Managing Director andCEO.

Brief particulars of Directors eligible for reappointment in terms of SEBI(ListingObligations and Disclosure Requirements) Regulations 2015 and the Secretarial Standardsare annexed to the Notice dated 09th August 2019 convening the 24th Annual GeneralMeeting.

Cessation

In accordance with their terms of appointment Mr. S. Muthukumar Mr. S. Mohan and Mr.M. Durairaj Independent Directors of the Company will vacate their office with effectfrom 25st September 2019 pursuantto Section 149(10) and other applicable provisions ofthe Companies Act 2013. The Board places on records its appreciation for the valuablecontributions made by them during their tenure as Independent Directors of the Company..

(B) KEY MANAGERIAL PERSONNEL

Pursuant to provisions of Section 203 of the Companies Act 2013 Mr.C.GanapathyExecutive Chairman Mr.G.Suresh Managing Director & CEO Mr.P.S.Subramanian ChiefFinancial Officer and Mr. Govind M Joshi Company Secretary and Compliance Officer are theKey Managerial Personnel of the Company as at 31st March 2019.

DECLARATION BY INDEPENDENT DIRECTORS

The company has received necessary declaration from each independent Director undersection 149(7) of the Companies Act 2013 that they meet the criteria of independence laiddown in Section 149(6) of the Companies Act 2013 and SEBI (LODR) Regulations.

BOARD EVALUATION

The evaluation framework for assessing the performance of Directors comprises of thefollowing key areas:

1. Attendance of Board Meeting and Board Committee Meetings

2. Quality of Contribution to Board deliberations

3. Strategic perspectives or inputs regarding future growth of the Company and itsperformance

4. Providing perspectives and feedback going beyond information provided by themanagement

5. Commitment to shareholders and other stakeholder interests

The evaluation involves self-evaluation by the Board Members and subsequent assessmentby the Board of Directors. A member of the Board will not participate in the discussion ofhis/ her evaluation.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy as a mechanism for employees to reportto the management concerned about unethical behaviour actual or suspected fraud orviolation of the company's code of conduct and it affirms that no personnel have beendenied access to the Audit Committee. A copy of Whistle Blower Policy has been placed atour website at www.cgvak.com for reference.

AUDITORS

Statutory Auditors M/s. N. C. Rajan & Co Chartered Accountants were appointed tohold office for a term of five consecutive years ie from the conclusion of 21st AGM tillthe conclusion of 26th AGM. Consequent upon the amendments to the Companies Act 2013ratification of appointment of the Statutory Auditors is no longer required.

The Auditors Report for the financial year 31.03.2019 does not contain anyqualification adverse remarks reservation or disclaimer.

SECRETARIAL AUDITOR

Mrs. Manimekala V Raj Practicing Company Secretary was appointed to conduct thesecretarial audit of the company for financial year 2019-20 as required under Section 204of the Companies Act 2013 and Rules made there under. The secretarial audit report for FY2018-19 forms part of the Annual Report as Annexure 7 to the Board's Report.

COST RECORDS AND COST AUDIT

Maintenance of cost records and requirements of cost audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable for thebusiness activities carried out by the Company.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference toFinancial Statements. Such controls were tested during the financial year and no materialweakness in the design or operation was observed.

DETAILS OF FRAUDS REPORTED

The Auditors of the Company have not reported any fraud specified under Section 143(12)of the Companies Act 2013.

DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013.

The Company has in this place an Anti Sexual Harassment Policy in line with therequirements of the sexual harassment of women at workplace (prevention prohibitionredressal) Act 2013. The Internal Complaints Committee ("ICC") has been setupto redress the complaints received regarding sexual harassment. All employees are coveredunder this policy.

The following are the complaints received and disposed off during the financial year2018-19:

A. No. of complaints received : 0
B. No. of complaints disposed off : 0

ACKNOWLEDGEMENT

The Directors of your Company would like to take this opportunity to thank one and allassociated with it enabling it to scale greater heights and emerge as a recognizedsoftware solutions vendor in the industry. The faith and confidence shown on your Companyby banks global clients government authorities and shareholders has propelled ourenthusiasm and strengthen our determination to achieve our vision.

Finally your Directors would like to express their sincere thanks to the dedication andcommitted hard work of the employees working in India USA and at various client locationsto reach our corporate vision working in India USA and at various client locations toreach our corporate vision..

(By Order of the Board)
For CG-VAK SOFTWARE AND EXPORTS LIMITED
Place: Coimbatore C.Ganapathy
Date : 09th August 2019 Chairman
DIN 00735840

Annexure - 1 to Director's Report

Particulars of Remuneration of Directors and Employees pursuant to Section 197 (12) ofthe Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.

(i) The ratio of the remuneration of each Director to the median remuneration of theemployees of the company for the financial year:

S. No. Name of the Director Ratio
1 Mr.C.Ganapathy Executive Chairman 2.66
2 Mr.G.Suresh Managing Director & CEO 16.77
3 Mr.M.Durairaj Independent Director Not Applicable
4 Mr.S.Muthukumar Independent Director Not Applicable
5 Mr.S.Mohan Independent Director Not Applicable
6 Mr.A.Sankar Independent Director Not Applicable
7 Mrs.S.Latha Women Director Not Applicable

During the year the Non-Executive Directors received only the sitting fees asremuneration.

(ii) The percentage increase in remuneration of each Director Chief Financial Officer(CFO) Chief Executive Officer (CEO) Company Secretary (CS) or Manager if any in thefinancial year:

S.No Name of the Director / CFO/ CEO/CS % Increase/(Decrease) in remuneration
1 Mr.C.Ganapathy Executive Chairman 3%
2 Mr.G.Suresh Managing Director & CEO 7%
3 Mr.M.Durairaj Independent Director Not Applicable
4 Mr.S.Muthukumar Independent Director Not Applicable
5 Mr.S.Mohan Independent Director Not Applicable
6 Mr.A.Sankar Independent Director Not Applicable
7 Mrs.S.Latha Non Executive Women Director Not Applicable
8 Mr.P.S.Subramanian CFO 12%
9 Mr.Govind M Joshi CS Not Applicable
(iii) The percentage increase in the median remuneration of the employees in the financial year 7.84%
(iv) Number of Permanent Employees on the rolls of the company (As on 31st March 2019) 205

(v) The explanation on the relationship between average increase in remuneration andcompany performance:

The performance of the company has increased when compared with the previous year. Theincrease granted to employees is in line with the normal increase granted by company fromtime to time and is intended to compensate for inflation and motivate employees to performat their best.

(vi) Comparison of the remuneration of the Key Managerial Personnel (KMP) against theperformance of the company

KMP's Remuneration (including perquisites) 2018-19(Rs Lakhs) % Increase/ (Decrease) in KMP's remuneration (2018-19 against 2017-18 including perquisites) Sales 2018-19 (Rs in Lakhs) % Increase/ (Decrease) in sales (2018-19 against 2017-18)
114.44 7.80% 2035.24 42.74%

(vii) Variations in the market capitalization of the company price earnings ratio asat the closing date of the current financial year and previous financial year andpercentage increase over decrease in the market quotations of the shares of the company incomparison to the rate at which the company came out with last public offer in case oflisted companies and in case of unlisted companies the variations in the net worth of thecompany as at the close of the current financial year and previous financial year:

Particulars As on 31.03.2018 As on 31.03.2019 Variations %+/(-)
Market
Capitalization 1080.74 2141.28 1060.54 98%
(Rs in Lakhs)
Price earnings ratio 9.73 6.21 (3.52) (36%)

 

Market quotations of the shares as on 31.03.2019 (BSE) Rs.42.40/- per share of the face value Rs.10/- per share
Market quotations of the shares when the company came out with last public offer Public Issue in December 1995 at a price of Rs.10/- per share of the face Value Rs.10/- per share.
Percentage increase/decrease over in the market quotations of the company The Company has come out with initial public offer in December 1995. An amount of Rs. 10/- invested in the said IPO would be worth Rs. 42.40 as on 31st March 2019 indicating a compounded annual growth rate of 6.2% which is excluding the dividend accrued thereon.

(viii) Average percentile increase already made in salaries of employees other thenmanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for the increase in the managerial remuneration: Theaverage percentile increase granted to employees other than the managerial personnel is17%.

The percentile increase granted to managerial personnel is 7.8%.

(ix) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company:

KMP's Name & Designation Remuneration for 2018-19 (Rs Lakhs) %Increase / (Decrease) in Remuneration (2018-19 against 2017-18) Sales (for 2018-19) (Rs in Lakhs) % Increase in Sales (2018-19 against 2017-18)
Mr.C.Ganapathy Executive Chairman 13.31 3%
Mr.G.Suresh Managing Director & CEO 83.89 7% 2035.24 42.74%
Mr.P.S.Subramanian Chief Financial Officer 9.50 12%
Mr.Harcharan. J & Mr.Govind M Joshi Company Secretary 7.74 24%

 

(x) The key paramaters for any variable Component of remuneration availed by the Directors. The Managing Director is eligible for 1% commission on net profits of the Company which he has waived.
(xi) The ratio of the remuneration of the highest paid Director to that of employees who are not Directors but receive remuneration in excess of the highest paid Director during the year. Since the remuneration of the highest paid employee is not in excess of the highest paid Director it is not applicable.

(xii) We affirm that the remuneration paid to Directors Key Managerial Personnel andemployees is as per the remuneration policy approved by the Board of Directors of thecompany.

(xiii) Statement of employees receiving remuneration not less than 5 lakh rupees permonth : Not Applicable

NOTE:

1. Mr.C.Ganapathy Mr.G.Suresh and Mrs.S.Latha are related to each other

2. Gross remuneration comprises salary commission allowance monetary values ofperquisites and the company's contribution to the provident fund Gratuity Fund andSuperannuation Fund.

3. Net remuneration is exclusive of contributions to provident fund gratuity fundsuperannuation fund and tax deducted.

(By Order of the Board)
for CG-VAK SOFTWARE AND EXPORTS LIMITED
Place: Coimbatore C.Ganapathy
Date : 09thAugust 2019 Chairman
DIN 00735840

Annexure - 2 to Director's Report

Explanations on the Matter of Emphasis in the Auditors' Report to the members of M/s.CG-VAK Software And Exports Limited for the year ended 31st March 2019

1. With reference to the auditors' remark on non provision of gratuity claim (noteno.23A(i) of the notes forming part of accounts) we wish to state that no provision hasbeen made as the Director concerned was a Non Executive Director and was not drawing anysalary and hence not eligible for gratuity. The company has disputed the claim and thesame is pending before the Labour Court;

2. With reference to the auditors' remark on non provision of gratuity claim (noteno.23A(ii) of the notes forming part of accounts) we wish to state that no provision hasbeen made as the employee was not eligible for gratuity. The company has disputed theclaim and the same is pending before the Labour Court;

3. With reference to the Auditors' remark on non-payment of fixed deposit (noteno.23A(iii) of the notes forming part of accounts) we wish to state that The FixedDeposit claim is an appeal made by a Former Managing Director and his family membersbefore the High Court Madras against the Company Law Board's Order. The Company Law Boardhad earlier passed an order that the claim was not maintainable and decided in favor ofCompany during June 2011. The Company has disputed the claim before the High CourtMadras.

4. With reference to the auditors' remark on cases filed by Registrar of CompaniesCoimbatore (note no.23-A(v) of the notes forming part of accounts) we wish to state thatthe case was filed pursuant to inspection made under Section carried out in the year 2012.The company has disputed and the same is pending before the Hon'ble Additional SessionsJudge Coimbatore;

(By Order of the Board)
For CG-VAK SOFTWARE AND EXPORTS LIMITED
Place: Coimbatore C.Ganapathy
Date : 09th August 2019 Chairman
DIN 00735840