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CG-VAK Software & Exports Ltd.

BSE: 531489 Sector: IT
NSE: N.A. ISIN Code: INE084D01010
BSE 11:15 | 16 Aug 346.70 -18.20
(-4.99%)
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358.20

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382.90

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NSE 05:30 | 01 Jan CG-VAK Software & Exports Ltd
OPEN 358.20
PREVIOUS CLOSE 364.90
VOLUME 8956
52-Week high 435.00
52-Week low 137.00
P/E 19.62
Mkt Cap.(Rs cr) 175
Buy Price 347.05
Buy Qty 9.00
Sell Price 349.95
Sell Qty 20.00
OPEN 358.20
CLOSE 364.90
VOLUME 8956
52-Week high 435.00
52-Week low 137.00
P/E 19.62
Mkt Cap.(Rs cr) 175
Buy Price 347.05
Buy Qty 9.00
Sell Price 349.95
Sell Qty 20.00

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 26thAnnualReport on the business and operations of your Company and the Audited Financial Accountsfor the year ended 31 March 2021. st

FINANCIAL RESULTS 2020-21

During the year under review your Company has achieved a turnover of Rs.2975 lakhs asagainst Rs. 2301 lakhs in the previous year. The profit after tax stands at Rs.686 lakhsas against Rs.373 lakhs in the previous year. The company has achieved significant growthin 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.4491 lakhs as compared to Rs.3992 lakhs in theprevious year.

STATE OF AFFAIRS OF THE COMPANY

In the financial year 2020-21 despite challenging business environment your companyachieved a growth of 29% in the total revenue and the profit after tax has increased toRs.686 lakhs from Rs. 373 lakhs. The increase has been at 84% as compared toprevious year.

The contribution of business from various Geographical areas were:

North America contributed 81% and Rest of the World 19% of the business.

During the year under review Business from Offshore Software Services is Rs.2971lakhs as against Rs. 2295 lakhs in the previous year. The increase has been at30% as compared to previous year. Significant growth has been achieved in the offshorecomponent of the business.

FUTURE PLANS

Worldwide the business scenario is changing rapidly due to the pandemic. Organizationsare forced to make changes to their business processes using latest technologies to adaptto the new normal. Increased Offshore work remote delivery new compensation models withcustomers are likely to happen. This provides opportunities for IT service providers likeus. More and more companies from almost every part of the world are using offshore serviceproviders to meet their software needs.

The Company is able to successfully implement the work from home model without dilutingthe quality of delivery. New systems and automation of processes have been put intopractice to improve the efficiency and monitoring of work.

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. Our clientshave appreciated the way the projects are handled during this pandemic. Inspite of thedisruption and slowdown in the economies we operate we have seen a positive growth in ourbusiness. In addition to North America our business and customer base from EuropeAustralia and Africa is also expected to grow as planned.

Out-sourced Product development (OPD) market space continues to be the key focus areafor the Company as we have achieved a significant success. The performance in Cloudpractice has been very good and it is expected to grow at the same pace. Our plan is tofocus on the existing relationships we have built with customers and grow the business.Apart from strengthening the presence in the markets in which the company is operatingnow plans are in place to penetrate into newer geographies globally.

We expect a positive growth in this year and the Company should perform better in theensuing Financial Year 2021-22.

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. 1/- per equity share (i.e. 10% 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.50.50 lakhs. During the previous year ended 2019-2020 your Company has paid adividend of Rs.37.88 lakhs.

As per Companies (Accounting Standards) Amendment Rules 2016 dividend will berecognized as liability on approval of shareholders at the ensuing Annual General Meeting.

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:

Pursuant to the provisions of the Act read with Investor Education and Protection FundRules the shares on which dividends have not been claimed for 7 consecutive years areliable to be transferred in favour of IEPF Authority. The Company has uploaded the detailsof the shares which are subject to be transferred in favour of IEPF Authority on thewebsite of the Company (www.cgvak.com). Efforts are also made to coordinate 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 31 March 2021 aggregates to Rs.50502000/- comprising 5050200 st 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 31 March 2021 st Equity Shares representing 94.49% 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 2021-22 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 year the 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 Act 2013.

AUDIT COMMITTEE

The Audit committee comprised of Independent Directors namely Mr. K. Kathirvel(Chairman) Mr.R.Jayaraman Mr.A.Sankar Mr. R. Krishnaswamy and Mr. G.S. Swaminathan asother Members.Mr.S.Padmanabhan (Past Chairman deceased on 01.02.2021). All therecommendations made by the 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 imported technology (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 (In Rs.)

Foreign Exchange Earnings 297531472
Foreign Exchange Outgo 2852018
Foreign Travel 0
Others 2852018

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 THE COMPANY

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

COMPANIES ACT 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 March2021 the Board consists of 9 st members one of whom isNon-Executive Chairman one of whom is Executive or whole time Director one of whom isNon-Executive Women Director and Six are independent directors.The Board periodicallyevaluates the need for change in its composition and size.

The policy of the Company on Directors' appointment and remunerationincluding Criteriafor determining Qualification positive attributes independence of a director and othermatters provided under Sub-Section(3) of Section 178 of the Companies Act2013 adopted bythe Boardis appended as Annexure 4 to the Board's Report.We affirm that theremuneration paid to the Directors is as per the terms laid out in the nomination andremuneration policy of the company.

WHOLLY OWNED SUBSIDIARY: CG-VAK SOFTWARE USA INC.

As on 31 March 2021 your Company has only one wholly owned subsidiary. Your Company'sWholly Owned Subsidiary st at USA CG-VAK Software USA Inc. has made a Sales Turnover of US$2.02 million during this year compared to the US$ 2.32 million during theprevious year.There has been a drop of revenue by 13% over the previous financial year.The drop is mainly due to the difficulty in obtaining visas for the engineers to travel tothe 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 ofwhich is placed at the website of the Company (www.cgvak.com).

CORPORATE SOCIAL RESPONSIBILITY

CGVAK believes in giving back to the society. The provisions of CSR are applicablew.e.f 01.04.2020. Due to the ongoing pandemic work from home model the Company could notimplement suitable projects due to operational difficulties. It has been proposed totransfer the entire amount to PM CARE's fund with a view to stand alongside the Country inits fight against the ongoing pandemic. A detailed report is appended as Annexure 7.

DIRECTOR'S RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3) (C) OF THE

COMPANIES 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 31 March 2021 theapplicable accounting st 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 DEPOSITS

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.G. Suresh retires from office byrotation 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. K. Kathirvel (DIN: 09091676) Mr. R. Krishnaswamy (DIN: 09091695) and Mr. G.S.Swaminathan (DIN: 02145687) have been appointed as Additional Directors with effect from31 March 2021 and they hold office upto st this Annual General Meeting. Mr. K. KathirvelMr. R. Krishnaswamy and Mr. G.S. Swaminathan are proposed to be appointed as IndependentDirectors at this Annual General Meeting and have given their consent and declaration thatthey fulfill the criteria of independence as prescribed under Section 149(6) of theCompanies Act 2013 as well as Regulation 16(1)(b) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (including statutory re-enactment thereof forthe time being in force).

(B) KEY MANAGERIAL PERSONNEL

Pursuant to provisions of Section 203 of the Companies Act 2013 Mr. G. SureshManaging Director & CEO Mr. P. S. Subramanian Chief Financial Officer and Mr.Harcharan. J Company Secretary and Compliance Officer are the Key Managerial Personnel ofthe Company as at 31 March 2021. st

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 13thAugust 2021 convening the 26th Annual GeneralMeeting.

DECLARATION BY INDEPENDENT DIRECTORS

The company has received necessary declaration from each independent Director undersection 149(7) of the Companies Act 2013 that they meets the criteria of independencelaid down 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 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 concern 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

M/s. N.C.Rajan& Co Chartered Accountants Coimbatore the Statutory Auditors ofyour Company hold office upto the conclusion of the forthcoming Annual General Meeting ofthe Company.

M/s.N.C.Rajan& Co have been the Statutory Auditors of the Company since theconclusion of 21 Annual General Meeting.st

The Statutory Auditors have maintained the highest level of governance rigor andquality in their audit. The Board places on record its appreciation for the servicesrendered by M/s.N.C.Rajan& Co as the Statutory Auditors of the Company.

In line with the requirement of Section 139 (1) of the Companies Act 2013 the AuditCommittee considering the qualifications and experience of M/s. SPP& Co CharteredAccountants Coimbatore has recommended their appointment as Statutory Auditors of theCompany to the Board. The Board further recommends their appointment as Statutory Auditorsto hold office from the conclusion of this Annual General Meeting (AGM) until theconclusion of the28th Annual General Meeting of the Company to the members' for approvalin this AGM.

M/s. SPP& Co Chartered Accountants Coimbatore have furnished a certificate oftheir eligibility as per Section 141 of the Companies Act 2013 and have provided theirconsent for appointment as Statutory Auditors of the Company. SECRETARIAL AUDITOR

Mr. D. Senthil Practicing Company Secretary was appointed to conduct the secretarialaudit of the company for financial year 2021-22 as required under Section 204 of theCompanies Act2013 and Rules made there under. The secretarial audit report for FY 2020-21forms part of the Annual Report as Annexure 8 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 year2020-21:

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.

(By Order of the Board)
For CG-VAK SOFTWARE AND EXPORTS LIMITED
Place: Coimbatore G.Suresh
Date : 13 August 2021 Managing Director & CEO
DIN 00600906

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