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Kellton Tech Solutions Ltd.

BSE: 519602 Sector: IT
NSE: KELLTONTEC ISIN Code: INE164B01022
BSE 00:00 | 14 Dec 31.00 -0.25
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HIGH

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NSE 00:00 | 14 Dec 30.85 0.05
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30.85

HIGH

32.00

LOW

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OPEN 30.35
PREVIOUS CLOSE 31.25
VOLUME 22628
52-Week high 84.70
52-Week low 25.75
P/E 30.10
Mkt Cap.(Rs cr) 299
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 30.35
CLOSE 31.25
VOLUME 22628
52-Week high 84.70
52-Week low 25.75
P/E 30.10
Mkt Cap.(Rs cr) 299
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kellton Tech Solutions Ltd. (KELLTONTEC) - Director Report

Company director report

Your Directors have pleasure in presenting their 24th Annual Report onthe business and operations of your company for the financial year ended March 31st 2018.

Financial Results

The standalone financial performance of the Company for the financialyear ended March 31 2018 is sum -marized below :

Standalone (Rs. in Lacs)

Particulars

2017-18

2016-17

Revenue from operations

1225438764

764969400

Other Income

24752266

21977058

Total Revenue

1250191030

786946458

Total Expenditure

1109521753

666181371

Profit/(Loss)

140669277

120765087

Tax Expense/(Benefit)

(42111834)

(41008924)

Profit/(Loss) after Tax

98557443

79756163

Earnings per equity shares in Rs.

1.04

0.84

Consolidated
Particulars

2017-18

2016-17

Revenue from operations

7834799953

6147698590

Other Income

27443022

37224475

Total Revenue

7862242975

6184923065

Total Expenditure

6867597318

5473095281

Profit/(Loss)

994645657

711827784

Tax Expense/(Benefit)

(310697960)

(181202630)

Profit/(Loss) after Tax

683947697

530625154

Earnings per equity shares in Rs.

6.60

5.39

Review of Performance and state of the company's affairs

During the year under review the overall performance of the Companywas reasonable considering to the

Sector/market conditions.

During the year under review Members will notice that the grossrevenues have increased to Rs.1250191030 from Rs. 786946458 while the Profitbefore Tax also increased from Rs. 120765087 to Rs.140669277.

The profit after tax also increased to Rs. 98557443 from Rs.79756163 reported in the previous year.

The earnings per share is Rs. 1.04 as compared to Rs. 0.84 in theprevious year.

The Consolidated revenue of your Company for the year ended 31st March2018 is Rs. 7862242975 as against previous year revenue of Rs.6184923065. Theconsolidated Net Profit for the year stood at Rs. 683947697 as against previous yearconsolidated net profit of Rs. 530625154.

Change in the nature of business if any:

There is no change in the nature of business of the Company or any ofits subsidiaries or joint venture during the year under review.

Dividend and Transfer to Reserves

Although your Company has earned profits during the year the Board ofDirectors have decided to plough back the Profits into the Company. Therefore yourDirectors have not recommended any dividend for the financial year 2017-18.

There were no transfers to Reserves during the financial year 2017-18.

Share Capital

The Authorized Share Capital of the Company stands at Rs.600000000(Rupees Sixty Crore only) divided into 120000000 (Twelve Crore only) EquityShares of Rs. 5/- (Rupees Five) each.

The Authorized Share Capital of the Company was increased from Rs.310000000 (Rupees Thirty One Crore only)divided into 62000000 (Six Crore Twenty Lakhonly) Equity Shares of Rs. 5/- (Rupees Five) each to Rs. 600000000 (Rupees Sixty Croreonly) divided into 120000000 (Twelve Crore only) Equity Shares of Rs. 5/- (Rupees Five)each on 19/03/2018. The increase was made to facilitate the issue of Bonus shares to themembers of the Company.

The Paid up Share Capital has increased to from Rs. 235722865/-(Rupees Twenty Three Crore Fifty Seven Lakh Twenty Two Thousand Eight Hundred and SixtyFive Only) divided into 47144573 (Four Crore Seventy One Lakh Forty Four Thousand FiveHundred and Seventy Three Only) equity shares of Rs. 5/- each to Rs. 481912340 (RupeesForty Eight Crore Nineteen Lakh Twelve Thousand Three Hundred and Forty only) divided into96382468 (Nine Crore Sixty Three Lakh Eighty Two Thousand Four Hundred and Sixty Eightonly) equity shares of Rs. 5/- each.

The change in the Share Capital of the Company has occurred due toallotment under ESOP Scheme 2013 and Bonus issue of shares.

The Company has not issued any shares with differential rights andhence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4)of the Companies (Share Capital and Debenture) Rules

2014 is furnished.

I) The shareholders of the company has vide resolution passed at the19th Annual General Meeting approved ESOP 2013 and has granted options to the employees.

Disclosure regarding Employees Stock Option Plan and forming part ofthe Directors' Report for the year ended 31st March 2018 is as follows:

Particulars Description
1. Date of Share holder's approval ESOP Scheme 2013 as approved on 27/12/2013 and amendment made on 27/09/2017 at the 23rd Annual General Meeting of the Company
Total number of options granted 2527500
Vesting requirements 12-60 months
The pricing formula Closing price of equity shares on the stock exchange where the shares are listed from vesting date
Maximum term of options granted Employees to exercise options within 3 years
Source of shares Primary
Method used to account for ESOS Fair Value

Option movement during the year (For each ESOS):

Particulars

Details

Number of options outstanding at the beginning of the period

1811359

Number of options granted during the year

0

Number of options forfeited / lapsed during the year

273336

Number of options vested during the year

646495

Number of options exercised during the year

1046661

Number of shares arising as a result of exercise of options

1046661

Money realized by exercise of options (INR) if scheme is implemented directly by the company

Rs. 31806005

Loan repaid by the Trust during the year from exercise price received

NIL

Number of options outstanding at the end of the year

491362

Number of options exercisable at the end of the year

60668

The Note: Details of disclosures pursuant to ESOP required under SEBI(Share Based Employee Benefits) Regulations 2009 are available at the websitewww.kelltontech.com

Listing

The Equity Shares of your Company are listed on Bombay Stock ExchangeLimited and National Stock Exchange of India Limited.

The Company confirms that it has paid the Annual Listing Fees for theyear 2017-18 to NSE and BSE where the Company's Shares are listed.

Directors & its board meetings:

The Board of directors of your company is duly constituted.

There was no resignation of Directors this year.

Proposed Appointments/re-appointments:

The following appointments to the Board are proposed:

In accordance with the Companies Act 2013 read with the Articles ofAssociation of the Company Mr. Ni-ranjan Chintam Directors retires by rotation at theensuing Annual General Meeting of the Company and being eligible offered himself forre-appointment.

Appropriate resolutions for the appointment/ re-appointment ofDirectors are being placed before you for your approval at the ensuing Annual GeneralMeeting. The brief resume of the aforesaid Directors and other information have beendetailed in the Notice. Your Directors recommend their appointment/reappointment asDirector of your Company.

Number of meetings of the board:

Twenty Board Meetings were held on 24.04.2017 30.05.2017 01.06.201712.06.2017 06.07.2017 12.07.2017 01.08.2017 01.09.2017 12.09.2017 26.09.201713.10.2017 08.12.2017 20.12.2017 26.12.2017 29.12.2017 17.01.2018 06.02.201807.03.2018 20.03.2018 and 31.03.2018 during the year ended on 31st March 2018. The gapbetween any two Board Meetings is within the period prescribed by the Companies

Act 2013 and Listing Agreement.

Declarations by Independent Directors:

The Company has received declarations from the Independent Directorunder Section 149(6) of the Companies Act 2013 confirming their independence vis-a-visthe Company.

Board evaluation and assessment:

The company believes formal evaluation of the board and of theindividual directors on an annual basis is a potentially effective way to respond to thedemand for greater board accountability and effectiveness. For the company evaluationprovides an ongoing means for directors to assess their individual and collectiveperformance and effectiveness. In addition to greater board accountability evaluation ofboard members helps in ;

a. More effective board process b. Better collaboration andcommunication c. Greater clarity with regard to members roles and responsibilities d.Improved chairman – managing directors and board relations

The evaluation process covers the following aspects - Self evaluationof directors

- Evaluation of the performance and effectiveness of the board -Evaluation of the performance and effectiveness of the committees - Feedback from the nonexecutive directors to the chairman - Feedback on management support to the board.

Familiarisation Programme for Independent Directors

The Company shall through its Senior Managerial personnel familiarisethe Independent Directors with the strategy operations and functions of the Company. TheIndependent Directors will also be familiarised with their roles rights andresponsibilities and orientation on Statutory Compliances as a Board Member.

On appointment of the Independent Directors they will be asked to getfamiliarised about the Company's operations and businesses. An Interaction with the keyexecutives of the Company is also facilitated to make them more familiar with theoperations carried by the company. Detailed presentations on the business of the companyare also made to the Directors. Direct meetings with the Chairman and the ManagingDirector are further facilitated for the new appointee to familiarize him/her about theCompany/its businesses and the group practices as the case may be and link is available atthe website www.kelltontech.com.

Directors' Responsibility Statement

Pursuant to the requirement under section 134 (3) and (5) of theCompanies Act 2013 with respect to Directors' Responsibility Statement your board ofdirectors to the best of their knowledge and ability confirm that:

a. in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures; b. such accounting policies have been selected and applied consistentlyand the Directors made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the

Company as at 31st March 2018 and of the profit/loss of the Companyfor that year; c. proper and sufficientcare was taken for 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;d. the annual accounts of the Company have been prepared on a going concern basis; e.internal financial controls have been laid down to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; f. propersystems have been devised to ensure compliance with the provisions of all applicable lawsand that such systems were adequate and operating effectively;

Constitution and Composition of Audit Committee

The Audit Committee of the company is duly constituted as per section177 of the Companies Act 2013 and Regulation 18 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Composition and Scope of Audit Committee isprovided under the Corporate Governance report annexed herewith.

Nomination and Remuneration cum Compensation Committee:

Nomination and Remuneration cum Compensation Committee meets therequirements of section 178 of the Companies Act 2013 and Regulation 19 of SEBI (ListingObligations and Disclosure Requirements)

Regulations 2015. The details of the composition of the Nomination andRemuneration cum Compensation Committee as required under the provisions of Section 178 ofthe Companies Act 2013 is given in the Corporate Governance Report furnished as part ofthe Annual Report.

Remuneration Policy

The remuneration paid to the Directors is as per the terms laid out inthe Nomination & Remuneration policy of the Company. The Nomination & Remunerationpolicy is adopted by the Board is placed on the

Company's website at www.kelltontech.com

Corporate Governance

In pursuance of Regulation 17 to 27 read with Schedule V of SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 entered into withthe Stock Exchanges a separate Report on Corporate Governance along with a certificatefrom a Practicing Company Secretary regarding its compliance is annexed and forms part ofthis Report. Your company will continue to adhere in letter and spirit to good corporategovernance policies.

Management Discussion & Analysis

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

Subsidiary Companies

Following are the Subsidiary and Step-down subsidiaries of the Company:

Name of the Entity Status
Kellton Dbydx Software Pri- Wholly Owned Subsidiary
vate Limited
Kellton Tech Inc Wholly Owned Subsidiary
Kellton Tech Solutions Inc Wholly Owned Subsidiary
Kellton Tech Limited (Ireland) Wholly Owned Subsidiary
Kellton Tech Solutions Pte. Ltd. Wholly Owned Subsidiary
Evantage Solutions Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Inc)
Supremesoft Global Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Inc)
Vivos Professionals LLC Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Inc)
Prosoft Technology Group Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Solu- tions Inc)
Cyberworld Solutions Inc Step Down Subsidiary (Wholly owned subsidiary of Prosoft Technology Group)
Intellipeople Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Solu- tions Inc)
Kellton Tech (UK) Limited Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Lim- ited)
Lenmar Consulting Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Solu-
tions Inc)
Planet Pro Inc Step Down Subsidiary (wholly owned subsidiary of Kellton Tech Inc)
SID Computer Group Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Solu- tions Inc)
Talent Partners Inc Step Down Subsidiary (Wholly owned subsidiary of Kellton Tech Solu- tions Inc)

Consolidation of Accounts

The consolidated financial statements of the Company and itssubsidiaries ("the Group") for the year

March 31 2018 are prepared in accordance with generally acceptedaccounting principles applicable in

India and the Indian Accounting Standard 110 (Ind AS 110) on‘Consolidated Financial Statements' notified by Companies (Accounting Standards)Rules 2015 ("Indian Accounting Standards") by and to the extent possible inthe same format as that adopted by the Company for its separate financialstatements.`

A statement containing brief financial details of the subsidiaries forthe financial year ended March 31 2018 is annexed. The annual accounts of thesesubsidiaries and the related detailed information will be made available to any member ofthe Company/its subsidiaries seeking such information at any point of time and are alsoavailable for inspection by any member of the Company/its subsidiaries at the registeredoffice of the Company. The annual accounts of the subsidiaries will also be available forinspection as above at registered office of the respective subsidiary companies.

Statutory Auditors

M/s. Sastri& Shah Chartered Accountants Hyderabad the auditorsof the Company have resigned from the position of Statutory Auditors of the Company due totheir professional pre-occuption and therefore

Directors have recommended the appointment of M/s PARY & Co Chartered Accountants Hyderabad as Statutory Auditors of the Company to fill thevacancy.

M/s PARY & Co confirmed their eligibility under Section 139(1) ofthe Companies Act 2013

The Audit Committee and the Board recommends the appointment of M/sPARY & Co Chartered Accountants as statutory Auditors of the company.

Management Replies To Auditors Report – Standalone AndConsolidated Financial Reports:

There are no qualifications mentioned by the Auditors in the AuditorsReport. Thus company have no replies.

Reporting of Fraud

The Auditors of the Company have not reported any frauds specifiedunder Section 143(12) of the Companies Act 2013.

Business Responsibility Report (BRR)

Securities Exchange Board of India (SEBI) vide circularCIR/CFD/DIL/8/2012 dated August 13 2012 has mandated the inclusion of BRR as part of theAnnual Report for the top 100 listed entities based on their market capitalization onBombay Stock Exchange Ltd and National Stock Exchange of India Ltd as at 31 March 2012. Inview of the requirements specified the company is not mandated for the providing the BRRand hence do not form part of this Report.

Corporate Social Responsibility

Kellton Tech believes in balancing growth priorities with socialresponsibility. Indeed even in its commercial undertakings it attaches special weightageto those projects concerning the welfare of masses. With healthcare child education anddestitute care as its focus areas Kellton Tech has contributed to its bit to the societythrough various initiatives in these arenas. Kellton Tech is providing scholarship to theneedy deserving students for further education.

In collaboration with Aashritha Samaj it has sponsored the educationof many children with single parent. In healthcare it has worked closely with NGO's anddonated a generous amount towards disease-eradication by educating people on prevention.

Through REACH OUT initiative the employees of Hyderabad and GurugramOffice helped the patients of local hospitals by providing essentials for infants andbabies and nourishing edibles to other patients. This has been an ongoing commitment ofthe Company and by dint their efforts they have been able to make some lives happier andfilled with warmth. A Report on Corporate Social Responsibility (CSR) Policy andActivities as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules 2014is appended to this annual report as Annexure – VII and link to the CSR policy isavailable at the websitewww.kelltontech.com.

Particulars of Loans Guarantees and Investments

Details of loans and guarantees given and investments made underSection 186 of the Act are provided in the Notes to the Financial Statements.

Cost Audit Report

The provisions of Section 148 of the Companies Act 2013 does not applyto the Company and hence no cost auditors are appointed.

Secretarial Audit Report

Pursuant to the provisions of Section 204 read with Section 134(3) ofthe Companies Act 2013 the company is required to obtain Secretarial Audit Report fromPracticing Company Secretary. Mr. NVSS Suryana-rayanaRao Practising company secretary wasappointed to issue Secretarial Audit Report for the financial year 2017-18.

Secretarial Audit Report issued by Mr. NVSS SuryanarayanaRaoPractising company secretary in Form

MR-3 for the financial year 2017-18 forms part to this report as ‘Annexure– V'.

The observation given in the said report is as follows:

I further observed that the company has delayed in filing resolutionswith respect to appointment of Internal Auditor as per section 179(3) read with rule 8 ofthe Act

Management's Reply to the observation:

The management will strengthen the procedures for adequate and timelycompliance of all statutory requirements of the regulatory authorities.

Whistle Blower Policy/Vigil Mechanism

Pursuant to the provisions of section 177 of the companies act 2013and the rules framed there under and pursuant to the applicable provision of Regulation 22of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the companyhas established a mechanism through which all stake holders can report the suspectedfrauds and genuine grievances to the appropriate authority. The Whistle blower policywhich has been approved by the board of directors of the company has been hosted on thewebsite of the company viz. www.kelltontech.com.

Risk Management Policy

The board of directors has formed a risk management committee toidentify evaluate mitigate and monitor the risks associated with the business carried bythe company. The committee reviews the risk management plan and ensures its effectiveness.A mechanism has been put in place which will be reviewed on regular intervals.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment ofWomen at Workplace in accordance with The Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. During the financial year ended 31stMarch 2018 the Company has not received any complaints pertaining to Sexual Harassment.

Particulars of Contracts or arrangements with related parties

All the related party transactions that were entered during thefinancial years were in the ordinary course of business of the company and were on armlength basis. There were no materially significant transactions entered by the companyduring the year with the promoters directors key managerial personnel or other personswhich may have a potential conflict with the interest of the company.

The policy on related party transactions as approved by the board ofdirectors is hosted on the website of the company viz. www.kelltontech.com.

Particulars of every contract or arrangements entered into by theCompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto shall be disclosed in Form No. AOC-2 as ‘Annexure II' to thisreport.

Material changes and commitments if any affecting the financialposition

There are no material changes and commitments affecting the financialposition of the company which occurred between the end of the financial year to which thefinancial statements relate and the date of the report.

Details of significant and material orders passed by the going concernstatus and company's operations in future

No significant and material order has been passed by the regulatorscourts tribunals impacting the going concern status and Company's operations in future

Public Deposits

Your Company has not accepted any deposits from the public. As suchthere was no principal or interest outstanding on the date of the Balance Sheet.

Material Subsidiary Policy

The Company has adopted a policy for determining material subsidiaryin line with the requirements of the

Listing Agreement. The Policy on Material Subsidiary is available onthe website of the Company at www. kelltontech.com.

Particulars of Employees

A table containing the particulars in accordance with the provisions ofSection 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is appended as ‘Annexure III'to this Report.

In terms of Section 136 of the Companies Act 2013 the same is open forinspection at the Registered Office of the Company.

Copies of this statement may be obtained by the members by writing tothe Company Secretary at the

Registered Office of the Company.

The ratio of the remuneration of each Director to the median employee'sremuneration and other details in terms of Section 197(12) of the Companies Act 2013 readwith Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 are enclosed in Annexure III and forms part of this Report

Extract of the Annual Return

In accordance with Section 134 (3) (a) of the Act an extract of theAnnual Return in the prescribed format is appended as ‘Annexure VI' to thisReport.

Particulars of Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo

Conservation of Energy which is not furnished as the relative rule isnot applicable to your company.

There is no information to be furnished regarding Technology Absorptionas your company has not undertaken any research and development activity in anymanufacturing activity nor any specifictechnology is obtained from any external sourceswhich needs to be absorbed or adapted.

Foreign Exchange Earnings and Outgo

In accordance with the provisions of Section 134 of the Companies Act2013 read with the Companies

(Disclosure of Particulars in the Report of Board of Directors) Rules1988 the information relating to foreign exchange earnings and outgo is provided as under:

31-03-2018

31-03-2018

Amount in Foreign Currency

Amount in INR

Value of Imports during the year

USD 382179

24975093

Expenditure in Foreign Curren-

USD 67252

4436913

cies

GBP 2452

214568

EURO 4726

369471

SGD 1740

87354

IDR 14800000

78330

Earnings in Foreign Currencies

USD 5514115

355850589

GBP 281321

24157336

EURO 361592

27102879

CAD 17901

900929

Internal Audit & Controls

The Company has a proper and adequate system of internal control toensure all the assets are safeguarded and protected against loss from unauthorized use ordisposition and the transactions are authorized regarded and reported correctly. Theinternal control is supplemented by an extensive program of internal audits review bymanagement and procedures. It is designed to ensure that the financial and other recordsare reliable for preparing financial statements and other data and for maintainingaccountability of assets.

The Company's Internal Audit Department is regularly carrying out theAudit in all areas. Normal foreseeable risks of the Company's Assets are adequatelycovered by comprehensive insurances.

The Company has adequate Internal Financial Controls consistent withthe nature of business and size of the operations to effectively provide for safety ofits assets reliability of financial transactions with ad -equate checks and balancesadherence to applicable statues accounting policies approval procedures and to ensureoptimum use of available resources. These systems are reviewed and improved on a regularbasis. It has a comprehensive budgetary control system to monitor revenue and expenditureagainst approved budget on an ongoing basis.

Internal Financial Control Systems

The Company has adequate Internal Financial Controls consistent withthe nature of business and size of the operations to effectively provide for safety ofits assets reliability of financial transactions with ad -equate checks and balancesadherence to applicable statues accounting policies approval procedures and to ensureoptimum use of available resources. These systems are reviewed and improved on a regularbasis. It has a comprehensive budgetary control system to monitor revenue and expenditureagainst approved budget on an ongoing basis.

INDUSTRIAL RELATIONS

The company enjoyed cordial relations with its employees during theyear under review and the Board appreciates the employees across the cadres for theirdedicated service to the Company and looks forward to their continued support and higherlevel of productivity for achieving the targets set for the future.

Human Resources

Your Company treats its "human resources" as one ofits most important assets.

Your Company continuously invests in attraction retention anddevelopment of talent on an ongoing basis. A number of programs that provide focusedpeople attention are currently underway. Your Company thrust is on the promotion of talentinternally through job rotation and job enlargement

Acknowledgements

Your Directors wish to express their appreciation of the support andco-operation of the Central and the

State Government bankers financial institutions business associatesemployees shareholders customers suppliers and alliance partners and seeks theircontinued patronage in future as well.

For and on behalf of the Board of

Kellton Tech Solutions Limited

Sd/-

Sd/-

Krishna Chintam

Niranjan Chintam

Managing Director

Whole Time Director

DIN: 01658145

DIN: 01658591

Place : Hyderabad
Date : 04/09/2018