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Megasoft Ltd.

BSE: 532408 Sector: IT
NSE: MEGASOFT ISIN Code: INE933B01012
BSE 00:00 | 27 Sep 18.00 -0.30
(-1.64%)
OPEN

18.70

HIGH

18.70

LOW

17.40

NSE 00:00 | 27 Sep 17.80 -0.35
(-1.93%)
OPEN

18.00

HIGH

18.50

LOW

17.50

OPEN 18.70
PREVIOUS CLOSE 18.30
VOLUME 42883
52-Week high 22.45
52-Week low 6.11
P/E 51.43
Mkt Cap.(Rs cr) 133
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 18.70
CLOSE 18.30
VOLUME 42883
52-Week high 22.45
52-Week low 6.11
P/E 51.43
Mkt Cap.(Rs cr) 133
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Megasoft Ltd. (MEGASOFT) - Director Report

Company director report

To The Members

Your Directors have pleasure to present their Report of your Company onthe business and operations for the year ended 31 March 2021.

Financial Highlights

(Rs. in lakhs)

Standalone Consolidated
Particulars For the year ended 31 March 2021 For the year ended 31 March 2020 For the year ended 31 March 2021 For the year ended 31 March2020
Revenues 1646.60 2034.40 5940.22 5673.26
Expenditure 1577.99 1921.32 5530.07 5136.21
Finance cost 273.69 366.67 548.96 682.82
Depreciation 343.30 344.73 363.04 437.58
Operating profit/(loss) (548.38) (598.33) (501.85) (583.35)
Profit before tax 138.03 51.94 184.55 66.93
Less: Taxes (0.85) (3.78) (0.26) (3.78)
Profit after tax 138.88 55.73 184.81 70.71
Other Comprehensive Income/(Loss) (6.66) (0.10) (6.66) (0.10)
Total Comprehensive Income 132.22 55.63 178.15 70.61
Earnings per share (equity shares par value Rs. 10 each)
Basic (Rs.) 0.31 0.13 0.42 0.16
Diluted (Rs.) 0.31 0.13 0.42 0.16

Overview

During the financial year ended 31 March 2021 your company recordedconsolidated revenues of 5940.22 lakhs as compared to 5673.26 lakhs for the financial yearended 31 March 2020. The consolidated profit was 178.15 lakhs during the current year ascompared to 70.61 lakhs in the previous year.

Further during the year under review there were no changes in natureof business of the company.

Transfer to Reserves in terms of Section 134(3) (j) of the CompaniesAct 2013

For the financial year ended on 31st March 2021 the Companytransferred Rs.1 38 87732/- to Reserves &Surplus.

Dividend

On account of inadequacy of profits during the financial year ended 31March 2021 the Board of Directors of the company have not recommended dividend.

Transfer of Unclaimed Dividend to Investor Education and ProtectionFund

The provisions of Section 125(2) of the Companies Act 2013 do notapply as there was no dividend declared and paid last year.

Share Capital

The paid-up equity share capital as on 31 March 2021 was 4426.73 lakhscomprising of 44267293 equity shares of 10 each. During the year under review thecompany has not issued shares with differential voting rights nor granted stock options orsweat equity or bonus shares. The Company has not bought back any of its securities duringthe year under review.

Directors and Key Managerial Personnel

The company has received declarations from all the independentdirectors of the company confirming that they meet the criteria of independence asprescribed under section 149(6) of the Companies Act 2013 and Schedule IV of theCompanies Act 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015.

During the year under review Mr. Kalyan Vijay Sivalenka has beenappointed as an Additional Director of the Company with effect from 29thSeptember2020.

During the year under review Mr. Upendar Mekala Reddy has beenappointed as an Additional Director of the Company with effect from 29thSeptember2020

In accordance with the provisions of the Companies Act 2013 and interms of the Memorandum and Articles of Association of the Company Mr. GV Kumar[DIN-00059107] Director of your Company retire by rotation at the ensuing AGM and beingeligible offers for reappointment.

In accordance with the provisions of the Companies Act 2013 approvalof the Members is being sought at the ensuing Annual General Meeting (‘AGM') ofyour Company for appointment of Mr. Kalyan Vijay Sivalenka [DIN-06404449] and Mr. UpendarMekala Reddy [DIN-08898174] as Independent Director (Non-Executive) of the Company.

Board Meetings

The Board of Directors met five (5) times during the financial year.The provisions of Companies Act 2013 and Regulation 17(2) of SEBI (Listing Obligations& Disclosure Requirements) Regulations 2015 Secretarial Standard - 1 issued by TheInstitute of Company Secretaries of India were adhered to in respect of meeting of Boardof Directors of the company.

Compliance with Secretarial Standards

During the year under review the provisions of Secretarial Standard 1(Board Meetings) and 2 (General Meetings) issued by the Institute of Company Secretariesof India (ICSI) were adhered to while conducting the respective Meetings.

Nomination & Remuneration Policy

The Board has on the recommendation of the Nomination &Remuneration Committee framed a policy for selection and appointment of Directors SeniorManagement and their remuneration. The Remuneration Policy is available on the website ofthe company and the terms of reference are given separately in the Corporate GovernanceReport.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas the evaluation of the working of its committees. The manner in which the evaluation hasbeen carried out has been detailed out in the Corporate Governance Report.

Performance Evaluation Criteria for Independent Directors

The performance evaluation criteria for independent directors aredetermined by the Nomination and Remuneration Committee. An indicative list of factors onwhich evaluation was carried out includes participation and contribution by a directorcommitment effective deployment of knowledge and expertise integrity experience(including the proficiency) and maintenance of confidentiality and Independence ofbehavior and judgment.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of section 134(3)(c) of the Companies Act 2013:

(i) in the preparation of the annual financial statements for the year ended 31 March2021 the applicable accounting standards had been followed along with proper explanationsrelating to material departures;

(ii) the directors had 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 as at the end of the financial year andof the profit of the company for the year;

(iii) the directors had taken proper and sufficient care 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;

(iv) the directors had prepared the annual accounts on a "going concernbasis";

(v) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(vi) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Significant Transactions

During the previous financial year Block 2 of your Company's ITfacility at Nanakramguda (Hyderabad) was leased out and your company started receivingrentals for the same from the last quarter of this financial year. (Completion of the sameas per Joint Development Agreement with M/S Darshita Infrastructure Pvt. Ltd (A SalarpuriaSattva Group Company) as declared by the company vide its disclosure to the StockExchanges on 5 February 2020).

Outlook

A detailed discussion on the performance of the company industrystructure threats opportunities risks future outlook and strategy is given separatelyin the Management's Discussion and Analysis section which forms a part of thisannual report.

Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo

In terms of Section 134(3)(m) of the Companies Act 2013 and the rulesframed thereunder your Directors furnish the required details below:

(a) Conservation of Energy: Your Company uses electric energy forall its equipment's such as air conditioners computer terminals lighting andutilities in the work premises. All possible measures have been taken to conserve energy:

through periodic energy audits to identify potential areas for saving by incorporatingenergy-efficient equipment

through automation i.e. using timers automatic level controllers etc.

(b) Research and Development (R&D):At the end of each yearmanagement and the Board jointly develop a list of major risks that the company plans toprioritize in the next year. Key areas of Risk management for the year 2021-22 includeData Security and privacy Technology obsolescence Service delivery retention anddevelopment of Human resources Business competition Delayed payments from key customers& resultant Cash flow problems and Foreign exchange fluctuations .

(c) Technology Absorption: In our quest to offer all our productsin a cloud environment Your Company re-architected and designed multiple components andtechnologies to enable porting of the services on to the cloud. With our intent to offerall flagship products in cloud our products require higher configurability auto scalingand data security frameworks. Your company has made significant progress in this regardduring last year.

(d) Foreign exchange earnings and outgo:The details of foreignexchange earnings and outgo are given in note no. 28 and 29 of the Notes forming part ofthe standalone financial statements of the company.

Particulars of Contracts or Arrangements made with Related Partiesunder section188

All related party transactions that were entered into during thefinancial year were on an arm's length basis and were in the ordinary course ofbusiness. There are no materially significant related party transactions made by theCompany with the promoters directors key managerial personnel or other designatedpersons which may have a potential conflict with the interest of the company at large.

All related party transactions are placed before the Audit/RiskCompliance Committee as also the Board for approval.

The Board of Directors of the company has on the recommendation of theAudit/Risk Compliance Committee adopted a policy to regulate transactions between thecompany and its related parties in compliance with the applicable provisions of theCompanies Act 2013 the Rules framed thereunder and Regulation 23 of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015. This Policy was consideredand approved by the Board and has been uploaded on the website of the company.

The details of the Related Party transactions on arm's lengthbasis has been provided in Annexure -1 appended hereto and forms part of thisreport.

Particulars of Loans Guarantees & Investments

Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in note no. 3 5 and 26 ofthe Notes forming part of the standalone financial statements of the company.

Quality certifications

Your company's quality management system (QMS) has its foundationon decades of experience and industry best practices that are aligned with internationalstandard quality models and certifications. This assures that the company maintainsconfidentiality integrity availability of corporate and client information.

ISO 9001:2015 Quality Management System

QMS enhancing customer satisfaction.

Your company is certified for ISO 9001:2015 by BSI India. Our products& solutions therefore ensure customer satisfaction.

ISO 27001:2013 Information Security Management System

Information security management system enhancing ConfidentialityAvailability and Integrity.

Risk Management

Although the company has long been following the principle of riskminimization as is the norm in every industry it has now become a compulsion.

Therefore in accordance with Section 134(3)(n) of the Companies Act2013 and Regulation 17(9) SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 the Board members formally adopted steps for framing implementing andmonitoring the risk management policy for the company.

A disciplined approach to risk is important in a diversifiedorganization like ours in order to ensure that we are executing according to our strategicobjectives and that we only accept risk for which we are adequately compensated. Weevaluate risk at the individual transaction level and evaluate aggregated risk at thecustomer industry geographic and collateral-type levels where appropriate.

At the end of each year management and the Board jointly develop alist of major risks that company plans to prioritize in the next year. Key areas of RiskManagement for the year 2020-21 include Data Security and Privacy Technologyobsolescence Service Delivery retention and development of Human Resources Businesscompetition Delayed payments from key customers & resultant cash flow problems andForeign Exchange fluctuations.

The main objective of Your Company's risk management policy is toensure sustainable business growth with stability and to promote a pro-active approach inreporting evaluating and resolving risks associated with the business. In order toachieve the key objective the policy establishes a structured and disciplined approach toRisk Management in order to guide decisions on risk related issues. The risk governancestructure is led by the Audit/Risk Compliance Committee chaired by Mr. Anil Kumar Sood.

This committee is responsible for the effective management of the risksfacing the Company. The Committee meets on a quarterly basis and reports to the Board. Asa matter of policy these risks are assessed and steps as appropriate are taken tomitigate the same.

Internal Control Systems and Their Adequacy

The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The scope and authority of the Internal Audit (IA)function is defined in the Internal Audit Charter. To maintain its objectivity andindependence the Internal Audit function reports to the Chairman of the Audit/RiskCompliance Committee of the Board.

The Internal Audit monitors and evaluates the efficacy and adequacy ofinternal control system in the company its compliance with operating systems accountingprocedures and policies at all locations of the company and its subsidiaries. Based on thereport of internal audit function process owners undertake corrective action in theirrespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions thereon are presented to the Audit/Risk Compliance Committee of theBoard.

Internal financial control with reference to the financial statements

The Company has in place adequate internal financial controls withreference to financial statements. During the year no material weakness in the design oroperation was observed.

Vigil Mechanism / Whistle Blower Policy

In order to ensure that the activities of the company and its employeesare conducted in a fair and transparent manner by adoption of highest standards ofprofessionalism honesty integrity and ethical behavior the company has adopted a vigilmechanism policy. This policy is explained in corporate governance report and also postedon the website of the company.

Enhancing Shareholder Value

Enhancing Shareholder Value is the common thread that runs througheverything we do as a company from innovating new products and broadening our existingportfolio to successful restructuring efforts and improving our working capital.

Throughout our history delivering value to our shareholders has beenand will continue to be uppermost in our minds as we manage our business. However in thelast few years due to declining revenues and performance the company has been unable todeclare dividends. Your company is also committed to creating value for all itsstakeholders by ensuring that its corporate actions positively impact the stock price andcreation of Shareholder Value.

Corporate Social Responsibility

The provisions for corporate social responsibility ("CSR")under the Companies Act 2013 are not applicable to the company for the current financialyear. However your company has beenover the years pursuing as part of its corporatephilosophy an unwritten CSR policy voluntarily which goes much beyond mere philanthropicgestures and integrates interest welfare and aspirations of the community with those ofthe company itself in an environment of partnership for inclusive development.

Corporate Governance

A report on Corporate Governance including the relevant Auditors'Certificate regarding compliance with the conditions of Corporate Governance as stipulatedin Regulation 34(3) and Schedule V of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 is annexed. Management's Discussion and Analysis isalso annexed.

Performance and Financial Position of each of the SubsidiariesAssociates and Joint Venture Companies included in the Consolidated Financial Statement

The Consolidated Financial Statements relates to the Company XIUSHolding Corp ( including XIUS Corp & XIUS S DE RL DE CV) and Megasoft Consultants SdnBhd. The Financial Statements of the Subsidiaries covered in the Consolidation process aredrawn upto the same reporting date as that of the Company i.e. 31st March2021. The Financial Statements of the Company and its Subsidiaries have been combined on aline-by-line basis by adding together like-items of assets liabilities income andexpenses after eliminating intragroup balances intra-group transactions and resultingunrealized profits or losses unless cost cannot be recovered. The statement pursuant toSection 129 of the Companies Act 2013 in respect of subsidiaries is attached as Annexure-2.

Deposits

The Company has neither raised nor renewed any Deposits as on March 312021 so as to attract the provisions of Section 73 of the Companies Act 2013 read withthe Companies (Acceptance of Deposits) Rules 2014 as amended from time to time.

Extract of Annual Return

The details forming part of the extract of the Annual Return in formMGT-9 has been given in the Annexure-3 appended hereto and forms part of thisreport.

Auditors' Report

Except as specified and explained below there are no otherqualifications reservations or adverse remarks or disclaimers in the Auditors'Report. Observations made in the Auditors' Report are self-explanatory and thereforedo not call for any further comments under Section 134(1) of the Companies Act 2013.

Auditors

Statutory Auditors

Members at its 17th Annual General Meeting held on July 282017 Appointed M/s. N. C. Rajagopal& Co. [Firm Registration No.003398S] CharteredAccountants to hold office as auditors of the company till the conclusion of the 22ndAnnual General Meeting to be held in the year 2022. The requirement of annual ratificationof auditor's appointment at the AGM has been omitted pursuant to Companies(Amendment) Act 2017 notified on May 7 2018

The Statutory Auditors have confirmed that they satisfy theindependence criteria required under Companies Act 2013 Code of Ethics issued byinstitute of Chartered Accountants of India.

Internal Auditor

Mr. R Balasubramanian (FCA-220677) Chartered Accountants perform theduties of Internal Auditors of the Company and their reports are reviewed by the auditcommittee from time to time.

Secretarial Auditor

Pursuant to the provisions of Sections 204 of the Companies Act 2013and the rules framed thereunder the company has appointed M/s. M Damodaran &Associates LLP (COP-5081/FCS-5837) to undertake the Secretarial Audit of the company.The Secretarial Auditors' Report in the prescribed format for the year ended 31March 2021 is annexed to this Directors' Report and forms part of the Annual Report (Annexure-4).Following are the qualification and observations made by the Secretarial Auditor:

Sr No. Observations made by the Secretarial Auditors Comments by the Board of Directors
1. The Company has complied with the Regulation 17(1)(C) of SEBI (LODR) 2015 with some delay The Board of Directors of the Company instructed the Company Secretary to ensure that the Company complies with the regulation in time.

Details in respect of frauds reported by Auditors other than thosewhich are reportable to the Central Government

During the year under review the Statutory Auditors of the Companyhave not reported any frauds to the Audit Committee or to the Board of Directors asprescribed under Section 143(12) of the Companies Act 2013 and rules made thereunder.

Details of Significant & material orders passed by the Regulatorsor Courts or Tribunal impacting the going concern status and company's operations infuture

During the financial year under review there were no significant ormaterial orders issued impacting the going concern status of the Company.

COVID-19 Impact

The detailed note on the impact of the outbreak of COVID-19 pandemic onthe areas of business has been provided in note number 35 to notes to the consolidatedfinancial statements.

Material changes from end of financial year to date of this report

Except as disclosed elsewhere in this report there have been no othermaterial changes and commitments which can affect the financial position of the Companyoccurred between the end of the financial year of the Company and date of this report.

Human Resources Development

Your Company is committed to provide a holistic experience to employeesthat fosters a culture of high performance led by innovation. Your Company believes thatwhile Technology can enable processes but it is People who lead the company towards itsgoals and successes. There is a significant focus on creating a fun-filled high-energywork environment where personal milestones organizational successes and special occasionsare celebrated with fervor and enthusiasm.

Particulars of Employees

There are no employees falling within the provisions of section134(3)(q) of the Companies Act 2013 read with Rule 5(2) and 5(3) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.

Employee Stock Option Scheme

The company has not issued any employee stock option during the yearunder review.

Disclosure ad per Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

Your company has in place an Anti-Sexual Harassment Policy in line withthe requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. The Internal Complaints Committee ("ICC") has been setup to redress the complaints received regarding sexual harassment. All employees arecovered under this policy. During the year under review the ICC has not received anycomplaints.

Corporate Social Responsibility

The Company is not required to constitute a Corporate SocialResponsibility Committee as it does not fall within purview of Section 135(1) of theCompanies Act 2013 and hence it is not required to formulate policy on corporate socialresponsibility.

Listing with Stock Exchanges

Your company's equity shares are listed on BSE [532408] and NSE[MEGASOFT]. Necessary stock exchange regulations are complied with from time to time.

Acknowledgments

Your directors place on record their appreciation of the customersbankers Government of India and of other countries Government of Telangana Governmentof Tamil Nadu Registrar and Share Transfer Agent vendors and technology partners for thesupport extended. Your directors also wish to place on record their appreciation of thecontribution made by employees at all levels without whom the growth of the company isunattainable. Your directors seek and look forward to the same support during future yearsof growth.

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