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MPS Infotecnics Ltd.

BSE: 532411 Sector: IT
NSE: VISESHINFO ISIN Code: INE861A01058
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MPS Infotecnics Ltd. (VISESHINFO) - Director Report

Company director report

DIRECTOR’S REPORT

Dear Members

Your Directors have pleasure in presenting before you the Twenty-ninth Annual Report ofyour Company together with the Audited Financial Statements for the Financial Year ended31st March 2018.

I. FINANCIAL RESULTS

The Financial results of the company for the period under review are as below:

Rs. In lacs
Particulars 2017-18 2017-18 2016-17 2016-17
Standalone Consolidated Standalone Consolidated
Income from operations 7705.11 7776.73 18643.49 20328.15
Other Income 685.87 685.87 140.29 145.74
Total Income 8390.98 8462.60 18783.78 20473.89
Total Expenditure 7907.46 7979.46 18783.27 20476.71
Profit / (Loss) Before Interest Depreciation & Tax 483.52 483.14 0.51 (2.82)
Interest 321.17 321.17 40.04 40.04
Depreciation 162.53 162.53 106.84 106.84
Profit before Tax (0.18) (0.56) (146.37) (149.70)
Provision for Taxation
a) Current Tax - - - -
b) Earlier year (Net) (360.29) (360.29) - -
c) Deferred Tax 108.98 108.98 (61.38) (61.38)
Profit / (Loss) after Tax 251.13 250.74 (84.99) (88.32)
Profit b/f. from previous year (2536.02) (2535.14) (2451.03) (2446.82)
Balance carried to Balance Sheet (2284.89) (2284.40) (2536.02) (2535.14)
Transfer to General Reserve - - - -
Paid-up equity Share Capital (Face value 37744.37 37744.37 37744.37 37744.37
- Re. 1/-)
Reserves & Surplus 7485.12 8141.01 7229.86 7884.17

II. DIVIDEND

In order to plough back its resources the Board has decided not to recommend anydividend for the year ended 31st March 2018.

III. RESERVES

No amount is being carried to reserves.

IV. SHARE CAPITAL

There is no change in the issued subscribed and Paid-up equity share capital of thecompany

V. CHANGES IN THE NATURE OF BUSINESS IF ANY

There is no change in the nature of business of your company during the year underreview

VI. DETAILS OF SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

SEBI vide its letter dated 7th August 2017 took pre-emptive interim measures undersection 11(1) of SEBI Act in respect of listed shall companies which included the name ofyour company also.

SEBI directed stock exchanges to place trading restrictions on promoters / directorsand place the scrip in the ‘trade to trade’ category with limitation on thefrequency of trade and imposed a limitation on the buyers by way of 200% deposit on thetrade value. The said measures were directed by

SEBI pending final determination after verification of credentials and fundamentals bythe Stock Exchanges including by way of Audit and forensic audit if necessary. Pursuantto the above National Stock Exchange (NSE) vide notice dated August 7 2018 addressed toall its market participants initiated actions envisaged in SEBI letter dated August 72018 in respect of all the listed companies including your company w.e.f. 8th August 2017.

Your company had thereafter made representation provided the stock exchange on theirrequest the Auditors Certificate inter alia to following effect:

(a) Status filing of Income Tax Returns for the last three years and status ofdisputes if any pending with the Income Tax Department.

(b) Status w.r.t. your company’s compliance with all requirements of Companies Actand Annual Returns filed during last three years; Your Company also provided SecretarialAudit Reports for the last three years.

(c) Description of business model along with Bank statements of last year with active /dormant status evidencing the company is a going concern

(d) Status of Company w.r.t. defaults to any bank / financial

(e) Status of compliance with all the listing regulations requirements for a period oflast three years

Your company was given an opportunity of personal hearing in the matter by NSE.Pursuant to which

NSE had submitted its report to SEBI however SEBI directed the Stock Exchanges todispose of the representations received by them directly from the company.

NSE thereafter given another opportunity of personal hearing in the matter to yourcompany in the month of December 2017 and raised certain queries and sought yourcompany’s reply in writing which was provided to NSE in January 2018. On 10th January2018 disposed of your company’s representation and modified the actions envisaged inSEBI’s letter dated August 7 2018.

The above directions took effect from the date of orders i.e. 10th January 2018 and arestill in force

The NSE thereafter sometime in the month of February 2018 appointed M/s. M.K. Aggarwal& Co. as the forensic Auditor to conduct audit of the company. Your company has fullyco-operated with the said auditors and had concluded their audit. We presume that the saidforensic auditors might have forwarded their report to the Stock Exchange though there isno communication either from the Forensic Auditors or from the Stock Exchange.

VII. BUSINESS PERFORMANCE / FINANCIAL OVERVIEW

THE COMPANY IS PRESENTLY ENGAGED IN THE FOLLOWING AREAS:

IT Solutions & Products which comprise of:

System Integration and Networking Solutions (Including Hardware) Enterprise Software

Trading of UID Kit

The entire business has three modes of execution of business i.e. Trading of Hardwareand Peripherals; Establishing IT Infrastructure and Customization and up-gradation. TheCompany based on the orders procures material from leading Dealers and Distributors ofleading brands of IT and IT Infrastructure product manufacturers like HP Samsung LGLenovo Dell Acer etc. thereafter the same are supplied.

IT Enabled Services comprising of:

Domain Registration & Web Hosting Services VAS & IT enabled Services AadhaarEnrolment Printing of Election Cards

SignDomainsTM is India’s first ICANN registration of top level domains(TLD) including .com .net .org .info .biz .in etc. Catering to a global client basethrough its on-line presence and secure payment gateway. SignDomainsTM hasseveral corporates large portals resellers and end-users as its clientele.

The Company has tied up with various top level TLDs and offer its network of over 400Re-sellers as well as directly by the Company.

MPS offers web-hosting solutions on MPS dedicated servers located at server farms anddata centres located in US.

Value added services like SMS payment gateways messaging e-identity managemente-commerce are available for corporate clients and other businesses.

The Company was engaged by CSC e-Governance Services India Ltd. a Central Governmentorganization for providing support for the implementation of the Election project in thestate of Gujrat. We were also engaged by CSC e-Governance Services India Ltd. for printingof Election Cards.

Telecommunication through web portal www.uvapoint.com comprising of

DTH Postpaid prepaid mobile recharge; Insurance;

Ola Car booking

The Company is aggressively working on capitalizing on the ever-growing telecom enabledservices market in India. It has firmed up plans enabled services to customers rangingfrom prepaid mobile top-up post-paid mobile bill payment DTH recharge landline billpayments data-card recharge / payments bulk SMS mobile application and softwareapplication. The company has tied up with ANI Technologies Pvt. Ltd. for booking of OLAcabs through our web portal www.uvapoint.com. Now our customers who do have smart phonescan book a cab through our web portal www.uvapoint.com. The company has also tied up withEasy Policy Easy policy is an insurance web aggregators licensed as such by IRDA. Thetie-up with Easy Policy has enabled insurance market place at UVApoint. Now our retailerscan show an interested customer different offers from several insurance providers andcustomer can choose the best one as per his choice which in turn enables our retailers andthe company to generate additional income from insurance services.

Effective training of retailers and customer care services will back this activity.

In the fiscal year 2017-18 the consolidated revenues decreased to Rs. 7776.73 lacs fromRs. 20328.15 lacs during the previous year whereby registering decline in revenues by61.74%. The consolidated Profit / (Loss) before interest depreciation and tax (EBIDT) isat Rs. 483.13 lacs as compared to loss of Rs. 2.82 lacs suffered by the company during theprevious year. The consolidated Profit / (Loss) after Tax (PAT) during the financial yearunder review was Rs. 250.74 lacs as compared to loss of Rs. 88.32 lacs. During thefinancial year under review the company had earned profits after tax of Rs. 1680.20 lacswhich is on account of sale of one of the properties of the company and reversal of Incometax along with interest charged in earlier years.

During the Financial year 2017-18 the standalone revenues declined to Rs. 7705.11 lacsfrom Rs. 18643.49 lacs during the previous year whereby registering a decline in revenuesby 58.67%. Though there has been an increase in profits after tax of Rs. 251.13 lacs ascompared to a loss of Rs. 84.99 lacs suffered by the company during the previous year. Theprofits again is on account of sale of one of the company’s property and reversal ofincome tax along with interest charges in earlier years.

Segment wise Performance

The segment wise revenues and profits are tabulated hereunder:

Segment Consolidated Standalone
2017-18 2016-17 2017-18 2016-17
Segment Revenue
IT Solutions & Products 196.55 591.68 196.55 591.68
IT enabled Services 50.14 112.38 50.14 112.38
Telecommunications 7530.05 19624.09 7458.43 17939.43
Total Revenues 7776.73 20328.15 7705.12 18643.49
Segment Results - Profit / (loss) before Interest and tax)
IT Solutions & Products (3.24) (15.09) (3.24) (15.09)
IT enabled Services 4.13 10.25 4.13 10.25
Telecommunications (186.79) (123.99) (186.41) (115.21)
Total (185.91) (128.84) (185.52) (120.06)
Less: Interest 321.16 40.04 321.17 40.04
Less: Other un-allocable Expenditure net off 179.36 126.56 179.36 126.57
Add: Un-allocable Income 685.87 145.74 685.87 140.03
Profit before Tax (0.56) (149.70) (0.18) (146.37)

There has been a sharp decline in the business of the company which is mainlyattributable to stiff competition both from the organized sector and unorganized sectorlow margins and long credit periods. The company is still to come out of the effectsofde-monetization. All the segments in which the company is engaged are under performing andyour Company is taking stern steps to increase its market share.

In its endeavor to increase its market share in its existing business your company hasdecided to sell its stake in its subsidiaries subject to the approval by the shareholdersin this Annual General Meeting and focus on its core business of development of enterprisesoftware and Domain registration and web-hosting and Telecommunication.

Your company is optimistic and expects to generate revenues in the times to come.

MPS was registered with UIDAI as one of its enrolment agency for Aadhaar Card. Howeverdue to technical issues and change in policy of appointment of Aadhaar Agency yourcompany could not meet the requirements hence the company’s application for renewalhad been kept pending by the Authority. Now that your company is able to meet the Policyrequirements of Aadhaar Enrolment Agency the company would again be applying forregistration. Your company is hopeful that it would again get itself registered with UIDAIas an Enrolment Agency. During the year under review the shares of your company were putunder GSM Grade VI surveillance w.e.f.

7th August 2017 by the Stock Exchanges where the shares of your company are listed.Your Company made its representation before the National Stock Exchange however theExchange appointed M/s.

M.K. Aggarwal & Co. to conduct Forensic Audit of your company. Your company hasfully co-operated with the said auditors and concluded their audit. We hope that theymight have by now submitted their report to National Stock Exchange. Your company is yetto receive any communication in this regard from the Stock Exchange.

There are no material changes or commitments affecting the financial position of theCompany between the end of the financial year and to the date of the report.

In summary your company is well positioned in the markets it serves with a broad rangeof service offerings and a diversified customer base.

VIII. DETAILS OF SUBSIDIARIES / JOINT VENTURES / ASSOCIATES COMPANIES

Currently Your Company has three wholly owned foreign subsidiary Companies namely:-

M/s Axis Convergence Ltd. (Incorporated in Mauritius) M/s Greenwire Network Ltd.(Incorporated in Hong Kong) and Opentech Thai Network Specialists Co. Ltd. (OTNS)(Incorporated in Thailand).

In the last Annual General Meeting of the company held on 29th September 2017 themembers had approved disinvestment in Opentech Thai Network Specialists Co. Ltd. (OTNS) acompany incorporated in Thailand however the resolution approving disinvestment couldnot be given effect. Now the company is proposing to disinvest in all its subsidiaries toenable it to concentrate its businesses in India. There has not been any material changein the nature of the business of the subsidiaries though the revenues have declined.During the year the Board of Directors reviewed the affairs of the subsidiaries.

Performance and financial position of each of the Subsidiaries Associates and JointVenture companies included in the Consolidated Financial Statements:

The performance and financial position of the subsidiaries associate companies andjoint venture companies included in the consolidated financial statement is provided inaccordance with the provisions of Section 129 read with Rule 5 of the Companies (Accounts)Rules 2014 containing the salient features of the financial statement of Company’ssubsidiaries/joint ventures or associate companies in Form AOC 1 in "Annexure I"to this report.

The Consolidated Financial Statements have been prepared in accordance with IndianAccounting

Standards Ind AS 110 issued by The Institute of Chartered Accountants of India andshown the financial resources assets liabilities income profits and other details ofyour Company and its subsidiaries as a single entity after elimination of minorityinterest.

The statement also provides the details of performance and financial position of eachof the subsidiaries.

In accordance with section 136 of the Companies Act 2013 Audited Financial Statementsincluding the consolidated financial statements and related information of the Company andAudited Accounts of each of its subsidiaries are available on our websitewww.mpsinfotec.com. These documents will also be available for inspection till the date ofthe AGM during business hours at our registered office in New

Delhi.

There are no subsidiaries joint venture or associate companies which ceased to bethe subsidiaries joint ventures or associate companies during the year as prescribedunder Rule 8(5) (iv) of the Companies (Accounts) Rules 2014 The policy for determiningMaterial Subsidiaries formulated by the Board of Directors is disclosed on theCompany’s website and is accessible on http://www.mpsinfotec.com

IX. HUMAN RESOURCES

Your Company is of the view that while Technology can enable processes but it is thePeople who actually make things happen. In a journey of delivering tangible business valueto stakeholders Associates are envisioned as a strategic differentiator for the Company.

Your Company promotes an empowered and collaborative work environment where leadersstay engaged with the Associates and encourage them to challenge conventional thinking.Our employees are our biggest assets. To meet the evolving need of our clients ourpriority is to attract and engage the best talent in the right locations with the rightskills.

Your Company is committed to providing a comprehensive employment experience toAssociates with the flexibility commitments. During their tenure at the Company employeesare motivated through various skill development programs. We create effective dialoguethrough our communication channels to ensure that feedback reach the relevant teamincluding leadership. Your Company invests substantially in employee engagement tomotivate employees and encourage social communication and collaboration. Your Companycontinuously invests in attraction retention and development of talent on an ongoingbasis. Your Company thrust is on the promotion of talent internally through job rotationand job enlargement.

X. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review all Independent Directors have given declaration that theymeet the criteria of Independence as laid down under section 149(6) of the Companies Act2013 and Regulation 16(1)(b) of the SEBI (Listing obligations and Disclosure Requirements)Regulations 2015.

In order to strengthen the Board of the Company the Nomination & RemunerationCommittee recommended the candidature of Mr. Rachit Garg DIN No. 07574194 to the officeof Director of the

Company. Consequent upon the recommendation by the Nomination & RemunerationCommittee the Board of Directors in its meeting held on 30th May 2018 appointed Mr.Rachit Garg DIN No. 07574194 as an additional director pursuant to the provisions ofsection 161 of the Companies Act 2013 who holds office up to the date of this AnnualGeneral Meeting and being eligible offers himself for this appointment as Non-ExecutionNon-Independent Director of the Company liable to retire by rotation.

Pursuant to the provisions of section 160 of the Companies Act 2013 the Company hasreceived notice in writing from a member of the company proposing Mr. Rachit Garg’scandidature as Director of the company.

Mr. Rachit Garg is an MBA Finance & Marketing from UP Technical University Meerutapart from being a

Commerce Graduate from Chaudhary Charan Singh University Meerut. He has a richexperience of over 7 years in Accounts & Finance. He had earlier worked with GeiperConsulting Pvt. Ltd. in the Accounts & Finance Department and he specializes inmarketing of financial products.

Your company will be immensely benefited his appointment as a Board Member.

During the year under review Mr. Peeyush Kumar Aggarwal DIN NO. 00090423 Mr. ManojJain DIN

NO. 02573858 and Mrs. Madhu Sharma DIN NO.06947852 were the directors of the Company.

During the year Mr. RahulMeena Chief Executive Officer

Board upon the recommendation of the nomination and remuneration committeeunanimously appointed

Mr. Peeyush Kumar Aggarwal as Managing Director of the Company with effect from 3rdJanuary 2018.

Mr. Peeyush Kumar Aggarwal has a very long association with the Company i.e. he hadbeen as the Board for the past nearly 2 decades and he is also the promoter of theCompany. Mr. Peeyush Aggarwal aged 55 years is a Fellow Member of the Institute ofChartered Accountants of India. He has extensive experience of over 29 years in the fieldof Finance and Taxation; Corporate Laws; Project Management; strategic business planningetc. He is first generation Entrepreneur having a clear business vision. His businessinterests today are in the areas of Information Technology; Telecom; VAS; Animation andGaming; Digital Cinema; Pharma; Real Estate; Construction & Hospitality; GarmentExports; and Broking (Shares Commodities Insurance). Other details required to bedisclosed in terms of the provisions of Secretarial Standard on General Meetings form partof the Notice.

During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company except infusion of funds by Mr. PeeyushKumar Aggarwal for the smooth functioning of the Company.

Pursuant to provisions of Section 203 of the Companies Act 2013 Mr. Peeyush KumarAggarwal

Managing Director Mr. Sanjay Sharma Chief Financial Officer and Miss. Garima SinghCompany Secretary & Compliance Officer were the Key Managerial Personnel of theCompany during the .

XI. COMMITTEES OF THE BOARD

As on March 31 2018 the Board had five committees remuneration committee thestakeholders’ relationship committee Corporate Social Responsibility and RiskManagement Committee. All Committees consists of Independent Directors. A detailed note onthe composition of the Board and its committees is provided in the Corporate GovernanceReport section of this Annual Report.

XII. BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Regulation 19 read withSchedule II Part D of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements)

Regulations 2015 the Board has devised a policy on evaluation of performance of Boardof Directors Committees and Individual directors. Accordingly the Chairman of theNomination and Remuneration Committee obtained from all the board members duly filled inevaluation templates for evaluation of the Board as a whole evaluation of the Committeesand peer evaluation. The summary of the evaluation reports was presented to the respectiveCommittees and the Board for their consideration.

The Board of Directors of your company has laid down Policy on appointment and removalof Directors Key Managerial Personnel and Senior Management. The Board of Directors hasalso adopted Policy on Remuneration of the Directors Key Managerial Personnel and otherEmployees. The said policies are available on the company’s websitewww.mpsinfotec.com extracts of which are provided in Annexure II to this report.

The Company’s Policy on Appointment and Removal of Directors KMPs and SeniorManagement includes inter alia Succession Plan for the Board of Directors KMPs andSenior Management. The Policy on Director’s appointment and remuneration alsoincludes criteria for determining qualifications positive attributes independence ofDirector and also remuneration for key managerial personnel and other employees formspart of the Corporate Governance Report of this Annual Report. The Company has laid down apolicy on training for Independent Directors as part of the governance policies.

The Board Members are regularly updated on changes in Corporate and allied lawsTaxation laws & matters thereto. MD along with Senior Management conducts exclusivesessions for the Board Members sharing updates about the Company’s business strategyoperations and the key trends in the IT industry relevant for the Company. These sessionsgenerally coincides with the Board Meetings. These updates help the Board Members to keepthemselves abreast with the key changes and their impact on the Company.

The details of programs for familiarization of the Independent Directors with theCompany are available on the Company’s website and can be accessed at the weblink;www.mpsinfotec.com

XIII. MEETING OF INDEPENDENT DIRECTORS

Independent Directors of the Company met on May 30 2018 to review the performance ofnon-independent directors the Board as a whole for the FY 2017-18. The Chairman of theCompany was evaluated taking into account the views of executive directors andnon-executive directors. The Independent Directors in their separate meeting also assessedthe quality quantity and timeliness of flow of information between the Company managementand the Board that is necessary for the Board to effectively and reasonably perform theirduties. The same was discussed in the board meeting that followed the meeting of theIndependent Directors at which the performance of the Board its committees andindividual directors was also discussed.

XIV. MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes affecting the Financial Position of the Company whichhave occurred between the end of the Financial Year of the Company to which the FinancialStatement relate and the date of the Report except that Mr. Rachit Garg was appointed asan Additional Director of the Company w.e.f. 30th May 2018.

XV. DIRECTOR’S RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013 your Directors based on therepresentation(s) received from the Operating Management and after due enquiry confirmthat:

a) in the preparation of annual accounts the applicable accounting standard had beenfollowed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies are consistently applied andreasonable made judgment and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at the end of the financialyear and of the Company for that period;

c) the Directors had taken proper and sufficient records in accordance with theprovisions of this Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a ‘going concern basis’.

e) the directors in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively. Basedon the framework of internal financial controls and compliance systems established andmaintained by the company work performed by the Internal statutory and secretarialauditors and the reviews performed by management and the relevant board committeesincluding the

audit committee the board is of the opinion that the Company’s internal financialcontrols were adequate and effective during the financial year 2017-18.

XVI. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TOTHE FINANCIAL STATEMENTS

The Company has internal financial controls which are adequate and were operatingeffectively. The controls are adequate for ensuring the orderly & efficient conduct ofthe business including adherence to the Company’s policies the safe guarding ofassets the prevention & detection of frauds & errors the accuracy &completeness of accounting records and timely preparation of reliable financialinformation

XVII. AUDITORS Statutory Auditor

M/s. RMA & Associates LLP Chartered Accountants had been the statutory auditorsof the Company and had been conducting Audit of your company since 2008-09. Pursuant tothe provisions of section 139(2) which states that "No listed Company or a companybelonging to such class or classes of Companies as may be prescribed shall appoint orre-appoint –

(a) An individual as auditor for more than one term of five consecutive year; and (b)An audit firm as auditor for more than two terms of five consecutive years

In terms of the said provisions and rules framed thereunder M/s. RMA & AssociatesLLP Chartered Accountants Firm Registration no. 000978N have completed two terms of fiveconsecutive years therefore the company has to appoint a fresh Chartered Accountant toconduct audit of the company. The Audit Committee in its meeting held on 14th August 2018had recommended the appointment of M/s. Nemani Garg Agarwal & Co. (Firm’sRegistration No. 010192N) Chartered Accountants (CAs) Delhi as the Statutory Auditors ofthe Company and the Board of Directors in their meeting held on 14th August 2018 have alsorecommended their appointment as the statutory auditors of the Company for a period of 5years commencing from the conclusion of this Annual general Meeting till the conclusion ofthe Annual General Meeting of the Company to be held in the Year 2023.

Brief Profile of Nemani Garg Agarwal & Co.

Nemani Garg Agarwal & Co. is a leading chartered accountancy firm renderingcomprehensive professional services which include Audit Management Consultancy TaxConsultancy Accounting

Services Manpower Management Secretarial Services etc.

Nemani Garg Agarwal & Co. is a professionally managed firm. The team consists ofdistinguished Chartered Accountants Corporate Financial Advisors and Tax Consultants. Thefirm represents a combination of specialized skills which are geared to offers soundfinancial advice and personalized Those associated with the firm have regular interactionwith industry and other professionals which enables the firm to keep pace withcontemporary developments and to meet the needs of its clients

Your company has received written consent of the auditor to such appointment in termsof Section 139

& 141 of the Companies Act 2013 as amended and have also obtained a certificatein terms of Rule 3 & 4 of the Companies (Audit & Auditors) Rules 2014 to theeffect that it is eligible for appointment and is not disqualified for appointmentregulations made there under; the proposed appointment is as per the term provided underthe Act; the proposed appointment is within the limits laid down by or under the authorityof the Act; and that there are no proceedings against the firm or any partner of the firmpending with respect to professional matter of conduct before the Institute of CharteredAccountants of India or other competent authority or court; that they satisfy the criteriaas provided under section 141 and other provisions if any of the Companies Act 2013

Further pursuant to the provisions of section 139 read with Rules framed thereunderthe resolution appointing M/s. Nemani Garg Agarwal & Co is being placed forconsideration by the members in the ensuing Annual General Meeting.

None of the Directors and Key Managerial Personnel of the Company and their relativesin any way and / or manner deemed to be concerned financially or otherwise in theOrdinary Resolution as interested set out in the Notice.

Secretarial Auditor

As required under Section 204 of the Companies Act 2013 and Rules thereunder theBoard on the recommendation of the Audit Committee appointed M/s. Kundan Agrawal &Associates Practicing Company Secretaries as Secretarial Auditor of the Company for theFY 2018-19.

Internal Auditors

Pursuant to the provisions of Companies Act 2013 and Rules thereunder the Board ofDirectors on the recommendation of the Audit Committee has appointed M/s. Sanghi &Co. Chartered Accountants as the Internal Auditor of the Company for the FY 2018-19.

XVIII. AUDITOR’S REPORT

The observations made in the Auditors’ Report are as under:

1. The Company has shown in the balance sheet bank balances in Banco Efisa (LisbonPortugal) amounting to Rs. 350977439/- (USD8883210.75) which the bank has adjusted andthe matter is in the court of law. Consequently the bank balances shown in balance sheetis overstated by Rs. 350977439/.

2. The Company has increased its Authorized Capital from Rs. 52.45 Crores to Rs. 377.50crores during the period of FY-2010-11 to FY 2012-13 ROC fees of Rs. 4.88 crores towardsthe same stands payable under the head "Other Current Liabilities" in thefinancial statements.

3. Income Tax for the Assessment year 2013-14 amounting to Rs. 20.80 lacs and interestthereon is payable.

Report of the Statutory Auditor is annexed with the Annual Report however as regardsqualifications made by the Auditors’ in their report your directors state as under:

1. The funds raised by the Company from GDR issue during F.Y. 2007-08 were kept infixed deposit account with Banco Efisa Lisbon Portugal as the said amount was to bedeployed in terms of INFORMATION MEMORANDUM of the GDR issue. During the F.Y. 2008-09Banco Efisa the Bank in

Portugal wrongly debited an amount of USD 8883210.75 out of the balance lying in theCompany’s Account with the Bank. The Company has denied and disputed this debit andhad initiated legal action under criminal jurisprudence of Portuguese Law. During thecriminal investigation several new facts/documents have come to our knowledge and basedon the evaluation of new facts/documents by Barristers Senior Advocates and investigationcarried out in India London and Portugal; your

Company has initiated a strong civil action for recovery of USD 8883210.75 alongwith interest against Banco Efisa and its Holding Company wherein our Portugueseadvocates confirm that the chances of recovery are very high. The suit filed by yourcompany before Portuguese courts is presently pending adjudication.

2. The Company had increased its authorised capital during the Financial Year 2010-11to 2012-13 however due to technical issues necessary forms along with the fees w.r.t.increase in authorised

Capital could not be filed and paid. Meanwhile the schedule of fees was increased asper the

Companies Act 2013. However the authorised capital was increased prior to theapplicability of Companies Act 2013. Yet the ROC demanded fee as per the schedule underthe Companies Act

2013 retrospectively which is much higher than the fees payable under the CompaniesAct 1956.

Representations made with the Ministry of Corporate Affairs did not yield any resultshence the company has filed a Writ Petition bearing No. WP(C) 5199 of 2015 before theHon’ble High Court of

Delhi challenging the applicability of provisions prescribed under Para 3 of Table Bunder Registration of Offices and Fees Rules 2014 which is pending adjudication.

3. As regards Auditors’ remarks w.r.t. Income Tax for the Assessment year 2013-14amounting to Rs. 20.80 Lacs and interest thereon is payable. It is stated that yourcompany has already provided for the amount payable towards Income Tax for AY 2013-14along with interest hence this liability has no further impact on the profits / retainedearnings of the reported period of the Company.

The Audit Report prepared by the Statutory Auditors forms part of this Annual report.

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. Kundan Aggarwal & Associates Practicing Company Secretary Delhi toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is providedas Annexure-III. There are no qualifications reservation or adverse remark or disclaimermade in the Secretarial Audit Report

Reporting Of Frauds By Auditors

During the year under review neither the statutory auditors nor the secretarialauditor or the Internal Auditors have reported to the audit committee under Section 143(12) of the Companies Act 2013 any instances of fraud committed against the Company byits officers or employees the details of which would need to be mentioned in the BoardReport’s.

XVII. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3) (a) of the Companies Act 2013 read with rule 12(1)of the Companies

(Management and Administration) Rules 2014 extract of annual return in the prescribedForm MGT-9 is annexed as Annexure-IV which forms part of this report.

XVIII. PARTICULARS OF EMPLOYEES

The ratio of the remuneration of whole-time director and key managerial personnel (KMP)to the median of employees remuneration as per section 197(12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 forms part of the Board’s Report. However as per theprovisions of Section 136 of the Companies Act 2013 the reports and accounts are beingsent to all the members of the Company and others entitled thereto excluding theaforesaid information. Any member interested in obtaining such particulars may write tothe Company

Secretary at the Registered Office of the Company. The said information shall also bemade available for inspection at the registered office of the Company during workinghours.

XIX. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In line with the requirements of the Companies Act 2013 and Listing Regulations yourCompany has formulated a Policy on Related Party Transactions which is also available onthe Company’s website at http://www.mpsinfotec.com/policies.htm. The Policy intendsto ensure that proper reporting approval and disclosure processes are in place for alltransactions between the Company and Related Parties. All Related Party Transactions areplaced before the Audit Committee for review and approval. Prior omnibus approval isobtained for Related Party Transactions which are entered in the ordinary course ofbusiness and are at Arm’s Length. All Related Party Transactions that were enteredinto during the financial year were on an arm’s length basis. There were nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have apotential28 conflict with the interest of the Company at large.

None of the Directors have any material pecuniary relationships or transactions withthe Company except to the extent of their shareholding.

Pursuant to Section 134 (3)(h) of the Companies Act 2013 and Rules made thereunderparticulars of transactions with related parties as required under section 188(1) of theCompanies Act 2013 in the prescribed Form AOC-2 is annexed herewith as Annexure-V.

XX. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

The Company is an equal opportunity provider and consciously strives to build a workculture that promotes the dignity of all employees. As required under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 andRules framed thereunder the Company has implemented a policy on prevention prohibitionand redressal of sexual harassment at the workplace. The Company has zero tolerance onSexual Harassment at workplace. During the year under review there were no cases filedpursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

XXI. CORPORATE GOVERNANCE

A separate report on Corporate Governance is provided together with Certificate fromthe Statutory

Auditors of the Company regarding Compliance of conditions of Corporate Governance asstipulated under Listing Regulations. A Certificate of the CEO and CFO of the Company interms of Listing Regulations inter-alia confirming the correctness of the financialstatements and cash flow statements adequacy of the internal control measures andreporting of matters to the Audit Committee also forms part of Report on CorporateGovernance.

XXII. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed Management Discussion and Analysis Report for the year under review asstipulated under Regulation 34 of the Listing Regulations forms part of this Report asAnnexure VI.

XXIII. RISK MANAGEMENT POLICY

In terms of the requirement of the Companies Act 2013 the Company has developed andimplemented the Risk Management Policy. The Audit Committee and the Board reviews the sameperiodically. The Risk Management Committee of the Board of Directors periodically reviewsthe Risk Management framework identified risks with criticality and mitigation plan.

The company has also laid down procedures to inform Board members about the riskassessment and minimization procedures. These procedures are periodically reviewed toensure that executive management controls risk through means of a properly definedframework.

XXIV. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THECOMPANIES ACT 2013.

The particulars of the loans guarantees and investments have been disclosed in thefinancial statements.

XXV. CORPORATE SOCIAL RESPONSIBILITY

Pursuant to section 135 of Companies Act 2013 Company has constituted a CSRCommittee the details of which are available on the website of the Company (URL:www.mpsinfotec.com/investors). Due to inadequacy of profit the Company had not contributedany amount towards CSR activities as required under the CSR Rules 2014.

The Corporate Social Responsibility Committee of the Company has formulated andrecommended to the29

Board a Corporate Social Responsibility Policy (CSR Policy) indicating the activitiesto be undertaken by the Company which has been approved by the Board. The CSR Policy maybe accessed on the Company’s website at the link: http://www.mpsinfotec.com/pdf/Coporate-Social-Resposibility (CSR)%20Policy-Final.pdf

1. The company’s CSR Policy intends to:

Strive for economic development that positively impacts the society at large withminimal resource footprint. ? Embrace responsibility for the Company’s actionsand encourage a positive impact through its activities on hunger poverty malnutritionenvironment communities stakeholders and the society.

2. The Composition of the CSR Committee during the Financial Year 2017-18 was:

Mr. Peeyush Aggarwal Promoter /Non-Executive Director and Chairman of the Committee till 2nd January 2018 and thereafter as Managing Director and Chairman of the Committee.
Mr. Manoj Kumar Jain Independent Director and Member of the Committee.
Mrs. Madhu Sharma Independent Director and Member of the Committee.

3. Average net profit (Loss) of the company for last three financial years: (Rs.38019063.33p)

Prescribed CSR Expenditure (two per cent of the amount as in item 3 above): Since theaverage net profits for preceding 3 financial years are in negative therefore no amountthat is required to be spent by the Company as CSR expenditure.

4. Details of CSR spent during the financial year:
(a) Total amount to be spent for the financial year; Nil
(b) Amount unspent if any; Nil

(c) Manner in which the amount sent during the financial year is detailed below.

(1) (2) (3) (4) (5) (6) (7) (8)
S. No. CSR Project or activity identified Sector in which the Project is covered Projects or Programs (1) Local Area or other (2) Specify the State and district where projects or programs was undertaken Amount outlay (budget) project or programs wise Amount spent on the projects or programs Sub-heads: (1) Direct expenditure on projects or programs (2) Overheads Cumulative expenditure upto the reporting period Amount spent direct or through implementing agency

Not Applicable since the company had suffered losses during the last three years

XXVI. DISCLOSURE REQUIREMENT

As per Regulation 34 of the SEBI (Listing Obligation and Disclosure Requirement)Regulations 2015 corporate governance report with auditors’ certification thereonand management discussion and analysis are attached and forms part of this report.

Details of familiarization programme of the independent directors are available on thewebsite of the Company (URL: www.mpsinfotec.com/investors).

Policy on dealing with related party transactions is available on the website of theCompany (URL: www. mpsinfotec.com/investors).

The Company has formulated and published a Whistle Blower Policy to provide VigilMechanism for employees including directors of the company to report genuine concerns. Theprovisions of this policy are in line with the provisions of the Section 177(9) of the Actand the revised Regulation 22 of the listing agreements with Stock Exchanges. (URL:www.mpsinfotec.com/investors).

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report. Theremuneration policy is also available on the company’s website.(URL:www.mpsinfotec.com/investors).

XXVII. DEPOSITS

Though Your Company has not accepted any fixed deposits and as such no amount ofPrincipal or interest on deposits from public was outstanding as of the date of balancesheet yet pursuant to the provisions of Chapter V of the Act below is the detailsrelating to deposits:

Particulars Amount *Rs.) / Remarks
(a) accepted during the year Nil
(b) remained unpaid or unclaimed as at the end of the year Nil
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved N.A since the company has not accepted any deposits
(i) at the beginning of the year Nil
(ii) maximum during the year Nil
(iii) at the end of the year Nil

XXVIII. SECRETARIAL STANDARDS

The Company has complied with the provisions of the applicable secretarial standardsi.e. SS-1 (Secretarial Standard on Meetings of the Board of Directors) and SS-2(Secretarial Standards on General Meeting).

XXIX. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Your Company is mainly engaged in the business of IT and IT enabled services providingsolutions to the customers. The operations of your Company are accordingly not energyintensive. However adequate measures are taken to conserve energy and ensure its optimumconsumption by using and purchasing energy-efficient equipments. Your Company is committedto follow a high standard of environmental protection and provision of a safe and healthywork place for our people customers and visitors. As energy costs comprise a very smallpart of our total expenses the financial impact of these measures is not material. Thecompany has not imported any technology during the year under review.

XXX. RESEARCH & DEVELOPMENT

Your Company strives to deliver high quality services to its customers and in suchendeavor constantly invests in and undertakes research & development aimed atimproving its solutions. MPS has a dedicated business unit for Research & Developmentwhich delivers innovative solutions to clients and also fosters R&D within allbusiness units to create intellectual property in the form of re-usable componentsframeworks etc. which help drive greater productivity. The company is carrying on R andD in multiple forms but all of these are focused on better efficiency systemsmethodologies and capabilities. Your company is committed to provide I.T. solutions thatare innovative and continuously upgraded in keeping with emerging technology trends by amotivated workforce that includes R and D group on time; all the time; resulting inmaximizing stake holder’s value. We have continued to invest in some fundamentalresearch involving small budget with long term perspective. In order to excel at newoperations and activities. MPS stress is on continuous innovation and research based onmarket requirements and customer expectations.

XXXI. FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of foreign exchange earnings and outgo are as follows:

(Rs. In Lacs)
Particulars Year ended 31.03.2018 Year ended 31.03.2017
Foreign exchange earnings 0.74 20.64
Foreign exchange Outgo 16.56 29.24

XXXII. ACKNOWLEDGEMENTS

The Board of Directors acknowledges their deep appreciation to our customers vendorsFinancial Institutions Business Associates Bankers and all other Stakeholders for theircontinued co-operation and support to the Company.

The Board places its special appreciation and values the trust reposed and faith shownby every shareholder of the Company.

The Board places on record its deep appreciation for the cooperation extended byAuditors of the Company. Further the Board wishes to record its deep gratitude to all themembers of MPS family for their whole hearted support. The Board is also confident thatthe employees will continue to contribute their best in the year to come.

For and on behalf of the Board
MPS Infotecnics Ltd.
Place : New Delhi SD/-
Date: 31st May 2018 Peeyush Aggarwal
Chairman & Managing Director
DIN No. 00090423