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Tanla Solutions Ltd.

BSE: 532790 Sector: IT
NSE: TANLA ISIN Code: INE483C01032
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OPEN 73.10
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VOLUME 6489
52-Week high 89.25
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Mkt Cap.(Rs cr) 1,112
Buy Price 75.20
Buy Qty 50.00
Sell Price 79.20
Sell Qty 100.00
OPEN 73.10
CLOSE 77.20
VOLUME 6489
52-Week high 89.25
52-Week low 33.80
P/E
Mkt Cap.(Rs cr) 1,112
Buy Price 75.20
Buy Qty 50.00
Sell Price 79.20
Sell Qty 100.00

Tanla Solutions Ltd. (TANLA) - Director Report

Company director report

Dear Members

Your Directors are pleased to submit their 23rd (twenty third) report ofTanla Solutions Limited (hereinafter referred as "Tanla" or the"Company") on the Company's business and operations together with the auditedfinancial statements of the Company for the year ended March 31 2019.

Summary of Financial Results:

The summary of Consolidated & Standalone Financial Results for the year is asfollows;

(Rs. in Lakh)

Particulars

Consolidated

Standalone

FY 2018-19 FY 2017-18 FY 2018-19 FY 2017-18
Revenue from Operations 100396.5 79161.3 80940.9 69193.5
Other Income 1061.1 476.0 956.0 467.2
Total Income 101457.6 79637.3 81896.9 69660.7
Expenses
Operating expenses 90756.4 72642.4 73124.8 64131.8
Depreciation 7322.8 5733.0 6808.3 4891.5
Total Expenses 98079.2 78375.5 79933.1 69023.2
Profit before Tax 3347.4 1261.8 1963.8 637.5
Less: Provision for Tax incl. deferred Tax 365.3 (649.0) 256.2 (671.7)
Profit after Tax 2982.1 1910.8 1707.6 1309.2
Other Comprehensive Income 119.6 227.8 433.9 34.7
Total Comprehensive Income 3101.7 2138.6 2141.4 1343.9
Attributable to:
Shareholders of the Company 3101.7 2138.6 2141.4 1343.9
Non-controlling interests - - - -
Retained earnings - opening balance 8570.1 6993.1 16484.6 15509.2
Add: Profit/(Loss) for the period 2982.1 1910.8 1707.6 1309.2
Less: Dividend and dividend tax (405.9) (333.8) (405.9) (333.8)
Retained earnings - closing balance 11146.3 8570.1 17786.3 16484.6
Earnings per Share (EPS)
Basic & Diluted 2.6 1.7 1.5 1.2

Consolidated Performance

The Consolidated Revenue from operations for FY 2019 stood at Rs. 1003.96 Crore andgrew by 26.83% Y-o-Y.

Standalone Performance

The Standalone Revenue from operations for FY 2019 stood at Rs. 809.41 Crore and grewby 16.98% Y-o-Y.

Dividend:

During the year under review the Board has recommended a final dividend for FY 2018-19@ 35% of the paid-up equity share capital i.e. Rs. 0.35 per fully paid-up equity share ofRs. 1/- each for your consideration and approval at the ensuing 23rd AnnualGeneral Meeting of the Company.

With the proposed final dividend the dividend for FY 2018-19 would be Rs. 0.35 perfully paid-up equity share of Rs. 1/- each (35% of the paid-up value) as against the totaldividend of Rs. 0.30 per equity share (30% of the paid-up value) declared in the previousyear 2017-18.

The total dividend outgo would amount to Rs. 6.06 Crore (including Corporate DividendTax) a payout of 35.52% of Net profit of the Company for the financial year 2018-19.

Transfer to Reserves:

The Company has not proposed to transfer any amount to the general reserve for theFinancial Year ended March 31 2019.

State of Company's affairs:

During FY 2019 the Company:

• has achieved a consolidated revenue of Rs. 1004 Crore registering a growth of27% Year-on-Year

• to strengthen and retain its leadership position the Company successfullylaunched Trubloq the first blockchain-enabled customer commercial communication stack

• completed the acquisition of Karix Mobile Private Limited and its wholly ownedsubsidiary Unicel Technologies Ltd

Listing with Stock Exchanges:

Tanla is a public limited Company listed on leading Indian stock exchanges The BSELimited (BSE: 532790 and National Stock Exchange of India Limited. (NSE: TANLA). Theannual listing fee for the financial year 2018-19 is paid to both these exchanges.

Particulars of Loans Guarantees or Investments:

Details of loans and guarantees given and investments made under Section 186 of the Actare given in the Notes to the Financial Statements.

Disclosure under Section 197(14) of Act

The managing director of the Company is not receiving any remuneration or commissionfrom any subsidiary companies of the Company.

Material Changes and Commitments:

Tanla has completed acquisition of Karix Mobile Private Limited (hereinafter referredas "Karix") on April 10 2019 making Karix a 100% wholly-owned subsidiary (WOS)of Tanla. Karix has a WOS Unicel Technologies Private Limited (hereinafter referred as"Unicel") making Unicel step down subsidiary of Tanla. Post-acquisitionRegistered Office of Karix and Unicel has been shifted to the State of Telangana from thestates of Tamilnadu and Karnataka respectively.

RBI has vide Order No. DNBS (H) CMS No. 131/00.01.692/2019-20 dated August 2 2019confirmed cancellation of the Registration of CapitalSiri Investments Private Limited asNBFC.

Apart from above acquisitions there are no material changes and commitments affectingthe financial position of the Company which have occurred between the end of the FY2018-19 to which the financial statements relate and to the date of this report.

Management Discussion & Analysis:

The Management Discussion and Analysis Report highlighting the industry structure anddevelopments opportunities and threats outlook risks and concerns etc. is furnishedseparately and forms part of this Annual Report as per the requirements of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015.

Directors' Responsibility Statement as required under Section 134 of the Companies Act2013:

The Directors' Responsibility Statement pursuant to the requirement of Section134(3)(c) and 134(5) of the Companies Act 2013 ("the Act") is appended asAnnexure-1 to this Report.

Consolidated Financial Results:

Pursuant to Regulation 33 of SEBI (Listing Obligations & Disclosures Requirements)Regulations 2015 and the Companies Act 2013 the Consolidated Financial Statementsprepared as per Companies Act 2013 and Indian Accounting Standards duly audited frompart of the Annual Report.

Consolidated Financial Statements incorporating the operations of the Company itsSubsidiaries Joint Venture Company and Associate Company is appended. Pursuant to Section129(3) of the Companies Act 2013 read with Rule 5 of Companies (Accounts) Rules 2014 astatement containing the salient features of the financial statements of the SubsidiariesJoint Venture and Associate is enclosed in Form AOC-1 as Annexure-2 to this Report.

Change in the nature of business if any:

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

Subsidiary Associate & Joint Venture (JV) Companies

Tanla Corporation Private Limited India ("TCPL")

A wholly-owned subsidiary of Tanla Solutions Limited based at Hyderabad India isengaged in development of products and services.

Tanla Mobile Asia Pacific Pte Limited Singapore ("Tanla Singapore" or"TMAP") a wholly-owned subsidiary of Tanla based at Singapore providesaggregator and offshore development services to clients in telecommunications and offshoreservice sectors.

Capitalsiri Investments Private Limited ("Capitalsiri") a wholly-ownedsubsidiary of Tanla Solutions Limited based at Hyderabad India is engaged in NBFCactivity and the Company is yet to commence its operations. RBI has vide Order No. DNBS(H) CMS No. 131/00.01.692/2019-20 dated August 2 2019 confirmed cancellation of theRegistration of CapitalSiri Investments Private Limited as NBFC.

Karix Mobile Private Limited ("Karix") a wholly-owned subsidiary of TanlaSolutions Limited is engaged in the business of Cloud Communications. It has received aCertificate of Registration from the Registrar of Companies on August 8 2000 and theCompany was acquired by Tanla on April 10 2019.

Unicel Technologies Private Limited ("Unicel") a wholly-owned subsidiary ofKarix and Step-Down Subsidiary of Tanla is engaged in the business of providing wirelessapplications hosting services designed to help businesses deliver Internet and othercontent and web applications to users. It has received a Certificate of Registration fromthe Registrar of Companies on May 29 2003 and Unicel became Step-Down Subsidiary of Tanlaas a result of acquisition of Karix by Tanla on April 10 2019.

TZ Mobile Private Limited ("TZ Mobile") a joint venture of Tanla with ZedWorldwide (ZWW) Spain is under liquidation w.e.f. June 18 2019 Jengatron Gaming PrivateLimited ("Jengatron") an associate Company of Tanla provides a skill basedmobile gaming platform.

The audited financial statements of each of its subsidiary associate and joint venturecompanies are available for inspection at the Company's registered office and also atregistered offices of the respective companies and pursuant to the provisions of Section136 of the Companies Act 2013 the financial statements of each of its subsidiarycompanies are also available on the Company's website www.tanla . com. Copies of theannual financial statements of the subsidiary associate and joint venture companies willalso be made available to the investors of the Company and those of the respectivecompanies upon request.

Deposits:

The Company has not accepted any deposit from the public under Chapter V of the Act orunder the corresponding provisions of Section 73 and 74 of the Companies Act 2013 and noamount of principal or interest was outstanding as on the Balance Sheet date.

Share Capital:

The paid-up equity share capital of the Company as on March 31 2019 was Rs. 1156.27Lakh.

Particulars

As at March 31 2019

As at March 31 2018

Number of shares Rs. Number of shares Rs.
SHARE CAPITAL
(a) Authorised Equity shares of Rs. 1/- each 200000000 200000000 120000000 120000000
(b) Issued Subscribed and fully paid-up:
Equity Shares of Rs. 1/- each fully paid-up 115626827 115626827 112421952 112421952
115626827 115626827 112421952 112421952

During the year the Company had issued shares as detailed below:

(i) Reconciliation of the shares outstanding at the beginning and at the end of thereporting period:

Particulars

As at March 31 2019

As at March 31 2018

Equity Shares No. of Shares Rs. No. of Shares Rs.
Shares outstanding at the beginning of the year 112421952 112421952 107485785 107485785
Add: Issued and allotted during the year 3204875 3204875 4936167 4936167
Less: Shares bought back during the year - - - -
Shares outstanding at the end of the year 115626827 115626827 112421952 112421952

The Company has one class of equity shares of Rs. 1/- each fully paid-up. As on April01 2018 the paid-up share capital of the Company was Rs. 112421952. For the year underreview the Company has issued & allotted 300000 equity shares under ESPS 2018 onDecember 27 2018 63750 equity shares under ESOP 2015 on March 7

2019 1176125 equity shares under ESPS 2018 on March 15 2019 and 1665000 equityshares to Promoters upon conversion of warrants into equity on Preferential basis on March29 2019.

During the year under review the Promoters Mr. D. Uday Kumar Reddy & Ms. D. TanujaReddy have subscribed to 7950858 warrants at Rs. 40/- each by paying 25% upfront amount.Out of the above 1665000 warrants were converted into Equity Shares on March 29 2019by paying remaining 75% amount. The balance 6285858 warrants are to be converted intoEquity Shares.

As on March 31 2019 the paid-up share capital of the Company was Rs. 115626827.

(ii) Terms/Rights and restrictions attached to the equity shares:

The Company has only one class of equity shares having a face value of Rs. 1/-. Eachshareholder is eligible for one vote per every equity share held.

(iii) The details of shareholders holding more than 5% shares in the Company:

D. Uday Kumar Reddy

Shareholding at the beginning of the year

Cumulative shareholding during the year

No. of shares % of total shares of the Company No. of shares % of total shares of the Company
1 At the beginning of the year 19496493 17.34 - -
26/10/2018 (Purchase) 7 0.00 19496500 17.34
28/01/2019 (Purchase) 190000 0.17 19686500 17.46
29/01/2019 (Purchase) 446947 0.40 20133447 17.86
29/03/2019 (Preferential Allot.) 832500 0.72 20965947 18.13
At the end of the year 20965947 18.13

Shareholding at the beginning of the year

Cumulative shareholding during the year

D. Tanuja Reddy No. of shares % of total shares of the Company No. of shares % of total shares of the Company
2 At the beginning of the year 14319270 12.74 - -
29/03/2019 (Preferential Allot.) 832500 0.72 15151770 13.10
At the end of the year 15151770 13.10

Particulars of Employees:

Disclosure pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 isprovided as Annexure-3 of this Report.

In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel)Rules 2014 including the amendments thereto a statement showing the names and otherparticulars of the employees drawing remuneration in excess of the limits set out in thesaid rules are provided in Annexure-4 to this report.

Extract of the Annual Return:

Pursuant to the provisions of Section 134(3) (a) of the Companies Act 2013 and rulesframed thereunder an extract of the Annual Return in form MGT-9 in the prescribed formatis appended as Annexure-5 to this Report. The Weblink for accessing the extract of annualreturn is www.tanla.com .

Corporate Governance:

Your Company is committed to good Corporate Governance coupled with good corporatepractices.

The report on corporate governance for the year ended March 31 2019 pursuant toRegulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015forms part of this annual report. A Compliance Report on Corporate Governance for the year2018-19 from a Practicing Company Secretary confirming compliance with the conditions ofCorporate Governance is attached to the Report on Corporate Governance.

The Corporate Governance Report inter alia contains the following disclosure:

i. Number of Board Meetings

ii. Composition of Audit Committee

iii. Composition of Nomination & Remuneration Committee

iv. Composition of Stakeholders' Relationship Committee

v. Composition of Corporate Social Responsibility Committee

vi. Appointment & Remuneration Policy (for

Directors Key Managerial Personnel & Senior Management Personnel of the Company)

vii. Performance Evaluation criteria of the Board its Committees & individualDirectors

viii. Details as required by SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Directors and Key Managerial Personnel:

Pursuant to the provisions of Sections 149 & 184 of the Companies Act 2013 andunder Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 all the Independent Directors of the Company have submitted a declaration that eachof them meets the criteria of Independence as prescribed in Section 149(6) of the Act andthere has been no change in the circumstances which may affect their status as anIndependent Director during the year.

Pursuant to provisions of Section 203 of the Act Mr. Dasari Uday Kumar Reddy Chairman& Managing Director Mr. Srinivas Gunupudi Kamoji Chief Financial Officer and Ms.Seshanuradha Chava Company Secretary are the Key Managerial Personnel (KMP) of theCompany.

No Director or KMP was appointed or had retired or resigned during FY 2018-19.

Mr. D. Uday Kumar Reddy Chairman & Managing Director of the Company is recommendedby the Board and by Nomination & Remuneration Committee to be reappointed as theChairman & Managing Director of the Company for next 5 (Five) years subject toapproval of the Shareholders.

Ms. Amrita Gangotra who was appointed by the board on July 31 2019 and Mr. RohitBhasin Mr. Sanjay Baweja & Mr. Sanjay Kapoor who were appointed by the board onAugust 30 2019 as Additional Directors up to the date of Annual General Meeting areproposed by the Board and Nomination & Remuneration Committee to be appointed as aregular Directors on the Board of the Company subject to the approval of Shareholders.

Mr. R. N. Agarwal & Ms. Kalpana Kunda are retiring from the Board as their term asIndependent Directors is expiring in this Annual General Meeting the Board thanks themfor their contribution on the Board during their association with the Company.

Dr. A. G. Ravindranath Reddy is retiring as Independent Director as his term isexpiring in this Annual General Meeting. The Board and Nomination & RemunerationCommittee propose to appoint and redesignate him as Non-Executive Director on the Board ofthe Company subject to the approval of Shareholders.

Brief particulars and expertise of each director seeking appointment/re-appointmenttogether with their other directorships and committee memberships has been given in theannexure to the Notice of the Annual General Meeting and Report on Corporate Governancewhich forms part of this Annual Report in accordance with the requirements of the ListingRegulations and applicable Secretarial Standards.

Declaration from Independent Directors:

The independent directors have submitted the declaration of independence stating thatthey meet the criteria of independence as provided in sub-section (6) of Section 149 ofthe Companies Act 2013 and Regulations 16 & 25 of the Listing Regulations. TheIndependent Directors have also confirmed that they have complied with the Company's codeof conduct

Familiarisation Programme for Independent Directors:

In terms of Clause 25(7) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 details of the familiarisation programme of the independent directorsare available on the website of the Company (www.tanla.com)

A meeting of Independent Directors was held on January 24 2019.

Committees of Board Number of Meetings of the Board and Board Committees:

During the year ended March 31 2019 Seven (7) Board Meetings were held. And the dateson which they were held are - May 4 2018 May 18 2018 August 14 2018 August 24 2018November 1 2018 January 23 2019 & March 7 2019.

As on March 31 2019 the Board has Four committees namely the Audit Committee theNomination and Remuneration Committee the Corporate Social Responsibility ('CSR')Committee the Stakeholders' Relationship Committee.

All the recommendations made by committees of the Board including the Audit Committeewere accepted by the Board. A detailed update on the Board its composition detailedcharter including terms and reference of various Board Committees number of Board andCommittee meetings held during FY 2018-19 and attendance of the Directors at each meetingis provided in the Report on Corporate Governance which forms part of this Annual Report.

Secretarial Standards:

Pursuant to the provisions of Section 118 of the Companies Act 2013 the Company hascomplied with the applicable provisions of the Secretarial Standards issued by theInstitute of Company Secretaries of India and notified by Ministry of Corporate Affairs.

Internal Financial Controls and their adequacy:

The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofits assets prevention and detention of fraud error reporting mechanisms accuracy andcompleteness of accounting records and timely preparation of reliable financialdisclosures. Refer to "Internal control systems and adequacy" in the ManagementDiscussion and Analysis report.

Whistle-Blower Policy/Vigil Mechanism:

Pursuant to the requirement of the Companies Act 2013 and Regulation 22 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company has aWhistle-Blower Policy and has established the necessary vigil mechanism for directors andemployees to report concerns about unethical behaviour. The said Policy provides foradequate safeguard against victimisation of directors/employees who avail of suchmechanism and provides access to the Chairman of Audit Committee in exceptional cases. Noperson has been denied access to the Chairman of the Audit Committee. The Whistle-BlowerPolicy has been placed on website of the Company and web link thereto is www.tanla.com.

During the year no whistle blower complaints were received.

Board Evaluation:

The Company believes that formal evaluation of the board and of the individualdirectors on an annual basis is a potentially effective way to respond to the demand forgreater board accountability and effectiveness. Evaluations provide an ongoing means fordirectors to assess their individual and collective performance and effectiveness on theBoard of the Company.

In line with the provisions of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosures Requirements) Regulations 2015 the Board has carried out evaluation ofits own performance the Directors individually and the Committees of the Board.

The board evaluation was performed after seeking inputs from all the directors andincluded criteria such as the board composition and structure effectiveness of boardprocesses information and functioning as provided by the Guidance Note on BoardEvaluation issued by the Securities and Exchange Board of India on January 5 2017 and theamendments brought in SEBI (LODR) Regulations in 2018.

Nomination and Remuneration Policy:

Pursuant to the provisions of Section 178(3) of the Companies Act 2013 and Regulation19 of the Listing Regulations the NRC has formulated a policy relating to the nominationand remuneration for the Directors and Key Managerial Personnel (KMP). The current policyis to have an appropriate mix of executive non-executive and Independent Directors tomaintain the independence of the Board and separate its functions of governance andmanagement.

The policy of the Company on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters are adopted as per the provisions of the Companies Act 2013. Theremuneration paid to the Directors is as per the terms laid out in the Nomination &Remuneration policy of the Company. The Nomination & Remuneration policy adopted bythe Board is placed on the Company's website www.tanla.com.

Risk Management:

The Company follows a comprehensive system of Risk Management. Your Company has adopteda procedure for assessment and minimisation of probable risks. It ensures that all therisks are defined and mitigated in accordance with the well-structured risk managementprocess.

During the year the Risk management team reviewed the elements of risk and the stepstaken to mitigate the risks and in the opinion of the Board there are no major element ofrisk which has the potential of threatening the existence of the Company. A report onrisk management is prepared by the management and forms part of this annual report.

Material Subsidiary Policy:

The Company has adopted a policy for determining material subsidiary in line with therequirements of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The Policy on Material Subsidiaries is available on thewebsite of the Company and weblink thereto is www.tanla.com

Related Party Transactions:

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.

None of the Directors had any pecuniary relationship or transactions with the Companyother than to the extent of their shareholding and except the payments made to them in theform of remuneration/sitting fee.

In accordance with Section 134(3)(h) of the Companies Act 2013 and Rule 8(2) of theCompanies (Accounts) Rules 2014 the particulars of contract or arrangement entered intoif any by the Company with related parties referred to in Section 188(1) in Form AOC-2 isattached as Annexure-6.

Corporate Social Responsibility Committee (CSR):

The Company has formed its Corporate Social Responsibility Committee and the details ofthe composition of the Corporate Social Responsibility Committee as required under theprovisions of Section 135 of the Companies Act 2013 are given in the Corporate GovernanceReport which forms part of this annual report.

Pursuant to the provisions of Section 135 of the Companies Act 2013 and the Rules madethereunder the brief outline of the Corporate Social Responsibility ('CSR') policy of theCompany and the initiatives undertaken by the Company on the CSR activities during theyear are provided elsewhere in this report in the format prescribed in the Companies(Corporate Social Responsibility) Rules 2014. The said policy is available on theCompany's website www.tanla.com .

The prescribed minimum CSR spend i.e. 2% of the average net profits of the Company forthe immediately preceding three financial years calculated as per Section 198 of theCompanies Act 2013 works out to Rs. 11.03 Lakh and the Company has spent Rs. 14.46 Lakhon CSR activities in the areas of Education. Detailed disclosure of CSR are provided inManagement Discussion & Analysis annexed to this Annual Report.

Auditors and Auditors' Report:

Statutory Auditors:

In terms of the provisions of Section 139 of the Companies Act 2013 M/s. M. N. Rao& Associates Chartered Accountants were appointed as the Company's Statutory Auditorsin the 22nd AGM for a period of one year i.e. till the conclusion of 23rdAGM. The Board has duly examined the Statutory Auditors' Report to the financialstatements which is self-explanatory and required no further clarifications.

The Auditors have not reported any frauds to the Audit Committee and/or to the CentralGovernment as prescribed under Section 143 (12) of the Companies Act 2013.

Auditors of the Company have completed their term as they have been appointed for aperiod of 1 year from the date of 22nd AGM until the conclusion of 23rdAGM to be held in 2019 and therefore the Board of Directors of your Company on therecommendation of the Audit Committee have recommended to the members for appointment ofM/s. MSKA & Associates Chartered Accountants Firm Registration number 105047W asStatutory Auditors of the Company for a period of 5 years from the conclusion of 23rdAnnual General Meeting of the Company till the conclusion of 28th AnnualGeneral Meeting to be held in 2024.

Internal Auditors:

The Company has appointed KPMG as the Internal Auditors for FY 2018-19 to auditspecific locations and processes. It reports to the Audit Committee about the adequacy andeffectiveness of the internal control system of your Company. The recommendations of theinternal audit team on improvements in the operating procedures and control systems arealso presented to the Audit Committee and the business to use these as tools forstrengthening the operating procedures.

Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act2013and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board had appointedM/s. BS & Company Company Secretaries LLP as Secretarial Auditors to conductSecretarial audit of the Company for the financial year 2018-19. The Secretarial Auditorshave submitted their report confirming compliance by the Company of all the provisions ofapplicable corporate laws. The Secretarial Audit Report issued by M/s. BS & CompanyCompany Secretaries LLP in form MR-3 is enclosed as Annexure-7 to this Annual Report.

The Report does not contain any qualification reservation disclaimer or adverseremark.

Cost Audit:

Pursuant to Section 148(1) of the Companies Act 2013 Cost Audit is not required forthe Company for the financial year ended March 31 2019.

Significant and material orders passed by the Courts/Regulators:

There are no significant and material orders passed by the Courts or Regulators againstthe Company.

Rating:

The rating was not changed during the year and the Company has maintained rating ofCARE A2+ by CARE and 5a3 by Dun & Bradstreet.

Insurance:

All the properties and insurable interests of the Company including buildings have beenfully insured.

Human Capital:

Employees are our most valuable assets and they play a vital role in the growth of yourCompany. The Company places the engagement development and retention of talent as itshighest priority to enable achievement of organisational vision. Structure Process andCulture are the cornerstones of our Human Resource strategy and we have made strides inthese areas during the last year.

With an unswerving focus on nurturing training and retaining talent your Companyprovides avenues for learning and development through functional behavioural andleadership training programmes communication channels for information sharing to name afew.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo:

The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act readwith the Companies (Accounts) Rules 2014 are enclosed as Annexure-8 to this Report.

Employee Stock Option Scheme (ESOP):

Nomination and Remuneration Committee of the Board of Directors of the Company interalia administers and monitors the Employees' Stock Option Plan of the Company inaccordance with the Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 ("SEBI Regulations"). There was no change in the ESOP schemeof the Company during the year.

The Company has an operative Employees Stock Option Scheme Plan 2015 (ESOP 2015-16)which provides for grant of Stock Options to eligible employees of the Company.

The details of Employee Stock Options pursuant to Section 62 of the Companies Act 2013read with Rules made thereunder and SEBI (Share Based Employee Benefits) Regulations 2014and erstwhile SEBI (Employees' Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines 1999 are provided in Annexure-9 to this Report. 63750 shares were grantedunder ESOP 2015 during FY 2018-19.

Employee Stock Purchase Scheme (ESPS)

Company believes in rewarding its employees for their hard work dedication andsupport which has led the Company on growth path. Equity based compensation is consideredto be an integral part of employee compensation across sectors.

The Company implemented employee stock purchase scheme i.e. Tanla Employee StockPurchase Scheme 2018" ("ESPS 2018"/"Scheme") pursuant to theapproval of shareholders on September 17 2018 on the recommendation of Nomination andRemuneration Committee of the Board.

The details of ESPS 2018 pursuant to Section 62 of the Companies Act 2013 read withRules made thereunder and SEBI (Share Based Employee Benefits) Regulations 2014 areprovided in Annexure-10 to this Report.

Sexual Harassment of Women at Workplace

Pursuant to the provisions of "The Sexual Harassment of Women at Workplace(Prohibition Prevention and Redressal) Act 2013" ("POSH Act") the Companyhas framed a Policy on Prohibition Prevention and Redressal of Sexual Harassment of Womenat Workplace and matters connected therewith or incidental thereto. Internal ComplaintsCommittee (ICC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent contractual temporary trainees) are covered underthis policy.

The Company has always provided a safe and harassment free workplace for every womanworking in its premises through various policies and practices. The Company alwaysendeavours to create and provide an environment that is free from discrimination andharassment including sexual harassment. The Company has been actively involved in ensuringthat the associates are aware of the provisions of the POSH Act and rights thereunder. Inthe year under review the Company has not received any complaint from any woman employee.

Acknowledgement:

The Board of Directors takes this opportunity to place on record their appreciation toall the Stakeholders of the Company viz. customers investors banks regulatorssuppliers and other business associates for the support received from them during the yearunder review. The Directors also wish to place on record their deep sense of gratitude andappreciation to all the employees for their commitment and contribution towards achievingthe goals of the Company. The relation between the management and the employees has beencordial throughout the year.

On behalf of The Board of Directors
For Tanla Solutions Limited
Sd/-
Hyderabad D. Uday Kumar Reddy
August 30 2019 Chairman & Managing
Director
(DIN: 00003382)

Annexures to Board's Report

Annexure-1

Directors' Responsibility Statement

Pursuant to the provisions of Sections 134(3)(c) and 134(5) of the Companies Act 2013and on the basis of compliance certificate received from the executives of the Company andsubject to disclosures in the Annual

Accounts as also on the basis of the discussion with the Statutory Auditors of theCompany from time to time and to the best of our knowledge and information furnished westate that:

i) In preparation of the Annual Accounts for the year ended March 31 2019 all theapplicable Accounting Standards prescribed by the Institute of Chartered Accountants ofIndia have been followed along with proper explanation relating to material departures ifany.

ii) We have adopted such accounting policies as selected in consultation withStatutory Auditors and applied them consistently and made judgements and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit of the Company for thefinancial year ended March 31 2019.

iii) We have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

iv) The Annual Accounts for the year ended March 31 2019 has been prepared on a goingconcern basis.

v) Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.

vi) The systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

On behalf of The Board of Directors
For Tanla Solutions Limited
Sd/-
Hyderabad D. Uday Kumar Reddy
August 30 2019 Chairman & Managing Director
(DIN: 00003382)

Annexure-2

Form AOC-1

(Pursuant to first proviso to sub-section (3) of Section 129 read with rule 5 ofCompanies (Accounts) Rules 2014)

Statement containing salient features of the financial statement of subsidiaries orassociate companies or joint ventures

Part A: Subsidiaries

Name of the Subsidiary The date since when subsidiary was acquired /date of incorporation Reporting period for the subsidiary concerned if different from the holding company's reporting period. Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries. Share capital Reserves and surplus Total assets Total Liabilities Investments Turnover Profit before taxation Tax expense Profit after taxation Proposed Dividend Extent of shareholding (in percentage)
1 Tania Corporation Private Limited 16-11-1998 31.03.2019 INR 13286470 540486416 735961219 182188332 347099388 34166499 10910919 23255580 100
2 Tania Mobile Asia Pacific Pte Ltd 24-04-2007 31.03.2019 USD 555063 4342620 14468685 9571002 26094602 1589779 1589779 100
3 Capitalsiri Investments Private Limited 17-11-2017 31.03.2019 INR 20500000 -4141101 21686497 5327598 -3689606 -3689606 100

Names of subsidiaries which are yet to commence operations- Capitalsiri InvestmentsPrivate Limited Names of subsidiaries which have been liquidated or sold during the year-Not applicable

Part B: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures

Particulars TZ Mobile Private Limited Jengatron Gaming Private Limited
1 Latest audited Balance Sheet Date 31.03.2019 31.03.2019
2 Date on which the Associate or Joint Venture was associated or acquired 27.07.2009 27-11-2018
3 Shares of Associate or Joint Ventures held by the company on the year end
No. 103490 60000
Amount of Investment in Associates or Joint Venture 10349000 20000000
Extent of Holding (in percentage) 50% 30%
4 Description of how there is significant influence Company holds 50% of shares in TZ Mobile Private Limited. Company holds 30% of shares in Jengatron Gaming Private Limited.
5 Reason why the associate/joint venture is not consolidated Not applicable Not applicable
6 Networth attributable to shareholding as per latest audited Balance Sheet 3465834 12347826
7 Profit or Loss for the year -22000 -13475869
(i) Considered in Consolidation -11000 -3096200
(ii) Not Considered in Consolidation - -946560

Names of associates or joint ventures which are yet to commence operations- Notapplicable

Names of associates or joint ventures which have been liquidated or sold during theyear- Not applicable

For M N Rao & Associates For and on behalf of the Board
Chartered Accountants Tanla Solutions Limited
Firm Regn. No. 005386S Sd/- Sd/-
M. V. Ratnam D. Uday Kumar Reddy Srinivas Kamoji Gunupudi
Partner Chairman & Managing Director Chief Financial Officer
Membership No. 008314 Din: 00003382 Sd/-
Hyderabad Seshanuradha Chava
May 02 2019 VP - Legal & Secretarial & Company Secretary

Annexure-3

The details of remuneration during the year 2018-19 as per Rule 5(1) of the Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014 are as follows:

Sr. No. Disclosure Requirement Disclosure Details
1. Ratio of Remuneration of each Director to the median remuneration of the employees of the Company for the financial year: Executive Directors Ratio to median remuneration (In %)
Mr. D. Uday Kumar Reddy 56.3
Non-Executive Directors
Mr. Ram Narain Agarwal 0.11
Dr. A. G. Ravindranath Reddy 0.52
Ms. Kalpana Reddy 0.52
2. Percentage increase in the remuneration of each Director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the Financial year Directors Chief Executive Officer Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
Mr. D. Uday Kumar Reddy -
Chairman & Managing Director
Mr. Ram Narain Agarwal -
Dr. A. G. Ravindranath Reddy -
Ms. Kalpana Reddy -
Mr. Srinivas Gunupudi Kamoji Chief Financial Officer 8.2%
Mrs. Seshanuradha Chava Company Secretary 6%

3. Percentage increase in the median remuneration of the employees in the financialyear - 48%

4. Number of permanent employees on the rolls of the Company as on March 31 2019 is130.

5. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average annual increase in salaries of employees was around 10%.

Increase in the managerial remuneration for the year was 10%.

6. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company is in compliance with its remuneration policy.

On behalf of The Board of Directors
For Tanla Solutions Limited
Sd/-
Hyderabad D. Uday Kumar Reddy
August 30 2019 Chairman & Managing Director
(DIN:00003382)

Annexure-4

Statement under Section 134 of the Companies Act 2013 read with Rule 5 (2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rule 2014

a) Employed throughout the Financial Year and in receipt of remuneration aggregatingRs. 10200000 per year or more:

Name Age and Qualification Designation and nature of duties Date of commencement of employment Experience in years Remuneration (in Rs.) Last Employment
D. Uday Kumar Reddy 52 Years MBA Chairman & Managing Director 27/11/1999 23 Years Rs. 22000000 (excluding contributions to provident and other funds

List of Top 10 employees in terms of Remuneration drawn as set out in Rule 5(2)Companies (Appointment and Remuneration 0f Managerial Personnel) Rules 2014

Sr. No. Name of the Employee Designation Remuneration* received (Rs.) p.a. Nature of employment whether contractual or otherwise Qualification and experience of the employee Date of Commencement of employment Age The last employment held before joining the Company The percentage of equity shares held by the employee in the Company within the meaning of Clause (iii) of subrule (2) of Rule 5 Whether the employee is a relative of any director or manager of the Company
1 Sriram Srinivasa Vinjamuri COO 15128560 Permanent MBA and 25.3 years 22/10/2018 49 Tata Teleservices No Employee was in receipt of No
2 Venkata Papi Reddy Konda AVP - Delivery Product Engineering 7180762 Permanent MCA and 25 Years 08/11/2006 49 Virtu mobile Pvt. Ltd. remuneration above the remuneration No
3 Srinivas Gunupudi Kamoji CFO 8289882 Permanent CA and 27 Years 08/08/2008 57 Omeir travel agency of Managing No
4 Ravichandra Reddy Kanuparthi Manager - Delivery 7337840 Permanent MBA and 20 Years 01/06/2001 43 Poojitha Infotech Director/ Whole-time No
5 Chandra Sekhar Konetisetti VP - Product Planning 6738115 Permanent MBA and 23.9 Years 01/11/2007 40 Tecsys Pvt Ltd Director No
6 Badrinath Krishnarao Agnihotri AVP - India Sales 5862715 Permanent MBA and 21.6 Years 12/02/2014 50 Loop Mobile Pvt. Ltd. No
7 Kiran Kumar Sikhakolli GM - Operations 6596001 Permanent MBA and 18.6 Years 11/02/2008 40 People infocom Pvt. Ltd. No
8 Amar Reddy Chilukuri Manager - Delivery 6374642 Permanent B.Tech and 16.8 Years 11/12/2002 39 - No
9 Seshanuradha Chava VP - Legal & Secretarial 6764010 Permanent M.COM LLb ACS-22.9 Years 06/11/2005 47 Virtusa No
10 Praveen Kumar Reddy Narra DGM - Pre-sales 6084698 Permanent MBA and 14.1 Years 16/07/2008 39 XiUS-BCGI Pvt Ltd. No

* Remuneration paid includes perquisite value of shares allotted under ESPS / ESOP.

b) Employed for part of the Financial Year and in receipt of remuneration aggregatingRs. 850000 per month or more:

Mr. Sriram Srinivasa Vinjamuri- COO of the Company- details in the tableabove-mentioned

1. Remuneration includes salary and allowances commission where applicable Company'scontribution to Provident Fund Superannuation Fund and Group Gratuity Schemereimbursement of medical expenses at actuals and monetary value of perquisites calculatedin accordance with the Income Tax Act/Rules.

2. There are no employees in the service of the Company within the category covered byRule 5 (2) (iii) of The Companies (Appointment & Remuneration of Managerial Personnel)Rules 2014.

3. None of the above employees is a relative of any Director of the Company.