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Tera Software Ltd.

BSE: 533982 Sector: IT
NSE: TERASOFT ISIN Code: INE482B01010
BSE 00:00 | 14 Nov 33.55 -1.60
(-4.55%)
OPEN

37.55

HIGH

37.55

LOW

33.10

NSE 00:00 | 14 Nov 33.40 -0.70
(-2.05%)
OPEN

38.00

HIGH

38.00

LOW

33.05

OPEN 37.55
PREVIOUS CLOSE 35.15
VOLUME 9401
52-Week high 78.00
52-Week low 22.65
P/E 24.49
Mkt Cap.(Rs cr) 42
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 37.55
CLOSE 35.15
VOLUME 9401
52-Week high 78.00
52-Week low 22.65
P/E 24.49
Mkt Cap.(Rs cr) 42
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Tera Software Ltd. (TERASOFT) - Director Report

Company director report

Dear Members

Your Board of Directors present the 24th Annual Report and the AuditedFinancial Statements for the year ended 31st March 2018.

FINANCIAL HIGHLIGHTS:

During the year performance of your Company is as under:

(Rs.in Lakhs)
PARTICULARS Year Ended 31.03.2018 Year Ended 31.03.2017
Gross Income 17185.73 27670.72
Expenditure 15977.65 25095.57
Profit before Finance Cost depreciation & tax 1208.07 2575.15
Less : Finance Cost 723.57 658.21
Depreciation 254.19 236.13
Profit before tax 230.31 1680.81
Less : Provision for Current tax 89.13 637.87
Tax Expense relating to earlier years (12.00) (4.87)
Deferred tax (4.43) (29.65)
Profit for the year 157.61 1077.46

* The financial statements for the year ended March 31 2018 are prepared as per Ind AS(Indian Accounting Standards) and accordingly previous year numbers are re-grouped inaccordance with the provisions of Ind AS for comparative information.

INDIAN ACCOUNTING STANDARDS (IND AS)

The Ministry of Corporate Affairs ('MCA') vide its notification in the Official Gazettedated February 16 2015 notified the Indian Accounting Standards ('Ind AS') applicable tocertain class of companies. Ind AS has replaced the existing Indian GAAP prescribed underSection 133 of the Companies Act 2013 read with the rules made thereunder. For yourCompany the said new accounting standards are applicable from April 12017. The impact onaccount of the transition is disclosed as part of notes to financial statements

OPERATIONS & STATE OF COMPANYS AFFAIRS

During the year under review your Company has reported a turnover of Rs. 17185.73lakhs and registered a net profit of Rs. 157.61 lakhs. The company's turnover is decreasedby 38% compared to the turnover of F/Y 2016-17 as there were no substantial value of workorder awarded to your company.

Further the Company has been effected with volatile market conditions where thetenders/bids submitted are either being cancelled or the entire tender process isre-initiated due to various reasons like insufficient budget from the Government/Organizations. Despite the uncertainties the Company is determained and focusing to getnew projects with an objective to achieve growth and profitability.

MATERIAL CHANGES & COMMITMENTS

There have been no material changes and commitments affecting the financial position ofthe Company during the financial year ended 31s1 March 2018.

DIVIDEND

Your Directors have not recommended the payment of dividend for the F.Y. 2017-18 due toissues in cash flows consequent on slow realisations from customers. Therefore the boardthought it better to conserve funds to support the existing projects and to invest inupcoming and expected projects. The Company is persistently striving to improve theposition both in terms of revenue profitability and cashflows. Hence the board requeststhe members to bear with the situation and seeks member's support and cooperation.

DEPOSITS

Your company has not accepted any deposits and as such no amount of principal orinterest is outstanding as on 31st March 2018.

SHARE CAPITAL

There was no change in the share capital during the year and the company neither issuedany shares with differential voting rights nor any employee stock options or sweat equityshares and does not have any scheme to fund its employees to purchase the shares of theCompany.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A Report on Management Discussion and Analysis is appended as (Annexure-I) tothis report as per the requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

CORPORATE GOVERNANCE

The Company endeavors to maximize the wealth of the shareholders by managing theaffairs of the Company with accountability transparency and integrity. A report onCorporate Governance pursuant to the provisions of Corporate Governance Code stipulatedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexedand forms part of the annual report. A Certificate from the Statutory Auditors of theCompany M/s. Mullapudi & Co. Chartered Accountants regarding compliance of conditionson Corporate Governance is enclosed as (Annexure II).

BOARD & COMMITTEES MEETING

During the year four meetings of Board of Directors of the Company were convened andheld in accordance with the provisions of the Companies Act 2013. The date(s) of theBoard Meeting attendance by the directors are given in the Corporate GovernanceReportforming part of this annual report

The Audit Committee is constituted by all the Independent Directors; Shri.R.S.Bakkannavar (Chairman) Radma Shri Dr T. Hanuman Chowdary and Shri. Koteswara Rao SSRas Members. During the year under review the Board has accepted all the recommendations ofthe Audit Committee.

Details of the composition of the Board and its Committees and of the Meetings held andattendance of the directors at such meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the limits prescribed underthe companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

DIRECTORS & KEY MANAGERIAL PERSONNEL:

A. Retirement By Rotation

Pursuant to Section 152 of Companies Act 2013 Shri T. Bapaiah Chowdary (DIN:00107795) Director will retire at the ensuing Annual General Meeting and being eligibleoffers himself for re-appointment. The Board recommends his re-appointment.

B. Changes In Key Managerial Personnel

During the year Mr. Pavan Pise ceased to be Company Secretary of the Company witheffect from 20th April 2017. Subsequently the Company had appointed Mrs. B.Sowmya as Company Secretary of the Company with effect from 22nd May 2017.

C. Declaration By Independent Directors

All the Independent Directors of the Company have given declarations stating that theymeet the criteria of independence as provided under Section 149(6) of Companies Act 2013.

D. Performance Evaluation

The Board evaluation process is designed to provide directors with an opportunity toexamine Board effectiveness and to make suggestions for improvement The Nomination andRemuneration Committee has devised a criteria for evaluating the performance of Board itsDirectors and its committees on the basis of definite parameters like attendance at themeetings of the Board effective participation decision making and performance ofspecific duties and obligations.

The evaluation of the Independent Directors and that of the Chairman was carried out bythe entire Board and the evaluation of Non-Independent Directors was carried out by theIndependent Directors.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

The Company has not made any loan given guarantee or provided security or madeinvestments as specified in Section 186 of Companies Act 2013.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

A) Conservation of energy:

The operations of the Company are not energy intensive and every effort has been madeto ensure the optimal use of energy avoid waste and conserve energy by using energyefficient computers and equipment with latest technologies.

(B) Technology absorption:

The Company is constantly upgrading its technology with emerging technologies. It hasnot incurred any expenditure on Research and Development.

(C) Foreign exchange earnings and Outgo:

Foreign Exchange Earnings during the year: NIL

Foreign Exchange outgo: Rs. 392483401

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

a. The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Name Designation Ratio to Median Remuneration
Mr. T. Gopichand Vice-Chairman & Managing Director 83.07%

b. The percentage increase in remuneration in each Director Chief Financial OfficerCompany Secretary in the financial year:

Name Designation % increase in Remuneration in the financial year
Mr. Vijaya Bhaskar Chief Financial Officer 19.44%

c. The percentage increase in the median remuneration of employees in the financialyear: Nil

d. The number of permanent employees on the rolls of the Company as on 31" March2018:955

e. The relationship between average increase in remuneration and company performance ismainly governed by the market trend.

f. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company was in line with business results.

g. Variations in the market capitalization of the Company Price Earnings ratio as atthe closing date of the current financial year and previous financial year:

Particulars 28th March 2018 31st March 2017 % Change
Market Capitalization (Rs. Crores) 46.61 127.25 -63.37%
Price Earnings Ratio 29.48 11.81 17.67%

h. Percentage increase or decrease in the market quotations of the shares of theCompany in comparison to the rate at which the company came out with the last publicoffer:

Particulars 28th March 2018 IPO price % Change
Market Price (BSE) 37.25 10 272.5%
Market Price (NSE) 37.15 10 271.5%

i. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the financial year 2017-18: Nil

j. The Key parameters for any variable component of remuneration availed by thedirectors:

The payment of sitting fees to the non-executive directors of the Company is wellwithin the applicable provisions of the Companies Act 2013. The said sitting fees isdetermined by the board of directors based on the recommendations made by the Nominationand Remuneration Committee and is paid amongst non-executive directors based on theirattendance and contribution at the board and at certain committee meetings.

k. The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but received remuneration in excess of the highest paid directorduring the year: NIL

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

The company affirms that the remuneration of the employees is as per its remunerationpolicy.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility Committee formed pursuant to section 135 ofCompanies Act 2013 approved and spent Rs. 2316210/- during the Financial Year 2017-18.The manner in which the amount spent during the financial year is detailed below:

SI. 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 the project or Programs was Undertaken Amount outlay (budget) project or program wise Amount spent on the project or program Subheads: (1) Direct Expenditure on projects or program (2) Overheads Cumulative Expenditure upto the reporting period Amount spent Direct or through implementation agency
1 Distribution of Set Top Boxes under concept of smart Village Rural Development Projects Mori Village East Godavari district Andhra Pradesh Rs. 2400000 (1) Direct Expenditure on projects = Rs. 2316210 Rs. 2316210 Direct

HUMAN RESOURCES

Human Resources' are recognized as a key pillar of any organization and so is for TeraSoftware Limited. The company puts constant efforts in recruiting and training theemployees and ensures to bring out the best of them. The company adopts a HR policy andensures that all the employees are aware of such policies. The needs of the employees areaddressed with high importance and efforts are made to provide a healthy environment.Besides all these the company places high emphasis on professional etiquette andintegrity.

RISK MANAGEMENT

The provisions related to the Risk Management Committee as stated in SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 are not applicable to theCompany. However the Company has constituted a Risk Management Committee and RiskManagement Framework to identify evaluate mitigate and monitor the risk management inthe Company. The Committee is responsible for reviewing risk management plan and ensuringits effectiveness. The audit committee has additional oversight i n the area of financialrisk and controls.

INTERNAL FINANCIAL CONTROLS

The Company has an Internal Financial Control System to commensurate with the size andscale of its operations. The scope of the internal audit is decided by the Audit Committeeand the Board. To maintain its objectivity and independence the Board has appointed aninternal auditor who reports to the Audit Committee and the Board on a periodic basis.The internal auditor monitors and evaluates the efficacy and adequacy of internal controlsystems in the company its compliance with operating systems accounting procedures andpolicies for various functions of the Company audit observations and actions takenthereof are presented to the Audit Committee.

VIGIL MECHANISM

The Company has a whistle blower policy as part of its Vigil Mechanism to deal withinstance of fraud and mismanagement if any. It provides for the directors and employeesto report genuine concerns and provides adequate safeguards against victimization ofpersons who use such mechanism. The Policy on vigil mechanism may be accessed on theCompany's website at the link: http://terasoftware.com/investors/vigil-blower-policy/. Therewere no complaints received during the year 2017-18.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS ORCOURTS

During the year under review no significant and material orders have been passed bythe Regulators or Courts or Tribunals impacting the going concern status and operations ofthe Company.

LISTING OF SHARES ON STOCK EXCHANGES:

The Equity Shares of your Company are listed on the BSE Limited and National StockExchange of India Ltd. The Annual listing fees of both the stock exchanges have been paid.

EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 92 of the Companies Act 2013 and rules framedthereunder the extract of the Annual Return in form MGT-9 is annexed herewith as (AnnexureIII) and forms part of this report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

Particulars of contracts or arrangements with related parties as referred to in Section188(1) of the Companies Act 2013 is mentioned in form AOC-2 and is appended as (AnnexureIV) to the Board's report.

There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which have apotential conflict with the interest of the Company at large. Prior omnibus approval ofthe Audit Committee is obtained on a yearly basis. The transactions so entered pursuant tothe omnibus approval are reviewed by the audit committee on a quarterly basis. The policyon Related Party Transactions as approved by the Board is uploaded on the Company'swebsite.

AUDITORS & AUDITORS REPORT:

i. STATUTORY AUDITORS:

M/s. Mullapudi & Co. Chartered Accountants (Firm Reg no: 006707S) Hyderabad havebeen appointed as Statutory Auditors of the Company on 23rd September 2017 fora period of five years

Further the amendment in the provisions of section 139 of companies Act 2013 vide theCompanies (Amendment) Act 2017 notification dated 7'1' May 2018 therequirement of ratifying the appointment of statutory auditor by members at every annualgeneral meeting has been omitted. Hence M/s. Mullapudi & Co. Chartered Accountantscontinue to hold office until the conclusion of 28th AGM to be held in the year2022.

. SECRETARIAL AUDITORS:

During the year the Company has appointed M/s. C.V. Reddy K & AssociatesPractising Company Secretaries as Secretarial Auditor. The Secretarial Audit reportfortheFinancial Year 2017-18 is annexed herewith as "Annexure-V" to thisReport. The Secretarial Audit Report does not contain any reservation qualification oradverse remark.

SEXUAL HARASSMENT

Your Company always believes and endeavors to provide safe and healthy environmentwhich is free from discrimination and harassment including sexual harassment. Du ring theyear there were no complaints filed pursuant to the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of Section 123124 and 125 of the Companies Act 2013 the unclaimed dividendand shares wherein the dividends unclaimed for a period of seven consecutive years i.e(Final Dividend for the year 2009-10) have been transferred to the IEPF Fund/Suspenseaccount respectively. The details of shares transferred to the I EPF suspense account isavailable on the website of the Company

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:

a) In the preparation of the Annual Accounts for the year ended 319 March2018 the applicable accounting standards have been followed and there were no materialdepartures.

b) We have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for the financial year ended 31st March 2018;

c) We have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) The Annual Accounts for the year ended 31st March 2018 have beenprepared on a going concern basis

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

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

ACKNOWLEDGMENT:

The Board of Directors take this opportunity to place on record their appreciation toall the stakeholders of the Company viz. Customers Investors Employees BanksRegulators Suppliers and other business associates for the support extended during theyear.

For and on behalf of the Board of Directors

Sd/ Sd/-
(Koteswara Rao SSR) (T. Gopichand)
Place : Hyderabad Chairman Vice Chairman and Managing Director
Date : 14.08.2018 DIN: 00964290 DIN: 00107886