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Vedavaag Systems Ltd.

BSE: 533056 Sector: IT
NSE: N.A. ISIN Code: INE359B01010
BSE 00:00 | 28 Feb 23.80 -0.20
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NSE 05:30 | 01 Jan Vedavaag Systems Ltd
OPEN 24.00
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VOLUME 973
52-Week high 37.50
52-Week low 17.90
P/E 7.75
Mkt Cap.(Rs cr) 55
Buy Price 23.80
Buy Qty 17.00
Sell Price 23.80
Sell Qty 1.00
OPEN 24.00
CLOSE 24.00
VOLUME 973
52-Week high 37.50
52-Week low 17.90
P/E 7.75
Mkt Cap.(Rs cr) 55
Buy Price 23.80
Buy Qty 17.00
Sell Price 23.80
Sell Qty 1.00

Vedavaag Systems Ltd. (VEDAVAAGSYSTEMS) - Director Report

Company director report

Dear Shareholders

Your Directors have immense pleasure in presenting the 20th Director'sReport of your Company together with the Audited standalone and consolidated financialstatements for the year ended 31st March 2018.

FINANCIAL HIGHLIGHTS

Rs. in Lacs

Consolidated Standalone
2018 2017 2018 2017
Total Income 9170.17 10162.69 7452.47 9409.69
Total Expenditure 7054.56 8424.39 6008.69 7923.09
Gross profit before depreciation and Tax 1750.17 1738.30 1212.31 1360.88
Depreciation 324.19 405.56 271.59 248.90
Profit Before tax 2155.73 1414.11 1483.90 1237.70
Provision for tax 493.17 409.43 308.06 375.81
Deffered Tax 163.82 (21.61) 127.59 (42.51)
Profit after tax 1498.74 1026.29 1048.25 904.40

OVERVIEW OF THE COMPANY'S FINANCIAL PERFORMANCE

During the year under review the total Income of the Company was Rs 7452.47 as againstRs. 9409.69 in the previous year which shows the decrease in revenue by -20.79%. Duringthe period The Company has earned a Profit after tax of Rs. 1048.25 compared to Rs.904.40 in the previous year which shows the increase by 15.90%.

DIVIDEND

Your Directors have recommended dividend of Rs. One per equity for the financial yearended 31st March 2018 which is payable on obtaining shareholders approval at the 20thAnnual General meeting on 29th September 2018.

SHARE CAPITAL :

Your company at its Extraordinary General Meeting held on 4th January 2017has issued 10000000 convertible equity warrants on preferential basis to promoters andNon-promoters at Rs. 39 per share. The company obtained In principle approval on 13thJanuary 2017 the allotment of the same was done on 18th January 2017.

Your company allotted 1685000 equity shares of Rs. 10 with premium of Rs. 29 afterreceipt of warrants amount from various allotees namely Mr. S. Nagaraj Mr. G. KaladharMr. Deven Nani Wadekar Mr. S. Abheesta and Mrs. D.V. Devamma and Mr. K.Vijaykumar duringthe year.

MATERIAL CHANGES AND COMMITMENTS IF ANY CRITERIA SPECIFY

There were no material changes and commitments occurred affecting the financialposition of the Company:

DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES

Your company has three subsidiaries as on 31 March 2018 namely VSL Data SystemsPrivate Limited Vagdevi Sark Edutech Private Limited and Vedavaag Common Services PrivateLimited.

In accordance with section 129(3)of the companies Act 2013a separate statementcontaining salient features of financial statements in the prescribed Form AOC-1 isannexed to this report (Annexure I).

RELATED PARTY TRANSACTIONS :

No Contracts or arrangements have been entered into by the company with related partiesreferred to in section 188(1) of the Companies Act 2013. (Annexure - 2)

CHANGE IN THE NATURE OF BUSINESS

No changes in the nature of business..

MANAGEMENT DISCUSION AND ANALYSIS:

A Detailed report on Management Discussion and analysis is provided as a separatechapter in Annual Report (Annexure:3).

ANNUAL RETURN

The Extract of Annual Return as required under section 92(3) of the Companies Act 2013in Form MGT-9 is annexed herewith for your kind perusal and information.

(Annexure: 4)

MEETINGS OF THE BOARD OF DIRECTORS

The following Meetings of the Board of Directors were held during the Financial Year2017-18:

S.No. Date of Meeting Board Strength No. Of Directors Present
1 29th May 2017 6 4
2 16th August 2017 6 5
3 2nd September 2017 6 5
4 18th October 2017 5 4
5 13th November 2017 5 4
6 11th January 2018 6 4
7 12th February 2018 6 4
8 29th March 2018 6 4

PRESENCE/ATTENDANCE OF DIRECTORS IN THE MEETINGS

S.No Name of Director Board Meeting Committee Meeting AGM
No. of Meeting held No. of Meeting attended No. of Meeting held No. of Meeting attended Held on 27 Sep 2017
1 Mr. J.S.R. Durgaprasad 8 5 6 4 Yes
2 Mr. J. Murali Krishna 8 8 6 2 Yes
3 Mr. B. Locabhiram 8 5 6 5 No
4 Dr. G. T. Murthy 8 6 6 6 Yes
5 Mr. Srinivas Pannala 8 4 6 2 No
6 Mrs. J. Sujatha 8 5 6 1 No

Report on Corporate Governance is annexed as Annexure - 7.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors of theCompany confirms that-

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period.

c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.

(d) The Directors had prepared the annual accounts on a going concern basis and

(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 provisionsof all applicable laws and that such systems were adequate and operating effectively.

APPOINTMENT OF INDEPENDENT DIRECTORS IN THE BOARD AND DECLARATION UNDER SECTION 149(6)

As at 31st March 2018 the Board Directors comprised of three Independentdirectors duly appointed by the company have given the declaration and they meet thecriteria of independence as provided under section 149(6) of the Companies Act 2013.

STATUTORY AUDITOR AND AUDITORS' REPORT

At the Annual General Meeting held on 27th September 2017 M/s. Sastri and Shah.Chartered Accountants were appointed as statutory auditors of the company to hold officetill the conclusion of the next Annual General Meeting.

In the place of the retiring auditor M/s. Pary & Co Chartered Accountants (FirmReg. 007288C) are proposed to be appointed as auditors till the conclusion of the nextAGM. M/s. Pary & Co. Chartered Accountants have consented to the said appointment andconfirmed that their appointment of made would be with in the limits specified U/s141(3)(g) of the Act.

They have further confirmed that they are not disqualified to be appointed as StatutoryAuditors in terms of the proviso to section 139(1) Section 141(2) and section 141(3) ofthe Act and the provisions of the companies (Audit & Auditors) Rules 2014. The Auditcommittee and the Board of Directors recommended the appointment of M/s. Pary & Co. asStatutory Auditors.

There are no observations (including any qualification reservation adverse remark ordisclaimer) of the Auditors in their Audit Report that may call for any explanation fromthe Directors. Further the notes to accounts referred to in the Annual Report areself-explanatory.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

The Board has appointed Ch.Veeranjaneyulu Practicing Company Secretary to conductSecretarial Audit for the financial year 2017-18. The Secretarial Audit Report for thefinancial year ended March 31 2018 is annexed herewith marked(Annexure: 5) to thisReport.

COST AUDITOR

Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintenance is notapplicable on the company.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As required under Section 135 of the Companies Act 2013 your Board of Directors hasconstituted a Corporate Social Responsibility (CSR) Committee to formulate and recommendto the Board a Corporate Social Responsibility (CSR) Policy which shall indicate theactivities to be undertaken by the Company as specified in Schedule VII of the CompaniesAct 2013 to recommend the amount of expenditure to be incurred on the activities and tomonitor the Corporate Social Responsibility Policy of the Company from time to time.

The Company's Corporate Social Responsibility Committee comprises of threeNon-executive Directors. The table sets out the composition of the Committee:

Name of the Director Position held in the Committee Category of the Director
Mr. B. Locabhiram Chairman Non Executive Independent Director
Mr. Srinivas Pannala Member Non Executive Independent Director
Dr. G. T. Murthy Member Non Executive Independent Director

The Annual report on CSR activates is annexed as Annexure - 6.

NOMINATION AND REMUNERATION COMMITTEE

The Company's Nomination and Remuneration Committee comprises of three Directors. Thetable sets out the composition of the Committee:

Name of the Director Position held in the Committee Category of the Director
Mr. Srinivas Pannala Chairman Non Executive Independent Director
Mr. J. Murali Krishna Member Executive Director
Dr. G. T. Murthy Member Non Executive Independent Director

TERMS OF REFERENCE

The Nomination and remuneration committee is constituted inline with provisions ofRegulation 19 of SEBI listing regulations and section 178 of the Act.

The Terms of Reference of the Nomination and Remuneration Committee are as under:

1. To identify persons who are qualified to become Directors and who may be appointedin senior management in accordance with the criteria laid down recommend to the Boardtheir appointment and removal and shall carry out evaluation of every Director'sperformance.

2. To formulate the criteria for determining qualifications positive attributes andindependence of a Director and recommend to the Board a policy relating to theremuneration for the Directors Key Managerial Personnel and other employees.

3. The Nomination and Remuneration Committee shall while formulating the policy ensurethat:

a. the level and composition of remuneration is reasonable and sufficient to attractretain and motivate directors of the quality required to run the Company successfully.

b. relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and

c. remuneration to Directors Key Managerial Personnel and senior management involves abalance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the company and its goals:

4. Regularly review the Human Resource function of the Company

5. Discharge such other function(s) or exercise such power(s) as may be delegated tothe Committee by the Board from time to time.

6. Make reports to the Board as appropriate.

7. Review and reassess the adequacy of this charter periodically and recommend anyproposed changes to the Board for approval from time to time.

8. Any other work and policy related and incidental to the objectives of the committeeas per provisions of the Act and rules made there under.

COMPOSITION OF AUDIT COMMITTEE

The Audit Committee consists of the following members

Name of the Director Position held in the Committee Category of the Director
Mr. B. Locabhiram Chairman Non Executive Independent Director
Mr. J.S.R. Durga Prasad Member Non Executive -Non Independent Director
Dr. G. T. Murthy Member Non Executive Independent Director

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism and overseas through the committee thegenuine concerns expressed by the employees and other Directors. The Company has alsoprovided adequate safeguards against victimization of employees and Directors who expresstheir concerns. The Company has also provided direct access to the chairman of the AuditCommittee on reporting issues concerning the interests of co employees and the Company.

COMPOSITION OF STAKEHOLDER RELATIONSIP COMMITTEE

Name of the Director Position held in the Committee Category of the Director
Dr. G. T. Murthy Chairman Non Executive–Independent Director
Mr. B. Locabhiram Member Non executive-Independent Director
Mr. Srinivas Pannala Member Non Executive Independent Director

REMUNERATION POLICY

Remuneration to Executive Directors:

The remuneration paid to Executive Directors is recommended by the Nomination andRemuneration Committee and approved by Board in Board meeting subject to the subsequentapproval of the shareholders at the General Meeting and such other authorities as may berequired. The remuneration is decided after considering various factors such asqualification experience performance responsibilities shouldered industry standards aswell as financial position of the Company.

Remuneration to Non Executive Directors:

The Non Executive Directors are paid remuneration by way of Sitting Fees andCommission. The Non Executive Directors are paid sitting fees for each meeting of theBoard and Committee of Directors attended by them.

COMPANY'S POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION

The Company's Policy relating to appointment of Directors payment of Managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Companies Act 2013.

FIXED DEPOSITS

The company has not accepted deposits from public within the meaning of Section 73 ofthe Companies Act 2013.

LOANS GUARANTEES AND INVESTMENTS

The Company has not made / given / advanced any Loan Guarantee and Investment duringthe financial year covered under section 186 of the Companies Act 2013.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on conservation of Energy Technology absorption Foreign Exchange earningsand outgo required to be disclosed under Section 134 of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 are provided hereunder:

1. Conservation of Energy : The operations of the company involve low energyconsumptionadequate measures have been taken to conserve energy

2. Technology Absorption : Since Business and technologies are changingconstantlyinvestment in research nad development activites is of parmount importance.Your company continues its focus on quality upgradtion of product and servicedevelopment.

3. Conservation of Energy Technology Asborption & Foreign Exchange earnings andoutgo.

RISK MANAGEMENT

Risks are events situations or circumstances which may lead to negative consequenceson the Company's businesses. Risk management is a structured approach to manageuncertainty. A formal enterprise wide approach to Risk Management is being adopted by theCompany and key risks will now be managed within a unitary framework. As a formalroll-out all business divisions and corporate functions will embrace Risk ManagementPolicy and Guidelines and make use of these in their decision making. Key business risksand their mitigation are considered in the annual/strategic business plans and in periodicmanagement reviews. The risk management process in our multi-business multi-siteoperations over the period of time will become embedded into the Company's businesssystems and processes such that our responses to risks remain current and dynamic.

INTERNAL FINANCIAL CONTROLS

The Companies Act 2013 re-emphasizes the need for an effective Internal FinancialControl system in the Company. The system should be designed and operated effectively.Rule 8(5) (viii) of Companies (Accounts) Rules 2014 requires the information regardingadequacy of Internal Financial Controls with reference to the financial statements to bedisclosed in the Board‘s report. To ensure effective Internal Financial Controls theCompany has laid down the following measures:

1. The internal financial control systems are commensurate with the size and nature ofits operations.

2. All legal and statutory compliances are ensured on a monthly basis. Non-complianceif any is seriously taken by the management and corrective actions are taken immediately.Any amendment is regularly updated by internal as well as external agencies in the system.

3. Approval of all transactions is ensured through a preapproved Delegation ofAuthority Schedule which is reviewed periodically by the management.

4. The Company follows a robust internal audit process. transaction audits areconducted regularly to ensure accuracy of financial reporting safeguard and protection ofall the assets. Fixed Asset verification of assets is done on an annual basis. The auditreports for the above audits are compiled and submitted to Board of Directors for reviewand necessary action.

BOARD EVALUATION

The Board evaluated the effectiveness of its functioning and that of the Committees andof individual directors by seeking their inputs on various aspects of Board/CommitteeGovernance.

The aspects covered in the evaluation included the contribution to and monitoring ofcorporate governance practices participation in the long-term strategic planning and thefulfillment of Directors' obligations and fiduciary responsibilities including but notlimited to active participation at the Board and Committee meetings. The Chairman of theBoard had one-on-one meetings with the Independent Directors and the Chairman of theNomination and Remuneration Committee had one-on-one meetings with the Executive andNon-Executive Directors. These meetings were intended to obtain Directors' inputs oneffectiveness of Board/Committee processes. The Board considered and discussed the inputsreceived from the Directors. Further the Independent Directors at their meeting reviewedthe performance of Board Chairman of the Board and of Non-Executive Directors.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.

4. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

Your directors further state that during the year under review there were no casesfiled pursuant to the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

ACKNOWLEDGEMENT

Your Directors wish to express their grateful appreciation to the continuedco-operation received from the Banks Government Authorities Customers Vendors andShareholders during the year under review. Your Directors also wish to place on recordtheir deep sense of appreciation for the committed service of the Executives staff andWorkers of the Company.

Date : 01-09-2018 For & on behalf of the Board of Directors
Place : Hyderabad J. Murali Krishna
(Managing Director)
DIN : 0000016054