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Zenith Infotech Ltd.

BSE: 532298 Sector: IT
NSE: ZENITHINFO ISIN Code: INE899A01017
BSE 05:30 | 01 Jan Zenith Infotech Ltd
NSE 05:30 | 01 Jan Zenith Infotech Ltd

Zenith Infotech Ltd. (ZENITHINFO) - Director Report

Company director report

To the Members,

Your Directors have pleasure in presenting their 16th Annual Report and the auditedAccounts for the financial year ended 30th September, 2012.

FINANCIAL HIGHLIGHTS

(Rs.in lakhs)

2011-2012 (Financial Year of 12 Months) 2010-11 (Financial Year of 18 Months)
Profit/ (Loss) before Depreciation & Taxation (4681.38) 5728.34
Less : Depreciation 1269.24 4041.08
Profit / (Loss) before Taxation & Exceptional Items (5950.62) 1687.26
Less : Exceptional Items NIL (3032.81)
Profit / (Loss) before Tax (5950.62) (1345.55)
Less : Provision for Taxation NIL 2975.50
Profit/ (Loss) after taxation available for appropriation (5950.62) (4321.05)
Profit/(Loss) brought forward from the previous year NIL 34.36
Amount available for appropriations : (5950.62) (4286.69)
Appropriations
Proposed Dividend NIL NIL
Tax on Proposed Dividend NIL NIL
Transfer to General Reserves (5950.62) (4286.69)
Balance Profit / (Loss) carried to the Balance Sheet NIL NIL

COMPANY'S ACTIVITIES

The Company suffered a sharp drop in its business during fiscal 2012, on account of aweak US economy as well as the reputational and financial damage the Company has sufferedon account of its ongoing litigation. The Company's turnoverwasatRs. 10661.51 Lakhs asagainst Rs. 49446.84 Lakhs in the previous year (of 18 months). Your Company's operations,during the year under report, yielded a loss of Rs. 5950.62 Lakhs.

DIVIDEND

Your Directors do not recommend payment of any Dividend in view of the loss made duringthe financial year ended 30th September, 2012.

REVIEW OF OPERATIONS

a) During the year, the Earnings before Interest, Depreciation and Taxes (EBIDTA) ofthe Company was negative at Rs. 4504.08 Lakhs as against Rs. 11052.66 Lakhs during theprevious year.

Exports of the company's TigerCloud and BDR products were Rs. 10588.05 Lakhs as againstRs. 48674.34 Lakhs during the previous year (comprising 18 months).

PROSPECTS AND OUTLOOK

Your Directors are fully seized of the fact that the need of the hour is to enhance theRevenue and Profit to higher levels and to achieve this end, efforts have been initiatedby adding on value of products, customers and markets.

• Vigorous marketing efforts and ceaseless cost reduction activities continue withmore thrust and vigor to accomplish these goals.

• The efforts are being intensified to sustain leadership position by constantlyupgrading the products to match advancing technology trends, maintaining the superiorityin quality, and continuing the unblemished timely service support;

• Your Directors are hopeful that all the above, coupled with continuousmonitoring of inventory, receivables and overheads, would result in healthier resultsduring the current and coming years.

SUBSIDIARY COMPANIES

The Board of Directors had passed a resolution in its meeting held on 14th February,2013, pursuant to 'General Circulars No. 2 & 3/2011 dated 08.02.2011 and 21.02.2011,giving consent, inter alia, for not attaching the audited Accounts of its subsidiarycompanies The audited Statements of Accounts of the Company's Subsidiary Companies inSingapore, Malaysia and the UAE in respect of the financial year ended 31st March, 2012have therefore not been attached, pursuant to Section 212(8) of the Indian Companies Act,1956. The list of subsidiaries included in the Consolidated Financial Statements and theCompany's holding therein is appended hereto as Annexure 'C and forms part of this Report.

FIXED DEPOSITS

During the year, the Company has not accepted any fixed deposits under Sections 58A and58AA of the Companies Act, 1956.

COMPULSORY DEMATERIALISATION OF COMPANY'S SHARES

The Company's Securities were compulsorily dematerialized with effect from 28thFebruary, 2001 and continue to be traded in the electronic form as per the relevant SEBIguidelines.

LISTING OF SHARES ON THE STOCK EXCHANGES

The Company's Securities continue to be listed on the Bombay Stock Exchange Limited(BSE), Mumbai and the National Stock Exchange of India Limited (NSE), Mumbai.

The Company has paid the requisite Annual Listing Fees for the year 2012-13, to theabove Exchanges.

DIRECTORS

Mr. Vijay Mukhi retires by rotation at the ensuing Annual General Meeting (AGM) andbeing eligible, offers himself for re-appointment.

BUSINESS EXCELLENCE AND QUALITY INITIATIVES

Your Company continues its process in the Zenith Business Excellence Model known asZBEM and the Company has gone through external assessment process with good results. Anumber of initiatives were launched in order to strengthen business processes.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors confirm:

(1) that in the preparation of the Annual Accounts, the applicable Accounting Standardshave been followed;

(2) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year ended 30th September, 2012 and of the loss of the Company for that year;

(3) that the Directors have taken proper and sufficient care for the maintenance ofadequate records in accordance with the provisions of the Companies Act, 1956, forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; and

(4) that the Directors have prepared the annual accounts on a going concern basis.

FOREIGN CURRENCY CONVERTIBLE BONDS

The Company has issued Foreign Currency Convertible Bonds (FCCBs) of the value of US$83 million. FCCBs of the value of US$ 6.080 Million were converted into 8,93,879 EquityShares of Rs. 10/- each, till date and these shares were duly listed on BSE and NSE in duetime. FCCBs of the value of US $ 76.92 million out of US$ 83 million are outstanding as on30th September, 2012. The Company's issued, subscribed and paid-up capital is Rs.12,68,13,790/-divided into 1,26,81,379 Equity Shares of Rs. 10/- each, fully paid-up, ason 30.09.2012. The matter is currently under litigation in the Bombay High Court and hencesub-judice.

CORPORATE GOVERNANCE

The Company has complied with the requirements of Corporate Governance as applicable tothe Company, as per the amended Listing Agreements with the Stock Exchanges. The Report ofCorporate Governance with the Auditors' Report thereon is annexed hereto in accordancewith Clause 49 of the Listing Agreement with the Stock Exchanges.

AUDITORS

M/s. C.L.Khanna & Company, Chartered Accountants, Mumbai, the Statutory Auditors ofthe Company, retire at ensuing Annual General Meeting and are eligible for reappointment.

EMPLOYEES & THE PARTICULARS UNDER SECTION 217(2A)

Relations between the management and its employees have been cordial. Your Directorsplace on record their appreciation of the efficient and loyal services rendered by theemployees of the Company at all levels.

The Statement in respect employees drawing a salary of Rs. 5 lakhs per month or morefor part of the year or Rs. 60 Lakhs or more per annum as required under Section 217(2A)of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975is enclosed as Annexure 'A' and forms part of this Report..

ENERGY, TECHNOLOGY ABSORPTION and FOREIGN EXCHANGE

The information required under Section 217(1)(e) of the Companies Act, 1956 read withthe Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, with respect to conservation of energy, technology absorption and foreign exchangeearnings and outgo is appended hereto as Annexure 'B' and forms part of this Report.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation of the support received from theCompany's Bankers and Shareholders and look forward to their continued support andgoodwill.

By Order of the Board
MUMBAI RAJKUMAR SARAF
14th FEBRUARY, 2013 CHAIRMAN

ANNEXURE 'B' TO THE DIRECTORS' REPORT

PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OFBOARD OF DIRECTORS) RULES, 1988.

A. Conservation of Energy : Though the Company's manufacturing operations are notpower intensive, regular and preventive maintenance of all equipment is undertaken by theCompany.

B. Technology Absorption : Form B enclosed.
C. Foreign Exchange Earnings and Outgo : Rs. In Lakhs
Total foreign exchange used and earned
(i) Expenditure in foreign currency 10336.38
(ii) Foreign Exchange earned 10588.05

FORM B

FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHONOLOGY ABSORPTION

1. Specific areas in which R&D carried out by the Company :

Being a product company in the area of systems technology, the Company needs tocontinuously invest in R & D to keep its current products TigerCloud and BDRcompetitive with market requirements.

2. Benefits derived as a result of the above R&D:

New product offerings which contribute to the revenue growth and profitability of theCompany.

3. Future plan of action :

Continued development of new products and improvement in existing products.

TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION

1. Efforts, in brief, made towards technology absorption, adaptation and innovation:

Tie up with various overseas companies for Cloud Computing products.

2. Benefits derived as a result of the above efforts :

Greater variety and better quality product availability and enhanced quality ofservices.

3. Expenditure in R & D : Rs. in Lac's

a. Capital NIL
b. Recurring NIL
c. Total NIL
d. Total R&D expenditure as a percentage of total turnover NIL%

4. Import of Technology :

No technology has been imported by way of foreign collaboration or otherwise forexisting range of products and services of the Company.

By Order of the Board
MUMBAI RAJKUMAR SARAF
14th FEBRUARY, 2013 CHAIRMAN

ANNEXURE 'C TO THE DIRECTORS' REPORT

The list of subsidiaries included in the Consolidated Financial Statements and theCompany's holding therein is given below:

Sr. No. Name of the Subsidiary Country of Incorporation % of Company's Holding
1 ZENITH INFOTECH (S) PTE LTD. SINGAPORE 97.56%
2 ZENITH INFOTECH SERVICES SDN BHD. MALAYSIA 97.56%
3 ZENITH INFOTECH FZE U.A.E. 100.00%
4 VU TELEPRESENCE FZC U.A.E. 93.58%
5 ZENITH CLOUD COMPUTING FZC U.A.E. 99.20%
6 VU TELEPRESENCE INC U.S.A. 93.58%

 

By Order of the Board
MUMBAI RAJKUMAR SARAF
14th FEBRUARY, 2013 CHAIRMAN
.