Zylog Systems Ltd.
|BSE: 532883||Sector: IT|
|NSE: ZYLOG||ISIN Code: INE225I01026|
|BSE 00:00 | 15 Jul||Zylog Systems Ltd|
|NSE 05:30 | 01 Jan||Zylog Systems Ltd|
|BSE: 532883||Sector: IT|
|NSE: ZYLOG||ISIN Code: INE225I01026|
|BSE 00:00 | 15 Jul||Zylog Systems Ltd|
|NSE 05:30 | 01 Jan||Zylog Systems Ltd|
To the Members
The Board of Directors submits the Annual Report of the Company along with the auditedfinancial statements for the financial year ended March 31 2016:
1. FINANCIAL RESULTS
Rs. in lakhs except per share data
Negative figures are given in "-" sign
2. RESULTS OF OPERATION
The company has been under great challenges during past few years. The company has beenin continuous turbulence for the past few years due to the acute financial difficultiesfaced by the company. The promoters of the company have been removed from theirdirectorship by the shareholders. The Administrator of the Company appointed by the MadrasHigh Court has reconstituted the Board with new set of directors in Nov' 15 whoseappointments were subsequently approved by the shareholders of the company in Mar16. Presently the company is in the process of consolidating its businessesincluding its subsidiaries. The net loss at the consolidated level has reduced from Rs.637.29 cr in the previous year to Rs. 195.05 crores. Total Revenue for Zylog SystemsLimited was Rs. 228.80 cr as against Rs. 411.01 cr in the previous year.
At standalone level the net loss amounted to Rs. 153.44 as against Rs. 628.40 cr. Therevenue recorded during the year is Rs. 139.41 cr as against Rs. 313.08 cr.
3. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
There are no significant events after balance sheet date.
4. INFORMATION ABOUT THE FINANCIAL PERFORMANCE/ FINANCIAL POSITION OFSUBSIDIARIES/ASSOCIATES/JVs/
The shares of the Canadian subsidiary M/s. Zylog Systems (Canada) Limited have beenpledged with ICICI Bank for availing loan for acquiring this company. Due to defaults inthe payments to the bank ICICI Bank has sold the pledged shares and recovered the money.However the company is pursuing this legally. Secondly the acquired entity M/s. MatrixPrimus Partners Inc was also under financial turbulence for last five years. The companyhas defaulted all its payments to its lenders vendors employees etc. Due to this thecompany lost its businesses employees and reputation in the market and as on date thecompany is virtually closed. Considering the present scenario of these companies theinvestment in these subsidiaries has been written off fully as loss of investments. Thecompany has provided diminution value of 95% on the investments made in its Indiansubsidiaries viz. Vishwa Vikas Services Limited Zylog Systems (India) Limited andAlgorithm Solutions Private Limited. The revenue of these companies have fallen steeplyand considering the marketable price of these companies the provisions have been made.Other than these there has been no material change in the nature of the business of theSubsidiaries. A statement containing brief financial details of the subsidiaries isincluded in the Annual Report.
Information in form AOC-1 with respect to the subsidiary company as required underSection 129(3) of the Companies Act 2013 is also forming part of the Board's Report.
5. SHARE CAPITAL
Directors state that no disclosure or reporting is required in respect of the followingitems as there were no transactions on these items during the year under review: a) Issueof equity shares with differential rights as to dividend voting or otherwise; b) Issue ofShares (including Sweat Equity Shares and ESOS) to employees of the Company under thescheme.
At the end of the financial year the Company's Equity Share Capital stands at Rs.2949.64 Lakhs consisting of 58992840 Equity Shares of Rs. 5/- each.
6. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTIONFOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134 of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 on energy conservation technology absorption foreignexchange earnings and outgo is given in Annexure 2 and forms an integral part of thisreport.
Based on the Company's performance the Directors have not recommended any dividendduring the year.
8. TRANSFER TO RESERVES
During the year the company has not transferred any amount to the general reserve dueto the loss it booked.
9. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).
10. EXTRACT OF ANNUAL RETURN
An extract of annual Return in form MGT 9 is forming part of this report.
11. PARTICULRS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts and arrangements with related parties are on arms length basis and in theordinary course of business. Form AOC-2 as required under section 134(3) (h) is enclosedas annexure-4 to this report.
12. CORPORATE GOVERNANCE
Pursuant to Schedule V of the SEBI (LODR) Regulation the following Reports/Certificatesform part of the Annual Report: the Report on Corporate Governance; the Certificate dulysigned by the CEO on the Financial Statements of the Company for the year ended March 312016 as submitted to the Board of Directors at their meeting held on April 29 2016; thedeclaration by the CEO regarding compliance by the Board members and senior managementpersonnel with the Company's Code of Conduct ; and
The Auditors' Certificate on Corporate Governance
13. MANAGEMENT DISCUSSION AND ANALYSIS:
Pursuant to Regulation 34 and other applicable regulations of SEBI (LODR) Regulations2015 a Statement on Management Discussion and Analysis forms part of the Boards report.
A cautionary note: Certain statements in the Management Discussion and Analysis sectionmay be forward looking and are stated as required by applicable laws and regulation. Manyfactors may affect the actual results which could be different from what we envisage interms of future performance and outlook.
14. ADVISORY COMMITTEE
The company is presently managed by Retd. Justice Mr. S. Rajeswaran appointed by Hon'ble High Court of Madras who has appointed Mr. Srikanth Parthasarathy Mr. Srihari S PMr. Vimalesh Kumar S Mr. Mehrotra M P Mr. Krishna Kishore and Mr. K.S.M. Rao to advisehim on the operations of the business and to oversee the day to day functions.
15. QUALITY INITIATIVES
Quality and best practices define the foundation of a company. Your company is an ISO9001:2015 now. It is a great achievement considering the present status of the company. Itshows that the company continues to maintain its quality standards and living up to theclients' needs despite all the odds. Your company continuously leverages cutting edgetools methodologies and benchmark standards to exceed the expectations of our customers.We as an IT Solution provider will continue to strive for excellence in all areas ofbusiness guarantee the quality of its software products at all stages of development andbuild the highest quality standards. Your Company follows the most widely used paradigmsfor QA management PDCA (Plan-Do-Check-Act) approach also known as the Shewhart cycle.The main goal of QA is to ensure that the product / service fulfills or exceeds customerexpectations. An independent audit team who reports directly to the Managing Directorensures proper implementation of all the control functions. The audit team conductsregular internal audits intimates the non-conformities found during such audits ensuresthat necessary corrective and preventive actions are taken and furnishes necessary summaryreports to the Senior Management. Your Company have developed and implemented controlsystems for software development for information security and for managerial functions.Policies processes and procedures have been developed for each control system and theseare placed in the company's network to ensure their availability to all the employees atall times.
16. PUBLIC DEPOSITS
The company has not accepted any deposits from the public during the financial year2015-2016 within the meaning of Section 73 of the Companies Act 2013 read with Companies(Acceptance of Deposits) Rules 2014 and there is no outstanding amount on account ofprincipal or interest as on date.
During the financial year ended 31st March 2016 under review the following directorswere inducted in the Board by the Administrator
1) Mr. M P Mehrotra
2) Mr. KSM Rao
3) Mr.Krishna Kishore
4) Mr. Srikanth Parthasarathy
5) Mr. Srihari S P
6) Mr. S Vimalesh Kumar
And Mr. Ramanujam Sesharathnam Managing Director & COO who was ousted byshareholders in AGM held during 2014-2015.
The Company appericated and thank him for the services rendered during his tenure asManaging Director of the Company.
18. DIRECTORS' RESPONSIBILITY STATEMENT
In terms of section 134(3) (c) read with section 134(5) of the Companies Act 2013 theDirectors to the best of their knowledge and belief and according to information andexplanation obtained by them confirm that (a) In the preparation of the annual accountsthe applicable accounting standards have been followed along with proper explanationrelating to any material departures; (b) Such accounting policies have been selected andapplied consistently and such judgments and estimates have been made that are reasonableand prudent so as to give a true and fair view of the state of affairs of the company asat the end of the financial year 31st March 2016 and of the profit of the company for theyear ended 31st March 2016.
(c) Proper and sufficient care has been taken 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; (d) The annual accounts have been prepared on a "going concern"basis.
(e) Proper internal financial controls to be followed by the company have been laiddown and such internal financial controls were adequate and were operating effectively (f)Proper systems have been devised to ensure compliance with the provisions of allapplicable laws have been devised and such systems were adequate and were operatingefficiently
19. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013
The company has not given loans guarantees nor made any .investments during thefinancial year under consideration.
20. CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business of the company during the year underreview
21. REMUNERATION OF KEY MANAGERIAL PERSONNAL
There is no remuneration paid to the Key Managerial Personnel in FY 2015-16.
22. BOARD EVALUATION
Pursuant to the provisions of Rule 4 of the Companies (Accounts) Rules 2014 the Boardhas carried out an annual performance evaluation of its directors individually as well asthe working of its Committees (Audit Nomination & Remuneration Committee andStakeholders Relationship Committee) and Independent Directors (without participation ofthe relevant Director). The Company is in process selecting the candidate for WomenDirector to full the compliance of the Companies Act 2013 and as stated provisions inSEBI (LODR) Regulations 2015.
23. BOARD MEETINGS
During the year 9 meetings of the Board of Directors were held. The details of themeeting are furnished in the Corporate Governance Report.
24. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
Your company has no employees covered in terms of the provisions of Section 197(12) ofthe Companies Act 2013 read with Rules 5(2) of the Companies (Appointment andRemuneration of Management Personnel) Rules 2014.
Your company has not paid any remuneration to the Managing Director Disclosurepertaining to remuneration and other details as required under Section 197 (12) ofthe Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is not applicable .
25. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
This is discussed in details in the Management Discussion and Analysis Report.
26. RISK MANAGEMENT POLICY
The Company has taken adequate steps towards management and mitigation of risks in atimely and effective manner. Your company has ensured that with proper Risk Companymechanism timely detection of risks is possible and effective control measures could beadopted for easy resilience of any damage arising thereof. Management Discussions andAnalysis Report contained more details on the risk management policy of the Company.
27. MATERIAL CHANGES
There were no material changes and commitments occurred after the Closure of thefinancial year 2015-2016 that affect the financial positions of the Company.
28. PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has in place a Prevention of Sexual Harassment policy in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibitionand Redressal) Act 2013.
M/s Ramadoss & Co Chartered Accountants Chennai have expressed theirunwillingness to continue. We appreciate their dedicated services rendered so far and yourDirectors appointed Mr. T.R. Sarathy Chartered Accountant Chennai have expressedwillingness to accept office. who will retire as the Auditors of the Company at theconclusion of the ensuing Annual General Meeting and being eligible pursuant to Section139 of the Companies Act 2013 and other applicable provisions and rules made thereunder.The Audit Committee in their meeting held on 22nd June 2016 has recommended theappointment of Mr. T.R. Sarathy Chartered Accountant Chennai.
30. SECRETARIAL AUDITOR
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed Mr. V. Sudindhar Practicing Company Secretary as Secretarial Auditor of thecompany to undertake Secretarial audit of the company. The report of the secretarialauditor is annexed as Annexure 5. It does not contain any qualification reservationadverse remark or disclaimer.
31. HUMAN RESOURCES
As this is a people business employees are vital and most valuable assets possessed bythe company. Despite the financial difficulties and even after major changes happened inthe company the employees who have been associated with the company for so many yearshave not left their services which shows their commitment and confidence they have. TheISO certification which we got during the year after 2-3 years shows the commitment totheir work which is one of the major inherent strength the company possesses. Yourcompany continues to attract highly talented individuals possessing skill sets with anx' factor. Your company rightly appeals to young qualified people who want to makea difference in their contribution and be at the forefront of change which is very muchthe hallmark that we pursue to the highest degree as we cross several pioneeringfrontiers in our pursuit of perfection. Employee strength was 450 at the end of the yearcontinues to be on an upward trend given the challenges we have. The effective andoptimal utilisation of precious onsite and offshore staff resources remains one of the keynear term objectives going forward.
32. ENVIRONMENTAL AWARENESS
"Go Green" initiatives to conserve resources has been initiated in theCompany. Steps required for conserving power across all delivery centres are beingundertaken. The Company has also taken initiatives within its office buildings to reduceelectrical power water and paper consumption. These initiatives shall be taken forward ata sustained pace.
Your directors profusely thank the clients vendors investors and bankers for theircontinued support of Company's growth. Your directors place on record their immenseappreciation of the contribution made by every employee at all levels who through theircommitment competency hard work solidarity cooperation and support have enabled thecompany to achieve this growth. Your directors sincerely thank the Government of Indiaparticularly the Department of Electronics the Customs and Excise Departments SoftwareTechnology Park Chennai the Ministry of Commerce Reserve Bank of IndiaDepartment of Telecommunications State Government and other Government agencies for theirsupport during the year and look forward to their continued support in the future.