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Directors Report of Cybermate Infotek Ltd.

Mar 31, 2015

Dear Members,

We have pleasure in presenting the report on our business and operations for the year ended 31st March 2015.

1. Extract of Annual Return

Form MGT 9 containing details, forming part of the extract of the Annual return is annexed to this report as Annexure "A" [pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014]

2. Number of Board meetings conducted during the year under review.

The directors of the company have met FIVE (5) times during the financial year under review for the purposes of discussing the affairs of the company and its business, the details of which are listed below:

S.No. Date of the Meeting For the quarter

1 30th May 2014 April - June

2 11th August 2014 July - Sept

3 4th September 2014 July - Sept

4 10th November 2014 Oct - Dec

5 13th February 2014 Jan - March

3. Financial Results The Company's financial performance for the year under review along with previous year's figures is given hereunder:

Particulars for the year ended For the year ended

INR-'000 INR-'000

31/03/2015 31/03/2014

Net Sales/Income from Business 1,17,211.97 1,00,429.76 Operations

Other Income 577.48 1,195.77

Total Income 1,17,789.45 1,01,625.53

Less Interest 13,261.09 6,389.95

Profit / (Loss) before Depreciation & -64,621.18 14,385.73 Exceptional Item

Less Exceptional Item 2,14,752.66 -

Profit before Depreciation -2,79,373.84 14,385.73

Less Depreciation 9,461.74 14,009.65

Profit after Depreciation and Interest -2,88,835.58 376.08

Less Current Income Tax - 1,139.98

Less Previous Year Adjustment of Income Tax - -

Less Deferred Tax 830.15 -1,023.77

Net Profit after tax -2,89,665.73 259.97

Dividend - -

Net Profit after dividend and Tax -2,89,665.73 259.97

Amount transferred to General Reserve - -

Balance Carried to Balance Sheet -2,89,665.73 259.97

Earnings per Share (Basic) -4 -

Earnings per share (Diluted) -4 -

Financial Highlights

Revenues-Standalone

Revenue for the year ended 31st March, 2015 is Rs 1172.11 lacs as compared to 1004.29 lacs the same period last year. The Company's services improved marginally by 16 % over the previous year.

Revenues-Consolidated

The subsidiaries of the company both at USA and UAE are dormant hence on account of consolidation there is no addition of revenues Profits- Standalone

The Company had earned a net profit of Rs. 13 Lakhs prior to charge off of the following

(a) Write off of Investment in US Subsidiary in full as against the amortisation over a period of four years

(b) Exceptional Items include Loans, Advances and Book Debts which have been carried forward over the past few years, have turned unrecoverable hence they have been written off.

However on account of the write offs, the company had reported a Loss of Rs28.96 Crores as against a Profit of Rs. 2.59 Lakhs in the previous year.

Profits-Consolidated

There are no additions to the Profits of the company on consolidated results as there were no operations in the Subsidiaries.

Capital Expenditure on Tangible Assets-Standalone

During the year the company had shifted its registered and corporate office to a new location. Capital Expenditure on Tangible assets amounted to about Rs 10.08 Lakhs as against 154.78 Lakhs in the previous year.

The Company has capitalised the Work in Progress amounting to Rs. 26.32 crores which was incurred over the past few years to Software Products as the expenditure pertains to additions in modules and features to the IT Products developed by the company as against Rs.NIL in the previous year.

Further the company has transferred an amount of Rs. 35.68 crores treated in holding company's books of account as Capital Work In Progress, to books of Subsidiary in UAE . The amount was incurred towards product/license fee and for ramping up operations of the Subsidiary.

Liquidity

The Company is dependent on funds from external sources for its working capital.

The promoters of the company have funded the working capital from their resources.

The company has been looking at raising long term working capital from the markets and had deferred the plan due to unfavourable conditions. Current year due to change in the Political environment and stable capital market conditions the company proposes to raise funds and hence a resolution is being proposed for approval of the shareholders.

4. Directors Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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 had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(A note on these controls forms a part of Management Discussion and Analysis Report)

f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

5. Directors and Key Managerial Personnel Profile of the Directors:

(i) Mr. Chenchaiah Pantulu Pattapurathi (DIN 01583136)

He is Seventy (70) years old. He is a commerce graduate and a member of Institute of Chartered Accountants of India (qualified in the year 1971). He has forty four (44) years of experience in industries such as Electrical Appliances, Food Processing, Ship Building, Cement, Cement Products, Textiles, Pharmaceuticals etc., to his credit. His experience has been in the area of Financial Management, Management Accounting and Taxation.

He promoted CIL in the year 1994 and has led the company since its inception and has been instrumental in shaping and executing strategy and financial structuring. At present he is Managing Director and Chief Executive Officer of CIL and is the chairman of the Nomination and Remuneration Committee.

He is a Trustee of Chennarayudu Public Charitable Trust.

He is a promoter of the company and holds 93, 15,820 shares of the company in his name as on March 31, 2015.

(ii) Mr.Satya Shiva Kumar Kanakadandi (DIN 02103299)

He is Forty Nine (49) years old. He is a science graduate. He has more than twenty (25) years of experience in Software Development, Training and Heading MIS Departments. He has been instrumental in launching various corporate training programs for universities, banks and other training establishments. He promoted CIL in the year 1994.

He has made significant contribution in setting up of the operations of the company since inception and has also been instrumental in providing a marketing base to the company and for delivering solutions in emerging technologies in yester years. At present he is Director Operations and Chief Operating Officer of CIL and is a member of Stakeholders Relationship Committee. He is a promoter of the company and holds 10, 61, 010 shares of the company in his name as on March 31, 2015.

(iii) Mr. Chandra Sekhar Pattapurathi (DIN 01647212)

He is Forty (40) years old. He is a commerce graduate and a member of the Institute of Cost and Works Accountants of India (qualified in the year 1998). He began his career with CIL as an Executive in Finance & Account. He has worked with a large retail chain in international markets as a Senior Financial Analyst before joining the Board of CIL has experience in, Finance, Accounts, Corporate Strategy, Financial Management, Taxation, Secretarial and International Trade Practices.

He has been appointed a director of CIL since 30th June 2006 .At present he is Director - Finance and Chief Financial Officer of the Company.

He is a promoter of the company and holds 3, 03,100 shares of the company in his name as on March 31, 2015.

(iv) Mr. Koteswara Rao Kanamarlapudi (DIN : 06401491)

He is sixty nine (69) years old. He is a commerce graduate and a member of the Institute of Chartered Accountants of India (qualified in the year 1972). He has worked with large logistics, Food Processing industries in India before setting up of a Construction and Contracting company in Doha, Qatar He joined the Board of CIL on 30th September 1996 as a non executive director

He is a promoter of the company and holds 31,000 shares of the company in his name as on March 31, 2015.

(v) Mr. Shankar Madhukar Khasnis (DIN : 02359561)

He is Forty Nine (49) years old. He is an Engineering Graduate.

He is the Chief Executive Officer of a Feedback Consulting, Mumbai. Shankar has worked across industry sectors and brings a strong strategic perspective to the board.

In his spare time, he teaches in management schools and enjoys mentoring students.

He is an independent director on the board of Cybermate Infotek Limited and is not a shareholder of the company.

(vi) Mr. Pawan Kumar Kasera (DIN 00125178)

He is Sixty One (61) years old. He is a commerce graduate. He has more than 30 years, experience as a business leader with "hands- on" mentality having commercial and technical background. He has extensive background and knowledge of business atmosphere, political and social structure in Asia South Pacific and some parts of South East Asia, Europe, Africa & the Middle-east. He brings his success in management of regional multicultural corporations with emphasis on marketing and corporate investment and also analytical skills and cultural approach.

He is an independent director on the board of Cybermate Infotek Limited and is not a shareholder of the company.

(vii) Dr. Devarapalli Jayarami Reddy ( DIN 02079731)

He is 70 years old. He is a medical practioner by profession. He is well experienced in business of health care and is presently an investor in midsized hospitals.

He is an independent director on the board of Cybermate Infotek Limited and is not a shareholder of the company.

(viii) Callepalli Kamakshi Bharathi (DIN 07144611)

She is 39 years old. She is a post graduate in Electronics. She has rich experience in telecommunications and signalling. She is presently mentoring research trainees on telecom engineering.

Independence of directors

The Board has received statement of disclosures from all the Independent Directors highlighting the fulfilment of all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. Every such statement submitted by the independents directors has been taken note of by the board.

Re-appointments

* Managing Director

Mr.P.C.Pantulu, Managing director is being re-appointed for a period of three years.

* Directors

Ms.C.Kamakshi Bharathi, was appointed as Additional Director on 28th March 2015 to hold the said office till the date of the Annual General Meeting. Subsequently, a notice has been received from a member proposing her candidature for reappointment.

Further, Mr Shankar Khasnis and Dr.D.Jayarami Reddy, retire at this Annual General Meeting and being eligible offer themselves for reappointment.

Disclosures about receipt of any commission by MD /WTD from company or any commission/remuneration from the subsidiaries The Managing Director, or Whole time directors are not in receipt of any commission from the company or any remuneration or commission from the subsidiaries.

6. Auditors and Auditors report

Statutory Auditors

M/s P. Murali & Co , Chartered Accountants, were appointed as Statutory Auditors from the conclusion of previous Annual General meeting until the upcoming annual general meeting. It is now proposed to re-appoint them as Statutory Auditors from the commencement of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting.. The Company has received a certificate from M/s P Murali & Co. to the effect that if reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

The Notes on financial statements referred to in the Auditor's Report are self explanatory

Secretarial Auditor

The Board has appointed Mr.Y. Koteswar Rao, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit report for the financial year ended March 31, 2015 is annexed herewith. Annexure-B The Auditors Report does contain any qualification. The Notes/Remarks on financial statements referred to in the auditors report are self explanatory.

The Secretarial Audit Report does contain any qualification, reservation or adverse remark.

7. Particulars of Loans, Guarantees or Investments made under section 186 of the Companies Act, 2013.

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

8. Particulars of Contracts or Arrangements made with Related Parties.

All Contracts/arrangements/transactions entered by the company during the financial year 2014-15 with related parties were in the ordinary course of business and on an arm's length basis. During the year the company has not entered into any contracts/arrangements/transactions with related parties which would be considered material.

In this regard, we draw your attention to Note 33 containing a Statement Pursuant to Clause (h) of sub section 134 of the companies Act 2013, and Rule 8(2) of the Companies (Accounts) Rules, 2014, to the financial statements which sets out related party disclosures.

9. Review of Business Operations and Future Prospects.

Your Directors wish to present the details of Business operations done during the year under review:

a. Services and Profitability

The year 2014 can be seen as a year of transformation at Cybermate. The year witnessed some changes in the operations of the company, shifting of the registered office of the company, commencement of BPO operations.

Despite negative business sentiments and tough working capital conditions, the company was able to address the challenges on time. During the previous year, the company was able to sustain existing IT operations, Network and Surveillance Services and Staff Augmentation Services to its clients.

The Company has also commenced its BPO operations and has two new clients in Telecom Domain. The BPO Operations are now stabilized and are contributing positive margins.

The company has also commenced work on platforms for emerging IT opportunities on SMAC Stack with a limited team and is working with one client.

The company's profitability for the period before exceptional items improved. However, due to the write off of Loans, Advances and Book debts amounting to Rs. 21.49 Crores, and charge off of investment in US Subsidiary in as against amortisation amounting to Rs. 13.07 Crores the operations resulted in a net loss of Rs. 20.16 Crores

b. Sales

Revenue for the year ended 31st March, 2015 is Rs 1172.11 lacs as compared to 1004.29 lacs the same period last year. The company's services improved marginally by 16 % over the previous year.

c. Marketing and Market environment

Our service offerings are primarily custom built application development, system integration , testing , maintenance , network , surveillance , IT support , consulting and BPO.

In order to differentiate our service and solution offerings, our strategy will be to bring in concepts of automation , analytics , improving productivity to gain higher accuracy and to reduce the total costs to clients. We continue to leverage the advantage of open source technologies in providing innovative and cost effective performance solutions.

Products: The company continues to enhance its products in health care domain and is targeting to get identified as a key player.

Heal soft (HMS): A complete Enterprise Hospital Management Software Suite (18 modules) for Clinics, Small, Medium and Large Hospitals at multi locations in multiple technologies which can be integrated to an ERP.

EHR: An Electronic Health Record is a digital version of a patient's medical records.

Platforms: The company at present is in the process of building mobile applications on multiple technologies to support E commerce and Utilities.

We have commenced our efforts in emerging mobile and digital technologies and big data analytics.

Services: - The company continues to improve upon its service offerings across domains in the below segments.

- IT Support

- Consulting

- Network and Surveillance

Infrastructure: - The company proposes to set up infrastructure such as data center to provide cost effective infrastructure solutions for storage , business continuity, disaster recovery for its own and third party applications and data.

Strategic Alliances: We propose to align with startups either as partners or as subsidiaries in creating, deploying, integrating and operating business solutions. We propose to raise additional capital to deploy in making selective business acquisitions that augment our expertise, compliment our presence in certain market segments and accelerate the execution of our strategies.

d. Future Prospects including constraints affecting due to Government policies

The future of IT Services business is providing a number of open source software components, and or proprietary software products , all of which can be deployed on public or private cloud or at the customer's premise. These platforms are intended to address the key challenges that businesses have n effectively storing , managing and analyzing the increasing amounts of data available to them.

CIL's objective is to enable customers find an improved way to package, develop , administer and monitor their enterprise data.

10. Dividend

No Dividend is being proposed for the current financial year.

11. Transfer of Unclaimed Dividend to Investor Protection Fund.

The provisions of Section 125(2) of the Companies Act, 2013 do not apply as there was no dividend declared and paid last year.

12. Material changes and commitments, if any affecting the financial position of the company occurred between the end of the financial year to which this financial statements relate and the date of the report

Considering certain factors, the following are the material changes and commitment that have occurred during the period under review which directly/indirectly had an impact on the financial position of the Company.

Company's Property and Litigation

The company has its own commercial space which was leased out to another I.T. Services Company for 10 years in 2004. The lease rentals were discounted with a housing finance company to augment working capital for the company. The tenant had terminated the lease and vacated the property of the company in 2009. Owing to the Political Conditions in the state the property could not be leased out and there by the account being irregular.

The company approached the lender to restructure the loan but they initiated proceedings under the SARFARESI Act to recover their dues. The company has approached the Debts Recovery Tribunal and appropriate Legal Authorities for relief to protect its property.

13. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo.

The detailed information as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished under Annexure "C" as attached to this report.

14. Statement concerning development and implementation of Risk Management Policy of the company.

The Company has constituted a Risk Management Committee at a board meeting held on the 28th May 2015 and details pertaining to the role and functions of this committee is mentioned under the Management Discussion and Analysis Report which forms a part of this report.

15. Details of Policy developed and implemented by the company on its Corporate Social Responsibility initiatives.

The Companies Act, 2015 lays down a mandatory provision wherein every company having

* Net worth of rupees five hundred crore or more, or

* Turnover of rupees one thousand crore or more or

* Net profit of rupees five crore or more

during any financial year, shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

As the said provisions are not applicable to the company, it has not developed and implemented any Corporate Social Responsibility initiatives.

16. Formal Annual Evaluation of Performance of the Board and its Committees

The manner in which the formal evaluation of the members of both the board ad various committees constituted by the company has been covered in the Corporate Governance Report. Annexure-D to this report.

The following policies relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 of the company are attached as Annexures E and F

(a) Policy relating to selection of directors appointment. (Annexure E)

(b) Remuneration Policy for directors, Key Managerial Personnel and other employees.(Annexure F)

17. Subsidiaries, Joint Ventures and Associate Companies.

Statement pursuant to Section 129 Subsection (3)(I) of the Companies Act 2013, read with Rule 5 of Companies Accounts Rules, 2014 relating to financial statements of subsidiary companies as formatted in AOC 1 form has been attached as Annexure- E to this report.

18. Deposits

The Company has neither accepted nor renewed any deposits during the year under review.

19. Disclosures

Board Committees

Disclosures pertaining to the mandatory committees constituted by the Board for specific purposes has been included in the Corporate Governance Report which forms a part of the Annual report. Thus the information pertaining to the composition of the and number of meetings held by the committees such as Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee are covered in there.

20 . Management Discussion and Analysis

Management Discussion and Analysis Report forms a part of the Annual Report

21. Vigil Mechanism

The Company has established a vigil mechanism and oversees through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company. The company has also set out a whistle blower policy in terms of the listing agreement with the stock exchange, so as to ensure that the business is conducted with integrity and the company's financial information is accurate.

The Policy on Vigil Mechanism and whistle blower policy may be accessed on the company's website.

22. Shares

Buy back of Securities

The Company has not bought back any of its securities during the financial year under review.

Sweat Equity

The Company has not issued any Sweat Equity Shares during the financial year under review.

Bonus Shares

No Bonus Shares were issued during the financial year under review.

Employees Stock Option Plan

The Company has not provided for any Stock Options to its employees during the financial year under review.

23. Disclosures under Sexual Harassment of Women at Workplace

In accordance with the provisions of the Sexual Harassment of Women at the workplace (Prevention, Prohibition and Redressal) Act, 2013, the company is required to have an Anti- sexual harassment policy though which an Internal Complaints Committee is constituted. The said committee meets at regular intervals to redress any complaints received by the committee in these lines and after due deliberation aims at disposing off the complaints. However there has been no such complaint filed within the company till date.

24. Acknowledgement

Your Directors place on record their sincere thanks to their employees, bankers, business associates, consultants, and various government authorities for their continued support extended to your Company's activities during the financial year under review. Your Directors also acknowledge gratefully for your support and for the confidence reposed on this Company.

By Order of the Board

P.C. Pantulu Managing Director

Place: Hyderabad Date: 30th July 2015


Mar 31, 2014

To the Members,

The Directors have pleasure in presenting their 20th Annual Report of the business and operations of your company for the year ended March 31st 2014.

Financial Results RS in LAKHS 2013-14 2012-13

Operational Income 1004.29 1239.73

Other Income 11.95 72.89

Total Revenues 1016.25 1312.62

Incr/(Deer) in Stock (48.50) -

Profit before Depreciation ,Interest & Tax 207.75 336.96

Depreciation 140.09 255.67

Interest 63.89 75.51

Profit before tax 376 578

Extra-ordinary Items/Prior Period Adjustment

Profit Before Tax 3.76 5.78

Provision for tax 11.39 60.77

Deferred Tax-Current Year -10.23 -60.89

Profit after Tax 2.59 5.90



Overview of Operations:

During the previous year the company continued its efforts to improve up the operations by identifying new technology areas such which are less dependent on working capital. There was a marginal improvement in the Software development and allied services and Staff Augmentation services but a notable drop in the products revenues. Further the company was receiving better traction in the networking, telecom engineering and related areas. The company is putting its best efforts to compete with players in the health care products and services and is confident of turning around the product revenue stream once the working capital position of the company improves.

The turnover of the company has dropped by 18.89 % over the previous year. Profit before Tax dropped by 34.95 %.

Directors'' Responsibility Statement

(As per the provisions of Section 217(2AA) of the Companies Act'' 1956), the Directors confirm that:

a) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation related to material departures.

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company as at the end of 31st March 2014 and the Profits for the year ended on that date.

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) the directors have prepared the annual accounts on a going concern basis. Information Pursuant to Section 217 of the Companies Act 1956.

As required under the provisions of Section 217(2A)of the Companies read with the Companies (Particulars of employees) Rules'' 1975 as amended form part of this report. However, in pursuance of section 219(l)(b)(iv) of the companies Act'' 1956 this report is being sent to all shareholders of the company excluding the aforesaid information and the said particulars are made available at the registered office of the company.

Fixed Deposits

Your company has not accepted any deposits and, as such no amount of principal or interest was outstanding on the date of Balance Sheet.

Directors:

Sri. Pawan Kumar Kasera and Sri Koteswar Rao Kanamarlapudi are to retire at the conclusion of this annual general meeting and being eligible offer themselves for reappointment. The Board of Directors recommend their appointment.

Auditors:

The auditors, M/s. P.Murali & Co., Chartered Accountants, Hyderabad (Firm Registration No 023412) retire at this Annual General Meeting and are eligible for re-appointment. The Board recommends their re-appointment.

Auditors Observations - Explanation of the Management.

Dues to Financial Institutions & Statutory Dues

The company''s property situated at Cyber Towers remained vacant for several months, dues to M/s Dewan Housing Finance Limited could not be met in time. This issue is being addressed on priority by discussing with the institution and a solution is expected to be reached amicably.

Wherever legal steps were initiated, the same are being addressed in accordance with the law.

During the Previous year the company was irregular in remitting of Tax Deducted at Source.

Employees

The Board records its sincere appreciation for the significant contributions made by employees across the company through their continued commitment and dedication.

Subsidiary Companies

The Company has two Wholly Owned Subsidiaries viz

1. Cybermate Infotek Limited Inc at U.S.A

2. Cybermate Infotek Ltd F.Z.E at Hamriyah Free Zone, Sharjah, U.A.E. The operations of the US Subsidiary remained dormant since the year 2002.

Further, the subsidiary company at U.A.E was incorporated in January 2008 and advances have been paid for acquisition of products for marketing in the Mddle East regions. Subsequently, due to the slowdown in economy the company has postponed its plans for commencement of its operations. The company is confident of marketing its offerings once the economy improves and will be in a position to present its financial statements.

The statement pursuant to Section 212(1) (e) of the companies Act 1956 in respect of the subsidiaries is attached.

Demerger

The Board of Directors has approved a scheme of Demerger of some of the activities of the company into separate companies. The scheme is being finalized and will be informed to the shareholders at the appropriate time.

Report on Corporate Governance, Management Discussion and Analysis.

A report on Corporate Governance along with certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as also a Management Discussion and Analysis Report pursuant to Clause 49 of the Listing Agreement are annexed hereto.

Acknowledgement

Your Directors acknowledge with a deep sense of gratitude the continued support extended by investors, customers, business associates, bankers and government departments.

For and on behalf of the Board

Place: Secunderabad P C Pantulu KS.Shiva Kumar P Chandra Sekhar Date: 11th August 2014 Managing Director Director & COO Director Finance


Mar 31, 2010

The Directors have pleasure in presenting their 16th Annual Report of the business and operations of your company for the year ended March 31st2010.

Financial Results: (Rs. in lakhs)

2009-10 2008-09

Operational Income 1410.12 2092.82

Otherlncome 54.70 156.22

Total Revenues 1464.82 2249.04 Profit before Depreciation,

Interest&Tax 360.44 577.98

Depreciation 240.89 240.40

Interest 36.80 40.81

Profit before Tax 82.74 296.77

Provision for Tax 8.52 19.50

ProfitafterTax 74.22 277.27



Overview of Operations:

The year began with many challenges and many things changed The financial sector suffered a meltdown, the stock markets collapsed Liquidity became tight the world over.What started as a problem in the housing sector became a problem of the financial sector and very shortly, it hit the real world economy. Funds to the real world economy got choked and customers found their business shrinking, their supply chains and inventories mounting and their profitability disappearing and the first quarter of the last year only deepened as the year progressed. We are not yet out of these problems. By the most favorable estimates, the world economy may hit the rock bottom in another 2/3 quarters, but the recovery will take bng time.

The pressure of liquidity and profitability forced customers all over cut costs, to postpone his commitments and to ensure that they got value for their money.

In a sense last year we emerged toughened by the fire of the global economic challenges and I believe we came out as a distinctly better company at the end of the year as compared to what we were at the beginning of the year.

Global Depositary Receipts(GDRs)

Your Company has been in a constant endeavour to get to *he next level in its services and offerings has been facing the pressure for liquidity. The company has commenced the folbw. on offering of its GDR. The company has obtained in-principal approvals from the Bombay stock exchange and also the Bangalore stock exchange where the equity share of the company is listed The company is in the process of concluding the offering to secure funds for its bng term working capital requirements.

Fixed Deposits

Your company has not accepted any deposits and, as such no amount of principal or interest was outstanding on the date of Balance Sheet

Directors:

Sri Pawan Kasera and Sri K Koteswara Rao are to retire at the conclusion of this annual general meeting and being eligible offer them selves for reappointment. The Board of Directors recommend their appointment In accordance with the requirements of Clause 49 of the Listing Agreement executed with the stock exchanges as also in pursuance of section 292A of the Companies Act1956, following steps have been taken by the Board of Directors:

a) The Board of Directors comprises eight members (inclusive of three executive directors and four Non-Executive directors). The reconstituted Board comprises the following:

1} Mr. P. C. Pantuhi Managing Director

2) Mr. K. S. Shiva Kumar Director & COO

3) Mr. P.Chandra Sekhar Director-Finance

4) Mr. K. K. Rao Non-Executive Director

5) Mr. Shankar Khasnis Independent Director

6) Mr. Pawan Kumar Kasera Independent Director

7) Dr.DJayarami Reddy Independent Director

Audit Committee:

The Audit committee provides direction to the audit and risk management function in the company and monitors the quality of internal audit and the Committee looks after the financial reporting process to ensure proper disclosure of financial statement, recommending appointment/ removal of external auditors and fixing remuneration.

Audit committee has been reconstituted as follows.

1) Mr. Pawan Kumar Kasera Chairman

2) Mr. D) Reddy Member

3) Mr.KKRao Member

Directors Responsibility Statement (As the provisions of Section 217(2AA) of the Companies Act 1956), the Directors confirm that

a) in preparation of the annual accounts, the applicable accounting standards have been followed abng with proper explanation related to material departures.

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company as at the end of 31* March 2010 and the profits for the year ended on that date.

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) the directors have prepared the annual accounts on a going concern basis.



For and on behalf of the Board

Sd/- Sd/- Sd/- P.C.Pantulu K.S.Shiva Kumar P Chandra Sekhar Managing Director Director Director &COO Finance.

Place:Secunderabad Date:31st May 2010