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Directors Report of Helios and Matheson Information Technology Ltd.

Sep 30, 2013

The Directors have pleasure in presenting the Twenty Eight Annual Report of your Company along with Audited Annual Accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS

The financial performance of the Company for the year ended on 31st March, 2013 is as follows:

Particulars 31.03.2013 31.03.2012

Turnover (FOB) 21,75,12,777.00 21,05,79,772.21

Other Income 69,71,928.28 60,71,901.12

Less: Total Expenditure 20,29,24,962.40 20,50,93,878.16

Profit before interest, depreciation and 2,15,59,742.88 1,15,57,795.17 tax

Interest 49,13,806.71 51,52,193.60

Depreciation 36,86,426.00 46,35,005.00

Profit before Exceptional & extra-ordinary 1,29,59,510.17 17,70,596.57 items & Tax

Less: Exceptional Item 11,16,605.00 9,27,769.62

Add/Less: Extra Ordinary Items

Profit before Tax 1,18,42,905.17 8,42,826.95

Less: Deferred tax 27,32,532.58 7,11,310.00

Less: Income tax 23,56,110.00 (3,87,389.00)

Net Profit/ (Loss) after Tax for the year 67,54,262.59 5,18,905.95

Profit/(Loss) brought forward 7,33,73,388.33 75773382.38

Profit available for appropriation 8,01,27,650.92 7,62,92,288.33 Appropriations:

Interim Dividend on Equity Shares for the year 24,17,400.00 0.00

Proposed dividend on equity shares 24,17,400.00 24,17,400.00

Tax on proposed dividend 7,84,326.00 4,01,500.00

Transfer to general reserve 2,00,000.00 1,00,000

Ba la nee ca rried forward 7,43,08,524.92 7,33,73,388.33

Previous year figures have been re-grouped and rearranged wherever considered necessary.

OPERATIONS

During the last two years global recession was at its peak which seriously affected certain sectors, exports not being an exception. Helios and Matheson Information Technology Ltd being a predominantly export oriented unit has also suffered serious negative consequences of the recession in Europe over the last two years which in turn has severely effected our export turn over. During the year 2009 10, it declined by 12% as compared to year 2008-2009. But in the year 2010-11 it was increased by 25.94% and in current year we have achieved 4.21% increment as compared to previous year''s turnover. In spite of this increment our profit margin comes down because of the effect of inflation on the price of raw materials.

a. In collaboration with M/s UVEX our German buyers:

European union is under recession. We are trying to stabilize out turnover and increase our customer base.

b. We undertook project implementation to start Vulka Shoe production for the Company Heckel Securite, France.

This has helped to nullify the reduction in exports to Europe over the last few years.

c. Development is on for new customers in Oman and Qatar to nullify reduction due to recession in middle east.

d. We are undertaking various activities to develop local Indian market:

Our presence in the local market was negligible in the year 2006 - 07. We have started activities during the year 2007-08 & by 2008-09 our local market was approx. 29429 Pairs valued at approx. Rs. 1.49 Crores. In the year 2010-11 our local turnover was increased approx. 64% in comparison with the year 2009-10.

During the year 2011-12 due to recession effect on local market our local turnover has decreased to 28250 pairs valued at 1.50 crore which is 43.62% decrease as compared to last year. And during the current year it is almost same as Previous Year i.e. 28341 pairs valued at 1.51 Crore. Efforts are on to increase local market hence to supplement decrease in export market.

However the thrust is to enter the Indian market in a big way as even in india people are moving towards safety consciousness and demand is slowly increasing for quality safety footwear even though price expectation is a challenge.

We expect to supplement the decrease in demand in Europe due to recession with increase in domestic supplies.

With reference to the above steps taken by the Company, the Company is confident of recovering the lost ground due to the recession in Europe.

However, there is one uncertainty in export business and that is the status of EURO. At the moment, it is very volatile and has decreased as compared with US Dollar from 1.45 to 1.30. Exchange rate is difficult to predict, but it is a global phenomena and both the exporters and the importers in Europe will have to find a solution to it.

We have also gone in for diversification. The idea is to expand business areas and for the purpose of the same the Company entered into business related to hotels, restaurants by altering the Object Clause of Memorandum of Association of the Company.

Our first foray into hospitality has been setting up of two restaurants and a Banquet hall in the Centre of the City. Although this has initially resulted a capital expenditure and additional revenue expenditure resulting decrease in overall profits of company. In the long run, we also intend to diversify into this line in a big way.

There has been very good response from the general public towards our restaurant ''STREETS'' and our Banquet hall at the same premises. Our second restaurant ''SPICES N SAUCES'' is just about ready to take off.

However we need to take a call on this restaurant business as restaurants are sprouting up in hundreds creating huge challenges to your customer base.

RESERVES

For the period under review the Board proposes to transfer Rs2.00 lacs to Genera I Reserve Account of the Company.

DIVIDEND

Your Company has always strived to maintain a balance by providing an appropriate return to the shareholders while simultaneously retaining a reasonable portion of the profit to maintain healthy financial leverage with a view to support and sustain the future growth. Company has a concerted dividend policy which ensures the availability of sufficient distributable income to its members. Your Company has paid 1 (One) interim dividend aggregating to Rs. 0.50 per equity share of Rs 10/- each (i.e. 5%) during the financial year ended on 31st March 2013. Your Director is pleased to recommend final dividend of Rs. 0.50 per equity share of Rs. 10/- each (i.e. 5%), for the year 2012-13 subject to approval of Shareholders in the Annual General Meeting. The total outgo on account of dividend payment, including dividend tax, is Rs. 56.19 Lacs.

FIXED DEPOSITS

The Company has not accepted or renewed any fixed deposits from public during the year.

CAPITAL STRUCTURE

During FY 12-13, there is no change in the capital structure of Company. The Authorised Share Capital of Company is 5.80 crore. Paid up share Capital of Company is 4.83 Crore.

DIRECTORS

Shri Rajesh V. Gupta, Director of the Company whose period of office is liable to retire by rotation pursuant to provisions of Company Act, 1956 and Article 39 of the Article of Association of the Company retire by rotation and being eligible offer themselves for reappointment. Shri Madhusudan Prasad Kejriwal and Shri Madhukar Chaturvedi who was appointed as additional Director of the Company w.e.f. 06.03.2013 pursuant to section 260 of Companies Act, 1956, and whose term of appointment expires at this Annual General Meeting. We Seek your support in confirming his appointment as director liable to retire by rotation.

A brief resume and other information required under clause 49 of the listing agreement is included in the Annual Report/ Notice of Annual General Meeting. The Board recommends their re- appointment.

AUDITORS

M/s. Madhukar Garg & Co., Chartered Accountants, having FRN 000866C the Statutory Auditors of the Company will retire at the ensuing Annual General Meeting and are eligible for reappointment. The Company had received a letter from M/s Madhukar Garg & Co., Chartered Accountants to the effect that their re-appointment, if made, would be within the prescribed limits under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The notes to the accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further comments.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its employees are its principal assets and that it''s continued growth is dependent upon the ability to attract and retain quality people. The Company also recognizes the importance of providing training and development opportunities to its people to enhance their skills and experiences, which in turn enables the company to achieve its business objectives. The morale of employees continued to remain high during the year contributing positively to the progress of the Company. However aspirations of employees in India remain to be high. This is a challenge as only growth can fulfill these aspirations and in today''s market scenarios one has to perform extraordinarily to achieve growth.

The Company has always provided a congenial atmosphere for work to all sections of the society. Your Company is committed to respect universal human rights. To that end, the Company practices and seeks to work with business associates who believe and promote these standards. The Company is committed to provide equal opportunities at all levels, safe and healthy workplaces and protecting human health and environment. The Company provides opportunities to all its employees to improve their skills and capabilities. The Company''s commitment extends to its neighbouring communities to improve their educational, cultural, economic and social well-being. Your Company is an equal opportunity employer and does not discriminate on the grounds of race, religion, nationality, ethnic origin, colour, gender, age, citizenship, sexual orientation, marital status or any disability not affecting the functional requirements of the position held.

The management took a strong decision to reduce production capacities in the Jaitpura plant and created a separate production facility at Sitapura.

This was done to minimize dependability on the existing labour force at Jaitpura.

It paid results and we got a larger section of the work force to agree on creation of an internal association of staff and workers and negotiated a more reasonable increment structure.

Thereby sidelining certain unreasonable self-profound leader among the workers, the company worked on offering a retirement compensation scheme for those who wished to leave. This would reduce cost of labour which had become redundant due to decrease in turnover, as such reduced productivity. 42 employees offered to resign by accepting the scheme. This cost the Company Rs.44.05 Lacs outflow as gratuity and additional compensation.

However discipline has returned with the removal of undesired elements in the work force. Production is now running smoothly in both the units.

We are also contemplating creating a self owned production structure in place of the existing structure which was on rental premises.

DELISTING OF EQUITY SHARES

The members have passed a special resolution in the Annual General Meeting held on 10.07.2004 permitting the Company to delist its shares from the stock exchanges of Delhi, Kolkata, and Ahmedabad. As on date, out of the four exchanges, the equity shares of the Company have been delisted from the Delhi, Ahmedabad and Jaipur Stock Exchanges. Delisting application of the Company is still pending with the Calcutta Stock Exchange Association Ltd., Kolkata since December 2004. Inspite of several reminders, the Company did not get any response from the exchange in the matter of the delisting status.

LISTING OF SHARE

Your Company''s shares are listed at Bombay Stock Exchange Limited and the listing fee for the year 2013-14 has been duly paid.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

On 1st October, 2010, "Mayur Abodes Private Limited" became the subsidiary of the Company by acquiring 97.56% holding. The company has converted its name to mayur abodes limited. In current year there are only 66.27% holding in this company.

As required under the Listing agreement with the stock exchange, a consolidated financial statement of the Company and its subsidiary "Mayur Abodes Limited" is attached.

The Board periodically reviews the working and performance of its subsidiary Company.

The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the company who may be interested in obtaining the same. The Consolidated Financial statements presented by the Company include financial results of its subsidiary also. The Directors have pleasure in presenting the Twenty Eight Annual Report of your Company along with Audited Annual Accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS

The financial performance of the Company for the year ended on 31st March, 2013 is as follows:

Particulars 31.03.2013 31.03.2012

Turnover (FOB) 21,75,12,777.00 21,05,79,772.21

Other Income 69,71,928.28 60,71,901.12

Less: Total Expenditure 20,29,24,962.40 20,50,93,878.16

Profit before interest, depreciation and 2,15,59,742.88 1,15,57,795.17 tax

Interest 49,13,806.71 51,52,193.60

Depreciation 36,86,426.00 46,35,005.00

Profit before Exceptional & extra-ordinary 1,29,59,510.17 17,70,596.57 items & Tax

Less: Exceptional Item 11,16,605.00 9,27,769.62

Add/Less: Extra Ordinary Items

Profit before Tax 1,18,42,905.17 8,42,826.95

Less: Deferred tax 27,32,532.58 7,11,310.00

Less: Income tax 23,56,110.00 (3,87,389.00)

Net Profit/ (Loss) after Tax for the year 67,54,262.59 5,18,905.95

Profit/(Loss) brought forward 7,33,73,388.33 75773382.38

Profit available for appropriation 8,01,27,650.92 7,62,92,288.33 Appropriations:

Interim Dividend on Equity Shares for the year 24,17,400.00 0.00

Proposed dividend on equity shares 24,17,400.00 24,17,400.00

Tax on proposed dividend 7,84,326.00 4,01,500.00

Transfer to general reserve 2,00,000.00 1,00,000

Ba la nee ca rried forward 7,43,08,524.92 7,33,73,388.33

Previous year figures have been re-grouped and rearranged wherever considered necessary.

OPERATIONS

During the last two years global recession was at its peak which seriously affected certain sectors, exports not being an exception. Helios and Matheson Information Technology Ltd being a predominantly export oriented unit has also suffered serious negative consequences of the recession in Europe over the last two years which in turn has severely effected our export turn over. During the year 2009 10, it declined by 12% as compared to year 2008-2009. But in the year 2010-11 it was increased by 25.94% and in current year we have achieved 4.21% increment as compared to previous year''s turnover. In spite of this increment our profit margin comes down because of the effect of inflation on the price of raw materials.

a. In collaboration with M/s UVEX our German buyers:

European union is under recession. We are trying to stabilize out turnover and increase our customer base.

b. We undertook project implementation to start Vulka Shoe production for the Company Heckel Securite, France.

This has helped to nullify the reduction in exports to Europe over the last few years.

c. Development is on for new customers in Oman and Qatar to nullify reduction due to recession in middle east.

d. We are undertaking various activities to develop local Indian market:

Our presence in the local market was negligible in the year 2006 - 07. We have started activities during the year 2007-08 & by 2008-09 our local market was approx. 29429 Pairs valued at approx. Rs. 1.49 Crores. In the year 2010-11 our local turnover was increased approx. 64% in comparison with the year 2009-10.

During the year 2011-12 due to recession effect on local market our local turnover has decreased to 28250 pairs valued at 1.50 crore which is 43.62% decrease as compared to last year. And during the current year it is almost same as Previous Year i.e. 28341 pairs valued at 1.51 Crore. Efforts are on to increase local market hence to supplement decrease in export market.

However the thrust is to enter the Indian market in a big way as even in india people are moving towards safety consciousness and demand is slowly increasing for quality safety footwear even though price expectation is a challenge.





We expect to supplement the decrease in demand in Europe due to recession with increase in domestic supplies.

With reference to the above steps taken by the Company, the Company is confident of recovering the lost ground due to the recession in Europe.

However, there is one uncertainty in export business and that is the status of EURO. At the moment, it is very volatile and has decreased as compared with US Dollar from 1.45 to 1.30. Exchange rate is difficult to predict, but it is a global phenomena and both the exporters and the importers in Europe will have to find a solution to it.

We have also gone in for diversification. The idea is to expand business areas and for the purpose of the same the Company entered into business related to hotels, restaurants by altering the Object Clause of Memorandum of Association of the Company.

Our first foray into hospitality has been setting up of two restaurants and a Banquet hall in the Centre of the City. Although this has initially resulted a capital expenditure and additional revenue expenditure resulting decrease in overall profits of company. In the long run, we also intend to diversify into this line in a big way.

There has been very good response from the general public towards our restaurant ''STREETS'' and our Banquet hall at the same premises. Our second restaurant ''SPICES N SAUCES'' is just about ready to take off.

However we need to take a call on this restaurant business as restaurants are sprouting up in hundreds creating huge challenges to your customer base.

RESERVES

For the period under review the Board proposes to transfer Rs2.00 lacs to Genera I Reserve Account of the Company.

DIVIDEND

Your Company has always strived to maintain a balance by providing an appropriate return to the shareholders while simultaneously retaining a reasonable portion of the profit to maintain healthy financial leverage with a view to support and sustain the future growth. Company has a concerted dividend policy which ensures the availability of sufficient distributable income to its members. Your Company has paid 1 (One) interim dividend aggregating to Rs. 0.50 per equity share of Rs 10/- each (i.e. 5%) during the financial year ended on 31st March 2013. Your Director is pleased to recommend final dividend of Rs. 0.50 per equity share of Rs. 10/- each (i.e. 5%), for the year 2012-13 subject to approval of Shareholders in the Annual General Meeting. The total outgo on account of dividend payment, including dividend tax, is Rs. 56.19 Lacs.

FIXED DEPOSITS

The Company has not accepted or renewed any fixed deposits from public during the year.

CAPITAL STRUCTURE

During FY 12-13, there is no change in the capital structure of Company. The Authorised Share Capital of Company is 5.80 crore. Paid up share Capital of Company is 4.83 Crore.

DIRECTORS

Shri Rajesh V. Gupta, Director of the Company whose period of office is liable to retire by rotation pursuant to provisions of Company Act, 1956 and Article 39 of the Article of Association of the Company retire by rotation and being eligible offer themselves for reappointment. Shri Madhusudan Prasad Kejriwal and Shri Madhukar Chaturvedi who was appointed as additional Director of the Company w.e.f. 06.03.2013 pursuant to section 260 of Companies Act, 1956, and whose term of appointment expires at this Annual General Meeting. We Seek your support in confirming his appointment as director liable to retire by rotation.

A brief resume and other information required under clause 49 of the listing agreement is included in the Annual Report/ Notice of Annual General Meeting. The Board recommends their re- appointment.

AUDITORS

M/s. Madhukar Garg & Co., Chartered Accountants, having FRN 000866C the Statutory Auditors of the Company will retire at the ensuing Annual General Meeting and are eligible for reappointment. The Company had received a letter from M/s Madhukar Garg & Co., Chartered Accountants to the effect that their re-appointment, if made, would be within the prescribed limits under section 224(1B) of the Companies Act, 1956 and that they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

The notes to the accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further comments.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its employees are its principal assets and that it''s continued growth is dependent upon the ability to attract and retain quality people. The Company also recognizes the importance of providing training and development opportunities to its people to enhance their skills and experiences, which in turn enables the company to achieve its business objectives. The morale of employees continued to remain high during the year contributing positively to the progress of the Company. However aspirations of employees in India remain to be high. This is a challenge as only growth can fulfill these aspirations and in today''s market scenarios one has to perform extraordinarily to achieve growth.

The Company has always provided a congenial atmosphere for work to all sections of the society. Your Company is committed to respect universal human rights. To that end, the Company practices and seeks to work with business associates who believe and promote these standards. The Company is committed to provide equal opportunities at all levels, safe and healthy workplaces and protecting human health and environment. The Company provides opportunities to all its employees to improve their skills and capabilities. The Company''s commitment extends to its neighbouring communities to improve their educational, cultural, economic and social well-being. Your Company is an equal opportunity employer and does not discriminate on the grounds of race, religion, nationality, ethnic origin, colour, gender, age, citizenship, sexual orientation, marital status or any disability not affecting the functional requirements of the position held.

The management took a strong decision to reduce production capacities in the Jaitpura plant and created a separate production facility at Sitapura.

This was done to minimize dependability on the existing labour force at Jaitpura.

It paid results and we got a larger section of the work force to agree on creation of an internal association of staff and workers and negotiated a more reasonable increment structure.

Thereby sidelining certain unreasonable self-profound leader among the workers, the company worked on offering a retirement compensation scheme for those who wished to leave. This would reduce cost of labour which had become redundant due to decrease in turnover, as such reduced productivity. 42 employees offered to resign by accepting the scheme. This cost the Company Rs.44.05 Lacs outflow as gratuity and additional compensation.

However discipline has returned with the removal of undesired elements in the work force. Production is now running smoothly in both the units.

We are also contemplating creating a self owned production structure in place of the existing structure which was on rental premises.

DELISTING OF EQUITY SHARES

The members have passed a special resolution in the Annual General Meeting held on 10.07.2004 permitting the Company to delist its shares from the stock exchanges of Delhi, Kolkata, and Ahmedabad. As on date, out of the four exchanges, the equity shares of the Company have been delisted from the Delhi, Ahmedabad and Jaipur Stock Exchanges. Delisting application of the Company is still pending with the Calcutta Stock Exchange Association Ltd., Kolkata since December 2004. Inspite of several reminders, the Company did not get any response from the exchange in the matter of the delisting status.

LISTING OF SHARE

Your Company''s shares are listed at Bombay Stock Exchange Limited and the listing fee for the year 2013-14 has been duly paid.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

On 1st October, 2010, "Mayur Abodes Private Limited" became the subsidiary of the Company by acquiring 97.56% holding. The company has converted its name to mayur abodes limited. In current year there are only 66.27% holding in this company.

As required under the Listing agreement with the stock exchange, a consolidated financial statement of the Company and its subsidiary "Mayur Abodes Limited" is attached.

The Board periodically reviews the working and performance of its subsidiary Company.

The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the company who may be interested in obtaining the same. The Consolidated Financial statements presented by the Company include financial results of its subsidiary also.

MANAGEMENT DICUSSION AND ANALYSIS REPORT

A detailed discussion on the industrial structure, development, opportunities, threats, review of operational performance and risks, as required under the Listing Agreements with stock exchanges, forms part of this report and is annexed herewith.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, your Directors confirmed that:

1. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and there are no material departures;

2. they 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 for the financial year ended 31st March 2012 and of profit/Loss of the Company for that year;

3. they have taken proper and sufficient care to the best of their knowledge and ability

for the maintenance of adequate Accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. they have prepared the Annual Accounts on a ''going concern'' basis.

PARTICULARS OF EMPLOYEES

There are no employees in the Company whose particulars are required to be disclosed under the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, from time to time.

COMPLIANCE CERTIFICATE

As per the requirements of Section 383A of the Companies Act, 1956 and Companies (Compliance Certificate) Rules, 2001, the Company has obtained a Certificate from M/s V. M. & Associates, Company Secretaries in Whole-time Practice, confirming that the Company has complied with the provisions of the Companies Act, 1956 and a copy of the Compliance Certificate is annexed to this report.

The appointment of M/s V.M. & Associates, Company Secretaries in Whole-time Practice, is also sought, for the year 2013-14, given in the notice.

CORPORATE GOVERNANCE

The Company considers Corporate Governance as an important step towards building investor confidence, improve investor''s protection and maximize long term shareholder value. It has implemented all the provisions of the Corporate Governance as stipulated under Clause 49 of the listing agreements with all the stock exchanges, where the Company is listed. It has always been a constant endeavor of the Company to adopt good corporate governance code through independent Board, transparent disclosures and shareholders empowerment for creating and sustaining shareholder value. A separate section on Corporate Governance along with a certificate from the Auditors of the Company, certifying compliance of stipulations of Clause 49 of listing agreements with the stock exchanges with regards to the Corporate Governance code is present elsewhere.

CONSERVATION OF ENERGY

The Company has taken various steps to reduce consumption of power, fuel, oil and other energy resources. The Company regularly takes advice from experts on energy conservation measures to be adopted. Regular studies are undertaken for assessing the possibilities of use of various methods by which the Company optimizes the use of energy without effecting the productivity, quality etc. Training programs are conducted to increase awareness on energy saving. As already mentioned, the efforts of the Company have already started showing results as the power, fuel and water expenses have been reduced for the year under review. This reduction has been achieved despite of escalating power and fuel prices.

RESEARCH & DEVELOPMENT / TECHNOLOGY ABSORPTION

Company continued to give utmost importance to the R&D activities. The Company has its own in- house well-developed Research and Development division. The objective of the Company through continuous Research and Development activities is the introduction of cost effective, state-of-art- products with enhanced life and to increase the production capacity. The Company''s Laboratory and R&D division is continuously working towards new developments and keeps pace with the latest developments in high tech areas.

FOREIGN EXCHANGE EARNING AND OUTGO

Activities relating to exports; initiatives taken to increase exports, development of new export markets for product and services; and export plans:

The Company is engaged in the manufacture and export of leather safety shoes and shoe uppers. The majority sale is through exports. Due to the economic slow down, the export market of the regular products has been badly affected. This is being countered by two activities: -

A. Realign fresh business from existing customers with new products.

B. Develop an Indian Market network.

Hopefully the results should start showing with in the next six months. It is our endeavor to fight the worldwide recession.

(Amount in Rs.) Earning:

Export (FOB) 1798.92

Outgo:

Travelling expenses 11.63

Claim & compensation for quality & Development 0.00

Raw material 179.27

Sales Commission 0.00

Repairs & Maintenance 1.20

Plant & machinery 2.68

Membership Fees 1.55

Testing fees 0.27

Royalty 197.68



ACKNOWLEDGEMENT

Your Directors would like to express their appreciation for assistance and co-operation received from the Bankers, Central & State government, Local Authorities, Client, Vendors, Advisors, Consultants, Associates at all levels for their continued guidance and support. Your Directors also wish to place on record their deep sense of appreciation for their commitment, dedication and hard work put in by every member of the Company.

To them goes the credit for the Company''s achievement and to you, our shareholders we are deeply grateful for the confidence and the faith that you have always reposed in us.

For and on behalf of the Board of Directors

PLACE : Jaipur Sd/- Sd/-

DATE : 30.05.2013 R.K. Poddar Amita Poddar

Director Director


Sep 30, 2012

To the members of the company

The directors have great pleasure in presenting the annual report together with audited statement of accounts for the year ended September 30, 2012.

consolidated standalone

financial highlights 2011-12 2010-11 2011-12 2010-11 In Rs. in Rs. in Rs. in Rs.

net revenue from operations 452,05,81,457 394,14,84,572 308,39,19,980 259,01,34,455

less expenditure 351,72,78,952 315,19,23,741 232,52,57,512 196,42,22,961

operating profit (pbidt) 100,33,02,505 78,95,60,831 75,86,62,468 62,59,11,594

Interest 20,51,99,592 13,12,51,927 18,38,28,194 11,23,28,263

profit before depreciation & tax (pbt) 79,81,02,913 65,83,08,904 57,48,34,274 51,35,83,331

Depreciation 42,34,87,038 38,13,99,581 29,79,43,411 28,50,32,096

profit before tax 37,46,15,875 27,69,09,323 27,68,90,863 22,85,51,235

provision for taxation 6,74,85,866 6,25,23,300 5,53,15,987 4,44,39,137

profit after tax 30,71,30,009 21,43,86,023 22,15,74,876 18,41,12,098

provision for deferred tax 1,30,14,433 1,33,65,153 1,12,54,813 1,18,15,561

profit after deferred tax 29,41,15,576 20,10,20,870 21,03,20,063 17,22,96,537

balance brought forward 51,66,76,293 60,76,03,627 22,14,10,737 34,10,62,404

Profit available for appropriation 81,07,91,869 80,86,24,497 43,17,30,800 51,33,58,941 appropriations

proposed final dividend 4,30,42,192 3,58,68,494 4,30,42,192 3,58,68,494

dividend distribution tax 69,82,520 60,79,710 69,82,520 60,79,710

general reserve 15,00,00,000 25,00,00,000 15,00,00,000 25,00,00,000

balance carried forward 61,07,67,157 51,66,76,293 23,17,06,088 22,14,10,738

results of operation: consolidated

income for the year ended September 30 2012 was Rs..452.06 crore as compared to Rs..394.15 crore for the previous year, net profit after tax wasRs.. 29.41 crore vis-a-vis Rs.. 20.10 crore for fy 2010-11. earningspersharewas Rs..12.30comparedto Rs..8.41 for the previous year.

standalone

income for the year ended September 30 2012 was Rs. 308.39 crore as compared to Rs.. 259.01 crore for the previous year, net profit after tax was Rs. 21.03 crore vis-a-vis Rs.. 17.23 crore for fy 2010-11. earnings per share was Rs..8.80 compared to Rs.. 7.21 for the previous year.

share capital

the paid up share capital of the company as on September 30 2012 stood at Rs. .23.91 cr and the reserves and surplus stood at Rs..206.18 cr and on consolidated level reserves and surplus stood at Rs.. 268.29 cr as against Rs.. 242.61 cr in the previous year.

dividend

your directors are pleased to recommend an enhanced dividend of re 1.80 per share on a paid up capital of X 23,91,23,290 total dividend pay-out including dividend distribution tax is Rs..5.00 cr.

allotment of convertible warrants on preferential basis in terms of the approval given by the shareholders of the company at the last annual general meeting held on 29.03.2012 and upon receipt of requisite statutory approvals, the board of directors of the company had, on 23.05.2012, allotted 12.50 lakh nos of convertible warrants each on preferential basis to g muralikrishna and v ramachandran, two of the promoters of the company, these warrants are convertible upon exercise of the option by the allottees within 18 months from the date of allotment, the promoters have brought in Rs..1,82,75,000 towards application money as per sebi guidelines, they have further brought in Rs..2,74,12,500 upon exercise of option for allotment of first tranche of equity shares as per applicable guidelines.

business and prospects

the business focus continues to be on banking and financial services and insurance, healthcare and technology verticals.

in the bfsi vertical, the company has seven of the top 20 global banks as its clients, clients in this vertical include universal banks, investment banks, capital market institutions, insurance companies etc. in the healthcare vertical the company caters to healthcare providers, healthcare payers and life sciences companies, the company works for multinational system integrators and technology companies, an iconic global automobile giant is another significant relationship in the manufacturing segment.

the company has long-standing relationships with large multinational corporations, top 20 clients are all fortune 500 corporations.

focus on a few large clients has helped the company to strengthen the relationship and gain increased traction from existing clients, the company derives more than 90% of revenues through repeat business, which is a result of established client relationships.

the company has a strong deal pipeline and there is strong traction in the bfsi vertical.

the time tested relationship the company enjoys with these marquee clients is the main driver propelling huge organic growth momentum, as a result of constant efforts in mining these accounts, the company is witnessing record growth rate over the last few quarters, the management feels this organic growth thrust would take the company into the big league during the current decade.

this is endorsed by the credit rating agency crisil too. crisil in their report states that helios will continue to benefit over the medium term from its established customer relationships, crisil believes that as the scale of operations improves significantly through better client and geographical diversification of revenues, the company maintains healthy profitability levels.

subsidiary companies and consolidated financial statements

with the gradual easing of the global slowdown and with the USA economy looking up, all the subsidiaries have performed satisfactorily during the year as per section 212 of the companies act 1956, the company is required to attach directors report, balance sheet and profit and loss account of the subsidiaries, the ministry of corporate affairs, government of india, vide its general circular no: 2/2011 dated 08.02.2011, has provided exemption to companies from complying with section 212, provided the board approves the proposal and such companies publish the audited consolidated financial statements in the annual report, accordingly, the annual report for 2011-12 does not contain the financial statements of the subsidiaries, the audited annual accounts and related information of the subsidiaries, where applicable, will be made available upon request, these documents will also be available for inspection during business hours at the registered office of the company at chennai. the same also will be published on the company''s website www.heliosmatheson.com.

vMoksha - arbitration status

as reported already, your company signed a definitive share purchase agreement (spa) to acquire 100% equity in three vmoksha entities based at bangalore, Singapore and usa in the month of may 2005. however, the sellers tried to renege the spa and hence your company initiated arbitration proceedings.

arbitration proceedings were presided by hon''ble justice mr.k.venkataswami, judge, supreme court (retd) as the sole arbitrator, arbitration proceedings were conducted over a period of two years spread over 34 sittings, the first sitting was held on 28.10.2006 and thirty fourth sitting was held on 28.06.2008 and 5 volumes of 1370 pages of documents were submitted before the arbitrator, the hon''ble arbitrator posted the matter for pronouncement of award on 20.09.2008. at the request of the advocates of the respondents the award date was rescheduled to 29.09.2008. unfortunately, hon''ble justice mr.k.venkataswami passed away on 26.09.2008 just 3 days before the revised pronouncement date, as the company wanted to settle the issue in a legally valid manner, the company decided to continue the arbitration proceedings, hence, the company has filed a petition before the hon''ble high court of madras seeking its directions for appointment of a new arbitrator for speedy disposal of the arbitration proceedings [o.p.no.336 of 2009]. the petition is pending before the honble high court for disposal.

based on its present knowledge of facts and as per legal opinion obtained, the current legal proceedings, in the opinion of your management, will not have a material adverse effect on the results / operations of helios and matheson.

particulars of employees

as required by the provisions of section 217 (2a) of the companies act, 1956, read with companies (particulars of employees) rules, 1975, as amended, the names and other particulars of the employees are set out in annexure to the directors'' report, however, as per the provisions of the section 219(1) (b) (iv) of the companies act, 1956, the report of the directors is being sent to all the shareholders of the company excluding the aforesaid information, any shareholder of the company interested in obtaining such information may write to the secretary at the corporate office of the company.

share capital

the company''s shares are listed on national stock exchange mumbai (nse), the bombay stock exchange ltd. (bse), and the madras stock exchange (mse). the company has paid the respective annual listing fees to all the stock exchanges and there are no arrears.

directors'' responsibility statement

pursuant to the requirement under section 217 (2aa) of the companies act, 1956, with respect to directors responsibility statement, it is hereby confirmed:

that in the preparation of the annual accounts for the financial year ended September 30 2012 the applicable accounting standards have been followed along with proper explanation relating to material departures.

that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the company for the year under review.

that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the companies act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

that the directors have prepared the accounts for the financial year ended September 30 2012 on a "going concern" basis.

directors

avm (retd) srinivasa rao.sistla retires by rotation at this annual general meeting and is eligible for election, the tenure of mr g.muralikrishna, managing director & ceo, expires in january 2014. the board of directors at their meeting held on 05.02.2013 decided to reappoint him for another 5 years with effect from 01.04.2013 on terms and conditions stipulated elsewhere in this annual report, mr.muralikrishna has been the managing director of the company since its inception in 1991. necessary resolutions for approval of shareholders are proposed in the notice of the ensuing annual general meeting for the reappointment of avm(retd) sr sistla as director and mr muralikrishna as managing director & ceo for a period of five years with effect from april 1,2013.

conservation of energy, research & development, technology absorption, foreign exchange earnings and outgo the provisions of subsection (1) (e) of section 217 of the companies act, 1956, read with companies (disclosure of particulars in the report of board of directors) rules, 1988, are set out in the annexure to this report.

auditors

m/s.venkatesh & co., chartered accountants, chennai, retire at the ensuing annual general meeting and are eligible for reappointment, a certificate under section 224 (1-b) of the companies act, 1956, has been received from them.

acknowledgement

your directors thank the clients, vendors, investors, financial institutions and bankers for their continued support for the company''s growth, your directors place on record their appreciation of the contribution made by the employees at all levels, who, through their competence, hard work, solidarity, cooperation and support, have enabled the company to achieve rapid growth.

your directors thank the government of india, particularly the department of electronics, software technology parks- chennai and bangalore, department of commerce (mepz special economic zone) chennai, ministry of information technology, ministry of commerce, the reserve bank of india, the department of telecommunications, the state governments, and other government agencies for their support during the year and look forward to their continued support in the future.

for and on behalf of the board

place: chennai muralikrishna g.

date: 05.02.2013 chairman & managing director


Sep 30, 2011

To the members of the company your directors have great pleasure in presenting the annual report together with audited statement of accounts for the year ended September 30, 2011.

financial highlights 2010-11 2009-10 in RS in RS

Net revenue from operations 259,01,34,555 230,45,57,427

Less expenditure 196,42,22,961 173,56,48,125

Operating profit (pbidt) 62,59,11,594 56,89,09,302

Interest 11,23,28,263 8,33,37,658

Profit before depreciation & tax (pbdt) 51,35,83,331 48,55,71,644

Depreciation 28,50,32,096 24,89,25,465

Profit before tax (pbt) 22,85,51,235 23,66,46,179

Provision for taxation 4,44,39,137 4,02,18,018

Profit after tax 18,41,12,098 19,64,28,161

provision for deferred tax 1,18,15,561 1,01,99,164

profit after deferred tax 17,22,96,537 18,62,28,997

balance brought forward 34,10,62,404 44,56,99,037

profit available for appropriation 51,33,58,941 63,19,28,034 appropriation s

proposed dividend 3,58,68,494 3,58,68,494

dividend tax 60,79,710 49,97,137

general reserve 25,00,00,000 25,00,00,000

balance carried forward 22,14,10,738 34,10,62,404

results of operation

income for the year ended September 30, 2011 was Rs. 259.01 crore as compared to Rs. 230.45 crore for the previous year (standalone). net profit after tax for the year ended September 30, 2011 was Rs. 17.22 crore vis-à-vis Rs. 18.62 crore for fy 2009-10. earnings per share was Rs. 7.21 as compared to Rs. 7.79 for the previous year.

Income for the year ended September 30, 2011 was Rs. 394.14 crore as compared to Rs.360.70 crore for the previous year (consolidated), net profit after tax for the year ended September 30, 2011 was Rs. 20.10 crore vis-a-vis Rs. 21.56 crore for fy 2009-10. earnings per share was Rs. 8.40 as compared to Rs. 9.00 for the previous year.

share capital

the paid up share capital of the company as on September 30, 2011 stood at Rs. 23.91 cr and the reserves and surplus stood at Rs. 190.15 cr.

dividend

your directors are pleased to recommend a 15% dividend at Rs. 1.50 per share on a paid up capital of Rs. 23,91,23,290. total dividend pay-out including dividend distribution tax is Rs. 4.19.cr.

foreign currency convertible bonds

the company bought back facts of nominal value of $ 1.40 million at 25% discount as per the guidelines and requisite approvals received from the reserve bank of india and extinguished the same, this transaction resulted in savings of Rs. 2.01 cr.in the redemption premium payable on maturity, after cancellation of these $ 1.40 million bonds, the balance outstanding $ 15.60 million bonds, together with accrued premium, were fully discharged on the due date in July 2011.there are no outstanding of fccb as on date.

business

our cutting edge technology and focus on seamless delivery of smart solutions has opened new opportunities, long standing relationship with clients that we have fostered and continue to build upon has been a key to our success, we continue to uphold trust by constantly trying to enhance client experiences - focusing on delivering consistently with better quality and understanding the needs of both the client and the market.

the company continues to invest in future proof technology infrastructure to meet the ever growing business requirements of its global clients, during the year the company invested in additional facilities in prime locations in Chennai and bengaluru. the entire infrastructure is certified to is 27001 standards covering 11 domains and 133 controls and is fully compliant with international security standards.

subsidiary companies accounts

as per section 212 of the companies act 1956, the company is required to attach directors report, balance sheet and profit and loss account of the subsidiaries, the ministry of corporate affairs, government of india, vide its general circular no: 2/2011 dated 08.02.2011, has provided exemption to companies from complying with section 212, provided the board approves the proposal and such companies publish the audited consolidated financial statements in the annual report, accordingly, the annual report for 2010-11 contains the consolidated financial statements, the audited annual accounts and related information of the subsidiaries, where applicable, will be made available upon request, these documents will also be available for inspection during business hours at the registered office of the company at Chennai. the same also will be published on the company's website www.heliosmatheson.com.

present position vis a vis arbitration proceedings in the vmoksha case

as reported already, your company signed a definitive share purchase agreement (spa) to acquire 100% equity in three vmoksha entities based at bengaluru, Singapore and usa in the month of may 2005. however, the sellers tried to renege the spa and hence your company initiated arbitration proceedings.

arbitration proceedings were presided by hon'ble justice mr.k.venkataswami, judge, supreme court (retd) as the sole arbitrator, arbitration proceedings were conducted over a period of two years spread over 34 sittings, the first sitting was held on 28.10.2006 and thirty fourth sitting was held on 28.06.2008 and 5 volumes of 1370 pages of documents were submitted before the arbitrator, unfortunately, hon'ble justice mr.k.venkataswami passed away on 26.09.2008 just 3 days before the pronouncement date, the company filed a petition before the hon'ble high court of madras seeking its directions for appointment of a new arbitrator [o.p.no.336 of 2009].the petition is pending before the hon'ble high court for disposal.

based on its present knowledge of facts and as per legal opinion obtained, the current legal proceedings, in the opinion of your management, will not have a material adverse effect on the results ! operations of helios and mathes on.

Particulars of employees

as required by the provisions of section 217 (2A) of the companies act, 1956, read with companies (particulars of employees) rules, 1975, as amended, the names and other particulars of the employees are set out in annexure to the directors' report . however, as per the provisions of the section 219(1)(b)(iv) of the companies act, 1956, the report of the directors is being sent to all the shareholders of the company excluding the aforesaid information, any shareholder of the company interested in obtaining such information may write to the secretary at the corporate office of the company.

listing

the company's shares are listed on national stock exchange Mumbai (nse), the Bombay stock exchange ltd (bse) and the madras stock exchange (mse). the company has paid the respective annual listing fees to all the stock exchanges and there are no arrears.

directors' responsibility statement

pursuant to the requirement under section 217 (2AA) of the companies act, 1956, with respect to directors responsibility statement, it is hereby confirmed:

that in the preparation of the annual accounts for the financial year ended September 30, 2011 the applicable accounting standards have been followed along with proper explanation relating to material departures.

that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the company for the year under review.

that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the companies act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

that the directors have prepared the accounts for the financial year ended September 30, 2011 on a going concern* basis.

Directors

Ms.chandra ramesh retires by rotation at this annual general meeting and is eligible for reappointment.

conservation of energy, research a development, technology absorption, foreign exchange earnings and outgo the provisions of subsection (1) (e) of section 217 of the companies act, 1956, read with companies (disclosure of particulars in the report of board of directors) rules, 1988, are set out in the annexure to this report.

auditors

m/s.venkatesh & co., chartered accountants, chennai, retire at the ensuing annual general meeting and are eligible for reappointment, a certificate under section 224 (1-b) of the companies act, 1956, has been received from them.

acknowledgement

your directors thank the clients, vendors, investors, financial institutions and bankers for their continued support for your company's growth, your directors place on record their appreciation of the contribution made by the employees at all levels, who, through their competence, hard work, solidarity, cooperation and support, have enabled the company to achieve rapid growth.

your directors thank the government of india, particularly the department of electronics, software technology parks- Chennai and bengaluru, department of commerce (mepz special economic zone) Chennai, ministry of information technology, ministry of commerce, the reserve bank of india, the department of telecommunications, the state governments and other government agencies for their support during the year and look forward to their continued support in the future.

for and on behalf of the board

place: chennai muralikrishna g. date: 14.02.2012 chairman & managing director


Sep 30, 2010

The directors have great pleasure in presenting the annual report together with audited statement of accounts for the year ended September 30 2010.

financial highlights 2009-10 2008-09 (12 months) (18 months) in rs in rs

net revenue from operations 230,45,57,427 307,40,73,154

less expenditure 173,56,48,125 229,90,60,705

operating profit (pbidt) 56,89,09,302 77,50,12,449

interest 8,33,37,658 9,99,95,695

profit before depreciation a tax (pbdt)48,55,71,644 67,50,16,754

depreciation 24,89,25,465 29,91,46,926

profit before tax (pbt) 23,66,46,179 37,58,69,828

provision for taxation 4,02,18,018 4,51,42,264

profit after tax 19,64,28,161 33,07,27,564

provision for deferred tax 1,01,99,164 3,04,65,159

profit after deferred tax 18,62,28,997 30,02,62,405

balance brought forward 44,56,99,037 46,19,38,278

profit available for appropriation 63,19,28,034 76,22,00,683 appropriations

interim dividend - 3,46,68,494

interim dividend tax - 47,91,727

proposed final dividend 3,58,68,494 2,31,12,329

final dividend tax 49,97,137 39,29,096

general reserve 25,00,00,000 25,00,00,000

balance carried forward 34,10,62,404 44,56,99,037

business 8t results of operation

it has been a satisfactory journey for the past 20 years, the company has been able to maintain an uninterrupted record of profits year on year for the last 20 years.

net revenue at rs.230 crore and pbidt at rs. 56.89 crore reflect an increase of 12% and 10% respectively over the previous year on a pro-rated basis, profit after tax is however impacted by 7% as compared to the previous year (on a pro-rated basis) on account of higher provision for depreciation, interest and income tax.

income for the year ended September 30.2010 was rs 360.70 crore as compared to rs. 525.60 crore (18 months) the previous year on a consolidated basis, earnings per share was rs 9.0 as compared tors. 10.35.

particulars of employees

as required by the provisions of section 217 (2a) of the companies act, 1956, read with companies (particulars of employees) rules, 1975, as amended, the names and other particulars of the employees are required to be set out in annexure to the directors report, however, as per the provisions of the section 219(1) (b) (iv) of the companies act, 1956, the report of the directors is being sent to all the shareholders of the company excluding the aforesaid information, any shareholder of the company interested in obtaining such information may write to the secretary at the corporate office of the company.

prospects

riding on the back of a drive towards long term engagements with key partners in the previous year, helios and matheson has scaled new heights, a shift in focus towards servicing the top players across verticals has played a distinct role in this growth, providing new business opportunities and rising revenue earnings.

another vital reason for our successes has been the sustained relationships with clients that helios and matheson has nurtured and continues to build upon, we repay this trust by constantly looking for ways to enrich client experience, focusing deliveries with better quality, consistency and an understanding of the clients and the markets needs.

inherent values coupled with an incisive vision let us ride the challenges of the recession, a strong belief that our growth and success should reflect on our clients.

active business remodeling during testing times has brought the strengths of our management to the fore, narrowing down on clientele allowed us to concentrate on servicing top players across the market, this paradigm shift has helped us climb up the value chain along with our clients.

as we end a decade of overcoming challenges, seizing opportunities and exciting growth, we look forward to leaping higher than ever before.

the IT industry presents a substantial scope of growth for enterprises that deliver quality service irrespective of the size, we staunchly adhere to establishing a long term relationship with the clients for equitable growth and success, the quality and expertise in our services is aptly demonstrated by the profitable revenue generation from repeat business.

listing

the companys shares are listed on national stock exchange mumbai (nse), the bombay stock exchange ltd. (bse), and the madras stock exchange (mse). the company has paid the respective annual listing fees to all the stock exchanges and there are no arrears.

directors responsibility statement

pursuant to the requirement under section 217 (2aa) of the companies act, 1956, with respect to directors responsibility statement, it is hereby confirmed:

that in the preparation of the annual accounts for the financial year ended September 30 2010 the applicable accounting standards have been followed along with proper explanation relating to material departures.

that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the company for the year under review.

that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the companies act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

that the directors have prepared the accounts for the financial year ended September 30 2010 on a "going concern" basis.

directors

mr. s.k patil retires by rotation at this annual general meeting and is eligible for reelection.

conservation of energy, research Et development, technology absorption, foreign exchange earnings and outgo

the provisions of subsection (1) (e) of section 217 of the companies act, 1956, read with companies (disclosure of particulars in the report of board of directors) rules, 1988, are set out in the annexure to this report. auditors

m/s.venkatesh & co., chartered accountants, chennai, retire at the ensuing annual general meeting and are eligible for reappointment, a certificate under section 224 (1-b) of the companies act, 1956, has been received from them.

acknowledgement

your directors thank the clients, vendors, investors, financial institutions and bankers for their continued support for your companys growth, your directors place on record their appreciation of the contribution made by the employees at all levels, who, through their competence, hard work, solidarity, cooperation and support, have enabled the company to achieve rapid growth.

your directors thank the government of india, particularly the department of electronics, software technology parks- chennai and bangalore, department of commerce (mepz special economic zone) chennai, ministry of information technology, ministry of commerce, the reserve bank of india, the department of telecommunications, the state governments, and other government agencies for their support during the year and look forward to their continued support in the future.

for and on behalf of the board place: chennai g.k.muralikrishna

date :14.02.2011 ceo & managing director


Sep 30, 2009

The directors have great pleasure in presenting the annual report together with audited statement of accounts for the 18 months period ended September 30 2009.

financial highlights 2008-09 2007-08

in rs in rs

net revenue from operations 307,40,73,154 218,26,36,019

less expenditure 229,90,60,705 147,08,93,445

operating profit (pbidt) 77,50,12,449 71,17,42,574

interest 9,99,95,695 5,18,26,341

profit before depreciation a tax (pbdt) 67,50,16,754 65,99,16,233

depreciation 29,91,46,926 12,86,19,736

profit before tax (pbt) 37,58,69,828 53,12,96,497

provision for taxation 4,51,42,264 3,94,83,200

profit after tax 33,07,27,564 49,18,13,297

provision for deferred tax 3,04,65,159 3,41,01,300

profit after deferred tax 30,02,62,405 45,77,11,997

balance brought forward 46,19,38,278 34,36,86,502

profit available for appropriation 76,22,00,683 80,13,98,499

appropriations

interim dividend 3,46,68,494 -

interim dividend tax 47,91,727 -

proposed final dividend 2,31,12,329 3,46,68,494

final dividend tax 39,29,096 47,91,727

general reserve 25,00,00,000 30,00,00,000

balance carried forward 44,56,99,037 46,19,38,278

business & results of operation

income for the eighteen months period ended september30,2009 was rs.307.41 crore (rs.218.26). net profit after tax during the relevant period was rs. 30.03 crore. earnings pershare was rs 12.99.

revenue on a consolidated basis for the eighteen months period was rs.525.60 crore and ebitda for the relevant period was rs.78.65 crore (rs.74.48).

the slow down in the global markets, particularly the USA which contributes significantly to your companys revenues, has impacted the performance during the year under review. however, the fundamental strengths of your companys business model helped the company post satisfactory results, some of the key factors responsible for this sustained success are:

proven global delivery model:

we believe our highly evolved global delivery model represents a key competitive advantage, over the past decade, we have developed our onsite and offshore execution capabilities to deliver high quality and scalable services, in doing so, we have made substantial investments in our processes, infrastructure and systems, and have refined our global delivery model to effectively integrate onsite and offshore technology services, our global delivery model provides clients with seamless, high quality solutions in reduced time frames enabling them to achieve operating efficiencies, to address changing industry dynamics, we continue to refine this model, through our modular global sourcing framework, we assist clients in segmenting their internal business processes and applications, including IT processes.

commitment to superior process:

the company delivers high quality and cost effective services to its clients through mature delivery processes, scalable infrastructure and skilled global resource base, the service offerings are delivered through a mix of onsite resources located in the client geography and offshore resources in india.

long-standing client relationships:

we have long-standing relationships with large multinational corporations built on successful prior engagements with them, our track record of delivering high quality solutions across the entire software life cycle and our strong domain expertise help us cement these relationships and gain increased business from our existing clients, as a result, we have a history of client retention and derive a significant proportion of revenues from repeat clients.

ability to scale:

we have successfully managed our growth by investing in infrastructure and by rapidly recruiting, training and deploying new professionals, we currently have 6 global development centers, we can rapidly deploy resources and execute new projects through the scalable network of our global delivery centers.

share capital

the paid up share capital of the company as on September 30,2009 stood at rs 23.11 cr and the reserves and surplus stood atrs. 182.18cr.

dividend

your directors are pleased to recommend a final dividend.of rupee one per share on a paid up capital of rs 23.11 cr. together with interim dividend of rs.1.50 paid earlier total dividend payment is rs 2.50 per share for the year, dividend pay-out including interim dividend and dividend distribution tax is rs.6.65cr(3.95cr)

fccb

as on date a total of US $ 8 million stand converted into equity shares as advised by the trustee, bank of new york, mellon, leaving US$17 million only outstanding.

accounting year

pursuant to the approval received from the registrar of companies, chennai, the company extended its accounting year for 2008-09 to cover a period of 18 months from april 01, 2008 to September 30, 2009. consequently, in future, the accounting year of the company will be from 1st October to 30th September of the following year.

subsidiary companies and consolidated financial statements

the company also received the approval of the central goverment granting it exemption under section 212(8) of the companies act, 1956, from attaching the annual audited accounts and other reports of its subsidiary companies. consequently the annual report is being sent to all the shareholders containing the summarised financial statement of the subsidiary companies, any shareholder of the company interested in obtaining the complete set of accounts may write to the company secretary at the corporate office of the company.

given the macro-environment, subsidiary companies viz. the laxmi group inc, ca, usa, maruti consulting, ca, usa, helios and matheson north america inc (hmna), helios and matheson inc, usa helios and matheson (Singapore) pte.ltd, Singapore jayamaruti software systems ltd, chennai, India and helios and matheson (IT) bangalore ltd, India have all performed satisfactorily during the year, the financial information relating to these subsidiaries is given elsewhere in the report.

hmna, a subsidiary of your company, has become a delaware corporation effective november 2009. your company has invested an additional usd 1 million in this company, thereby taking its holding to 69.43%.

acquisition of vmoksha - an update

as reported already, your company signed a definitive share purchase agreement (spa) to acquire 100 % equity in three vmoksha entities based at bangalore, Singapore and usa in the month of may 2005. however, the sellers tried to renege the spa and hence your company initiated arbitration proceedings.

arbitration proceedings were presided by honble justice mr.k.venkataswami, judge, supreme court (retd) as the sole arbitrator, arbitration proceedings were conducted over a period of two years spread over 34 sittings, the first sitting was held on 28.10.2006 and thirty fourth sitting was held on 28.06.2008 and 5 volumes of 1370 pages of documents were submitted before the arbitrator, the honble arbitrator posted the matter for pronouncement of award on 20.09.2008. at the request of the advocates of the respondents the award date was rescheduled to 29.09.2008. unfortunately, honble justice mr. k. venkataswami passed away on 26.09.2008 just 3 days before the revised pronouncement date, as the company wanted to settle the issue in a legally valid manner, the company decided to continue the arbitration proceedings. hence, the company has filed a petition before the honble high court of madras seeking its directions for appointment of a new arbitrator for speedy disposal of the arbitration proceedings [o.p. no. 336 of 2009].

based on its present knowledge of facts and as per legal opinion obtained, the current legal proceedings, in the opinion of your management, will not have a material adverse effect on the results / operations of helios and matheson.

particulars of employees

as required by the provisions of section 217 (2A) of the companies act, 1956, read with companies (particulars of employees) rules, 1975, as amended, the names and other particulars of the employees are set out in annexure to the directors report .however, as per the provisions of the section 219(1) (b) (iv) of the companies act, 1956, the report of the directors is being sent to all the shareholders of the company excluding the aforesaid information, any shareholder of the company interested in obtaining such information may write to the secretary at the corporate office of the company.

prospects

a recovery is on way after a difficult year, as companies resume spending on computers and software, according to analysts.

forrester research inc. has reported that it expects global spending on technology products and services to grow 8.1 percent in 2010, to more than $1.6 trillion. US spending is expected to rise 6.6 percent, to $568 billion.

forrester is not alone in predicting a rebound for the year. gartner inc. forecast 3.3 percent growth in global technology spending, another analyst firm, idc, said in december that worldwide tech spending would grow 3.2 percent in 2010, returning the industry to 2008 levels of about $1.5 trillion.

the companys shares are listed on national stock exchange mumbai (nse), the bombay stock exchange ltd. (bse), and the madras stock exchange (mse). the company has paid the annual listing fees to all the stock exchanges and there are no arrears.

directors responsibility statement

pursuant to the requirement under section 217 (2AA) of the companies act, 1956, with respect to directors responsibility statement, it is hereby confirmed:

i. that in the preparation of the annual accounts for the financial year ended September 30, 2009 the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii. that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the company for the year under review.

iii. that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the companies act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv. that the directors have prepared the accounts for the financial year ended September 30, 2009 on a "going concern" basis.

directors

air vice marshal(retd) s r sistla, director retires by rotation at the annual general meeting and offers himself for reelection. mr v ramachandiran who joined the board of your company as chairman in march 1991 will be retiring by rotation at the ensuing annual general meeting and, pursuant to the retirement policy of the company, has opted not to seek reelection, your board has resolved not to fill the vacancy caused by mr v ramachandirans retirement by rotation, mr v ramachandiran has been responsible for successfully steering the company through the past 2 decades with a focus on profitability and shareholder returns, your board places on record its deep appreciation of the valuable services rendered by mr v ramachandiran during his tenure to your company, mr ramachandiran would continue to be closely associated with your company in an advisory role, it has been decided that mr g k muralikrishna, managing director of the company will also function as chairman of the board from march 25, 2010, the date of the next annual general meeting of the company, it has also been decided that mr.diwakar sai yerra, director, who has been serving on the board since 28.12.1995 would start functioning as wholetime director on the board upon obtaining the approval of the shareholders at the ensuing annual general meeting.

conservation of energy, research & development, technology absorption, foreign exchange earnings and outgo

the provisions of subsection (1) (e) of section 217 of the companies act, 1956, read with companies (disclosure of particulars in the report of board of directors) rules, 1988, are set out in the annexure to this report.

auditors

m/s.venkatesh & co., chartered accountants, chennai, retire at the ensuing annual general meeting and are eligible for reappointment, a certificate under section 224 (1-B) of the companies act, 1956, has been received from them.

acknowledgement

your directors thank the clients, vendors, investors, financial institutions and bankers for their continued support for your companys growth, your directors place on record their appreciation of the contribution made by the employees at all levels, who, through their competence, hard work, solidarity, cooperation and support, have enabled the company to achieve rapid growth.

your directors thank the government of india, particularly the department of electronics, software technology parks- chennai and bangalore, department of commerce (mepz special economic zone) chennai, ministry of information technology, ministry of commerce, the reserve bank of india, the department of telecommunications, the state governments, and other government agencies for their support during the year and look forward to their continued support in the future.

for and on behalf of the board place: chennai

v. ramachandiran

date : January 30 , 2010 chairperson



 
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