Directors Report of Kavveri Telecom Products Ltd.

Mar 31, 2014

The Members,

The Board of Directors take pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended 3 lslMarch, 2014.

FINANCIAL HIGHLIGHTS:

PARTICULARS FOR THE YEAR FOR THE YEAR ENDED MARCH ENDED MARCH 2014 2013 Rs in Lakhs Rs in Lakhs

Net Sales & Other Incomes 10694.54 16213.41

Operating Profit 833.06 (262.88)

Interest 1397,57 1538.64

Profit before Depreciation (564.51) (181.52)

Depreciation 442.37 487.39

Exceptional Items 0 (73.19)

PBT & Exceptional items (1006.88) (2288.91)

Provision for Tax 0 0

Deferred Tax (88.50) 244.15

PAT '' (918.39) (2459.87)

RESULTS OF OPERATIONS:

The Year has been a challenging one for the company as the cellular operators have drastically reduced their capex spends and this has severely, affected your company''s operations resulting in drastic reduction of sales revenues compared to the previous year.

During the year the Company''s sales were Rs.10694.54 Lacs as against Rs.16213.41 lacs in the corresponding period of last year. The Company made a loss of Rs. 918.39 Lacs as against a Loss of Rs 2459.87 lacs in the corresponding period of last year

DIVIDEND:

To maintain liquidity, your Directors have not recommended any dividend for the reporting period. SUBSIDIARIES:

The company has following subsidiaries:

Direct subsidiaries: .

M/s Kavveri Telecom Infrastructure Limited, India ''

M/s Eaicom India Private Limited, India

M/s Kavveri Technologies Inc., Canada . _

M/s Kavveri Telecom Espana, Spain

Step down subsidiaries: (i.e., subsidiaries of M/s Kavveri Technologies Inc.,)

M/s Til-Tek Antennae Inc,

M/s Spotwave Wireless Ltd,

M/s DCI Digital Communications Inc.,

M/s Kavveri Realty 5 Inc.,

M/s Trackcom Systems Inc.

Pursuant to Ministry of Corporate Affair''s Circular No. 2/2011 dated 08.02.2011, since the company is presenting consolidated financial statement of Holding and Subsidiary companies, the individual financial statements of the subsidiaries are not presented separately.

The consolidated financial statement has been prepared in strict compliance with applicable Accounting Standards and, where applicable, Listing Agreement as prescribed by the Security and Exchange Board of India. The company do undertake that annual report that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and subsidiary companies seeking such information at any point of time. Annual accounts of the subsidiary companies are also kept for inspection by any shareholders in the head office (i.e., Registered Office) of the company and of the subsidiary companies.

Fixed Deposits:

Your Company has not accepted any Fixed Deposits during the year within the meaning of Section 58A of the Companies Act, 1956 and the Rules made there under.

Directors Responsibility Statement:

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the directors hereby confirm that: ''

- In preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

- 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 or loss of the Company for that period.

- The Directors had 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 frauds and other irregularities.

- The Directors had prepared the annual accounts on a going concern basis.

Corporate Governance:

Certificate of Compliance of Corporate Governance in terms of Clause 49 of the Listing Agreement is attached and forms part of this Report.

Particulars of Employees:

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 2011, the names and other particulars of employees are set out as Annexure to this report.

Human Resource Management:

At Kavveri, the most important asset is its employees. Your company has created a favorable work culture that encourages ambition and innovation. Your company has set up a scalable recruitment and human resource management process to attract and retain talent.

Disclosures:

Disclosures in terms of Companies (Disclosure of Particulars in report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo are attached and forms part of this Report.

M/s.P. Murali & Co., CharteredAccountants retires at the conclusion of the Annual General Meeting and being eligible for re-appointment as Statutory Auditors of the company. The Board recommends the appointment of M/s. P. Murali & Co. CharteredAccountants, as Statutory Auditor for the period from the Conclusion of this Annual General Meeting till the Conclusion of the 22nd Annual General Meeting.

Sri. R. L R Venugopal and Sri B S Shankamarayan Independent Directors were appointed / re- appointed by the Members of the Company. The provisions of the Companies Act, 2013 with respect to appointment and tenure of the Independent Directors have come into effect. As per the said provisions, the Independent Directors shall be appointed f or not more than two terms of five years each and shall not be liable to retire by rotation at every AGM.

Corporate Social Responsibility;

Your Company believes in addressing the needs of the underprivileged and is committed to serving them. Your Company aims to fulfill its social responsibilities by being actively involved in a variety of public service projects serving underprivileged groups. Your Company has also made donations to religious institutions.

Separation of Ownership from Management:

The Chairman being executive, Two (2) out of Four(4) directors on the Board of your company are non-executive and independent as per the requirements of Listing Agreement.

Disqualification of Directors:

None of the Directors were disqualified in terms of Section 274(1) of the Companies Act 1956, during the year under review.

Acknowledgements:

The Directors wish to place on record their appreciation and acknowledge with gratitude the support and co-operation extended by the customers, vendors, bankers, investors, shareholders and the media. We look forward to your continued support. Your Directors also thank employees at all levels for their contribution, and recognize and deeply value the dedication, co-operation and support which paved the way for our growth and success.

For and on behalf of the Board

Mr. C Shivakumar Reddy Chairman and Managing Director

Bangalore Date: 05.09.2014

---

Mar 31, 2013

To The Members,

The Board of Directors take pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended 31st March, 2013.

FINANCIAL HIGHLIGHTS:

PARTICULARS FOR THE YEAR FOR THE YEAR ENDED MARCH ENDED MARCH 2013 2012 (RUPEES IN LAKHS) (RUPEES IN LAKHS)

Net Sales & Other Incomes 23926.92 47301.31

Operating Profit : (30.95) 8854.4

Interest 2360.35 1477.99

Profit before Depreciation (2391.31) 7376.41

Depreciation 1214.68 918.5

Exceptional Items (64.39) 26.66

PBT 8s Exceptional items (3541.59) 6431.25

Provision for Tax 160.95 1419.12

Deferred Tax 608.59 168.11

PAT (4311.12) 4844.02



RESULTS OF OPERATIONS:

The Year has been a challenging one for the company as the cellular operators have drastically reduced their capex spends and this has severely affected your company''s operations resulting in drastic reduction of sales revenues compared to theprevious year.

During the year the Company''s sales were Rs. 25569.65 Lacs as against Rs. 47301.31 lacs in the corresponding period of last year. The Company made a loss of Rs. 4189.74 Lacs as against a Profit of Rs 4808.27 lacs in the corresponding period of last year

DIVIDEND:

To maintain liquidity, your Directors have not recommended any dividend for the reporting period.

SUBSIDIARIES:

The company has following subsidiaries:

Direct subsidiaries:

M/s Kaweri Telecom Infrastructure Limited, India

M/s Eaicom India Private Limited, India

M/s Kaweri Technologies Inc., Canada

M/s Kaweri Telecom Products UK Limited, UK

M/s Kaweri Technologies Asia PTE. Limited, Singapore

M/s Kaweri Telecom Espana, Spain

M/s Kaweri Technologies Americas Inc., USA*

Step down subsidiaries: (i.e., subsidiaries of M/s Kaweri Technologies Inc.,)

M/s Til-Tek Antennae Inc,

M/s Spotwave Wireless Ltd,

M / s D CI Digital Communications Inc.,

M/s Kaweri Realty 5 Inc.,

M/s Trackcom Systems Inc.

M/s Rymex, Mexico is a step down subsidiary with majority stake held by M/s Kaweri Telecom Espana, Madrid, Spain.

*M/s Kaweri Technologies Americas Inc was incorporated during the first quarter of 2012-13 which has acquired the wireless division of WPCS International Inc, USA on 25. 07. 2012 and now functioning as two subsidiaries of Kaweri Technologies Americas Inc as below:

1) Quality Communications Systems Inc, Lakewood, New Jersey, USA

2) New England Communications Systems Corp., Hartford, Connecticut, USA

Pursuant to Ministry of Corporate Affair''s Circular No. 2/2011 dated 08.02.2011, since the company is presenting consolidated financial statement of Holding and Subsidiary companies, the individual financial statements of the subsidiaries are not presented separately.

The consolidated financial statement has been prepared in strict compliance with applicable Accounting Standards and, where applicable, Listing Agreement as prescribed by the Security and Exchange Board of India. The company do undertake that annual report that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and. subsidiary companies seeking such information at any point of time. Annual accounts of the subsidiary companies are also kept for inspection by any shareholders in the head office (i.e., Registered Office) of the company and of the subsidiary companies.

FIXED DEPOSITS:

Your Company has not accepted any Fixed Deposits during the year within the meaning of Section 58A of the Companies Act, 1956 and the Rules made there under.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the directors hereby confirm that:

In preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

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 or loss of the Company for that period.

The Directors had 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 frauds and other irregularities.

The Directors had prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE:

Certificate of Compliance of Corporate Governance in terms of Clause 49 of the Listing Agreement is attached and forms part of this Report.

PARTICULARS OF EMPLOYEES:

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out as Annexure to this report.

HUMAN RESOURCE MANAGEMENT:

At Kaweri, the most important asset is its employees. Your company has created a favorable work culture that encourages ambition and innovation. Your company has set up a scalable recruitment and human resource management process to attract and retain talent.

DISCLOSURES:

Disclosures in terms of Companies (Disclosure of Particulars in report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo are attached and forms part of this Report.

PARTICULARS OF THE DIRECTORS SEEKING RE-APPOINTMENT:

Brief Profile of Mr. L.R.Venugopal, who retires by rotation and is eligible for re-appointment:.

Mr. L.R.Venugopal is a Chartered Accountant by profession. He has now over 27 years of experience in the Industry and is also a partner in a reputed Audit Firm. K.V.Narsimhan & Company. Mr. L.R.Venugopal does holds directorship in one other company-i.e. M/s Kaweri Telecom Infrastructure Limited. Mr. L.R.Venugopal does not hold any equity shares of the company as on 31st March, 2013

AUDITORS:

M/s. P. MURALI 8& Co., Chartered Accountants, retiring auditors of the Company being eligible offer themselves for appointment as auditors of the Company. M/s. P. Murali 8s Co., Chartered Accountants have furnished a certificate of their eligibility u/s 224(1B) of the Companies Act, 1956.

CORPORATE SOCIAL RESPONSIBILITY:

Your Company believes in addressing the needs of the underprivileged and is committed to serving them. Your Company aims to fulfill its social responsibilities by being actively involved in a variety of public service projects serving underprivileged groups. Your Company has also made donations to religious institutions.

SEPARATION OF OWNERSHIP FROM MANAGEMENT:

The Chairman being executive, Two (2) out of Four(4) directors on the Board of your company are non- executive and independent as per the requirements of Listing Agreement.

DISQUALIFICATION OF DIRECTORS:

None of the Directors were disqualified in terms of Section 274(1) of the Companies Act 1956, during the year under review.

ACKNOWLEDGEMENTS:

The Directors wish to place on record their appreciation and acknowledge with gratitude the support and co-operation extended by the customers, vendors, bankers, investors, shareholders and the media. We look forward to your continued support. Your Directors also thank employees at all levels for their contribution, and recognize and deeply value the dedication, co-operation and support which paved the way for our growth and success.



For and on behalf of the Board



C.SHIVAKUMAR REDDY

Place: Bangalore Chairman and Managing Director

Date: 05.09.2013

---

Mar 31, 2012

The Board of Directors take pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended 31st March 2012.

financial highlights: (Rs. in Lakhs)

Particulars As at 31.03.2012 As at 31.03.2011

Net Sales & Other Incomes 47301.31 33347.28

Operating Profit 8854.40 7121.99

Interest 1477.99 1251.82

Profit before Depreciation 7376.41 5870.17

Depreciation 918.50 717.41

Profit Before Tax & Exceptional items 6457.91 5152.76

Exceptional Items 26.66 43.82

Profit Before Tax 6431.25 5108.94

Provision for Tax 1419.12 1210.55

Deferred Tax 168.11 10.94

Profit After Tax 4844.02 3887.45

Minority Interest 35.75 62.01

Profit for the period 4808.27 3825.44

Results of Operation:

Your company has continued its growth and made a substantial improvement in its financial and operational performance. Our significant achievements:

- Total Revenue grew to Rs. 47301.31 lakhs as against Rs. 33347.28 lakhs in the corresponding previous financial year, which is an increase of 41.84%.

- Profit for the period grew to Rs. 4808.27 lakhs as against Rs. 3825.44 lakhs in the corresponding financial year, which is an increase of 25.69%.

- Earnings per shares; Rs. 26.93/- for the year 2011-12.

DIVIDEND

Your directors recommend a final dividend of Rs. 4/- per share (40% on par value of Rs. 10) fortifying the company's tradition of enabling shareholders to participate in its progressive performance. If approved by the shareholders at the ensuing Annual General Meeting, the dividend will be paid as per the applicable regulations.

SUBSIDIARIES

The company has following subsidiaries:

Direct subsidiaries:

M/s Kavveri Telecom Infrastructure Limited, India

M/s Eaicom India Private Limited, India

M/s Kavveri Technologies Inc., Canada

M/s Kavveri Telecom Products UK Limited, UK

M/s Kavveri Technologies Asia PTE. Limited, Singapore

M/s Kavveri Telecom Espana, Spain

M/s Kavveri Technologies Americas Inc., USA*

Step down subsidiaries: (i.e., subsidiaries of M/s Kavveri Technologies Inc., Canada)

M/s Til-Tek Antennae Inc,

M/s Spotwave Wireless Ltd,

M/s DCI Digital Communications Inc.,

M/s Kavveri Realty 5 Inc.,

M/s Trackcom Systems Inc.

M/s Rymex, Mexico is a step down subsidiary with majority stake held by M/s Kavveri Telecom Espana, Madrid, Spain.

*M/s Kavveri Technologies Americas Inc was incorporated during the first quarter of 2012-13 which has acquired the wireless division of WPCS International Inc, USA on 25. 07. 2012 and now functioning as two subsidiaries of Kavveri Technologies Americas Inc as below:

1) Quality Communications Systems Inc, Lakewood, New Jersey, USA

2) New England Communications Systems Corp., Hartford, Connecticut, USA

Pursuant to Ministry of Corporate Affair's Circular No. 2/2011 dated 08.02.2011, since the company is presenting consolidated financial statement of Holding and Subsidiary companies, the individual financial statements of the subsidiaries are not presented separately.

The consolidated financial statement has been prepared in strict compliance taking into account the applicable Accounting Standards, wherever applicable and Listing Agreement as prescribed by the Security and Exchange Board of India (SEBI). The company hereby undertakes that the annual accounts of the holding and subsidiary companies and other related information shall be made available to the shareholders seeking such information at any point of time. Annual accounts of the subsidiary companies are also kept for inspection at the head office (i.e., Registered Office) of the company for any shareholders interested to have a glance.

Preferential issue:

Pursuant to the approval of shareholders vide special resolution passed at the Extraordinary General Meeting held on 19.05.2012, the company is in its process of allotment of convertible warrants to its promoters and Non- promoter Directors to the extent of 16,40,000 warrants each convertible into one equity share at Rs. 170/- each.

EMPLOYEE STOCK OPTION PLAN

Employees Stock Option Scheme-2008 (ESOS-2008)

Under this scheme, a corpus of 5,00,000 options were created for grant to the eligible employees. Each option is convertible into one fully paid-up equity share of Rs. 10/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999.

As per the scheme, a compensation committee is formed, which grants option to the eligible employees. The options are granted at face value of Rs. 10/- at par. The options granted vests over a period of 1 to 3 years and can be exercised over a period of 5 years from the date of vesting.

Details of ESOS:

a) Number of options granted; 499,530

b) The pricing formula At par Rs. 10/-

c) options vested 115,530

d) options exercised 110,960

e) the total number of shares arising as a result of exercise of option 110,960

f) options lapsed 23,595

g) money realized by exercise of options Rs. 1,109,600

h) total number of options in force 388,570

i) employee wise details of options granted to

(i) senior managerial personnel Nil

(ii) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year.*

(iii) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant.

j) diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of Rs. 23.05 option calculated in accordance with [Accounting Standard (AS) 20 'Earnings Per Share']

k) Where the company has calculated the employee compensation cost using the NA intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed: Impact on EPS.

Basic

Diluted

l) Weighted-average exercise prices and weighted-average fair values of options NA shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock

*Mr. Nicholas, Director - R & D (200,000 options granted)

Mr. M G Balaji, General Manager - Operations (153,000 options granted)

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposits during the year within the meaning of Section 58A of the Companies Act, 1956 and the Rules made there under.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the directors hereby confirm that:

- In preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

- 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 or loss of the Company for that period.

- The Directors had 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 frauds and other irregularities.

- The Directors had prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Certificate of Compliance of Corporate Governance in terms of Clause 49 of the Listing Agreement is attached and forms part of this Report.

PARTICULARS OF EMPLOYEES

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out as Annexure to this report.

HUMAN RESOURCE MANAGEMENT

At Kavveri, the most important asset is its employees. Your company has created a favorable work culture that encourages ambition and innovation. Your company has set up a scalable recruitment and human resource management process to attract and retain talent.

DISCLOSURES

Disclosures in terms of Companies (Disclosure of Particulars in report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo are attached and forms part of this Report.

PARTICULARS OF THE DIRECTORS SEEKING RE-APPOINTMENT

Mr. C V Jagadish and Mr. L. Nicholas, retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

The brief resume / details relating to Directors who are to be re-appointed are furnished in the Corporate Governance Report

AUDITORS

The Auditors M/s. S. Janardhan and Associates, Chartered Accountants retire at the conclusion of the ensuing Annual General Meeting and their reappointment is sought under the ordinary business of the Notice of Annual General Meeting.

CORPORATE SOCIAL RESPONSIBILITY

Your Company believes in addressing the needs of the underprivileged and is committed to serving them. Your Company aims to fulfill its social responsibilities by being actively involved in a variety of public service projects serving underprivileged groups. Your Company has also made donations to religious institutions.

SEPARATION OF OWNERSHIP FROM MANAGEMENT

The Chairman being executive, 3 out of 6 Directors on the Board of your company are non-executive and independent as per the requirements of Listing Agreement.

DISQUALIFICATION OF DIRECTORS

None of the Directors were disqualified in terms of Section 274(1) of the Companies Act 1956, during the year under review.

ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation and acknowledge with gratitude the support and co-operation extended by the customers, vendors, bankers, investors, shareholders and the media. We look forward to your continued support. Your Directors also thank employees at all levels for their contribution, and recognize and deeply value the dedication, co-operation and support which paved the way for our growth and success.

For and on behalf of the Board

Bangalore C. SHIVAKUMAR REDDY

Date: 5th September 2012 Chairman and Managing Director

---

Mar 31, 2011

To the members,

The Board of Directors take pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended 31 st March 2011.

(Rs. In lacs)

FOR THE YEAR FOR THE YEAR ENDED MARCH 2011 ENDED MARCH 2010

Net Sales & other income 25953.40 20369.51

Operating Profit 5941.61 5813.69

Interest 1060.39 1154.22

Profit before Depreciation 4881.22 4659.47

Depreciation 389.68 238.27

Profit before Tax 4491.54 4421.19

Provision for Tax

-Current Tax 11130.60 901.90

-Deferred Tax 76.97 399.17

- Fringe Benefit Tax -

Profit after Tax 3411.62 3120.12

Balance brought forward 5302.78 2656.55

Amount available for appropriation 8714.40 5771.21

Dividend @ 20% (10%) per equity share 211.03 201.38

Dividend Tax 34.24 33.45

Amount Transferred to General Reserve 172.77 233.60

Balance carried to balance sheet 8296.35 5302.78

Basic Earnings per share (Rs.) 31.87 30.96

Results of Operation:

Your Company has continued its growth and made a substantial improvement in its financial and operational performance. Our significant achievements;

- Total Revenue grew to Rs. 25953.40 lacs as against Rs. 20369.51 lacs in the corresponding previous financial year. which is an increase of 27.14%

- Net Profit after tax grew to 3411.62 lacs as against Rs. 3120.12 lacs in the corresponding previous financial year. which is a increase of 9.34%

- Earnings per shares; Rs. 31.87 for the year under review against Rs.30.96 in the corresponding previous financial year.

DIVIDEND

Your directors recommend a final dividend of Rs. 1.50/- per share (15% on par value of Rs. 10) fortifying the company's tradition of enabling shareholders to participate in its progressive performance. If approved by the shareholders at the ensuing Annual General Meeting, the dividend will be paid as per the applicable regulations.

SUBSIDIARIES

The company has following subsidiaries:

Direct subsidiaries:

M/s Kaweri Telecom Infrastructure Limited, India

M/s EAICom India P Ltd, India

M/s Kaweri Technologies Inc., Canada

M/s Kaweri Telecom Products UK Limited, UK

Step down subsidiaries: (i.e.,subsidiaries of M/s KaweriTechnologies Inc.,)

M/s Til-TekAntennae Inc,

M/s Spotwave Wireless Ltd,

M/s DCI Digital Communications Inc.,

M/s Kaweri Realty 5 Inc.,

M/sTrackcom Systems Inc.

Pursuant to Ministry of Corporate Affair's Circular No. 2/2011 dated 08.02.2011, since the company is presenting consolidated financial statement of Holding and Subsidiary companies, the individual financial statements of the subsidiaries are not presented separately.

The consolidated financial statement has been prepared in strict compliance with applicable Accounting Standards and, where applicable, Listing Agreement as prescribed by the Security and Exchange Board of India.The company do undertake that annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and subsidiary companies seeking such information at any point of time. Annual accounts of the subsidiary companies are also kept for inspection by any shareholders in the head office (i.e., Registered Office) of the company and of the subsidiary companies.

Details of Conversion rate as on 31.03.2011:

Currency Balance Sheet Profit and Loss a/c

CAD 46.56 44.79

USD 45.34 45.34

PREFERENTIAL ISSUE:

The company allotted 40,00,000 equity shares & 10,00,000 warrants to promoters, 20,00,000 warrants to non-promoters, on preferential basis at the rate of Rs. 113/- per share, pursuant to the approval of shareholders vide special resolution passed at the Extraordinary General Meeting held on 26.08.2010.

EMPLOYEE STOCK OPTION PLAN

Employees Stock Option Scheme-2008 (ESOS-2008)

Under this scheme, a corpus of 5,00,000 options were created for grant to the eligible employees. Each option is convertible into one fully paid-up equity share of Rs. 10/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999.

As per the scheme a compensation committee is formed, which grants option to the eligible employees. The options are granted at face value of Rs. 10/- at par. The options granted vests over a period of I to 3 years and can be exercised over a period of 5 years from the date of vesting.

Details of ESOS:

(a) Number of options granted; 139125

(b) The pricing formula At par Rs. 10/-

(c) Options vested 27413

(d) Options exercised (last allotment for excercise was made on 30.04.2010 and no excercise since then) 8180

(e) The total number of shares arising as a result of exercise of option 8180

(f) Options lapsed 17300

(g) Variation of terms of options None

(h) Money realized by exercise of options Rs. 81800/-

(i) Total number of options in force 113645

(j) Employee wise details of options granted to

(i) Senior managerial personnel Nil

(ii) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year.

Mr. L Nicholas Director, R&D (67,000 options granted)

(iii) Identified employees who were granted option, during any one year, equal to or exceeding I % of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant-do-

(k) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with [19][Accounting Standard (AS) 20 'Earnings Per Share'] Rs. 30.01/-

(I) Where the company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed: Impact on EPS. NA

Basic

Diluted

(m) Weighted-average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock NA

Fixed Deposits

Your Company has not accepted any Fixed Deposits during the year within the meaning of Section 58A of the Companies Act, 1956 and the Rules made there under.

Directors Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the directors hereby confirm that:

- In preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

- 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 or loss of the Company for that period.

- The Directors had 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 frauds and other irregularities.

- The Directors had prepared the annual accounts on a going concern basis.

Corporate Governance

Certificate of Compliance of Corporate Governance in terms of Clause 49 of the Listing Agreement is attached and forms part of this Report.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out as Annexure to this report.

Human Resource Management

At Kaweri, the most important asset is its employees. Your company has created a favorable work culture that encourages ambition and innovation. Your company has set up a scalable recruitment and human resource management process to attract and retain talent.

Disclosures

Disclosures in terms of Companies (Disclosure of Particulars in report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo are attached and forms part of this Report.

Particulars of the Directors seeking re- appointment

Mr. L RVenugopal and Mr. B S Shankarnarayan, retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

The brief resume / details relating to Directors who are to be re-appointed are furnished in the Corporate Governance Report

Auditors

The Auditors M/s. S.Janardhan and Associates, Chartered Accountants retire at the conclusion of the ensuing Annual General Meeting and their reappointment is sought under the ordinary business of the Notice of Annual General Meeting.

Corporate Social Responsibility:

Your Company believes corporate must address the needs of the underprivileged and be committed to serving them. Your Company aims to fulfill its social responsibilities by being actively involved in a variety of public service projects serving underprivileged groups. Your Company has also made donations to religious institutions.

Separation of Ownership from Management

The Chairman being executive 3 out of 6 Directors on the Board of your company are non-executive and independent as per the requirements of Listing Agreement.

Disqualification of Directors:

None of the Directors were disqualified in terms of Section 274( I) of the Companies Act 1956, during the year under review.

Acknowledgements

The Directors wish to place on record their appreciation and acknowledge with gratitude the support and co- operation extended by the customers, vendors, bankers, investors, shareholders and the media. We look forward to your continued support. Your Directors also thank employees at all levels for their contribution, and recognize and deeply value the dedication, co-operation and support which paved the way for our growth and success.

For and on behalf of the Board

C. SHIVAKUMAR REDDY

Chairman and Managing Director

Bangalore

Date: 06.09.2011

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Mar 31, 2010

The Board of Directors take pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended 31 st March 2010.

(Rs. In lacs)

FOR THE YEAR FOR THE YEAR ENDED MARCH 2010 ENDED MARCH 2009

Net Sales & other income 20369.51 18329.91

Operating Profit 5813.69 2929.18

Interest 1154.22 1243.19

Profit before Depreciation 4659.47 1685.99

Depreciation 238.27 131.91

Profit before Tax 4421.19 1554.08

Provision for Tax

-Current Tax 9,01.90 271.93

-Deferred Tax 3,99.17 142.49

- Fringe Benefit Tax - 5.50

Profit after Tax 3120.12 1134.16

Balance brought forward 2656.55 1639.34

Amount available for appropriation 5771.21 2774.25

Dividend @ 20% (10%) per equity share 201.38 100.61

Dividend Tax 33.45 17.10

Amount Transferred to General Reserve 233.60 0

Balance carried to balance sheet 5302.78 2656.54

Basic Earnings per share (Rs.) 30.96 11.27

Results of Operation:

Your Company has continued its growth and made a substantial improvement in its financial and operational performance. Our significant achievements;

- Total Revenue grew to Rs. 20369.51 lacs as against Rs. 18329.91 lacs in the corresponding previous financial year, which is an increase of 11.13%.

- Net Profit after tax grew to 3120.12 lacs as against Rs. 1134.16 lacs in the corresponding previous financial year, which is a increase of 175.10%

- Earnings per shares; Rs. 30.96/- for the year under review against Rs. 11.27 in the corresponding previous financial year.

DIVIDEND

Your directors recommend a final dividend of Rs. 2.00 per share (20% on par value of Rs. 10) fortifying the companys tradition of enabling shareholders to participate in its progressive performance. If approved by the shareholders at the ensuing Annual General Meeting, the dividend will be paid as per the applicable regulations.

SUBSIDIARIES

The Company made application to Central Government vide SRN A74691080 dated 16.12.2009 for obtaining exemption under Section 212(8) of the Companies Act 1956 (i.e., exemption from enclosing the Balance Sheet...etc of subsidiary companies.) The Central Government Vide its letter dated 02.06.2010 has granted exemption from enclosing Balance Sheet etc of subsidiary companies. The Company undertakes that annual accounts of the subsidiary companies and related detailed information will be made available to the holding and subsidiary companys investors seeking such information at any point of time along with the full annual accounts. In addition to this, financial details of the subsidiary companies are enclosed with consolidated balance sheet as per the instruction of Central Government.

Details of Conversion rate as on 31.03.2010:

Currency Balance Sheet Profit and Loss a/c

CAD 44.2128 43.5073

USD 44.8950 47.2158

RIGHT ISSUE:

Due to secondary market conditions, the Board of Directors decided to defer the rights issue and withdrew the Draft Letter of Offer filed with SEBI on 10.03.2010.

Fixed Deposits

Your Company has not accepted any Fixed Deposits during the year within the meaning of Section 58A of the Companies Act, 1956 and the Rules made thereunder.

Directors Responsibility Statement

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the directors hereby confirm that:

- In preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

- 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 atrue and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

- The Directors had 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 frauds and other irregularities.

- The Directors had prepared the annual accounts on a going concern basis.

Corporate Governance

Certificate of Compliance of Corporate Governance in terms of Clause 49 of the Listing Agreement is attached and forms part of this Report.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out as Annexure to this report.

Human Resource Management

At Kaweri, the most important asset is its employees. Your company has created a favorable work culture that encourages ambition and innovation. Your company has set up a scalable recruitment and human resource management process to attract and retain talent.

Disclosures

Disclosures in terms of Companies (Disclosure of Particulars in report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo are attached and forms part of this Report.

Particulars of the Directors seeking re- appointment

Mr. L Nicholas, Director -R&D and Mr. C V Jagadish, Independent Director, retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

The brief resume / details relating to Directors who are to be re-appointed are furnished in the Corporate Governance Report

Auditors

The Auditors M/s. S. janardhan and Associates, Chartered Accountants retire at the conclusion of the ensuing Annual General Meeting and their reappointment is sought under the ordinary business of the Notice of Annual General Meeting.

Corporate Social Responsibility:

Your Company believes corporate must address the needs of the underprivileged and be committed to serving them. Your Company aims to fulfill its social responsibilities by being actively involved in a variety of public service projects serving underprivileged groups. Your Company has also made donations to religious institutions.

Separation of Ownership from Management

The Chairman being executive 3 out of 6 Directors on the Board of your company are non-executive and independent as perthe requirements of Listing Agreement

Disqualification of Directors:

None of the Directors were disqualified in terms of Section 274( I) of the Companies Act 1956, during the year under review.

Acknowledgements

The Directors wish to place on record their appreciation and acknowledge with gratitude the support and co- operation extended by the customers, vendors, bankers, investors, shareholders and the media. We look forward to your continued support. Your Directors also thank employees at all levels for their contribution, and recognize and deeply value the dedication, co-operation and support which paved the way for our growth and success.

For and on behalf of the Board

C. SHIVAKUMAR REDDY

Chairman and Managing Director

Bangalore

Date: 14.08.2010

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Jun 30, 2000

The directors hereby present their FIFTH ANNUAL REPORT on the business and operations of the company and the financial accounts for the year ended 30th June 2000.

2. OPERATIONS

The company recorded a turnover of Rs.905.21 Laksh for the year ended June 2000 (15 Months Period) as against the previous year figure of Rs. 670.90 Lakhs. The company recorded a profit after tax of Rs. 36.15 Lakhs as against the loss of Rs.114.55 Lakhs for the previous year. During the year the company has increased its Authorised share capital form Rs.6 Crores to Rs. 10 Crores to enable it to offer its shares on preferential basis to FIIs/OCBs. The company is in the final stage of signing the agreement for trading of its shares in electronics form. During the year there were delays in depositing provident fund and employees state insurance dues with appropriate authorities (Refere annexure to audit report point 17) due to paucity of funds. However the company has taken appropriate steps during the current year to avoid such delays.

3. TECHNOLOGY

The company during the year has developed technology for manufacture of High Bit Rate Digital Subscriber Line Equipment. The company sold this technology to public sector and private sector undertakings .The company is exploring the possibility of exporting the same.

4. NEW PRODUCTS :

The Company during the year developed Mini Repeaters for private cellular operators.

5. FINANCE:

Your company continued to maintain its excellent relationship with Banker and Financial Institution enabling it to raise funds to finance it short term & long term working capital requirement.

6. DIRECTORS:

In accoundance with the provisions of the companies Act 1956 and as per the companys Articles of Association, Mr. R. H. Jayaram Reddy, Mr. C. Shivkumar Reddy retire by rotation and being eligible offer themselves for re-appointment.

7. PARTICULARS OF EMPLOYEES

In accordance with section 217(2A) of the Company Act, 1956, a statement giving particulars of employees, which forms part of this report is annexed.

8. CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE EARNINGS AND OUTGO

Details of energy conservation and research and development activities undertaken by the Company along with the information in accordance with the provisions of section 217(1) (e) of the Companies Act, 1956, read with the Companies (disclosure of particulars in the Report of Board of Directors)Rules,1998 are given in Annexure A to the Directors Report.

The Company imported machineries worth Rs.10.88 Lakhs during the year against which the company obtained modvat on imports worth Rs.1.46 Lakhs. All the machineries are used towards research and development activities for which the Company is claiming exemption under Sec 35(2) of income Tax Act.

9. AUDITORS

M/s Rajagopal and Badri Narayanan,Chartered Accountants,the Auditors of the Company,retire at the ensuing Annual General Meeting, they have confirmed their eligibility and willingness to accept office,if appointed.

10. ADDITIONAL DISCLOSURES

The Company has not given any loan to its Directors or their relatives during the year under review.

No material differences in assets and liabilities have taken place between the end of financial year and the date of report.

Items appearing in the Annual Accounts have been treated appropriately in accordance with Accounting Standards prescribed by the Institute of Chartered Accountants of India.

11. ACKNOWLEDGEMENTS

Your Directors wish to place on record their sincere gratitude to the continuing patronage of our valued Customers who have sustained their support and encouragement to your company.

Your Directors take this opportunity to place on record, their sincere appreciation of the dedication and commitment of the company staff at all levels, who have together been responsible for the growth of the company.

Your Directors would also like to place on record their acknowledge of the support extended by the Bankers to the Company.

On behalf of the Boards of Directors

Date : 27.11.2000 Mrs.R.H. Kasturi

Place : Bangalore Managing Director.