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Directors Report of Palred Technologies Ltd.

Mar 31, 2015

To the Members,

The Directors have pleasure in presenting before you the 16th Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2015.

1. FINANCIAL SUMMARY/HIGHLIGHTS, OPERATIONS, STATE OF AFFARIS:

The performance during the period ended 31st March, 2015 has been as under:

(Rs. In millions)

Particulars 2014-2015 2013-2014 Consolidated Standalone Standalone

Total Income 135.55 83.80 221.19

Total Expenditure 122.22 54.22 207.27

Operating Profit / (Loss) (EBITDA) 13.33 29.58 13.92

Interest - - 0.43

Depreciation and amortization 4.37 3.65 5.63

Profit before Tax 8.96 25.93 7.86

Tax Expense - - 337.73

Profit/(Loss) after tax and before exceptional items 8.96 25.93 (329.87)

Exceptional Items - - 1601.48

Profit/(Loss) after tax and Exceptional Items 8.96 25.93 1271.61

Minority Interest (share of Loss) (3.55) - -

Profit / (Loss) after Minority Interest 12.51

Basic and diluted Earnings per share (in Rs.) 0.32 0.66 32.57

REVIEW OF OPERATIONS:

During the year under review, the Company has recorded a consolidated income of Rs.1355 lakhs and the profit of Rs. 125.10 lakhs as against an income of Rs.2283.39 Lakhs and profit of Rs. 12716.06 Lakhs in the previous financial year ending 31.03.2014.

DIVIDEND:

Since the Company has ventured in to new businesses after sale of its business and distribution of sale proceeds among its shareholders, your Board of Directors regret their inability to declare dividend for the financial year 2014-2015.

REDUCTION OF CAPITAL:

The Company has pursuant to Hon,ble High court order dated 09.06.2015, reduced the paid up capital of the Company to the extent of sixty percent which is in excess of the business requirements of the Company. Consequently, the issued, subscribed and Paid-up capital shall stand reduced from Rs. 195,184,850/- (Rupees Nineteen Crore Fifty One Lakhs Eighty Four Thousand Eight Hundred and Fifty Only) consisting of 39,036,970 (Three Crore Ninety Lakhs Thirty Six Thousand Nine Hundred and Seventy Only) Equity Shares of Rs. 5/- (Rupees Five Only) each fully paid-up to Rs. 78,073,940 (Rupees Seven Crore Eighty Lakhs Seventy Three Thousand Nine Hundred and Forty Only) consisting of 15,614,788 (One Crore Fifty Six Lakhs Fourteen Thousand Seven Hundred and Eighty Eight Only) Equity Shares of Rs. 5/- (Rupees Five Only) each.

INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES / ASSOCIATES/ JOINT VENTURES:

Palred Technology Services Private Limited and Palred Online Technologies Private Limited are the subsidiary companies of Palred Technologies Limited. The performance details of the Subsidiary companies are as under:

Palred Online Technologies Private Limited (Rs. In millions)

Particulars 2014-15 2013-2014

Standalone Standalone

Total Income 69.33 0.28

Total Expenditure 110.29 0.87

Operating Profit / (Loss) (EBITDA) (37.92) (0.59)

Interest

Depreciation and amortization 0.72 0.01

Profit before Tax (38.64) (0.60)

Tax Expense

Profit/(Loss) after tax (38.64) (0.60)

Basic and diluted Earnings per share (in Rs.) (7.55) (6.00)

Palred Technology Services Private Limited (Rs. In millions)

Particulars 2014-15 2013-14

Standalone Standalone - -

Total Income

Total Expenditure 0.99 -

Operating Profit / (Loss) (EBITDA) (0.99) -

Interest - -

Depreciation and amortization - -

Profit before Tax (0.99) -

Tax Expense - - Profit/(Loss) after tax (0.99) -

Basic and diluted Earnings per share (inRs.) (7) -

* FY 2014-15 being first year of operations there are no comparative figures for FY 2013-14

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis as required under clause 49(VIII)(D) of the Listing Agreement forms a part of this Report.

CORPORATE GOVERNANCE

A Separate section titled "Report on Corporate Governance" along with the Auditors, Certificate on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms a part of this report.

EXTRACT OF ANNUAL RETURN:

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report.

DIRECTORS AND KEY MANANGERIAL PERSONNEL:

During the year, Mr. Atul Sharma, Mr.S.Vijaya Saradhi and Mrs. Richa Patnaik were appointed as Additional Directors. Now the Board proposes to appoint themas Independent Directors in line with the requirements of the Companies Act, 2013, it is therefore proposed to appoint existing additional directors in the independent category, as Independent Director on the Board of the Company for a term up to five consecutive years. A brief profile of proposed Independent Directors, including nature of their expertise, is provided in this Annual Report.

a) Notice has been received from Members proposing candidature of the Director namely Mr. Atul Sharma, Mr. S. Vijaya Saradhi and Mrs. Richa Patnaik for the office of Independent Director of the Company In the opinion of the Board, they fulfil the conditions specified in the Companies Act, 2013 and the Rules made there under for appointment as Independent Director of the Company.

b) Mr. T.RSivarama Krishnan, Ms. A. Amala and Mr Mohan Krishna Reddy have resigned from the post of Directors we.f 14.08.2015

c) Mr. E. Srinivas Prasad has resigned from the post of Director we.f 31.08.2015

Details of appointments of the director:

Name of the Director Mr. Atul Sharma Mr. S. Vijaya Saradhi Mrs.Richa Patnaik

Date of Birth 27/08/1965 06/10/1959 11/11/1980

Date of Appointment 14/05/2015 14/05/2015 31/08/2015

Qualifications CA M.Com PGDBM

No. of Shares held in the Company 25000 2000 Nil

Directorships held in other companies

(excluding private limited and foreign companies) Nil Nil Nil

Positions held in mandatory committees of other companies Nil Nil nil

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received a declaration from, Mr. S. Vijaya Saradhi, Mr. Atul Sharma and Mrs. Richa Patnaik, Independent directors of the company to the effect that they are meeting the criteria of independence as provided in Sub-section (6) of Section 149 of the Companies Act, 2013.

VIGIL MECHANISM:

Vigil Mechanism Policy has been established by the Company for directors and employees to report genuine concerns pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013. The same has been placed on the website of the Company ww.palred.com

DIRECTOR,S RESPONSIBILITY STATEMENT:

In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that:

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

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

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis; and

(e) The Directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

AUDITORS AND AUDITORS REPORT

In the previous Annual General Meeting ( 15th AGM), the Company has appointed M/s. Walker Chandiok & Co., LLP, Chartered accountants as statutory Auditors to hold office until the conclusion of the 16th annual General Meeting. The Company has already received letter from them to the effect that their appointment, if made by the shareholders, would be within the prescribed limits and that they are not disqualified for re-appointment within the meaning of the Companies act 2013. The Board of Directors recommend their re-appointment for the financial year 2015-16.

INTERNAL AUDIT:

M/s. Lakshmi Niwas & Co., Chartered Accountants, Hyderabad are the Internal Auditors of the Company.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of managerial personnel) Rules 2014, Mr. S.Sarveswara Reddy, Practicing Company Secretary has conducted Secretarial Audit of the Company for the FY 2014-15. The Secretarial Audit Report for the FY 2014-15 is annexed hereto and forms part of this Annual report. The Company on large scale operations globally is in the process of appointing right candidate as CFO.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:

The required information as per Sec.134 (3) (m) of the Companies Act 2013 is provided hereunder:

A. Conservation of Energy:

Your Company,s operations are not energy intensive. Adequate measures have been taken toconserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment.

B. Technology Absorption:

1. Research and Development (R&D): NIL

2. Technology absorption, adoption and innovation: NIL

C. Foreign Exchange Earnings and Out Go:

Foreign Exchange Earnings: NIL

Foreign Exchange Outgo: 95,15,312

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec. 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules 2014, during the financial year under review.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:

Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations The organization is adequately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

INSURANCE:

The properties and assets of your Company are adequately insured.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Details of loans, guarantees or investments made under section 186 of the companies Act, 2013 are given in the note to the financial statements.

CREDIT & GUARANTEE FACILITIES:

The Company has not availed any facilities of Credit and Guarantee.

RISK MANAGEMENT POLICY:

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well structured risk management process.

CORPORATE SOCIAL RESPONSIBILTY POLICY:

Since your Company do not have the net worth of Rs. 500 Crore or more, or turnover of Rs. 1000 Crore or more, or a net profit of Rs. 5 Crore or more during the financial year, section 135 of the Companies Act, 2013 relating to Corporate Social Responsibility is not applicable and hence the Company need not adopt any Corporate Social Responsibility Policy

RELATED PARTY TRANSACTIONS:

All related party transactions that were entered into during the financial year were on arm,s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with the promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

As required under clause 49(V)(D) of the listing agreement, the Company has formulated a policy for determining 'material, subsidiaries, the said policy is disclosed at Company,s website at www.palred.com

As required under clause 49(VIII)(A)(2) of the listing agreement, the Company has disclosed the policy on dealing with related party transactions at Company,s website at www.palred.com

Your Directors draw attention of the members to Note 32 of the financial statement which sets out related party disclosures.

DISCLOSURE ABOUT COST AUDIT:

Cost Audit is not applicable to your Company

RATIO OF REMUNERATION TO EACH DIRECTOR:

Under section 197(12) of the Companies Act, 2013, and Rule 5(1)(2) & (3) of the Companies(Appointment & Remuneration) Rules, 2014, the ratio of remuneration paid to Managing Director and maiden employees is 1:18.

LISTING WITH STOCK EXCHANGES:

The Company is listed with BSE Limited and National Stock Exchange India Limited (NSE) and confirms that it has paid the Annual Listing Fees where the Company,s Shares are listed.

INDUSTRY BASED DISCLOSURES AS MANDATED BY THE RESPECTIVE LAWS GOVERNING THE COMPANY

The Company is not a NBFC, Housing Companies etc., and hence Industry based disclosures is not required.

SECRETARIAL STANDARDS EVENT BASED DISCLOSURES

During the year under review, the Company has not taken up any of the following activities:

1. Issue of sweat equity share: NA

2. Issue of shares with differential rights: NA

3. Issue of shares under employee,s stock option scheme: NA

4. Disclosure on purchase by company or giving of loans by it for purchase of its shares: NA

5. Buy back shares: NA

6. Disclosure about revision: NA

7. Preferential Allotment of Shares: NA

EMPLOYEE RELATIONS:

Your Directors are pleased to record their sincere appreciation of the contribution by the staff at all levels in the improved performance of the Company.

None of the employees is drawing Rs. 5,00,000/- and above per month or Rs.60,00,000/- and above in aggregate per annum, the limits prescribed under Section 134 of the Companies Act, 2013.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed during the calendar year.

- No. of complaints received: Nil

- No. of complaints disposed off: Nil

ACKNOWLEDGEMENTS:

Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels, to the continued growth and prosperity of your Company.

Your Directors also wish to place on record their appreciation of business constituents, banks and other financial institutions and shareholders of the Company like SEBI, BSE, NSE, NSDL, CDSL, ICICI Bank, Kotak Mahindra Bank and State Bank of India etc. for their continued support for the growth of the Company.

For and on behalf of the Board

Palred Technologies Limited



Place: Hyderabad Palem Srikanth Reddy

Date: 31.08.2015 Managing Director

(DIN: 00025889)


Mar 31, 2014

Dear Members,

The Directors are pleased to place before the shareholders the Fifteenth Annual Report of Paired Technologies Limited (formerly Four Soft Limited) (herein after referred to as ''Palred'' or ''the Company'') together with the audited financial statements for the year ended March, 31, 2014.

1. Standalone Financial Results

(Rs. In millions except per share data)

For the year ended 31st March

Particulars 2014 2013

Total Income 221.19 341.68

Total expenditure 207.27 342.12

Operating profit/(Loss)(EBITDA) 13.92 (0.44)

Interest 0.43 0.49

Depreciation and amortization 5.63 11.50

Profit before Tax 7.86 (12.43)

Tax Expense 337.73 -

Profit/(Loss) After tax and before exceptional items (329.87) (12.43)

Exceptional Items 1601.48 -

Profit/(Loss) after tax and Exceptional Items 1271.61 (12.43)

Basic and diluted Earnings per share (in Rs.) 32.57 (0.32)

2. Business Performance

During the year under review, the total income of the Company is Rs. 221.19 million as compared to Rs. 341.68 Million of the previous year. The operating profit stood at Rs. 13.92 Million as compared to a loss of Rs. 0.44 Million in the previous year 2012-13. The profit after tax of the Company stood at Rs. 1271.61 Million during the year under review compared to a loss of 12.43 million during the previous year.

Your Company is into providing IT solutions and IT services for Media and Entertainment and Online e-commerce portals after the sale of IT business and investments in the foreign subsidiaries. Your Company conducting its operations in online sale of Laptops, computers, Mobile accessories and computer peripherals through its website www.latestone.com.

3. Declaration of Interim Dividend

The Company has declared an interim dividend of Rs.29/- per share during the year under review. The interim dividend has been paid out of the profits on slump sale of the IT business and investments in the foreign subsidiaries. In view of the requirement of funds for the expansion of business after the sale of IT business and investments in the foreign subsidiaries, the directors do not recommend dividend for the financial year 2013-14.

4. Transfer to reserves

The Company proposes the entire amount of profit after tax for an amount of Rs. 1271.61 Million to be retained in profit and loss account.

5. Fixed Deposits

Your Company has not accepted any fixed deposits and, as such, no principal or interest was outstanding as of the balance sheet date.

6. Issue of equity shares under Employee Stock Option Scheme

During the year under review, your Company has allotted 77,226 shares under the Employee Stock Option scheme to the eligible employees. The Board of Directors had approved allotment of 65,228 shares under ESOP Scheme- 2009 on their Board Meeting held on 30th May, 2013 and 11,938 shares on their Board Meeting held on 10th August, 2013. The Company''s paid-up capital is Rs.195, 184,850/- consisting of 39, 036, 970 equity shares of Rs. 5/- each as on 31st March, 2014. There has been no change in the Authorized capital of the Company during the year under review.

7. Reservation of 20,00,000 shares to the new management team

The Company has reserved 20, 00,000 shares to the new management team, under the Employee Stock Option Scheme. The Board of Directors had given their approval on their meeting held on 13th October, 2013 and the members had given their approval at their general meeting held on 27th November, 2013.

8. Slump sale of business

During the year under review, your Company had sold the IT business and Investments in foreign subsidiaries to Transport I.T Solutions Private Limited, a Kewill Group Company, for a lumpsum consideration of USD 43.4 Million subject to customary price purchase adjustments. The respective sale of business had been approved by the Board of Directors at their meeting held on 10th August, 2013 and the shareholders had given their consent by way of postal ballot on 18th September, 2013.

9. Subsidiaries

As a part of slump sale of business, the entire investments in the share capital of foreign subsidiaries, Four Soft B.V, Four Soft Singapore Pte Ltd., and Four Soft USA Inc. including the step down subsidiaries have been sold off to Kewill Group. During the year under review, Four Soft Malaysia SDN applied for liquidation. As on 31st March, 2014 there are no subsidiaries for your Company.

10. Change in the registered office of the Company

During the year under review, the registered office of the Company has been shifted from 5Q1, A3, Cyber Towers, HITECH City, Madhapur, Hyderabad- 500081 to Plot No.2, 8-2-703/2/B, Road No.12, Banjara Hills, Hyderabad- 500034 with effect from 07th October, 2013.

11. Acquisition

During the year under review, your Company has acquired on January 8th 2014, Deals15.com from Premium Web Services which provides internet services and software services/solutions to business to business e-commerce and website development for the purpose of business operations in online e-commerce as it is being emerged as a profitable area of business and it would be an effective way to initiate the business post sale of Four Soft Limited.

12. Technology - Solutions offered

Presently your Company, after selling 4S products to Kewill, is focusing on three different verticals. The first vertical is online e-commerce solutions. Your Company is focusing on occupying the online electronics accessories e-commerce niche area in India. Your Company is doing Dry Run for your online electronics accessories e- commerce site called LatestOne.com which is powered by Palred Stores. Your Company also offers solution called Palred Stores for e-commerce industry, which would like to open their online store and focus on their business rather than worrying about the technology platform. Your Company is focusing on implementing processes to improve overall shipment delivery turn around, quality of service and better automations. The backend solution has been implemented using Microsoft Dynamics AX 2012 R2. The LatestOne.com site integrates with CCAvenue payment gateway and many of the 3PLs (Bluedart, Aramex, Delhivery, DotZot and EMS) for shipment delivery.

The Second vertical, your Company offers IT-services on high-end solutions like enterprise application integration, data analytics, big data and master data management. The third vertical, your company offers solutions for media and entertainment.

13. Corporate Governance

Your Company has been making every effort to improve governance and transparency in the conduct of business. Your Company is committed to good Corporate Governance coupled with good corporate practices. A detailed report on corporate governance is available as a separate section in this Annual Report. Certificate by a Practicing Company Secretary on compliance with the code of Corporate Governance under Clause 49 of the Listing Agreement is enclosed as an annexure in this Annual Report.

The Company has well framed policies such as Whistle Blower Policy, Fraud Detection Policy and Code of Conduct for prevention of Insider Trading. The Company has internal controls and documented procedures and continues to ensure compliance with the said policies.

14. Management Discussion and Analysis

A report on the Management Discussion and Analysis for the year under review is annexed hereto and forms part of the Annual Report.

15. Directors

Appointment:

With effect from 1st September, 2014, Ms. Amala Mudhapuram has been appointed as Additional Director by the Board of Directors of your Company.

As per the requirements of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the Stock Exchanges, the Independent Directors are not liable to retire by rotation and are to be appointed for a period of Five (5) consecutive years. Hence, Ms. Amala.M, Mr. E. Srinivas Prasad, Mr. A. Mohan Krishna Reddy and Dr. T.R. Sivarama Krishnan are being appointed for a period of five (5) years.

16. Corporate Social Responsibility

At Palred we strongly believe in improving the quality of life of the communities we serve. To achieve this objective, the Palred Technologies CSR team has been actively working on improving the welfare of the socially and economically disadvantaged communities, especially those that exist in and around its areas of primary operation.

Your Company CSR policy encompasses initiatives to encourage sustainable socio-economic development of the community and to improve the quality of life of the people living in the areas in which it operates. In line with the values of all its stakeholders and most importantly, based on a genuine concern for people and the community, we at Palred donated an amount of Rs. 5 Lakhs to Bhupati Raju Sita Devi Charitable Trust, for the education of the children of the trust.

17. Statutory Auditors

The retiring Statutory Auditors of the Company, M/s Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N) hold office as Statutory Auditors till the conclusion of Fifteenth Annual General Meeting and they have confirmed their eligibility and willingness to accept office and be re-appointed as the Statutory Auditors to hold office until the conclusion of sixteenth Annual General Meeting.

The Audit Committee and the Board of Directors recommend the re-appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, as the Statutory Auditors to hold office until the conclusion of sixteenth Annual General Meeting.

The Company has received a certificate from M/s Walker Chandiok & Co., LLP to the effect that their re-appointment, if made, would be in accordance with the limits as specified under Section 139 of the Companies Act, 2013 and that they meet the criteria of independence. The proposal of their re-appointment is included in the notice of the ensuing Annual General Meeting.

A report of Auditors on the financials of the Company is appended to this annual report. There are no qualifications in the report.

18. Particulars of Employees

As required under the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended thereon, no employees other than Managing Director are drawing more than rupees sixty lakhs per financial year or rupees Five Lakh per month, as the case may be for the year 2013-14. The particulars are mentioned in annexure II to the Directors'' Report.

19. Disclosures as per Listing Agreement Clause 32

The cash flow statement under indirect method is in accordance with the Accounting Standard on cash flow statement (AS-3) as notified by the Companies (Accounting Standards) Rules, 2006, as amended is appended to this Annual Report.

20. Directors'' Responsibility Statement

Your Company''s Directors make the following statement in terms of Section 217 (2AA) of the Companies Act, 1956 which is to the best of their knowledge and belief and according to the information and explanations obtained by them:

I. The financial statements have been prepared in conformity with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and requirements of the Companies Act, 1956. There are no material departures in the adoption of applicable Accounting Standards.

II. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the Company at the end of the financial year ended 31st March, 2014 and of the profit and loss of the Company for the year.

III. We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

IV. We have prepared the annual accounts for the financial year ended 31st March, 2014 on a going concern basis.

The Board of Directors and the management of your Company accepts responsibility for the integrity and objectivity of these financial statements. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order to that the financial statements reflect in a true and fair manner; the form and substance of transactions, and reasonably present the Company''s state of affairs and profit for the year.

The financial statements have been audited by Walker Chandiok & Co., LLP Chartered Accountants, the Statutory Auditors.

The Audit Committee of the Company meets periodically with the Statutory Auditors to review the manner in which the auditors are discharging their responsibilities, and to discuss auditing, internal control and financial reporting issues. To ensure complete independence, Statutory Auditors have full and free access to the members of the Audit Committee to discuss any manner of substance.

21. Acknowledgement

Your Directors wish to express their gratitude to the Central and State Governments, investors, Securities and Exchange Board of India, the stock exchanges, analysts, financial institutions, banks, associates, and customers for their support. Your directors commend all the employees of your company for their continued dedication, significant contributions, hard work and commitment.

Place: Hyderabad For and on behalf of the Board of Directors Date: 01.09.2014 Sd/- Palem Srikanth Reddy Chairman & Managing Director (DIN-00025889)


Mar 31, 2013

To the Members,

The Directors present to you the Fourteenth Annual Report of Four Soft Limited (hereinafter referred to as ''Four Soft'' or ''the Company'') together with the audited financial statements for the year ended on March 31, 2013.

1. Financial results

(Rs.in million except per share data)

For the year ended 31 March Particulars Consolidated Standalone 2013 2012 2013 2012

Total income 1339.42 1272.14 341.68 308.61

Total expenditure 1111.93 1115.38 342.12 373.90

Operating profit / (loss) (EBITDA) 227.49 156.76 (0.44) (65.29)

Interest 20.58 23.82 0.49 0.30

Depreciation 18.44 18.63 11.50 11.76

Profit / (Loss) before tax 188.47 114.31 (12.43) (77.35)

Current tax 30.17 52.71

Deferred tax expense / (benefit) 14.90 (12.02) 23.61

Profit after tax before exceptional items 143.40 73.62 (12.43) (100.96)

Exceptional items (28.15) 68.00

Profit after tax and exceptional items 115.25 73.62 (12.43) (32.96)

Impairment of goodwill resulting on consolidation (500.00)

Reported net profits / (loss) after tax 115.25 (426.38) (12.43) (32.96)

Basic and diluted earnings per share (in Rs) 2.97 and 2.96 (11.00) (0.32) (0.85)

2. Changes to share capital

During the year under review, there has been no change in the Company''s capital structure and the Authorized Share Capital of the Company stands at Rs. 350 million.

3. Dividend

In view of requirement of funds for various business expansion activities in future, the directors do not recommend dividend for the financial year 2012-13.

4. Reserves

There has been no transfer of funds to reserves during financial year 2012-13.

5. Business performance

Total income in financial year ended March 31, 2013, on a consolidated basis, is Rs.1,339.42 million (2012: Rs. 1,272.14 million) and on a standalone basis is Rs.341.68 million (2012: Rs.308.61 million).

Your Company made an operating profit of Rs.227.49 million (2012: Rs.156.76 million) on a consolidated basis. The operating loss on a standalone basis stands at Rs.0.44 million (2012: Loss of Rs.65.29 million). The profit for the year is Rs.115.25 million (2012: excluding impairment of goodwill, Rs.73.63 million) on a consolidated basis. The loss for the financial year ended 31 March 2013 on standalone basis is Rs.12.43 million (2012: Rs.32.96 million).

Your Company has grown by 5.3 % during the year on a consolidated basis. During the year under review your Company increased its client-base globally, built up a robust pipeline and progressed further on large implementations. Your Company''s vision is to become the Industry leader in transportation and logistics vertical and make significant headway in the supply chain/shippers market. By leveraging technology excellence, domain spread and expertise, your Company continues to mine existing customers who contribute to more than 90% of revenues. On a consolidated basis the Company has added assets worth Rs. 8.44 million (2012: Rs. 8.76 million) primarily consisting of computer hardware and furniture & fittings.

Your Company continues to focus on research and development and has incurred Rs.54.10 million (2012: Rs.76.58 million) during the year.

Your Company is operating in the markets such as Europe and the United States which are currently facing economic uncertainties and tough competition. However, your Company''s strong value creating product lines and sales efforts have resulted in closure of 9 contracts during the year in the European, American and Indian market. We see a definite trend in which our target market is shifting towards. Customers are increasingly leaning towards low capital expenditure model of Software as a Service (SaaS). Among the 9 contracts signed during the year, we have signed 2 SaaS contracts in American market.

Our visibility products 4S Visilog® and 4S Visilog Plus® continue to find increased reception among our potential customers. Our pipeline also includes significant number of prospects at different stages of contract finalization.

In addition to our direct sales and inside sales efforts which have resulted in execution of new contracts, we also have increased our order book by account mining of existing customers under implementation in line with the strategy in the previous year

6. Liquidity

Your Company continues to generate cash from operations and has been able to manage its working capital requirements. Your Company has cash equivalents of Rs.214.86 million as at March 31, 2013 (2012: Rs.184.25 million) on a consolidated basis, of which Rs.11.46 million (2012: Rs.17.5 million) were invested in short term liquid instruments.

7. Subsidiaries

Four Soft Ltd has three direct subsidiaries; Four Soft B.V, The Netherlands, Four Soft Singapore Pte Ltd, Four Soft Malaysia Sdn Bhd, and the following six step-down subsidiaries Four Soft Netherlands B.V, Four Soft Nordic A/s, Four Soft UK Ltd, Four Soft USA Inc., Four Soft Japan KK and Four Soft Australia Pty Ltd. All subsidiaries are wholly owned by your Company.

During the year, your Company has neither made any acquisitions nor has setup any subsidiaries. There has been no material change in the nature of the subsidiaries listed aforesaid. A statement with brief financial data of each subsidiary is part of this annual report.

A consolidated financial statement of the Company and its wholly owned subsidiaries is attached as required by the Listing Agreement. The consolidated financial statements have been prepared in accordance with Accounting Standard 21 - "Consolidated Financial Statements" as notified by the Companies (Accounting Standards) Rules, 2006, as amended.

The Ministry of Corporate Affairs has granted general exemption under section 212(8) of the Companies Act, 1956 exempting companies from attaching copies of the Balance Sheet, Statement of Profit and Loss, Reports of the Board of Directors and Auditors of Subsidiaries as specified under Section 212 (1) of the Companies Act, 1956 subject to publication of certain summarized financial information of the subsidiaries in the Annual Report. Accordingly these documents related to subsidiaries are not attached to the Balance Sheet and the summarized financial information related to subsidiaries is included in the Annual Report. Full Annual Report including financial information of the subsidiaries will be available upon request by any member interested in obtaining the same. All the documents related to subsidiaries are kept in the head office of the Company for inspection by any interested shareholder.

8. Solutions offered

Presently, your Company offers solutions for freight forwarding industry, 3PLs and service providers, customs brokerage, contract and warehousing logistics, and for liners, non-vessel operating common carriers (NVOCCs) and agencies. Products in freight forwarding industry include 4S eTrans®, 4S Visilog® and 4S eTrans SME® and that for contract and 3PL warehousing providers include 4S eLog®. In addition, 4S iShipping targets the liners market, 4S eCustoms® targets the customs brokers & shippers and 4S Visilog Plus® which represents the Four Soft shipper logistics industry targets the shippers and manufacturers for their logistic needs. Your Company also offers IT- services including consulting, software development and system integration and implementation in the domain of logistics related I T.

9. Human resources

To remain competitive in the IT industry and achieve its business objectives, your Company understands the need of constantly attracting, grooming and retaining the best talent in the industry for its strategic success.

The Company has focused on transformation through qualitative recruitments across all levels and functions (Project Managers, Technical Designers, QA lead, to name a few). We have focused on premier institutes (IIT Hyderabad, BITS Hyderabad, and NIT to name a few) to hire bright candidates into the organization who have the potential to become the future leaders with their high drive to excel. A concentrated effort in recruitment was taken to make the staff more culturally diverse and further improve workplace demographics by recruiting people from different cities and IT hubs in India.

Talent development and continuous learning have been the focus area during the year. More hours (600 hrs.) of training have been conducted spreading over technical, functional and behavioral growth of the resources. Constant improvements in behavioral skills and updations with advanced technologies have been the core areas for learning opportunities.

To have better control, improved process efficiency and quality, payroll administration and statutory compliances and filings were bought in-house. This has also resulted in a much lower operational cost than what was spent annually for outsourcing it. All these activities are managed and maintained by Company personnel.

Your Company follows performance with engagement methodology where each resource is entitled for having fun at work. Engagement activities with an objective of enhanced communication, cohesiveness and collaboration within the teams have been conducted at regular intervals. These activities have also acted as mode of de-stressing the resources who are sometimes hard pressed due to important project deliverables. Corporate wellness programs inclusive of health check-ups by related specialists paved their way into your Company''s motto for better, fitter and engaged resources.

Your Company has successfully ranked 18th in top 20 IT companies across India with employee headcount less than 2000 in the DQ-CMR Best Employer Survey 2012. It has successfully marked its entry in To p 20 in most of the major categories viz. ''Preferred Employer'' (18th), ''Managing Slowdown'' (17th), ''Company Image'' (18th) and ''HR Ranking'' (13th). It was also conferred with "Best HR Strategic Plan Award" at India Human Capital Summit 2012. This award was given for having best HR strategies in line and supporting the business to achieve its vision.

With various new initiatives planned in the year ahead, your Company aspires to retain or improve its image as an employer of choice and keep attracting and retaining the best talent in the industry for sustained high performance and growth.

10. Processes

Your Company''s quality system is built on three pillars: ISO 9000, CMMI and Lean Management. We have built our process definitions, standards, tools and documents so that the system is in conformance with all the three frameworks. We not only undertake extensive customer satisfaction surveys but also conduct internal audits to maintain and verify high levels of compliance. We are currently CMMI Level 5 Company. This continuous improvement model of CMMI is one of the most prestigious certifications and is a testimony of the organizational focus on process improvements. We initiated Lean Management in the year 2009 and we are reaping benefits of the same in all identified value streams. Measures that validate the success of this program are reduced amounts of rework in the Company, faster implementation cycle for standard implementations and increased automation levels in various functions. Lean is implemented in projects and functions focusing on reducing non value activities and increasing value to customer. Process and templates are reviewed applying lean principles and non-value process steps are removed. This has simplified process implementation for practitioners.

11. Corporate governance

As a good governance initiative, your Company continues to improvise on complying and providing additional disclosures apart from complying with the recommended SEBI guidelines on Corporate Governance. A report on corporate governance along with the certificate from a Company Secretary-in-Practice confirming compliance of conditions of corporate governance as stipulated under Clause 49 of the Listing Agreements with the stock exchanges form part of the Annual Report.

The Company has well framed policies such as the Whistleblower Policy, Fraud Detection Policy and the Code of Conduct for senior officers and executives in the Company. The Company has internal controls and documented procedures and continues to ensure compliance with the said policies.

12. Corporate social responsibility

At Four Soft we strongly believe in improving the quality of life of the communities we serve. To achieve this objective, the communities, especially those that exist in and around its areas of primary operation.

Your Company CSR policy encompasses initiatives to conserve, sustain and renew the environment, to encourage sustainable socio-economic development of the community and to improve the quality of life of the people living in the areas in which it operates. The greatest strength of the Company''s CSR activity is that it is looked upon as a business process, like any other, not post-profit philanthropy. In line with the values of all its stakeholders and most importantly, based on a genuine concern for people and the community, we at Four Soft implemented various CSR activities during the year including the following:

- Donations to Kinnera Welfare Society (Old Age Home) - to mark the occasion of Gandhi Jayanti (02 October 2012), we have distributed woolen clothes, blankets, grocery and other consumables to the residents of the old age home.

- Tribes India (2nd November 2012) - With a noble cause and positive support to tribal craftsmanship in India, a kiosk facility was extended by Tribes India in your Company.

- Blood Donation camp (1st March 2013) - Over 25ltrs of blood for the NTR Memorial Trust blood bank was contributed by your Company staff. The blood bank provides blood free of cost to the poor and collects nominal fee from others.

Consistent with Four Soft''s approach to social responsibility towards nature, the Company continues its march towards "Going Green." Our green policy is consistent with your Company''s commitment to good corporate citizenship and best management practices. We have continued the following initiatives as part of our campaign:

- Go Green Campaign: Dry waste collection by "Aashayein" on 23rd July 2012 as part of Environment - Employment - Education (EEE) campaign. This initiative leads to pollution free environment; provide employment opportunities to under privileged people through Aashayein by way of recruiting them for collecting dry waste from various corporates. Aashayein manufactures and sometimes provides dry waste to relevant small scale business units for recycling to make usable items like paper bags etc.

- Carpooling: As a more environmental friendly and sustainable way to travel, reducing carbon emissions and traffic congestion on the roads; carpooling by employees in your Company has been actively promoted.

Your Company recognizes the importance of quality life, in the growth and development of individuals, country and the world. As such, it always works towards the betterment of the society by conducting various projects and events aligned with its goals.

13. Directors

As per Article 88 of the Articles of Association, Mr. Mohan Krishna Reddy, Director is retiring by rotation at this meeting and being eligible, offers himself for re-appointment.

Pursuant to the provisions of Clause 49 of the Listing Agreement, brief profile of the above director is provided in the notice to the Annual General Meeting.

The Board of directors of your Company recommends his re-appointment.

14. Auditors

M/s. Walker, Chandiok & Co, Chartered Accountants hold office until the conclusion of the forthcoming Annual General Meeting and have confirmed their eligibility and willingness to accept the office of the Auditors, if reappointed.

The Board of Directors recommends the appointment of M/s. Walker, Chandiok & Co, as the Statutory Auditors of the Company for the year 2013-14.

A Report of the Auditors on the financials of the Company is appended to this Annual Report. There are no qualifications in the Report.

15. Disclosures as per Listing Agreement

Clause 32:

The cash flow statement under indirect method is in accordance with the Accounting Standard on cash flow statement (AS- 3) as notified by the Companies (Accounting Standards) Rules, 2006, as amended is appended to his Annual Report.

Director''s responsibility statement as required under Section 217 (2AA) of the Companies Act, 1956 Your directors confirm that -

- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

- the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give 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 have taken proper and sufficient care 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.

- The directors have prepared the annual accounts on a going concern basis. The financial statements have been audited by M/ s. Walker, Chandiok & Co, Chartered Accountants - the statutory auditors.

16. Four Soft Limited Employee Welfare Trust

The Company has established Four Soft Limited Employees Welfare Trust ("the Trust") to administer the ESOP Scheme and as at March 31, 2013 had issued 1,170,200 equity shares of Rs.5 each, including 217,200 equity shares issued pursuant to issue of bonus shares in 2003.

Pursuant to the ESOP Scheme 2003 the trust has granted equity shares at an exercise price of Rs. 5 each to the eligible employees, which are subject to progressive vesting (1 year after date of issue of options) over a period of three years from the date of grant. As of March 31, 2013 the total shares held by the Trust is 143,987 (2012: 243,987). Mode of settlement of these stock options is equity.

Details of the equity shares issued under ESOP and the disclosures in compliance with clause 12 of the SEBI (Employees Stock Options Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 are set out in the annexure to this report.

17. Fixed deposits

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the balance sheet date.

18. Personnel

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, as amended:

There are no such employees who were in receipt of remuneration, which in aggregate, was not less than Rs .60 Lacs for the year 2012-13.

Conservation of energy, research and development, technology absorption, foreign earnings and outgo:

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are set out in the annexure included in this report.

19. Acknowledgments

Your directors take this opportunity to convey their appreciation for the support and co-operation received during the year under review, from all the government authorities, shareholders, other stakeholders, clients, vendors, partners, bankers and other business associates. Your directors'' wish to place on record their deep sense of appreciation for the dedicated and sincere services rendered by the employees at all levels.

By order of the Board of Directors Sd/-

M. Raghuram

Hyderabad, August 10, 2013 Company Secretary

 
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