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Directors Report of Virinchi Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting you the 25th Directors'' Report on the business and operations of your company, for the financial year ended 31st March, 2014.

Financial Highlights:

(Rs. in Lacs) Consolidated Standalone

Particulars 2013-14 2012-13 2013-14 2012-13

Total Income 11445.62 8,035.36 6,533.14 4,395.77

Profit before interest, Depreciation and Tax 1637.68 1,571.98 1,105.19 1,196.86

Interest 192.66 274.16 152.43 232.34

Depreciation 850.29 735.54 731.82 641.87

Provision for Taxation 228.01 137.69 76.26 64.38

Profit after interest, Tax and depreciation 401.25 424.59 144.68 258.27

Deferred Tax provision 13.62 61.37 4.54 52.22

Balance brought forward 4,758.63 4,585.05 4,317.80 4,111.75

Balance Carried to Balance Sheet 4705.44 4,758.63 4,457.95 4,317.80

RESULTS OF OPERATIONS:

Following are the results of operations for the financial year 2013-14

BUSINESS PERFORMANCE

Consolidated Revenues: The total Consolidated income of the Company for the FY 2013-14 comprises operating revenues of Rs. 11297.35 Lacs as against Rs. 7868.32 Lacs in FY 2012-13 and other income of Rs. 148.27 Lacs for the current year as against Rs. 167.03 lacs in FY 2012-13.

Standalone Revenues: The total income of the Company for the FY 2013-14 comprises operating revenues of Rs. 6400.69 Lacs as against Rs. 4253.85 Lacs in FY 2012-13 and other income of Rs. 132.44 Lacs for the current year as against Rs. 141.92 lacs in FY 2012-13.

Consolidated Profits: Profit before Tax (PBT) stood at Rs. 629.25 Lacs as against Rs. 562.28 Lacs for the previous year. Profit after Tax (PAT) stood at Rs. 387.63 lacs as against Rs. 363.22 Lacs for the previous year.

Standalone Profits: Profit before Tax (PBT) stood at Rs. 220.94 Lacs as against Rs. 322.65 Lacs for the previous year. Profit after Tax (PAT) stood at Rs. 140.14 Lacs as against Rs. 206.05 Lacs for the previous year.

Reserves and Surplus

During the year the Company has not transferred any amount to Reserves and Surplus.

Dividend

Your directors did not recommend any dividend on shares for this year.

Material changes and commitments;

There are no material changes and commitments occurred between the end of the financial year of the company and the date of the report affecting the financial position of the company

Acquisition of majority stake in Asclepius Consulting & Technologies Private Ltd.

The company has acquired 51% stake in Asclepius Consulting & Technologies Private Ltd a Bangalore based Health IT Products Company. Asclepius consulting was founded in 2007 by three IIT/IIM Graduates with a focus on building value IT products for Indian Hospitals.

Directors

None of the directors of the company is disqualified under the provisions of the act or under the Listing agreement with the stock exchanges.

Appointments

In accordance with the provisions of the Companies Act, 1956 Datuk Kunasingam V. Sittampalam, Ramam Madu retire by rotation at the Annual General Meeting and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.

In terms of Section 149 and Schedule IV Companies Act, 2013 and in compliance with Clause 49 of Listing Agreement following Directors are proposed to be appointed as Independent Directors of the company for five consecutive years for a term upto 31st March, 2019.

1. K. Krishna

2. Kunasingam V Sittampalam

3. Samad A Momin

4. Ramam Madu

Brief resume of the Directors proposed to be reappointed, nature of their expertise in specific functional areas, directorships in other companies as stipulated under clause 49 of the listing agreement with the stock exchanges in India are provided in the report on corporate governance.

Cessations

Mr. Srinath Kompella ceased to Director of the company during period under review.

Allotment of Shares:

The Company has not allotted any shares during the period under review.

Directors'' Responsibility Statement:

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

I) In the preparation of the annual accounts for the year ended 31st March, 2014, the applicable accounting standards had been followed and there are no material departures.

ii) We have selected appropriate accounting policies and applied them consistently and have 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 as on 31st March 2014 and of the profit of the company for the financial year ended 31st March, 2014.

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; and

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

Auditors and Audit Report

M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The company has received consent letter from the Statutory auditors and certificate indicating satisfaction of criteria sated in Section 141 of Companies Act, 2013 .

PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT,1956

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (Act), documents in respect of the various subsidiaries Viz., Director''s Report, Auditor''s Report, Balance Sheet and Profit and Loss Account, are required to be attached to the Balance Sheet of the holding company. However, in terms of the provisions of Section 212(8) of the Act, the Government of India, Ministry of Corporate Affairs, has vide Circular No. 2/2011 dated 8th February, 2011 granted exemption from the provisions of Section 212(1) of the Act. Accordingly, the Annual Report does not contain the financial statements of the subsidiaries of the Company. However, the Company will make available the audited annual accounts and related detailed information of the subsidiaries to the shareholders upon request in accordance with the applicable law. These documents are also available for inspection at the Registered Office of the Company during business hours.

A statement pursuant to the provisions of Section 212(1)(e) of the Act appears elsewhere in the Annual Report.

Fixed Deposits

The Company has not accepted any fixed deposits as on 31st March, 2014 so as to attract the provisions of Section 58A and 58AA of the Companies Act, 1956 read with Companies (Acceptance of the Deposits) Rules, 1975 as amended from time to time.

Subsidiaries

Virinchi Learning Private Ltd

Virinchi learning incorporated in the year 2010 as wholly owned subsidiary of Virinchi Technologies Ltd. The primary objective of incorporating Virinchi Learning is to promote technology based, for profit, quality education services to the different student categories in India, both by creation of new content & infrastructure and also by partnering with existing content providers by leveraging the strength of Information technology.

The company has made an application to National Skill Development Corporation (NSDC) for training of youth in the specified skills as notified by the NSDC and the company got approval from NSDC and a loan of Rs.5.5 crores has been granted to the company towards healthcare and bio tech training objectives.

KSoft Systems Inc

M/s. KSoft Systems Inc is in the business of software development and consulting. M/s. KSoft Systems Inc provides consulting services to various clients in the US in the domains of SAP, Oracle and other technologies.

M/s. K Soft Systems Inc., has taken 5000 Sft office premises on lease in Edison, NJ and had set up state of art infrastructure facility for serving the existing and new customers.

M/s. K Soft Systems inc filed for 278 H-1B visa applications and 147 applications are picked up in the Random selection process of the USCIS. Depending on the visa approval, the employees will travel to client sites starting early 2015.

Consolidated Financial Statements

In accordance with the Accounting Standards AS-21 and AS-27 on Consolidated financial Statements read with the Accounting Standard AS-23 on Accounting for investments in Associates, the Audited consolidated financial statements are provided in the annual report.

Particulars of Employees

In pursuance of the provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, the Directors are to report that there are no employees who are in receipt of remuneration of Rs.60,00,000/- or more per annum or Rs.5,00,000/- or more per month where employed for a part of the year.

Details about Virinchi Employees Stock Option Scheme, 2004 (VESOS, 2004)

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 31st March, 2014 under the Virinchi Employee Stock Options Scheme, 2004 are as under:

Sl.No Description Details

1. Options Granted during 2013-14 NIL

2. Pricing formula N.A.

3. Options Vested N.A.

4. Options exercised N.A.

5. The total number of shares arising as a result of exercise of option N.A.

6. Options lapsed N.A.

7. Variation of terms of options N.A.

8. Money realized by exercise of options N.A.

9. Total number of options in force Total options reserved under the scheme11,67,000 and Total options granted: 9,00,000

10. Employee wise details of options N.A. granted to i) Senior Management personnel ii) Any other employee who receives a grant in any one year of option amounting to 5% of 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.

11. Diluted Earning Per share (EPS) N.A. pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS)20 Earning Per share

12. The difference between the employee N.A. compensation costs computed under intrinsic value method and the employee compensation cost that shall have been recognized if the Company had used the Fair Value methods and its impact on profits and EPS of the Company.

13. Weighted Average exercise prices and NIL weighted average fair values of options for options whose exercise price either equals or exceeds or is less than the market price of the stock

14. Description of the method and The Company has opted signigicant assumptions used during intrinsic Value method used during the year to estimate the for accounting of Compen- fair value of options. sation Cost arising out of ESOP. The Company has not made any assumptions.

i. Risk-free interest rate

ii. Expected life

iii. Expected Volatility

iv. Expected dividends

v. The price of the underlying share in market at the time of option grant.

Information required under Section 217(1) (e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988.

a) Conservation of Energy:

Company''s operations require electrical energy for its use in air conditioning the premises, for power supply to computer systems and lighting which are not energy intensive. However, adequate measures have been taken to reduce energy consumption, wherever possible.

To decrease the carbon footprint, company transportation is extended to associates from different parts of the city; the occupation is 100% in all the buses on all the working days. Also, to conserve the natural resources, STP plan is installed and the waste water and solid material emitted out, after processing is being used for landscaping. The company has adopted laudable practices like reducing the carbon foot prints, maximizing the utilization of natural light and reducing the electric light fitments, reduction of size of work station partitions. use of recycled material for the work stations'' wood boards, provision of task lights for every work station to minimize the power consumption, central control switch for entire work station and automated water control taps in the rest rooms. As part of energy conservation, LED lighting is being use for the new areas, which are undergoing interior renovation works.

b) Research and Development

Your company will continue to focus and invest in its R & D activities in software engineering, technologies and products. Your company leverages its excellence in technology for producing World Class Products and solutions. The continual exposure to new technologies has helped maintain high motivation levels in employees and to generate higher levels of productivity, efficiency and quality. Your company continues to give due importance to research and development to maintain its leadership in the field of leading edge technologies.

d) Technology Absorption, Adaptation and Innovation

Your company continues to use state-of-the-art technology for improving the productivity and quality of its products and services. To create adequate infrastructure, your Company continues to invest in the latest hardware and software.

To support its growth plans, the company continues to invest in global solutions that are configured consistently for its core business processes.

Report on Corporate Governace

Corporate Governance Report is set out as separate Annexure to this Report.

Management Discussion and Analysis

Management''s Discussion and Analysis report for the year under review as stipulated under Clause 49 of the Listing Agreement with the stock exchanges is presented in a separate section forming part of the Annual report.

Acknowledgments

Your directors would like to place on record their appreciation of support, co-operation and assistance received from the company''s clients, Government authorities, bankers, shareholders and suppliers. The board wishes to convey its appreciation for hard work, solidarity, cooperation and support put in by the company''s employees at all levels in enabling such growth.



BY ORDER OF THE BOARD For VIRINCHI TECHNOLOGIES LIMITED

PLACE : HYDERABAD G. Santi Priya

DATE : 30-08-2014 Chairperson & Whole Time Director


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting you the 24th Directors'' Report on the business and operations of your company, for the fnancial year ended 31st March, 2013.

Financial Highlights: (Rs. in Lacs)

Consolidated Standalone Particulars 2012-13 2011-12 2012-13 2011-12

Total Income 8,035.36 6,987.91 4,395.77 3,708.21

Proft before interest, Depreciation and Tax 1,571.98 1,866.77 1,196.86 1,292.04

Interest 274.16 281.01 232.34 245.74

Depreciation 735.54 854.13 641.87 810.56

Provision for Taxation 137.69 159.74 64.38 56.98

Proft after interest, Tax and depreciation 424.59 571.88 258.27 178.76

Deferred Tax provision 61.37 32.88 52.22 19.48

Balance brought forward 4,585.05 4,153.49 4,111.75 4,039.55

Balance Carried to Balance Sheet 4,758.63 4,585.05 4,317.80 4,111.75

RESULTS OF OPERATIONS:

Following are the results of operations for the fnancial year 2012-13

BUSINESS PERFORMANCE

Consolidated Revenues: The total Consolidated income of the Company for the FY 2012-13 comprises operating revenues of Rs. 7868 Lacs as against Rs. 6804 Lacs in FY 2011-12 and other income of Rs. 167 Lacs for the current year as against Rs. 183 lacs in FY 2011-12.

Standalone Revenues: The total income of the Company for the FY 2012-13 comprises operating revenues of Rs. 4554 Lacs as against Rs. 3525 Lacs in FY 2011-12 and other income of Rs. 142 Lacs for the current year as against Rs. 183 lacs in FY 2011-12.

Consolidated Profts: Proft before Tax (PBT) stood at Rs. 562.28 Lacs as against Rs. 731.63 Lacs for the previous year. Proft after Tax (PAT) stood at Rs. 363.22 lacs as against Rs. 538.99 Lacs for the previous year.

Standalone Profts: Proft before Tax (PBT) stood at Rs. 322.65 Lacs as against Rs. 235.74 Lacs for the previous year. Proft after Tax (PAT) stood at Rs. 206.05 Lacs as against Rs. 159.28 Lacs for the previous year.

Your Company is primarily engaged in the business of providing IT Products & Services to its customers in US, Europe, and Middle East. The fnancial results of the Company on consolidated basis have been encouraging despite the challenges faced in terms of unfavorable business conditions in our primary markets of US and Europe.

Reserves and Surplus

During the year the Company has not transferred any amount to Reserves and Surplus.

Dividend

Your directors did not recommend any dividend on shares for this year.

Material changes and commitments;

There are no material changes and commitments occurred between the end of the fnancial year of the company and the date of the report affecting the fnancial position of the company

Directors

None of the directors of the company is disqualifed under the provisions of the act or under the Listing agreement with the stock exchanges.

Appointments:

In accordance with the provisions of the Companies Act, 1956 G.Santi Priya and K. Krishna retire by rotation at the Annual General Meeting and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.

Ms. G. Santi Priya reappointed as Chairperson& Whole Time Director w.e.f 22nd July, 2013 and Sri Kalyan Kompella appointed as Additional Director and Whole Time Director on 12th August, 2013

Brief resume of the Directors proposed to be reappointed, nature of their expertise in specifc functional areas, directorships in other companies as stipulated under clause 49 of the listing agreement with the stock exchanges in India are provided in the report on corporate governance.

Cessations:

Srinath Kompella resigned to be a director of the company w.e.f 12th August, 2013. Your directors place on record the appreciation and gratitude to him for his valuable contributions during his tenure as director.

Allotment of Shares:

The company has alloted 30,00,000 Equity shares on preferential basis to promoter and strategic investors during the year.

Directors'' Responsibility Statement:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the

Directors'' Responsibility Statement, it is hereby confrmed that:

I) In the preparation of the annual accounts for the year ended 31st March, 2013, the applicable accounting standards had been followed and there are no material departures.

ii) We have selected appropriate accounting policies and applied them consistently and have 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 as on 31st March 2013 and of the proft of the company for the fnancial year ended 31st March, 2013

iii) We have taken proper and suffcient 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; and

iv) We have prepared the annual accounts for the fnancial year ended 31st March, 2013 on a going concern basis.

Auditors and Audit Report

M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The company has received letter from the Statutory auditors to this effect that their reappointment, if made would be within the prescribed limits under section 224 (1B) of the Companies Act, 1956 and they are not disqualifed for such reappointment within the meaning of section 226 of the said act.

PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (Act), documents in respect of the various subsidiaries Viz., Director''s Report, Auditor''s Report, Balance Sheet and Proft and Loss Account, are required to be attached to the Balance Sheet of the holding company. However, in terms of the provisions of Section 212(8) of the Act, the Government of India, Ministry of Corporate Affairs, has vide Circular No. 2/2011 dated 8th February, 2011 granted exemption from the provisions of Section 212(1) of the Act. Accordingly, the Annual Report does not contain the fnancial statements of the subsidiaries of the Company. However, the Company will make available the audited annual accounts and related detailed information of the subsidiaries to the shareholders upon request in accordance with the applicable law. These documents are also available for inspection at the Registered Offce of the Company during business hours.

A statement pursuant to the provisions of Section 212(1)(e) of the Act appears elsewhere in the Annual Report.

Fixed Deposits

The Company has not accepted any fxed deposits as on 31st March, 2013 so as to attract the provisions of Section 58A and 58AA of the Companies Act, 1956 read with Companies (Acceptance of the Deposits) Rules, 1975 as amended from time to time.

Subsidiary Companies

The company has incorporated two subsidiaries namely M/s. Tyohar Foods Private Ltd and M/s. Virinchi Infra and Realty Private Ltd during the year.

The details pertaining to fnancials of Subsidiary Companies have been given elsewhere in this report.

Consolidated Financial Statements

In accordance with the Accounting Standards AS-21 and AS-27 on Consolidated fnancial Statements read with the Accounting Standard AS-23 on Accounting for investments in Associates, the Audited consolidated fnancial statements are provided in the annual report.

Particulars of Employees

In pursuance of the provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, the Directors are to report that there are no employees who are in receipt of remuneration of Rs.60,00,000/- or more per annum or Rs.5,00,000/- or more per month where employed for a part of the year.

Details about Virinchi Employees Stock Option Scheme, 2004 (VESOS, 2004)

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 31st March, 2013 under the Virinchi Employee Stock Options Scheme, 2004 are as under:

Sl.

Description Details

No

1. Options Granted during 2012-13 NIL

2. Pricing formula N.A.

3. Options Vested N.A.

4. Options exercised N.A.

5. The total number of shares arising as a result of N.A. exercise of option

6. Options lapsed N.A.

7. Variation of terms of options N.A.

8. Money realized by exercise of options N.A.

9. Total number of options in force Total options reserved under the scheme:

11,67,000 and Total options granted: 9,00,000

10. Employee wise details of options granted to i) N.A. Senior Management personnel ii) Any other employee who receives a grant in any one year of option amounting to 5% of or more of option granted during that year iii) Identifed 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.

11. Diluted Earning Per share (EPS) pursuant to N.A. issue of shares on exercise of option calculated in accordance with Accounting Standard (AS)20 Earning Per share

12. The difference between the employee N.A. compensation costs computed under intrinsic value method and the employee compensation cost that shall have been recognized if the Company had used the Fair Value methods and its impact on profts and EPS of the Company.

13. Weighted Average exercise prices and weighted NIL average fair values of options for options whose exercise price either equals or exceeds or is less than the market price of the stock

14. Description of the method and signigicant The Company has opted intrinsic Value method assumptions used during the year to estimate for accounting of Compensation Cost arising the fair value of options. out of ESOP. The Company has not made any assumptions.

i. Risk-free interest rate

ii. Expected life

iii. Expected Volatility iv. Expected dividends

v. The price of the underlying share in market at the time of option grant Information required under Section 217(1) (e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988.

a) Conservation of Energy:

Company''s operations require electrical energy for its use in air conditioning the premises, for power supply to computer systems and lighting which are not energy intensive. However, adequate measures have been taken to reduce energy consumption, wherever possible.

To decrease the carbon footprint, company transportation is extended to associates from different parts of the city; the occupation is 100% in all the buses on all the working days. Also, to conserve the natural resources, STP plan is installed and the waste water and solid material emitted out, after processing is being used for landscaping. The company has adopted laudable practices like reducing the carbon foot prints, maximizing the utilization of natural light and reducing the electric light ftments, reduction of size of work station partitions. use of recycled material for the work stations'' wood boards, provision of task lights for every work station to minimize the power consumption, central control switch for entire work station and automated water control taps in the rest rooms. As part of energy conservation, LED lighting is being use for the new areas, which are undergoing interior renovation works.

b) Research and Development

Your company will continue to focus and invest in its R & D activities in software engineering, technologies and products. Your company leverages its excellence in technology for producing World Class Products and solutions. The continual exposure to new technologies has helped maintain high motivation levels in employees and to generate higher levels of productivity, effciency and quality. Your company continues to give due importance to research and development to maintain its leadership in the feld of leading edge technologies.

d) Technology Absorption, Adaptation and Innovation

Your company continues to use state-of-the-art technology for improving the productivity and quality of its products and services. To create adequate infrastructure, your Company continues to invest in the latest hardware and software.

To support its growth plans, the company continues to invest in global solutions that are confgured consistently for its core business processes.

Report on Corporate Governance

Corporate Governance Report is set out as separate Annexure to this Report.

Management Discussion and Analysis

Management''s Discussion and Analysis report for the year under review as stipulated under Clause 49 of the Listing Agreement with the stock exchanges is presented in a separate section forming part of the Annual report.

Acknowledgments

Your directors would like to place on record their appreciation of support, co-operation and assistance received from the company''s clients, Central Government authorities, bankers, shareholders and suppliers. The board wishes to convey its appreciation for hard work, solidarity, cooperation and support put in by the company''s employees at all levels in enabling such growth.

BY ORDER OF THE BOARD

For VIRINCHI TECHNOLOGIES LIMITED

PLACE : HYDERABAD G. Santi Priya

DATE : 12-08-2013 Chairperson & Whole Time Director


Mar 31, 2012

The Directors have pleasure in presenting you the 23rd Directors' Report on the business and operations of your company on standalone basis, for the financial year ended 31st March, 2012.

Financial Highlights on standalone basis (Rs. in Lacs)

Consolidated Standalone

Particulars 2011-12 2010-11 2011-12 2010-11

Total Income 6,988 6,478 3,708.21 3,816.88

Profit before interest, Depreciation and Tax 1,867 1,644 1,292.04 1,309

Interest 281 230.87 245.74 187.30

Depreciation 854 839.31 810.56 819.04

Provision for Taxation 159.74 171.61 56.98 82.32

Profit after interest, Tax and depreciation 572 402.33 178.76 220.10

Deferred Tax provision 33 (43.64) 19.48 (50.19)

Balance brought forward 4,153 3,923.64 4,039.55 3,856.64

Balance Carried to Balance Sheet 4,549 4282 4,112 4,040

RESULTS OF OPERATIONS:

Following are the results of operations for the financial year 2011-12

BUSINESS PERFORMANCE

Consolidated Revenues: The total Consolidated income of the Company for the FY 2011-12 comprises operating revenues of Rs. 6804 Lacs as against Rs. 6377 Lacs in FY 2010-11 and other income of Rs. 183 Lacs for the current year as against Rs. 101 lacs in the previous year.

Standalone Revenues: The total income of the Company for the FY 2011-12 comprises operating revenues of Rs. 3525 Lacs as against Rs. 3715 Lacs in FY 2010-11 and other income of Rs.183 Lacs for the current year as against Rs. 101 lacs in the previous year.

Consolidated Profits: Profit before Tax (PBT) stood at Rs. 731.63 Lacs as against Rs. 573.94 Lacs for the previous year. Profit after Tax (PAT) stood at Rs. 538.99 lacs as against Rs. 445.97 Lacs for the previous year.

Standalone Profits: Profit before Tax (PBT) stood at Rs. 235.74 Lacs as against Rs. 302.42 Lacs for the previous year. Profit after Tax (PAT) stood at Rs. 159.28 Lacs as against Rs. 270.29 Lacs for the previous year.

Your Company is primarily engaged in the business of providing IT Products & Services to its customers in US, Europe, and Middle East. The financial results of the Company on consolidated basis have been encouraging despite the challenges faced in terms of unfavorable business conditions in our primary markets of US and Europe.

Reserves and Surplus

During the year the Company has not transferred any amount to Reserves and Surplus.

Dividend

Your directors are pleased to recommend payment of a dividend of Rs. 0.50/-per equity share (at the rate of 5% on the par value of Rs. 10/-each) subject to the approval of share holders.

Material changes and commitments;

There are no material changes and commitments occurred between the end of the financial year of the company and the date of the report affecting the financial position of the company

Directors

In accordance with the provisions of the Companies Act, 1956 Datuk Kunasingam V. Sittampalam and Samad A. Momin retire by rotation at the Annual General Meeting and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.

Brief resume of the Directors proposed to be reappointed, nature of their expertise in specific functional areas, directorships in other companies as stipulated under clause 49 of the listing agreement with the stock exchanges in India are provided in the report on corporate governance.

Directors' Responsibility Statement:

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

I) In the preparation of the annual accounts for the year ended 31st March, 2012, the applicable accounting standards had been followed and there are no material departures.

ii) We have selected appropriate accounting policies and applied them consistently and have 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 as on 31st March 2012 and of the profit of the company for the financial year ended 31st March 2012

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; and

iv) We have prepared the annual accounts for the financial year ended 31st March, 2012 on a going concern basis.

Auditors and Audit Report

M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The company has received letter from the Statutory auditors to this effect that their reappointment, if made would be within the prescribed limits under section 224 (1B) of the Companies Act, 1956 and they are not disqualified for such reappointment within the meaning of section 226 of the said act.

PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (Act), documents in respect of the various subsidiaries Viz., Director's Report, Auditor's Report, Balance Sheet and Profit and Loss Account, are required to be attached to the Balance Sheet of the holding company. However, in terms of the provisions of Section 212(8) of the Act, the Government of India, Ministry of Corporate Affairs, has vide letter No. 47/15/2011-CL-III dated 27 January 2011 granted exemption from the provisions of Section 212(1) of the Act. Accordingly, the Annual Report does not contain the financial statements of the subsidiaries of the Company. However, the Company will make available the audited annual accounts and related detailed information of the subsidiaries to the shareholders upon request in accordance with the applicable law. These documents are also available for inspection at the Registered Office of the Company during business hours.

A statement pursuant to the provisions of Section 212(1)(e) of the Act appears elsewhere in the Annual Report.

Fixed Deposits

The Company has not accepted any fixed deposits as on 31st March, 2012 so as to attract the provisions of Section 58A and 58AA of the Companies Act, 1956 read with Companies (Acceptance of the Deposits) Rules, 1975 as amended from time to time.

Subsidiary Companies

The details pertaining to financials of Subsidiary Companies have been given elsewhere in this report.

Consolidated Financial Statements

In accordance with the Accounting Standards AS-21 and AS-27 on Consolidated financial Statements read with the Accounting Standard AS-23 on Accounting for investments in Associates, the Audited consolidated financial statements are provided in the annual report.

Particulars of Employees

In pursuance of the provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975, the Directors are to report that there are no employees who are in receipt of remuneration of Rs. 60,00,000/- or more per annum or Rs. 5,00,000/- or more per month where employed for a part of the year.

Details about Virinchi Employees Stock Option Scheme, 2004 (VESOS, 2004)

Pursuant to the provisions of Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee stock purchase Scheme), Guidelines, 1999, the details of stock options as on 31st March, 2012 under the Virinchi Employee Stock Options Scheme, 2004 are as under:

SI. Description Details No

1. Options Granted during 2011-12 NIL

2. Pricing formula The Company is issuing the shares at Face Value of Rs. 10/- each as per the resolution passed in the 17th Annual General Meeting of the Company.

3. Options Vested NIL

4. Options exercised NIL

5. The total number of shares arising NIL as a result of exercise of option

6. Options lapsed NIL

7. Variation of terms of options There is no variation of terms in this financial year

8. Money realized by exercise of NIL options 9. Total number of options in force Total options reserved under the scheme: 11,67,000 and Total options granted: 9,00,000

10. Employee wise details of options N.A. granted to i) Senior Management personnel ii) Any other employee who receives a grant in any one year of option amounting to 5% of 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.

11. Diluted Earning Per share (EPS) Rs. 3.00 per share pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS)20 Earning Per share

12. The difference between the - employee compensation costs computed under intrinsic value method and the employee compensation cost that shall have been recognized if the Company had used the Fair Value methods and its impact on profits and EPS of the Company.

13. Weighted Average exercise NIL prices and weighted average fair values of options for options whose exercise price either equals or exceeds or is less than the market price of the stock 14. Description of the method and The Company has opted significant assumptions used intrinsic Value method for during the year to estimate accounting of Compensation the fair value of options. Cost arising out of ESOP. i. Risk-free interest rate The Company has not made any assumptions. ii. Expected life

iii. Expected Volatility iv. Expected dividends

v. The price of the underlying share in market at the time of option grant

Information required under Section 217(1) (e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988.

a) Conservation of Energy:

Company's operations require electrical energy for its use in air conditioning the premises, for power supply to computer systems and lighting which are not energy intensive. However, adequate measures have been taken to reduce energy consumption, wherever possible.

b) Research and Development and Technology Absorption:

Your company will continue to focus and invest in its R & D activities in software engineering, technologies and products. Your company leverages its excellence in technology for producing World Class Products and solutions. The continual exposure to new technologies has helped maintain high motivation levels in employees and to generate higher levels of productivity, efficiency and quality. Your company continues to give due importance to research and development to maintain its leadership in the field of leading edge technologies.

c) Foreign Exchange Earnings and Outgo:

Most of your Company's earnings are from the export of Computer Software and Services. In order to promote product sales and services, your Company participated in various exhibitions and carried product promotion activities.

Earnings: Rs. 3393.45 Lacs Outgo: Rs. 58.98 Lacs

d) The company has not made any technology absorption during the year. Report on Corporate Governance

Corporate Governance Report is set out as separate Annexure to this Report.

Management Discussion and Analysis

Management's Discussion and Analysis report for the year under review as stipulated under Clause 49 of the Listing Agreement with the stock exchanges is presented in a separate section forming part of the Annual report.

Acknowledgments

Your directors would like to place on record their appreciation of support, co-operation and assistance received from the company's clients, Central Government authorities, bankers, shareholders and suppliers. The board wishes to convey its appreciation for hard work, solidarity, cooperation and support put in by the company's employees at all levels in enabling such growth.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS For VIRINCHI TECHNOLOGIES LIMITED

G. Santi Priya Chairperson & Whole Time Director

PLACE : HYDERABAD DATE : 29-08-2012

 
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