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Directors Report of Zen Technologies Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 22nd Annual Report of the Company along with the Audited Financial Statements for the financial year ended 31 March 2015.

FINANCIAL RESULTS

The financial highlights of the Company are as follows:

(Rs. in Cr) Particulars 2014-15 2013-14

Total Income 81.86 49.89

Total Expenditure 57.67 45.73

Operating Profit (PBIDT) 24.19 4.16

Interest 2.13 2.48

Depreciation & Amortization 2.25 1.57

Profit before tax 19.82 0.11

Provision for Tax 4.08 0.02

Deferred Tax Liability - -

Profit after Tax 15.74 0.09

Appropriations:

Transferred to General Reserve 1.39 -

Proposed Dividend 2.70 0.77

Dividend Tax 0.55 0.13

Retained profit 11.10 -

Earnings Per Share (Rs.) (face value of Equity Share of Rs. 1/- each) - Basic 2.04 0.01

STATE OF THE COMPANY'S AFFAIRS

During the year under review, your Company achieved total income of Rs. 81.86 Crores as against Rs. 49.89 Crores during the previous year. The Net profit after tax stood at Rs. 15.74 Crores (Rs. 9.33 Lakhs for the previous year). The Earnings Per Share (EPS) of face value of Rs. 1/- each is Rs. 2.04 (previous year's EPS Rs. 0.01).

The order book size as on 31 March 2015 is around Rs. 118.94 Crores including AMCs of worth Rs. 79.04 Crores as against Rs. 3.84 Crores excluding AMCs for the previous year.

During the year, the R&D expenditure (capital and revenue) is Rs. 13.07 Crores (previous year 20.66 Crores). The R&D products developed during the year have substantial scope for revenue generation and are expected to become commercially viable in the next two years.

STRATEGIC ALLIANCE

During the year under review, your Company signed a Memorandum of Understanding (MoU) with Rockwell Collins, an American Company having facilities in Hyderabad and near New Delhi to combine their strengths in simulation and training to offer industry-leading, high fidelity solutions to Indian military customers. This alliance marks the first time that a global simulator original equipment manufacturer has partnered with an Indian simulator manufacturing company to cater to the Indian Defence market.

Further to MoU, your Company and Rockwell Collins joined their forces in military flight simulation by unveiling a next generation rotary wing simulator at Aero India 2015. This strategic alliance will produce high fidelity innovative solutions while also ensuring cost benefits for customers across the region since the alliance's capabilities are indigenized, including in software, electronics and visuals. With the rotary wing platform launch, both companies aim to emerge, in the near future, as key partners to the Indian Armed Forces.

DIVIDEND

Your Directors have recommended a dividend of Rs. 0.35 per Equity Share (35 percent) of face value of Rs. 1.00 each of the Company for the financial year ended 31 March 2015, amounting to Rs. 3.25 Crores, (including dividend tax of Rs. 0.55 Crores). The dividend, if approved, at the ensuing Annual General Meeting to be held on 26 September 2015, will be paid to those members whose names appear in the Register of Members as on record date. The Register of Members and Share Transfer books of the Company will remain closed from 22 September 2015 to 26 September 2015 (both days inclusive) for the purpose of payment of dividend for the financial year ended 31 March 2015 and the AGM.

TRANSFER OF AMOUNT TO RESERVES

An amount of Rs. 1.39 Crores out of the current profits for the year are transferred to General Reserves. An amount of Rs. 11.10 Crores is proposed to be retained in the surplus.

SUB-DIVISION OF EQUITY SHARES AND CONSEQUENT AMENDMENT IN MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY

During the year, with a view to broad-base the investor base by encouraging the participation of the small investors and also to increase the liquidity of Equity Shares of the Company, the Company after obtaining members approval on 18 September 2014 through Postal Ballot has sub-divided each Equity Share of face value of Rs. 10/- (Rupees Ten only) as existing on the Record Date (24 November 2014) into 10 (Ten) Equity Shares of face value of Rs. 1/- (Rupee One only) each fully paid-up, with effect from the Record Date.

Consequent upon sub-division of Equity Shares of the Company, the Capital Clause of Memorandum of Association and Article 4 of the Articles of Association of the Company were amended with the approval of the members through Postal Ballot i.e. from Rs. 20,00,00,000/- (Rupees Twenty Crores only) divided into 2,00,00,000 (Two Crores) Equity Shares of Rs. 10/- (Rupees Ten only) each to 20,00,00,000 (Twenty Crores) Equity Shares of Rs. 1/- (Rupees One only) each.

ESTABLISHMENT OF 100% WHOLLY OWNED SUBSIDIARY COMPANY AT AJMAN FREE ZONE AUTHORITY, AJMAN, UAE

As a part of the expansion program, the Board accorded its consent to establish a 100% wholly owned subsidiary company at Ajman Free Zone Authority, Ajman, UAE to tap the global market for the products of the company.

ALLOCATION OF SUB-LIMITS FOR PORTFOLIO INVESTMENT WITHIN THE DEFAULT PORTFOLIO INVESTMENT LIMIT OF 24% OF THE PAID-UP EQUITY SHARE CAPITAL OF THE COMPANY

In terms of applicable provisions of the Foreign Exchange Management Act, 1999 (which along with the regulations framed thereunder be referred to as "FEMA"), Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (including any statutory modification(s), amendment or re- enactment thereof for the time being in force), and pursuant to Reserve Bank of India A.P. (DIR Series) Circular No. 46 dated 8 December 2014 on Foreign Direct Investment (FDI) in India – Review of FDI policy –Sector Specific conditions- Defence, the Company passed Special Resolution on 9 March 2015 by way of Postal Ballot for allocation of sub-limits for Portfolio Investment for Registered Foreign Portfolio Investor/s (including Qualified Foreign Investor/s and Foreign Institutional Investor/s), Foreign Venture Capital Investor/s up to 20% and for Non Resident Indian/s up to 4% in the shares of the Company, within the default portfolio investment limit of 24% of the paid-up equity share capital of the Company and to enable RBI to monitor the RFPIs, FVCIs and NRIs holdings of the Company.

Accordingly, Reserve Bank of India vide its Press Release dated 13 March 2015 advised that FIIs/RFPIs can invest up to 20% and Non Resident Indian (NRI)/Persons of Indian Origin (PIO) can invest up to 4% of the paid up capital of Zen Technologies Limited under the Portfolio Investment Scheme (PIS).

LISTING OF COMPANY'S EQUITY SHARES ON THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED, MUMBAI

The Company had made application to the National Stock Exchange (NSE) for getting the shares listed on the Exchange. NSE vide its letter dated 26 March 2015, granted listing approval stating that the equity shares of the Company shall be listed and admitted to dealings on the Exchange w. e. f. 30 March 2015. Accordingly, the equity shares of the Company got listed on NSE with effect from 30 March 2015.

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

Pursuant to Rule 8 of the Companies (Accounts) Rules, 2014, report on the performance and financial position of the subsidiary included in the consolidated financial statements is appended as Annexure 1 to this Report.

SUBSIDIARY

VERSION 2 GAMES LTD

As per the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, a separate statement containing the sailent features of the financial statements of the subsidiary in the prescribed format AOC-1 is appended to this Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Section 129(3) of the Companies Act, 2013, consolidated financial statements of the Company and its subsidiary have been prepared in accordance with the requirements of Accounting Standards issued by Institute of Chartered Accountants of India (ICAI) and as per the provisions of the Companies Act, 2013, which form part of the Annual Report.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements of the Company, including the consolidated financial statements and audited accounts of its subsidiary, are placed on the Company's website www.zentechnologies.com. A copy of separate audited financial statements of subsidiary will be provided to the shareholders at their request.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 is appended as Annexure 2 to this report.

NUMBER OF MEETINGS OF THE BOARD

During the year 2014-2015, six Board Meetings were held.

The dates on which the Board meetings were held are 5 April 2014, 24 May 2014, 9 August 2014, 8 November 2014, 5 January 2015 and 9 February 2015.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Companies Act, 2013, the Directors confirm that:

i. In the preparation of Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

ii. 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.

iii. 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.

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

v. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively and

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (6) OF SECTION 149

The independent directors have submitted the declaration of independence, as required pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Section 149(6) and Clause 49 of the Listing Agreement.

COMPANY POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

The Board of Directors, on recommendation of the Nomination and Remuneration Committee framed a Nomination and Remuneration policy on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Companies Act, 2013. The Policy is posted under the Investors section of the Company's website at: http://www. zentechnologies.com/investor_relations/Nomination-Remuneration-Policy.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of loans, guarantees or investments as required under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 are provided in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as Annexure 3 to the Board's report.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. The Board of Directors framed a policy for Related Party Transactions to ensure a process for approval and reporting of transactions between the Company and its Related Parties. The policy is posted under the Investors section of the Company's website at: http://www.zentechnologies.com/investor_relations/Related-Party- Transaction-Policy.pdf

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments affecting the financial position of the Company from the financial year ended 31 March 2015 to the date of signing of the Board's Report.

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

The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 with respect to Conservation of Energy, Technology Absorption, and Foreign Exchange Earnings and Outgo are provided in Annexure 4 to this Report.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Board formulated a Risk Management Policy identifying different kinds of risks and the mitigation measures adopted and to be adopted for dealing with the risks of the Company.

The Board constituted a Risk Management Committee constituting Mr Ashok Atluri, Chairman and Managing Director, Mr M Ravi Kumar, Whole-time Director and Mr P V Krishna Mohan, Chief Financial Officer. The Committee regularly meets to monitor and review the risk management policy.

The Audit Committee and Board reviews and evaluates the internal financial controls and risk management systems of the Company.

DEVELOPMENT AND IMPLEMENTATION OF CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

Pursuant to Section 135 of the Companies Act, 2013, the Board constituted Corporate Social Responsibility Committee constituting Mr G Prasad, Independent Director, Mr Ashok Atluri, Chairman and Managing Director and Mr M Ravi Kumar, Whole-time Director. The Committee formulated and recommended to the Board the CSR Policy. On the recommendations of the CSR Committee, the Board approved and adopted the CSR Policy of the Company. The Corporate Social Responsibility Policy is posted under the Investors section of the Company's website at:http://www.zentechnologies.com/investor_relations/CSR-Policy.pdf

As per Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, annual report on CSR is prepared and the same is enclosed as Annexure 5 to this Report.

ANNUAL EVALUATION OF PERFOMANCE OF BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors evaluated the annual performance of the Board as a whole, its committee's and the directors individually in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement with specific focus on the performance and effective functioning of the Board and Individual Directors.

A separate meeting of Independent Directors was held on 9 February 2015 to review the performance of the Non- Independent Directors and the Board as a whole, review the performance of Chairperson of the Company and assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

CRITERIA FOR PERFORMANCE EVALUATION

a. Ability of the candidates to devote sufficient time and attention to his professional obligations as Independent Director for informed and balanced decision making.

b. Adherence to the Code of Conduct in letter and in spirit by the Independent Directors.

c. Bringing objectivity and independence of view to the Board's discussions in relation to the Company's strategy, performance, and risk management

d. Statutory Compliance and ensuring high standards of financial probity and Corporate Governance

e. Responsibility towards requirements under the Companies Act, 2013, Responsibilities of the Board and Accountability under the Director's Responsibility Statement

CHANGE IN THE NATURE OF BUSINESS

There is no change in the nature of the business of the Company.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

During the year, Mr P V Krishna Mohan was appointed as the Chief Financial Officer of the Company.

Mr P V Krishna Mohan, Chief Financial Officer has resigned from the services of the Company with effect from the close of business hours on 30 June 2015.

Names of companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year: NIL

FIXED DEPOSITS

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

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

In every quarter during the approval of Financial Statements, Internal Audit Report is presented by the Internal Auditor. The Audit Committee reviews the Internal Audit Report along with the Management Replies.

The internal financial controls are evaluated and reviewed by the Audit Committee and the Board for ensuring orderly and efficient conduct of its business, including adherence to Company's policies safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial statements.

VIGIL MECHANISM

The Board of Directors, on recommendation of the Audit Committee, established a vigil mechanism for Directors and Employees called "Whistle Blower Policy" pursuant to the provisions of Companies Act, 2013 and Listing Agreement to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy and to provide adequate safeguards against victimization of persons who use such mechanism and to provide for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases.

The Whistle Blower Policy is posted under the Investors section of the Company's website at: http://www.zentechnologies.com/investor_relations/Whistle-Blower- Policy-2014.pdf

SEXUAL HARASSMENT POLICY

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year ended 31 March 2015, the Company has not received any Complaints pertaining to Sexual Harassment.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Management Discussion & Analysis forms part of the Annual report as per the requirements of Listing Agreement with the Stock Exchanges.

DIRECTORS

Cmde Sarvotham Rao retired as an Independent Director from the Board of Directors of the Company on 29 June 2015 in accordance with the retirement age policy for Directors of the Company. The Board places on record its sincere appreciation for Cmde Sarvotham Rao's long and fruitful association with the Company and thank him for providing valuable guidance to the Company during his tenure.

On the recommendation of Nomination and Remuneration Committee, Mr Venkat Samir Kumar Oruganti, was appointed as an Additional Director (Non-Executive Independent) of the Company in the Board Meeting held on 14 August 2015, pursuant to Section 161 of the Companies Act, 2013 read with Articles of Association of the Company and holds office up to the date of this AGM. In accordance with the provisions of Section 149 of the Act, Mr Venkat Samir Kumar Oruganti, is proposed to be appointed as an Independent Director to hold office as per the tenure of appointment mentioned in the Notice of the forthcoming AGM of the Company.

In accordance with the provisions of Companies Act, 2013 and the Articles of Association of the Company, Mr Ashok Atluri, Chairman and Managing Director will retire by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.

The aforesaid appointment/reappointment of Independent Director and Managing Director are subject to your approval.

The Company has received declarations from all the Independent Directors of the Company confirming that they continue to meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

AUDITORS

Statutory Auditors:

At the 21st Annual General Meeting held on 27 September 2014, M/s Gokhale & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 24th Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s Gokhale & Co., Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

The Notes on the Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Secretarial Audit:

Mr Mahadev Tirunagari, Practicing Company Secretary was appointed to conduct secretarial audit for the financial year 2014-15. Pursuant to Section 204 of the Companies Act, 2013 and Rules thereunder, the Secretarial Audit Report for the financial year ended 31 March 2015 in form MR-3, is annexed to this Annual Report as Annexure 6.

There are no qualifications in the Secretarial Audit Report.

Internal Auditors:

M/s Venkatadri & Co., Chartered Accountants have been appointed as Internal Auditors of the Company to conduct the Internal Audit on quarterly basis. The Audit Committee of the Board is apprised on the internal audit report and the action taken by the management. The Audit Committee also reviews the adequacy of internal control systems, reporting structure coverage and frequency of internal audit.

AUDIT COMMITTEE

For the year 2014-15, Audit Committee has been constituted as per the requirements of Section 177 of the Companies Act, 2013. The details of the composition of the Audit Committee as required under the provisions of Section 177(8) of the Companies Act, 2013, is given in the Corporate Governance Report furnished as part of the Annual Report. During the year under review, the Board has accepted all the recommendations of the Audit Committee.

CORPORATE GOVERNANCE

The Report on Corporate Governance along with a certificate from the Statutory Auditor of the Company with regard to the compliance of Corporate Governance as per Clause 49 of the Listing Agreement forms part of this Annual Report.

PARTICULARS OF EMPLOYEES

The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure 7 to the Board's report.

ACKNOWLEDGEMENTS

The Board of Directors thank the company's customers, suppliers, dealers, banks, financial institutions, Government and Regulatory authorities and consultants for their continued support. The Directors express their sincere gratitude to the shareholders and also wish to place on record their appreciation for the committed services rendered by all the employees of the Company.

For and on behalf of the Board

Place: Hyderabad Ashok Atluri

Date : 14 August 2015 Chairman and Managing Director

DIN: 00056050


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 21st Annual Report of the Company along with the Audited Financial Statements for the financial year ended 31 March 2014.

FINANCIAL RESULTS

The financial highlights of the Company are as follows:

('' in Cr)

Particulars 2013-14 2012-13

Total Income 49.89 41.77

Total Expenditure 45.73 32.55

Operating Profit (PBIDT) 4.16 9.23

Interest 2.48 1.84

Depreciation & Amortization 1.57 1.84

Profit before tax 0.11 5.55

Provision for Tax 0.02 0.85

Deferred Tax Liability - -

Profit after Tax 0.09 4.70

Appropriations:

Transferred to General Reserve - 3.00

Proposed Dividend 0.77 0.89

Dividend Tax 0.13 0.15

Retained profit - 0.66

Earning Per Share (Rs.) (face value of Equity share of Rs.10/- each)

- Basic 0.12 5.29

RESULTS OF OPERATIONS

During the year under review, your Company achieved total income of ''49.89 Crores as against Rs.41.77 Crores during the previous year. Due to delay in receipt of some of the orders and cancellation of some tenders, the sales of the current year are lower than expected. The Net profit after tax stood at Rs. 9.33 lakhs (Rs. 4.70 Crores for the previous year). The Earnings Per Share (EPS) is Rs.0.12 (previous year''s EPS Rs. 5.29).

The order book size as on 31 March 2014 is about Rs. 3.84 Crores excluding AMCs as against Rs. 0.96 Crores for the previous year.

The increase in R&D expenditure caused the fall in profit. The R&D expenditure during the year 2013-14 is '' 14.85 crores (previous year ''9.16 crores). The R&D products developed during the year have substantial scope for revenue generation and are expected to become commercially viable in the next two years.

DIVIDEND

Your Directors have recommended a dividend of '' 1.00 per Equity Share (10 percent) of face value of ''10.00 each of the Company for the financial year ended 31 March 2014, amounting to '' 90.27 lakhs, (including dividend tax of '' 13.11 lakhs). The dividend, if approved, at the ensuing Annual General Meeting will be paid to those members whose names appear in the Register of Members as on record date.

APPROPRIATIONS

In accordance with the Companies Act, 1956 and the Companies (Transfer of Profits to Reserves) Rules, 1975, transfer of profits to reserves is required only if the dividend proposed exceeds 10 percent of the paid-up capital of the Company. The Board decided not to transfer any profits to reserves for the financial year 2013- 14.

BUYBACK OF EQUITY SHARES

The Board in its meeting held on 22 April 2013 approved Buyback offer of the Company upto maximum of 16,00,000 equity shares and minimum of 4,00,000 equity shares of '' 10.00 each at a price not exceeding '' 90.00 per equity share for a maximum amount not exceeding '' 1,000 lakhs through open market mechanism on Stock Exchange.

The Buyback commenced on 9 May 2013 and closed on 25 October 2013. Your Company has bought back 11,72,426 equity shares through electronic mode and incurred an amount of '' 810.70 lakhs towards Buyback of shares, which constitutes 81.07% of the total buyback offer size of ''1,000 lakhs. The paid-up capital post buyback offer is '' 7,71,60,060/-.

SUB-DIVISION OF EQUITY SHARES AND CONSEQUENT AMENDMENT IN MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY

The Equity Shares of the Company are listed on BSE Limited (BSE). With a view to broadbase the investor base by encouraging the participation of the small investors and also to increase the liquidity of Equity Shares of the Company, the Board of Directors at its meeting held on 9 August 2014 have recommended the sub- division of each Equity Share of face value of ''10/- (Rupees Ten only) of the Company into 10 (Ten) Equity Shares of face value ''1/- (Rupee One only) each for approval by the members through Postal Ballot.

Accordingly, each issued Equity Share of nominal value ''10/- (Rupees Ten only) of the Company existing on the Record Date shall stand sub-divided into 10 (Ten) Equity Shares of nominal value ''1/- (Rupee One only) each.

The Record Date for the aforesaid sub-division of the equity shares will be fixed by the Board of Directors after the approval of the Members is obtained through Postal Ballot.

Consequent upon sub-division of Equity Shares of the Company, the Capital Clause of Memorandum of Association and Article 4 of the Articles of Association of the Company will also require amendment. Accordingly, the Board has also recommended for approval for Members through Postal Ballot to amend Clause V of the Memorandum of Association and Article 4 of Articles of Association to reflect the alteration in the Authorised Share Capital of the Company, i.e. from ''20,00,00,000/- (Rupees Twenty crores only) divided into 2,00,00,000 (Two crores) Equity Shares of '' 10/- (Rupees Ten only) each to 20,00,00,000 (Twenty crores) Equity Shares of ''1/- (Rupee One only) each.

BORROWINGS AND CREATION OF CHARGE UNDER SECTION 180(1)(c) AND 180(1)(a) OF THE COMPANIES ACT, 2013

In view of increased scope of operations and R&D activities, the Board of Directors at its meeting held on 9 August 2014 have recommended to the Members of the Company to accord their consent through Postal Ballot, to the Board to borrow for and on behalf of the Company from time to time as they may consider fit, any sum or sums of money, on such terms and conditions as the Board may deem fit, in any manner where the monies to be borrowed together with the monies, if any, already borrowed by the Company (apart from temporary loans and credit obtained or to be obtained from the Company''s bankers in the ordinary course of business) will exceed the aggregate of the paid-up share capital of the Company and its free reserves such that, the total amount so borrowed by the Board of Directors and outstanding at any point of time, shall not at any time exceed, in the aggregate, the sum of ''500 crores (Rupees Five Hundred crores only).

Further, the Board in the above said meeting held on 9 August 2014 have recommended to the Members of the Company to accord their consent through Postal Ballot, to the Board to create charge / mortgage/ hypothecate etc., in addition to the charge/mortgage/ hypothecation etc., already created, in such form, manner and ranking and on such terms as the Board deems fit in the interest of the Company, on the whole or substantially the whole of the Company''s any one or more of the undertakings or all of the undertakings, whether immovable and /or movable properties of the Company, both present and future and /or any other assets or properties, either tangible or intangible, of the Company as may be agreed to in favour of the bank(s), financial institution(s) or other body(ies) corporate(s), other entity(ies), firms(s), person(s)etc. in India or abroad, to secure the borrowings availed or to be availed by the Company, up to the limits which shall not at any time exceed ''500 crores (Rupees Five Hundred crores only).

FIXED DEPOSITS

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding on the date of the Balance Sheet. Therefore the provisions of Section 58A of the Companies Act, 1956, and the rules made thereunder, are not applicable to the Company.

SUBSIDIARY

VERSION 2 GAMES LTD

Version 2 Games Ltd is a wholly owned subsidiary of the Company. During the year under review, the company had not done any business. The statement of Holding Company''s interest in Subsidiary Company pursuant to Section 212(3) of the Companies Act 1956, is given in Annexure I, which forms part of this Report. Relevant details have been disclosed in the Consolidated financial statements, as a part of Annual Report.

EXEMPTION FROM ATTACHING THE BALANCE SHEET, ETC. OF THE SUBSIDIARY COMPANY WITH THE BALANCE SHEET OF THE COMPANY

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (the Act), documents in respect of the subsidiary viz., Directors'' Report, Auditors'' Report, Balance Sheet and Statement of Profit and Loss 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 General Circular No. 2/2011 dated 8 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 subsidiary of the Company, but contains audited consolidated financial statements of the Company and its Subsidiary. However, the Company will make available the audited annual accounts and related detailed information of the subsidiary

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 of Company''s interest in the subsidiary and a summary of the financials of the subsidiary are given along with the consolidated financial statements.

DIRECTORS

As per the provisions of Section 152 of the Companies Act, 2013, at every AGM, one-third of such of the Directors for the time being are liable to retire by rotation, or if their number is neither three nor a multiple of three, then the number nearest to one-third, shall retire from office. The said Act also provides that the provisions of retirement of Directors by rotation shall not be applicable to appointment of Independent Directors. To comply with the requirement of the Companies Act, 2013, the Board of Directors in their meeting held on 9 August 2014 have recommended to the Members to accord their consent through Postal Ballot to amend Article 66 of Articles of Association of the Company so as to enable the office of the Managing Director and or Manager or Whole-time Director(s) liable to determination by retirement of Directors by rotation. At the ensuing AGM, Mr M Ravi Kumar is proposed to be appointed as Director liable to retire by rotation.

In terms of the provisions of Section 149(4) of the Companies Act, 2013, which came into effect from 1 April 2014, your Company is required to have at least one-third of the total number of Directors as Independent Directors, who are not liable to retire by rotation.

The Company''s non-executive Independent Directors were appointed as Directors liable to retire by rotation under the provisions of erstwhile Companies Act, 1956 and holds office as Independent Directors of the Company under Clause 49 of the listing agreement with Stock Exchange.

The above referred Independent Directors have furnished declarations under Section 149(7) of the Act to the effect that they meet the criteria of Independent Directors and in the opinion of the Board of Directors, the said Independent Directors fulfill the conditions specified in the Companies Act, 2013 and rules made thereunder and they are independent of the Management.

The Company has received notices in writing from members along with the deposit of requisite amount under Section 160 of the Act, proposing the candidatures of Cmde Sarvotham Rao, Mr G Prasad and Mrs M Sridevi for the office of Directors of the Company. In accordance with the provisions of Section 149 of the Act, these Directors are being appointed as Independent Directors to hold office as per their tenure of appointment mentioned in the Notice of the forthcoming Annual General Meeting of the Company.

Mr Ashok Atluri is proposed to be reappointed as the Managing Director of the Company for a period of 5 years effective from 1 November 2014.

The aforesaid appointment/reappointment of Independent Directors, Managing Director and Whole-time Director are subject to your approval.

AUDITORS

Statutory Auditors:

M/s Gokhale & Co., Chartered Accountants, the Statutory Auditors of the Company will retire at the conclusion of the forthcoming 21st AGM. The Company is in receipt of confirmation from the Statutory Auditors that in the event of their reappointment as Statutory Auditors of the Company, such reappointment will be in accordance with the limits specified in Section 141(g) of the Companies Act, 2013.

Your Company would comply with the requirement of Rotation of Auditors within 3 years as permitted under the Companies Act, 2013.

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder, it is proposed to appoint M/s Gokhale & Co., as Statutory Auditors of the Company from the conclusion of the forthcoming 21st AGM till the conclusion of 24th AGM to be held in the year 2017, subject to ratification of their appointment at every AGM.

The Notes on the Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

Secretarial Auditor:

For effective corporate governance and compliance, Secretarial Audit was conducted by Mr Mahadev Tirunagari, Practicing Company Secretary for the financial year 2013-14. The Secretarial Audit Report for the financial year ended 31 March 2014, is annexed to the Annual Report.

Internal Auditor:

M/s Venkatadri & Co., Chartered Accountants has been appointed as an Internal Auditor of the Company to conduct the Internal Audit on quarterly basis. The Audit Committee of the Board is apprised on the internal audit report and the action taken by the management. The Audit Committee also reviews the adequacy of internal control systems, reporting structure, coverage and frequency of internal audit.

CORPORATE GOVERNANCE

The Report on Corporate Governance and Management Discussion and Analysis along with a certificate from the Statutory Auditor of the Company with regard to the compliance of Corporate Governance as per Clause 49 of the Listing Agreement is annexed to this report.

CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of the Companies Act, 2013, the Board of your Company constituted a Corporate Social Responsibility (CSR) Committee to formulate and recommend CSR Policy and to comply with other requirements as mandated under the said Companies Act, 2013. Commencing from financial year 2014- 15, your Company, each year, has to spend at least 2% of its average profits made during three immediate preceding financial years towards CSR Policy.

PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time and forming part of Directors'' Report for the year ended 31 March 2014:

There were no employees who were in the Company''s employment for whole or a part of the year and were in receipt of remuneration for any part of the financial year at a rate, which in the aggregate was not less than '' 5,00,000/- per month.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

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, and Foreign Exchange Earnings & Outgo are provided in Annexure II and forms part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

i) In the preparation of Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

ii) They 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 as on 31 March 2014 and of the profit of the Company for that period.

iii) Proper and sufficient care has been taken 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.

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGMENTS

Your Directors thank the company''s customers, suppliers, dealers, banks, financial institutions, Government authorities and consultants for their continued support. Your Directors express their sincere gratitude to the shareholders and also wish to place on record their appreciation for the committed services rendered by all the employees of the Company.

For and on behalf of the Board

Place: Hyderabad Ashok Atluri

Date: 9 August 2014 Chairman and Managing Director

(DIN: 00056050)


Mar 31, 2013

Dear Members,

The Directors are pleased to present the 20th Annual Report of the Company along with the Audited Statement of Accounts for the financial year ended 31 March 2013.

FINANCIAL RESULTS

The financial performance of the Company is summarized below:-

(Rs.in Cr)

Particulars 2012-13 2011-12

Total Income 41.77 107.17

Total Expenditure 32.55 64.75

Operating Profit (PBIDT) 9.23 42.42

Interest 1.84 1.90

Depreciation & Amortization 1.84 1.10

Profit before tax 5.55 39.42

Provision for Tax 0.85 7.80

Deferred Tax Liability

Profit after Tax 4.70 31.62

Appropriations:

Transferred to General Reserve 3.00 10.00

Proposed Dividend 0.89 5.77

Dividend Tax 0.15 0.94

Retained profit 0.66 14.91

Earning Per Share (Rs.) (face value of Equity share of Rs.10/- each) - Basic 5.29 35.57

RESULTS OF OPERATIONS

During the year under review, your Company achieved total income of Rs. 41.77 Crores as against Rs. 107.17 Crores during the previous year. Due to delay in receipt of some of the orders and cancellation of some tenders, the sales of the current year are lower than expected. The Net profit after tax stood at Rs. 4.70 Crores as against a net profit of Rs. 31.62 Crores for the previous year. In line with the profit, the Earnings Per Share (EPS) has also considerably declined to Rs. 5.29 compared to previous year''s EPS of Rs. 35.57.

The order book size as on 31 March 2013 is about Rs. 0.96 Crores excluding AMCs as against Rs. 31.49 Crores for the previous year.

DIVIDEND

Your Directors have recommended a dividend of Rs. 1/- per Equity Share (10 percent) of face value of Rs.10/- each of the Company for the financial year ended 31 March 2013, amounting to Rs. 103.99 lakhs, (including dividend tax of Rs. 15.11 lakhs). The dividend, if approved, at the ensuing Annual General Meeting will be paid to those members whose names appear in the Register of Members as on record date.

APPROPRIATIONS

Your Company has voluntarily transferred Rs. 3 Crores to the General Reserve, which is higher than the limits as prescribed under the Companies (Transfer of Profits to Reserves) Rules, 1975.

BUYBACK OF EQUITY SHARES

The Board in its meeting held on 22 April 2013 approved Buyback offer of the Company upto maximum of 16,00,000 equity shares and minimum of 4,00,000 equity shares of Rs. 10.00 each at a price not exceeding Rs. 90.00 per equity share for a maximum amount not exceeding Rs. 1,000 lakhs through open market mechanism on Stock Exchange.

The Buyback commenced on 9 May 2013 and last date for completion of Buyback is 25 October 2013 or when the Company completes Buyback to the extent of 16,00,000 Equity Shares under the offer or upon exhaustion of Rs.1,000 lakhs set aside for Buyback, whichever is earlier. The Board reserves the right to close the Buyback offer at an earlier date by giving appropriate notice and reasons for such early closure and completing all formalities.

Your Company has bought back 11,32,832 equity shares through electronic mode as of 2 August 2013 and incurred an amount of Rs. 783.92 lakhs towards Buyback of shares, which constitutes 70.80% of total Buyback offer size in terms of quantity.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding on the date of the Balance Sheet. Therefore the provisions of Section 58A of the Companies Act, 1956, and the rules made thereunder, are not applicable to the Company.

SUBSIDIARY

VERSION 2 GAMES LTD

Version 2 Games Ltd is a wholly owned subsidiary of the Company, registered in the State of Andhra Pradesh, India. During the year under review, the company had not done any business. The statement of Holding Company''s interest in Subsidiary Company pursuant to Section 212(3) of the Companies Act 1956, is given in Annexure I, which forms part of this Report. Relevant details have been disclosed in the Consolidated Financial Statements, as a part of Annual Report.

EXEMPTION FROM ATTACHING THE BALANCE SHEET, ETC. OF THE SUBSIDIARY COMPANY WITH THE BALANCE SHEET OF THE COMPANY

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (the Act), documents in respect of the subsidiary viz., Directors'' Report, Auditors'' Report, Balance Sheet and Statement of Profit and Loss 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 General Circular No. 2/2011 dated 08 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 subsidiary of the Company, but contains audited consolidated financial statements of the Company and its Subsidiary. However, the Company will make available the audited annual accounts and related detailed information of the subsidiary 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 of Company''s interest in the subsidiary and a summary of the financials of the subsidiary are given along with the Consolidated Financial Statements.

DIRECTORS

In accordance with Sections 255, 256 and other applicable provisions of the Companies Act, 1956, Mr D Satish Babu and Mr Utpal H Sheth, Directors of the Company retire by rotation at the twentieth Annual General Meeting and though eligible for reappointment have not offered themselves for reappointment. The vacancy in the Board caused by their retirement will not be filled up for the time being. The Members of the Board place on record their deep sense of appreciation and immense gratitude for the services rendered by Mr D Satish Babu and Mr Utpal H Sheth for being valuable source to the Company as Directors on the Board.

Mr G Prasad was appointed as an Additional Director of the Company w.e.f 9 November 2012, to hold office up to the date of the ensuing Annual General Meeting. Notice was received from a member under Section 257 of the Companies Act, 1956 proposing his candidature as the Director of the Company. The Board at its meeting held on 3 August 2013 had recommended to the Members for appointment of Mr G Prasad as Director liable to retire by rotation, subject to the approval of the members at the ensuing Annual General Meeting.

The Board of Directors at their meeting held on 3 August 2013 on recommendation of Remuneration Committee and subject to the approval of the Members at the ensuing Annual General Meeting had reappointed Mr M Ravi Kumar as a Whole Time Director of the Company for a period of three years w.e.f 29 June 2013.

AUDITORS

Statutory Auditors:

M/s Gokhale & Co., Chartered Accountants, the Statutory Auditors of the Company will retire at the conclusion of the twentieth Annual General Meeting. The Company is in receipt of confirmation from the Statutory Auditors that in the event of their reappointment as Statutory Auditors of the Company, such reappointment will be in accordance with the limits specified in sub-section (1B) of Section 224 of the Companies Act, 1956.

The Notes on the Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

Cost Auditor:

The Board of Directors at their meeting held on 30 May 2013 appointed M/s Nageswara Rao & Co., Cost Accountants, Secunderabad as the Company''s Cost Auditors, subject to the approval of the Central Government, to conduct an audit of Cost Accounting records and for issuance of Cost Audit Report for the financial year 2013 - 14. The due date of filing the Cost Audit Report by the Cost Auditor is 30 September 2014 for the financial year 2013-14.

Secretarial Auditor:

For effective corporate governance and compliance, a Secretarial Audit was conducted by Mr Mahadev Tiruanagari, Practicing Company Secretary for the financial year 2012-13. The Secretarial Audit Report for the financial year ended 31 March 2013, is annexed to the Annual Report.

Internal Auditor:

M/s Venkatadri & Co., Chartered Accountants has been appointed as an Internal Auditor of the Company to conduct the Internal Audit on quarterly basis. The Audit Committee of the Board is apprised on the internal audit report and the action taken by the management. The Audit Committee also reviews the adequacy of internal control systems, reporting structure, coverage and frequency of internal audit.

CORPORATE GOVERNANCE

The Report on Corporate Governance and Management Discussion and Analysis along with a certificate from the Statutory Auditor of the Company with regard to the compliance of Corporate Governance as per Clause 49 of the Listing Agreement is annexed to this report.

PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time and forming part of Directors'' Report for the year ended 31 March 2013.

There were no employees who were in the Company''s employment for whole or a part of the year and were in receipt of remuneration for any part of the financial year at a rate, which in the aggregate was not less than Rs. 5,00,000/- per month.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

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, and Foreign Exchange Earnings & Outgo are provided in Annexure II and forms part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

i) In the preparation of Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

ii) They 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 as on 31 March 2013 and of the profit of the Company for that period.

iii) Proper and sufficient care has been taken 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.

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGMENTS

Your Directors thank the company''s customers, suppliers, dealers, banks, financial institutions, Government authorities and consultants for their continued support. Your Directors express their sincere gratitude to the shareholders and also wish to place on record their appreciation for the committed services rendered by all the employees of the Company.

For and on behalf of the Board

Place : Hyderabad Ashok Atluri

Date : 3 August 2013 Chairman and Managing Director


Mar 31, 2012

The Directors are pleased to present the 19 Annual Report along with the Audited Accounts of the Company for the year ended 31 March 2012.

FINANCIAL RESULTS

The financial performance of the Company is summarized below:-

(Rs. in Cr)

Particulars 2011-12 2010-11

Total Income 107.17 25.09

Total Expenditure 64.75 25.52

Operating Profit (PBIDT) 42.42 (0.43)

Interest 1.90 1.26

Depreciation & Amortisation 1.10 1.25

Profit before tax 39.42 (2.93)

Provision for Tax 7.80 0.99*

Deferred Tax Liability - (1.85)

Profit after Tax 31.62 (2.08)

Appropriations:

Transferred to General Reserve 10.00 1.80

Proposed Dividend 5.77 1.33

Dividend Tax 0.94 0.21

Retained profit 14.91 -

Earnings Per Share (Rs.) (face value of Equity share of Rs.10/- each)

- Basic 35.57 (2.34)

*Tax for earlier period

RESULTS OF OPERATIONS

During the year under review, your Company performed well with a total income of Rs. 107.17 Crores against Rs. 25.09 Crores during the previous year. The Net profit after tax is of Rs. 31.62 Crores against a net loss of Rs. 2.08 Crores for the previous year. In line with the profit, the Earnings per Share (EPS) has also considerably increased to Rs. 35.57 compared to previous year's negative EPS of Rs. 2.34.

The order book size as on 31 March 2012 is about Rs. 31.49 Crores as against Rs. 110 Crores for the previous year.

DIVIDEND

Your Directors have recommended a dividend of Rs. 6.50/- per Equity Share (65 percent) of face value of Rs. 10/- each of the Company for the financial year ended 31 March 2012, amounting to Rs. 671.16 lakhs, (including dividend tax of Rs. 93.69 lakhs). The dividend, if approved, at the ensuing Annual General Meeting will be paid to all eligible equity shareholders of the Company.

APPROPRIATIONS

Your Company has voluntarily transferred Rs. 10.00 Crores to the General Reserve, which is higher than the limits as prescribed under the Companies (Transfer of Profits to Reserves) Rules, 1975.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding on the date of the Balance Sheet. Therefore the provisions of Section 58A of the Companies Act, 1956, and the rules made thereunder, are not applicable to the Company.

SUBSIDIARIES ZEN TECHNOLOGIES FZE

Zen Technologies FZE, a wholly owned subsidiary of the Company, registered in RAK Free Trade Zone, Ras Al Khaimah, U.A.E. During the year under review, the Company has not done any business. The statement of Holding Company's interest in Subsidiary Company pursuant to Section 212(3) of the Companies Act 1956, is given in Annexure I, which forms part of this Report. Relevant details have been disclosed in the Consolidated Balance Sheet, as a part of Annual Report

Due to very little strategic advantage and support that the Company has got locally and owing to the global economic slowdown, no significant operations had been carried on at Zen Technologies FZE, U.A.E, since its inception. Consequently the same was de-registered from RAK Free Zone and closed.

VERSION 2 GAMES LTD

Version 2 Games Ltd is a wholly owned subsidiary of the Company, registered in the State of Andhra Pradesh, India. During the year under review, the company released the SnS game in February 2012. However, the sales of the game were far below expectation. The statement of Holding Company's interest in Subsidiary Company pursuant to Section 212(3) of the Companies Act 1956, is given in Annexure I, which forms part of this Report. Relevant details have been disclosed in the Consolidated Balance Sheet, as a part of Annual Report.

ACCOUNTS OF THE SUBSIDIARIES

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (the Act), documents in respect of the various subsidiaries viz., Directors' 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 General Circular No. 2/2011 dated 08 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, but contains audited consolidated financial statements of the Company and its Subsidiaries. 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 of Company's interest in the subsidiaries and a summary of the financials of the subsidiaries are given along with the consolidated accounts.

DIRECTORS

In accordance with Sections 255, 256 and other applicable provisions of the Companies Act, 1956, Dr. Pamidi Kotaiah, Director of the Company retires by rotation at the 19 Annual General Meeting and though eligible for reappointment has not offered himself for reappointment. The vacancy in the Board caused by his retirement will not be filled up for the time being. The Members of the Board place on record their deep sense of appreciation and immense gratitude for the services rendered by Dr. Pamidi Kotaiah for being a valuable source to the Company as Director on the Board and Chairman of the Audit Committee.

AUDITORS

M/s Gokhale & Co., Chartered Accountants, the Statutory Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting. The Company is in receipt of confirmation from the Statutory Auditors that in the event of their re-appointment as Statutory Auditors of the Company, such re-appointment will be in accordance with the limits specified in sub-section (1B) of Section 224 of the Companies Act, 1956.

The Notes on the Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

CORPORATE GOVERNANCE

A Report on Corporate Governance and Management Discussion Analysis along with a certificate from the Auditor with regard to the compliance of Corporate Governance as per Clause 49 of the Listing Agreement is annexed to this report.

PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act, 1956 read along with the Companies (Particulars of Employees) Rules, 1975 as amended and forming part of Directors Report for the year ended 31 March 2012.

The Employees who were in the Company's employment throughout the financial year and were in receipt of remuneration, which in the aggregate, was not less than Rs. 60,00,000/- for the year including perquisites, if any.

Name of the Employee : Mr Ashok Atluri

Age : 46 Years

Qualification : B.Com, PGDACS

Designation : Chairman and Managing Director

Nature of Employment : Contract

Remuneration : Rs. 1,36,42,888/-

Experience : 18 Years

Date of commencement of employment : 01-11-1994

Percentage of Equity shares held in the Company : 27.14

There were no employees who were in the Company's employment for a part of the year and were in receipt of remuneration for any part of the financial year at a rate, which in the aggregate was not less than Rs. 5,00,000/- per month.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

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, and Foreign Exchange Earnings & Outgo are provided in Annexure II and form part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT

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

i) In the preparation of Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

ii) They 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 as on 31 March 2012 and of the profit of the Company for that period.

iii) Proper and sufficient care has been taken 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.

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGMENTS

Your Directors thank the company's customers, suppliers, dealers, banks, financial institutions, Government authorities and consultants for their continued support. Your Directors express their sincere gratitude to the shareholders and also wish to place on record their appreciation for the committed services rendered by all the employees of the Company.

For and on behalf of the Board

Place: Hyderabad Ashok Atluri

Date: 3 August 2012 Chairman and Managing Director


Mar 31, 2011

The Members

The Directors present to you their 18th Annual Report along with the Audited Accounts of the Company for the year ended March 31, 2011. The financial highlights of the Company are as follows:-

FINANCIAL PERFORMANCE

(Rs in Lakhs)

Particulars 2010-11 2009-10

Total Income 2509.03 5515.72

Total Expenditure 2584.87 3443.16

Operating Profit (PBIDT) (75.84) 2072.56

Interest 126.23 39.65

Depreciation 91.41 58.88

Profit before tax (293.48) 1974.03

Provision for Tax 99.28 285.65

Deferred Tax Liability (185.19) 4.16

Profit after Tax (207.58) 1684.22

Appropriations:

Transferred to General Reserve 180.00 300.00

Proposed Dividend 133.33 399.98

Dividend Tax 21.63 66.43

Retained profit - 917.81

Earning Per Share (Rs)(face value of equity share of Rs.10/- each) - Basic (2.34) 19.39

RESULTS OF OPERATIONS

Your Company passed through a lean phase during the year under review because of delay in realizing the orders from customers due to which the income was Rs. 2509.03 lakhs as against Rs. 5515.72 lakhs for the previous year. Consequently, there was a net loss after tax of Rs. 207.58 lakhs as against profit of Rs. 1684.22 lakhs for the previous year. The orders were received at the end of the year and we expect to execute, at least, a part of these pending orders by the end of the next financial year.

Your Company is, however, hopeful that with a significant order size of Rs. 110 crores (previous year Rs.4.33 Crores), the next financial year is expected to be profitable.

DIVIDEND

Your Directors recommend a dividend of Rs. 1.50/- on the Equity Share of Rs. 10/- each of the Company for the financial year ended March 31, 2011. The dividend out flow will aggregate to Rs. 154.96 lakhs, including dividend tax.

APPROPRIATIONS

Your Company has transferred Rs 180.00 lakhs to the General Reserve as required under the Companies Act, 1956.

DEPOSITS

Your Company has not accepted any deposits and, as such, no amount of principal or interest was outstanding on the date of the Balance Sheet, therefore the provisions of Section 58A of the Companies Act, 1956 and the rules made thereunder are not applicable to the Company.

WORLD-CLASS OFFICE AT MAHESWARAM

The world-class 75,000 sft production facility built on the land allotted to us near Hyderabad International Airport is operational.

SUBSIDIARIES

ZEN TECHNOLOGIES FZE

Zen Technologies FZE, is a wholly owned subsidiary of the Company, registered in RAK Free Trade Zone, Ras Al Khaimah, U.A.E. During the year under review the Company has not done any business. The statement of Holding Company's interest in Subsidiary Company pursuant to Section 212(3) of the Companies Act 1956, is given in Annexure I, which forms part of this Report. Relevant details have been disclosed in the Consolidated Balance Sheet, as a part of Annual Report.

VERSION 2 GAMES LTD

Version 2 Games Ltd is a newly incorporated wholly owned subsidiary of the Company, registered in Andhra Pradesh, India. During the year under review, the Company has not done any business. The statement of Holding Company's interest in Subsidiary Company pursuant to Section 212(3) of the Companies Act 1956, is given in Annexure I, which forms part of this Report. Relevant details have been disclosed in the Consolidated Balance Sheet, as a part of Annual Report.

ACCOUNTS OF THE SUBSIDIARIES

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (Act), documents in respect of the various subsidiaries viz., Directors' 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. 51/12/ 2007-CL-III dated February 08, 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, but contains audited consolidated financial statements of the Company and its Subsidiaries. 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. The details of accounts of individual subsidiary companies will also be available on the website of the Company. A statement of Company's interest in the subsidiaries and a summary of the financials of the subsidiaries are given along with the consolidated accounts.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956, Cmde. S. Rao, Director retires by rotation at the 18th Annual General Meeting and being eligible offers himself for re-appointment.

AUDITORS

M/s Gokhale & Co., Chartered Accountants, the Statutory Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting. The Company is in receipt of confirmation from the Statutory Auditors that in the event of their re-appointment as Statutory Auditors of the Company, such re-appointment will be in accordance with the limits specified in sub-section (1B) of Section 224 of the Companies Act, 1956

CORPORATE GOVERNANCE

A report on Corporate Governance and Management Discussion Analysis along with a certificate from the Auditor with regard to the compliance of Corporate Governance as per Clause 49 of the Listing Agreement is annexed to this report.

EMPLOYEE STOCK OPTION SCHEME (ESOS)

Your Company believes that its greatest strength is its human resources and it is this resource, which makes your Company a force to reckon with in the highly competitive environment. Accordingly, the Company has instituted an Employee Stock Option Scheme viz. ESOS 2004 by means of a special resolution passed by the members at the Tenth Annual General Meeting held on September 30, 2003, for the employees including Directors. Pursuant to the provisions of Clause 12 of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, the required disclosures regarding Employee Stock Options is set out as Annexure-III of this report. The shares/options reserved under the scheme to Employees do not exceed 5% of the paid-up Share Capital of the Company. During the financial year 10,000 options were granted to Mr.Vishnu V Yarmaneni, Vice President (Finance) of the Company at market price but lapsed as he left the company before the vesting period.

EMPLOYEE PARTICULARS

Information as per Section 217(2A) of the Companies Act, 1956 read along with the Companies (Particulars of Employees) Rules, 1975 as amended and forming part of Directors Report for the year ended March 31, 2011.

There were no employees who were in the Company's employment for whole or a part of the year and were in receipt of remuneration for any part of the financial year at a rate, at which the aggregate was not less than Rs 5,00,000/- per month.

DISCLOSURES

A) 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, and Foreign Exchange Earnings & Outgo are attached (Annexure II) and forms part of this Report.

B) Directors Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 The Directors confirm that:

i) In the preparation of Annual Accounts, applicable accounting standards had been followed along with proper explanation relating to material departures.

ii) The accounting policies adopted are consistent and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2011 and of the profit of the Company for the year ended as on that date.

iii) Proper and sufficient care has been taken 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.

iv) The annual accounts have been prepared on a going concern basis.

ACKNOWLEDGMENTS

Your Directors thank the company's customers, suppliers, dealers, banks, financial institutions, Government authorities and consultants for their continued support. Your Directors express their sincere gratitude to the shareholders and place on record their appreciation for the contribution made by all the employees of the Company.

For and on behalf of the Board

Hyderabad Ashok Atluri

August 10, 2011 Chairman and Managing Director













 
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