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Directors Report of Zicom Electronic Security Systems Ltd.

Mar 31, 2016

Directors'' Report

To the Members,

The Directors presents their Twenty Second Annual Report, together with the Audited Accounts of the Company for the Financial Year ended March 31, 2016.

FINANCIAL HIGHLIGHTS: ,

(Amount in Rs.)

Particulars

March 31, 2016 Consolidated

March 31, 2015 Consolidated

March 31, 2016 Standalone

March 31, 2015 Standalone

Net Sales / Income from Operations

11,178,743,842

11,081,171,351

4,228,776,777

3,835,240,358

Other Income

40,403,138

47,357,288

121,352,113

70,082,893

Total Income

11,219,146,980

11,128,528,639

4,350,128,890

3,905,323,251

Total Expenditure

10,237,059,819

9,681,708,594

4,103,160,709

3,516,906,986

Gross Profit before Interest and Depreciation

982,087,161

1,446,820,045

246,968,181

388,416,265

Interest and Finance Charges

706,889,493

538,681,427

179,218,640

147,546,760

Gross Profit before Depreciation and Taxation

275,197,668

908,138,618

67,749,541

240,869,505

Depreciation

363,323,550

307,690,027

44,395,246

67,377,781

Profit / (Loss) Before Tax

(88,125,882)

600,448,591

23,354,295

173,491,724

Provision for Taxation: Current year

35,582,000

81,563,000

13,400,000

74,990,000

Deferred

(20,159,014)

(16,293,617)

(7,208,594)

(14,517,786)

Net Profit / (Loss) After Taxation

(103,548,868)

535,179,208

17,162,889

113,019,510

Less: Minority Interest

3,112,716

29,326,311

--

--

Profit / (Loss) for the year

(106,661,584)

505,852,897

17,162,889

113,019,510

Add: Balance brought forward from previous year

1,867,957,085

1,439,640,634

628,697,887

551,854,924

Profit available for Appropriation

1,761,295,501

1,945,493,531

645,860,776

664,874,434

APPROPRIATIONS:

Transfer to General Reserve

--

43,859,899

--

2,500,000

Provision for Dividend

10,099,915

24,239,795

10,099,915

24,239,795

Provision for Tax on Dividend

2,056,105

4,934,641

2,056,105

4,934,641

Adjustment Relating to Fixed Asset

--

4,502,111

--

4,502,111

Balance of Profit carried forward to Balance Sheet

1,749,139,481

1,867,957,085

633,704,756

628,697,887

OPERATIONAL PERFORMANCE

As can be seen from the above table, on consolidated basis, the Total Income for the year 2015-16 was '' 11,219,146,980 (previous year '' 11,128,528,639) and the Loss Before Tax was '' 88,125,882 (previous year Net Profit '' 600,448,591). After adjusting for Tax '' 15,422,986 (previous year '' 65,269,383), Net Loss after Tax was at '' 103,548,868 (previous year Net Profit of '' 535,179,208). After accounting for Minority Interest therefrom Net Loss After Tax and Minority Interest was at '' 106,661,584 as compared to Net Profit of '' 505,852,897 in the previous year.

The Consolidated Financial Statements (CFS) includes the financial statements of Zicom Electronic Security Systems Limited ("the Company") and its subsidiary companies, namely,

a) Zicom SaaS Private Limited ("Zicom SaaS");

b) Unisafe Fire Protection Specialists Singapore Pte. Ltd. ("Unisafe Singapore") and its subsidiaries, viz. Unisafe Fire Protection Specialists LLC, Dubai ("Unisafe Dubai") and its subsi diaries; and Phoenix Inter nationa l WLL, Qatar ("P hoe nix Qatar");

c) Unisafe Fire Protection Specialists India Private Limited ("Unisafe India"); and

d) Zicom Security Projects Pte. Ltd., Singapore ("Zicom Singapore")

On standalone basis, the Total Income for the year 2015-16 was '' 4,350,128,890 (previous year Rs. 3,905,323,251). The Profit before Tax was Rs. 23,354,295 (previous year Rs. 173,491,724). After adjusting for Tax Rs. 6,191,406 (previous year Rs. 60,472,214), Net Profit After Tax was at Rs. 17,162,889 (previous year Rs. 113,019,510).

BUSINESS DEVELOPMENTS AND PROSPECTS

The slump in the global crude prices led to slow-down in Middle East economy, which adversely affected project executions. This resulted delayed recovery from debtors and thereby affecting our consolidated performance. Despite every efforts made to expedite collections, external situation are taking it longer to settle down. To improve profitability, we have focused on service and maintenance business which offers steady cash flow. We have also taken up distribution of Unisafe branded products which are approved by Civil Defense to GCC and North African Region. As the weight age of fire security business in Middle East is high in the total consolidated revenue, performance has been affected adversely. The performance of Zicom SaaS Private Limited, a wholly-owned Indian subsidiary, has been exceptionally well, which shows significant growth on account of new addition of Banks and other Enterprise Customers for ATM and Facility Surveillance.

The initiative of the Central Government to remove custom duties on import of CCTV equipment in Budget of 2016 has made significant impact on electronic security industry. However, this sudden change has unfortunately impacted the valuation of existing inventories held by the Company and resulted in a onetime adjustment impact in profitability for the financial year under review. Further, with environment in our Distribution Business continuing to be competitive, margins were under severe pressure, impacting adversely the standalone performance.

In Unisafe India, your Company''s focus continued to work as Global Design Centre by catering to the design, engineering and estimate needs of all our projects in Gulf Region. Our two wholly-owned subsidiaries in Singapore, viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) and Zicom Security Projects Pte. Ltd. (Zicom Singapore) continues to hold our investment in Phoenix Qatar.

DIVIDEND

Keeping in view the affected performance of the Company and also with a view to conserve resources to meet the business requirements, your Directors have recommend dividend for the financial year 2015-16 at a lower rate of Rs. 0.50 per Equity Share of Rs. 10 each (i.e. 5%) (previous year Rs. 1.20) on share capital of 20,199,829 Equity Shares (previous year 20,199,829 Equity Shares) of the Company. This dividend will entail a total outgo of Rs. 12,156,020 (Rs. 29,174,436) which shows decrease of 58%. The dividend outgo is lower on account of decrease in rate of dividend. The dividend will be paid to Members whose names appear in the Register of Members as on September 21, 2016 and in respect of shares held in dematerialized form, it will be paid to Members whose names are furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), as beneficial owners as on that date.

FINANCE

Subsequent to end of the year under review, on August 9, 2016, the Company has cancelled 1,050,000 Warrants due to non-exercise of the option by the Warrant-holders. As a result of same, the application money received upon allotment of said Warrants (calculated @ Rs. 40 per Warrant, being 25% of share price of Rs. 160 to be issued upon exercise of option by the Warrant-holders) were forfeited and the Securities Premium Account of the Company increased by Rs. 42,000,000.

The aforesaid Warrants were allotted by the Company on February

10, 2015 to Promoters'' Group Companies i.e. Baronet Properties and Investments Private Limited and Coronet Properties and Investments Private Limited (525,000 Warrants each) with an option to Warrant-holders to acquire one Equity Share of Rs. 10 each, of the Company at a conversion price of Rs. 160 per Equity Share. This option was to be exercised on or before August 9, 2016. SUBSIDIARY AND JOINT VENTURE COMPANIES As on March 31, 2016, your Company had the following subsidiaries:

1. Zicom SaaS Private Limited (wholly owned subsidiary);

2. Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore (wholly-owned subsidiary);

3. Unisafe Fire Protection Specialists LLC, Dubai (step-down subsidiary);

4. Phoenix International WLL, Qatar (step-down subsidiary);

5. Unisafe Fire Protection Specialists India Private Limited (wholly-owned subsidiary); and

6. Zicom Security Projects Pte. Ltd., Singapore (wholly-owned subsidiary)

A statement containing salient features of the financial statement of subsidiaries for 2015-16 as required under Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules 2014 and amendment there under is provided in Annexure A hereto in prescribed Form AOC-1. In respect of foreign subsidiary companies, figures in rupees are converted from applicable foreign currency at appropriate exchange rate as on year end date. The Policy on Material Subsidiary as approved may be accessed on the Company''s website at the link: http://beta.zicom.com/img/pdf/ZESSL-Policy on Material Subsidiary.pdf

T h e det ails of key subsidiaries and highlights of their workings are given below:

Zicom SaaS Private Limited

Zicom SaaS has turned up with excellent performance during the year under review, which is evident from the fact that it has posted Total Income of '' 481,987,014 (previous year Rs. 335,496,922) and Net Profit of Rs. 31,791,381 (previous year Rs. 13,293,907) for the financial year ended March 31, 2016. Thus, although in the topline of consolidated results, Zicom SaaS''s contribution may not be substantial; in the consolidated bottomline its contribution has been noteworthy.

This subsidiary offers wide range of managed electronic security services (e-SaaS). The two focus areas for Zicom SaaS are Enterprise division and Make Your City Safe (MYCS) division, where it makes offering of Security as a Service (SaaS).

While Enterprise division, mainly caters to BFSI sectors (Banks, Financial Services and Insurance), the other two sectors where the business is picking up are Retail and Education. Making use of the latest technology, this division offers customized security services to enable management of business more effectively. Various solution packages are offered under e-SaaS (i.e. Security as a Service). The other division being run by Zicom SaaS is Make Your City Safe (MYCS). MYCS caters to housing & residential societies in Greater Mumbai and Pune cities in Maharashtra providing right choice of technology to residential sector without making capital expenditure. This is facilitated through monthly service fees (EMI form), which has increase the affordability of surveillance services to residential sector.

In addition, a safety app called "Ziman" launched by this subsidiary has received overwhelming response. Ziman leverages Zicom Command Centre (also being operated under Zicom SaaS) and offers a strong backend support and all-in-one mobile safety solution. Enthused by the success of free App of Ziman, the Company has also launched Ziman''s paid offering.

Unisafe Fire Protection Specialists LLC, Dubai Unisafe Dubai is one of the major contributor to the consolidated topline and bottomline. However, on account of weakening of crude prices and consequential of slowdown of economy in entire Middle East, performance of Unisafe Dubai has suffered a setback. For the financial year ended March 31, 2016, Unisafe Dubai has posted Total Income of Rs. 5,137,190,113 (as compared to Rs. 5,443,255,742 in the previous year) and a Net Profit of Rs. 33,950,450 (as compared to Rs. 454,061,092 in the previous year). Unisafe Dubai, a leading fire protection company in Dubai, UAE, is a step-down subsidiary of your Company owned 41% by Unisafe Singapore, our wholly owned subsidiary and 8% directly by your Company, making total stake of Zicom Group in this Company at 49%; and the balance 51% is held by our local partner. However, Zicom Group has economic interest of 95% in Unisafe Dubai. It has got presence in seven Emirates, Qatar and Oman and has got exceptional track record of part performance. Its clientele ranges from Government to corporate, refineries, shopping malls and multistorey buildings, etc. to whom it provides comprehensive range of solutions from fire protection needs.

Phoenix International WLL, Qatar

For the financial year ended March 31, 2016, Phoenix Qatar, posted Total Income of Rs. 1,380,355,335 (as compared to Rs. 1,414,389,855 in the previous year) and a Net Profit of Rs. 30,363,148 (as compared to Rs. 143,754,604 in the previous year). This is another step-down subsidiary in which Zicom Group holds 49% stake; 44% by Unisafe Singapore and 5% by your Company. However, Zicom Group''s entitlement in economic interest in Phoenix Qatar is 95%.

Like, Unisafe Dubai, Phoenix Qatar has also suffered a set-back in its operations for the same reason as explained under Unisafe Dubai above. However, extent of set-back in operations is less severe in case of Phoenix Qatar. This subsidiary has also substantial impact on consolidated topline and bottomline of the Company. Unisafe Fire Protection Specialists India Private Limited

This is a wholly-owned subsidiary in India which has also suffered adverse impact on its operations as can be seen from its working results for the financial year ended March 2016. Unisafe India has shown total income of '' 86,699,825 (previous year Rs. 169,419,928) and a Net Loss of Rs. 5,451,305 (previous year Net Loss Rs. 7,238,748) in the year under review.

This business focuses on catering to the needs of design and engineering requirements of fire protection business in Gulf region by acting as a Global Design Centre and also as a trader in fire safety and security equipments.

The turnover and profitability of this Company does not have much impact on consolidated results of the Company.

Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore and Zicom Security Projects Pte. Ltd., Singapore

Both these companies are Company''s wholly-owned subsidiaries in Singapore, incorporated with a view to internationally align and consolidate present and future investments of the Group. The Group overseas investment in fire business falls under the umbrella of Unisafe Singapore acting as a holding company for all such ventures, whereas Zicom Singapore, aimed as a holding company for Group investment in international electronic security business.

CONSOLIDATED FINANCIAL STATEMENTS

As per Section n 134 of the Companies Act, 2013, your Company has provided the audited Consolidated Financial Statements for the year ended on March 31, 2016; together with Auditors'' Report thereon forming part of this Annual Report, which includes financial information of all the subsidiaries. These documents will also be available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. Pursuant to the provisions of the Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014 and amendment thereof, a statement containing salient features of the financial statements of Company''s Subsidiaries for financial year 2015-16 (in Form AOC-1) is appended as Annexure A hereto. Your Company has placed the audited annual accounts and related information of subsidiary companies on its website and same will be made available to the Members upon request.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors:

During the year under review, Mr. Vijay Kalantri (DIN: 00019510), Independent Director resigned from the Directorship of the Company w.e.f. December 17, 2015.

Further, Ms. Kunjan Trivedi (DIN: 07131011) whose term as a Whole-time Director of the Company ended on March 25, 2016, ceased to be Director effective from the said date. The Company is looking out for a suitable woman candidate having experience in IT Security Industry for the post of Director, whose experience and knowledge in the security industry will benefit the Company in its business growth.

In accordance with provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Manohar Bidaye (DIN: 00010699) is the Director liable to retire by rotation at the ensuing Annual General Meeting and has offered himself for re-appointment.

On December 18, 2015, Mr. Sanjeev Dayal (DIN: 03490363), was appointed as an Additional Director under Section 161 of the Companies Act, 2013 to hold office till the date of the ensuing Annual General Meeting. Mr. Dayal being eligible, has offered himself for appointment as an Independent Director, not liable to retire by rotation.

The first term of Mr. K. D. Hodavdekar and Mr. Prabhakar Dalal, Independent Directors, appointed pursuant to Section 149 of the Companies Act, 2013, ended on March 31, 2016 and June 26, 2016 respectively. The Board of Directors at their meetings held on March 31, 2016 and June 26, 2016 appointed Mr. Hodavdekar and Mr. Dalal as Additional Directors, effective from April 1, 2016 and June 27, 2016 respectively; and proposed their appointments as Independent Directors for their second term, pursuant to Section 149 of the Act, for approval of the Members at the ensuing Annual General Meeting by Special Resolutions.

Pursuant to Section 161 of Companies Act, 2013, the Company has received requisite notices, in writing from Members proposing the candidature of Mr. Sanjeev Dayal, Mr. K. D. Hodavdekar and Mr. Prabhakar Dalal for the office of Independent Directors, not liable to retire by rotation. Their appointments shall be subject to the approval of Members at the forthcoming Annual General Meeting

The brief profiles of Mr. Sanjeev Dayal, Mr. K. D. Hodavdekar and Mr. Prabhakar Dalal are given in Notice of the Annual General Meeting and discussed at length in the Corporate Governance Report.

Your Directors recommend the above appointments for your approval.

Besides, subsequent to the year end, Mr. Venu Raman Kumar, a Non-Independent / Non-Executive Director resigned w.e.f. August 9, 2016.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under provisions of the Companies Act, 2013, Rules thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").

Mr. Pramoud Rao, Managing Director of the Company, whose remuneration package includes commission, is appointed as the Managing Director of Zicom SaaS Private Limited, a wholly owned subsidiary of the Company, w.e.f. March 30, 2015 and is entitled for remuneration from the said subsidiary as per terms of his remuneration approved. However, for the year under review,

Mr. Rao has neither received any commission from the Company nor has received any remuneration from the said subsidiary.

Key Managerial Personnel:

Ms. Kunjan Trivedi, Company Secretary was appointed as a Whole time Director of the Company on the Board for a period of one year, effective from March 26, 2015 and as such she ceased as a Director effective from March 25, 2016. However, she continues to be Company Secretary of the Company. In view of the above, the position of Key Managerial Personnel is as under:

Name of Key Managerial Personnel

Designation

Mr. Pramoud Rao

Managing Director

Mr. Hemendra Paliwal

Chief Financial Officer

Ms. Kunjan Trivedi

Whole-time Director (up to March 25, 2016) & Company Secretary

BOARD EVALUATION

In accordance with the requirements of the Companies Act, 2013 and Listing Regulations, the Board evaluation process was carried out. The Board / Nomination and Remuneration Committee of Directors have laid down the criteria for evaluation of the performance of the Board, its Committees and individual Director. A structured questionnaire prepared covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committee, Board procedures, development, e tc. was circulated to Directors for the purpose of evaluation.

The Board and Nomination and Remuneration Committee of Directors reviewed the performance of the individual Directors on the basis of set criteria''s.

The Independent Directors, at its separate meeting, carried out performance evaluation of Board as a whole, its Committees, Chairman of the Company and Non-Independent Directors. The same was discussed in the Board meeting that followed the meeting of Independent Directors, at which performance of the Board, its Committees and individual Directors was also discussed. REMUNERATION AND NOMINATION POLICY The Board of Directors has framed a Policy which lays down the framework in relation to remuneration to Directors, Key Managerial Personnel and Senior Management of the Company. This Policy also lays down criteria for selection and appointment of Board Member. The Policy is provided in Annexure B to this Report.

AUDITORS AND THEIR REPORT

At the previous Annual General Meeting held on September 29, 2015, M/s. Shyam Malpani & Associates, Chartered Accountants, Mumbai, were appointed as Statutory Auditors of the Company to hold office from that Annual General Meeting until the conclusion of the ensuing Annual General Meeting. On August 10, 2016, the Company received a communication from the Auditors informing that effective from July 22, 2016 the constitution of their Firm has been changed from proprietorship to partnership and also the name has changed from M/s. Shyam Malpani & Associates to

M/s. S M M P & Associates. In view of this, M/s. S M M P & Associates holds the office as Statutory Auditors of the Company till the ensuing Annual General Meeting and are eligible for re-appointment.

As required under provisions of Section 139 and Section 141 of the Companies Act, 2013, the Company has obtained a written consent and certificate from them in respect of the proposal for their re-appointment to the effect that their re-appointment, if made, would be in conformity with the criteria specified in the said sections. The Auditors'' Report does not contain any qualification, reservation or adverse remark. Further, with regard to emphasis of matter as per clause IV in the Auditors'' Report, your Directors wish to state that the said emphasis of matter read with Note No. 25.8 of Standalone Financial Statements is self-explanatory and does not require any further explanation. Your Directors would like to add that the said matter will not have any material adverse effect on the functioning of the Company.

The Board recommends the re-appointment of M/s. S M M P & Associates, Chartered Accountant, for your approval.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act,

2013 and Rules there under, the Company has appointed Ganesh Narayan & Co, Company Secretaries in Practice (CP No. 2238) to conduct Secretarial Audit of the Company for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith as Annexure C (as Form MR-3) to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

DIRECTORS'' RESPONSIBILITY STATEMENT Pursuant to Section 134 of the Companies Act, 2013, based on the representations received from the operating management, your Directors hereby state that -

a) in preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit / loss of the Company for the year ended on that date;

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

d) The Directors have prepared the annual accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

MEETINGS OF THE BOARD

Six (6) meetings of the Board of Directors were held during the year under review. For further details, please refer Section II (F) - Other provisions related to Board and Committees of the Corporate Governance Report forming part of this Report.

COMMITTEES OF THE BOARD

The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Agreement / Listing Regulations are given under Section III - Board Committees of the Corporate Governance Report forming part of this Report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of loans given, investments made, guarantees given and securities provided are given in the standalone financial statements. Further, following are the purposes for which the loans or guarantees or securities are proposed to be utilized by the recipient:

Name of Recipient Entity

Relation

Purpose for which the loans, guarantees and securities are proposed to be utilized

Unisafe Fire Protection Specialists LLC, Dubai

Subsidiary

Business Purpose

Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore

Subsidiary

Business Purpose

Zicom Security Projects Pte. Ltd., Singapore

Subsidiary

Cash Management

Phoenix International WLL, Qatar

Subsidiary

Business Purpose

Zicom SaaS Pvt. Ltd., India

Subsidiary

Business Purpose

Unisafe Fire Protection Specialists India Pvt. Ltd., India

Subsidiary

Business Purpose



RELATED PARTY TRANSACTIONS

All transactions entered with related parties during the year 2015-16 were on arm''s length basis and in the ordinary course of business and that the provision of Section 188(1) of the Companies Act, 2013 are not attracted. Hence the particulars to be disclosed in this regards in Form AOC-2 is Nil. Further, during the year under review, there were no material related party transactions.

The Audit Committee and the Board of Directors have approved the Related Party Transaction Policy, which has been prepared in consonance with provisions of Regulation 23 of the Listing Regulations and Companies Act, 2013. The same has been uploaded on the Company''s website at the link: http://beta.zicom.com/img/pdf/ZESSL-Related Party Transaction Policy.pdf.

All Related Party Transactions are being placed before the Audit Committee for approval. Omnibus approvals are also obtained for transactions which are of repetitive nature. Such transactions are placed before the Audit Committee and Board (as required) for periodical review and approval.

VIGIL MECHANISM / WHISTLE BLOWER POLICY Pursuant to Section 177(9) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations, the Company has formulated Vigil Mechanism / Whistle Blower Policy for Directors and employees to report to the management about the unethical behavior, fraud or violation of Company''s Code of Conduct. The mechanism provides for adequate safeguards against victimization of employees and Directors who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in exceptional cases. The said Committee oversees implementation of the Whistle Blower Policy of the Company. The said Policy as approved may be accessed on the Company''s website at the link: http://beta.zicom.com/img/pdf/ZESSL-Whistle Blower Policy.pdf.

MATERIAL CHANGES AND COMMITMENTS As informed under Finance Section above, subsequent to end of the year under review, on August 9, 2016, the Company has cancelled 1,050,000 Warrants due to non-exercise of the option by the Warrant-holders. As a result of same, the application money received upon allotment of said Warrants (calculated @ Rs. 40 per Warrant, being 25% of share price of Rs. 160 to be issued upon exercise of option by the Warrant-holders) were forfeited and the Securities Premium Account of the Company increased by Rs. 42,000,000.

Except for the above, there have not been any other material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company as on March 31, 2016 and the date of this Report.

RISK MANAGEMENT

The Company already has in place the system to inform the Board about the risk assessment and minimization procedure. The risk management system identifies and assesses various risks associated with the Company and its business and finds out and suggests measures to mitigate them. This also includes mechanisms for their proper and timely monitoring and reporting. In this regard, the Company has framed policy to identify and evaluate business risks, and to mitigate them. The Policy defines the risk management approach at various levels including documentation and reporting. The Policy helps in identifying risks trend, exposure and potential impact analysis at Company level and also separately for each business division of the Company. The risk management system is periodically evaluated by the Audit Committee / Board in the light of changing business scenario. Accordingly, new risks are identified, and modified mechanism & procedure for risk assessment and minimization are adopted to ensure that executive management controls risk by means of properly defined framework. Progress in this regard is periodically reported to Audit Committee / Board for their review and corrective actions, required if any. This is a continuous process which enables the Company to keep its risk management system updated and robust in view of fast changing economic and business scenario affecting the Company.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return of the Company as on the financial year ended on March 31, 2016, in Form MGT-9, as required under Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, is appended herewith as Annexure D to this Report.

CORPORATE GOVERNANCE

A separate section on Corporate Governance, together with a certificate from your Company''s Auditors confirming compliance of the conditions of Corporate Governance as stipulated under Listing Regulations is appended herewith as Annexure G forming part of this Report.

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

Pursuant to the provisions of Section 134(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relevant information are given hereunder:

A. Conservation of Energy

The Company''s operations include selling, distributing, marketing and installing of electronic security systems, gadgets and equipments and monitoring them; and as can be obs erved s uch operations do not involve much use of energy. However, your Company makes every possible effort to conserve energy at all levels of its operations.

(i) The steps taken or impact on conservation of energy:

At offices and workplaces, creating awareness among employees, contractual workers and customers about modes and means of energy saving through utilization of energy saving systems, devices and equipments; and inculcating a habit in them to strive for conservation and saving of energy.

The above has helped the Company in keeping its energy cost under control.

(ii) The steps taken by the Company for utilizing alternate sources of energy:

As the operations of your Company does not involve much use of energy, the possibility of using alternate source of energy as a measure of conservation of energy in its operations are minimal.

(iii) The capital investment on energy conservation equipments: No material capital investment on energy conservation equipments has been made during the year by your Company.

B. Technology Absorption

As your Company has not imported any technology, the required information to be provided in this regard is Nil. Your Company is continuously working on improving its indigenous products and software. Your Company continuously strives to provide electronic security systems, gadgets and equipments based on latest technology. Further, the details of expenditure incurred on the research and development are Nil.

C. Foreign Exchange Earnings and Outgo and Export Market Developments

Your Company has earned Rs. 112,352,810 (previous year Rs. 59,750,165) in foreign currency and has spent Rs. 204,676,978 (previous year Rs. 237,424,758) in foreign exchange during the year under review. The details of the same are available at Note No. 25.17 being Notes forming part of the Financial Statements.

PARTICULARS OF EMPLOYEES

The disclosure required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure E to this Report.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,

2014 and amendment thereof, during the year under review, there was no employee under the employment of your Company, who was in receipt of remuneration of Rs. 12,000,000 (before notification Rs. 6,000,000) or more per annum, if employed for the entire year, or a remuneration of Rs. 850,000 (before notification Rs. 500,000) or more per month, if employed during any part of the said year. Hence, the information required to be furnished in this regard is Nil.

At present the Company does not have any Employee Stock Option Plan / Scheme nor does it have any live stock options pending to be exercised.

HUMAN RESOURCES

The Human Resource (HR) is truly a strategic business partner in the growth of your Company. Our HR philosophy is developed around the fundamental of creating value through our most valued resource "Zi-Champ" to drive profitable growth and make Zicom a preferred choice of employer. HR has developed and maintained friendly, transparent and professional work culture woven into the fabric of the company''s environment with strong business ethics.

HR has time and again used innovation in hiring talent in Zicom. With usage of high end assessment tools and latest hiring channels like social media, campus selection, references (Talent Connect) and job portals, HR has hired the best talent from the industry at competent compensation & benefits. HR has created benchmark in the Fire and Security Industry by hiring the Engineers through Pool Campus Recruitment from Tier II and III cities.

In order to fulfill our vision of value creation, a number of developmental initiatives have been undertaken which interalia includes employee branding and a series of learning sessions from senior management within the organization which helps them to serve the customer well.

During the financial year under the review, HR organized Employee connect programs wherein the Zi-Champs were cross functionally bonded with each other and took up fun activities as a team. The most appreciated initiative was "Meet the Top" which helped Employees to connect and share ideas directly with respective Business Heads and Managing Director of the Company.

As on March 31, 2016 the total numbers of direct and indirect employees were standing at 171.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with provisions under the Companies Act, 2013, a Corporate Social Responsibility (CSR) Committee has been constituted and also a CSR policy has been adopted by the Company.

Pursuant to Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, the requisite details on CSR is given under Annexure F appended to this Report.

A provision of Rs. 851,000 made during the year for CSR activities, however the said amount was unspent during the year under review.

INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

Your Company follows current best practices in internal audit and risk management system. Internal Audit System monitors the adequacy and effectiveness of the internal control as per the policy and procedures framed and also under the supervision and guidance of the Audit Committee. It is supported by the enterprise resource planning platform for all business process.

All transactions are properly authorized, recorded and presented to the Management. Your Company observes all the accounting standards prescribed for proper maintenance of books of accounts and reporting of financial statements.

The Internal Control inter-alia facilitates:

- Review of long-term business and annual plans

- Adherence to applicable accounting standards and policies

- Periodic review and rolling forecasts

- Proper accounting and review mechanism

- Compliance with applicable statutes, listing requirement and internal policies and procedures

- Audit on concurrent basis, carried out by an internal auditor covering all statutes and compliance requirements

- IT systems with adequate in-built controls and security

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals that would impact the going concern status of the Company and its future operations.

5. The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation and thanks for the valuable co-operation and support received from the employees of your Company at all levels, Company’s Bankers, lenders, suppliers, Government authorities, business partners and Members of the Company; and look forward for the same to even greater extent in the coming year.

For and on behalf of the Board of Directors

Manohar Bidaye

Chairman

Place: Mumbai

Date: August 12, 2016

Registered Office:

501, Silver Metropolis,

Western Express Highway,

Goregaon (East), Mumbai 400063.


Mar 31, 2015

The Directors presents their Twenty First Annual Report, together with the Audited Accounts of the Company for the Financial Year ended March 31, 2015.

FINANCIAL HIGHLIGHTS:

(Amount in Rs,)

Particulars March 31, 2015 March 31, 2014 Consolidated Consolidated

Net Sales / Income from Operations 11,081,171,351 9,260,956,985

Other Income 47,357,288 25,318,584

Total Income 11,128,528,639 9,286,275,569

Total Expenditure 9,681,708,594 8,176,579,557

Gross Profit before Interest and Depreciation 1,446,820,045 1,109,696,012

Interest and Finance Charges 538,681,427 349,350,690

Gross Profit before Depreciation and Taxation 908,138,618 760,345,322

Depreciation 307,690,027 249,284,173

Profit Before Tax, Exceptional & 600,448,591 511,061,149

Extraordinary Items

Exceptional Item -- 45,954,516

Extraordinary Items

Profit Before Tax 600,448,591 465,106,633

Provision for Taxation:

Current year 81,563,000 28,967,000

Deferred -16,293,617 -10,084,269

Taxation of earlier years

Net Profit After Taxation 535,179,208 446,223,902

Less: Minority Interest 29,326,311 26,798,053

Profit for the year 505,852,897 419,425,849

Add: Balance brought forward 1,439,640,634 1,256,852,427 from previous year

Add: Transfer of Economic Interest -- 202,318,612

Profit available for Appropriation 1,945,493,531 1,878,596,888

APPROPRIATIONS:

Transfer to General Reserve 43,859,899 2,500,000

Provision for Dividend 24,239,795 24,529,430

Provision for Tax on Dividend 4,934,641 3,426,824

Buy Back of Economic Interest -- 408,500,000

Adjustment Relating to Fixed Asset 4,502,111

Balance of Profit carried forward 1,867,957,085 1,439,640,634 to Balance Sheet



Particulars March 31,2015 March 31,2014 Standalone Standalone

Net Sales / Income from Operations 3,835,240,358 3,230,634,433

Other Income 70,082,893 64,447,673 Total Income 3,905,323,251 3,295,082,106 Total Expenditure 3,516,906,986 2,969,676,670 Gross Profit before Interest and 388,416,265 325,405,436 Depreciation

Interest and Finance Charges 147,546,760 97,265,130

Gross Profit before 240,869,505 228,140,306 Depreciation and Taxation

Depreciation 67,377,781 77,463,807 Profit Before Tax, Exceptional & 173,491,724 150,676,499 Extraordinary Items

Exceptional Item -- 51,776,297 Extraordinary Items -- --

Profit Before Tax 173,491,724 98,900,202 Provision for Taxation:

Current year 74,990,000 27,140,000 Deferred -14,517,786 -9,769,253 Taxation of earlier years -- --

Net Profit After Taxation 113,019,510 81,529,455 Less: Minority Interest -- -- Profit for the year 113,019,510 81,529,455

Add: Balance brought forward 551,854,924 497,372,088 from previous year

Add: Transfer of Economic Interest -- --

Profit available for Appropriation 664,874,434 81,529,455

APPROPRIATIONS:

Transfer to General Reserve 2,500,000 2,500,000 Provision for Dividend 24,239,795 21,119,795 Provision for Tax on Dividend 4,934,641 3,426,824

Buy Back of Economic Interest -- --

Adjustment Relating to Fixed Asset 4,502,111 --

Balance of Profit carried forward 628,697,887 551,854,924 to Balance Sheet

OPERATIONAL PERFORMANCE

At the outset your Directors are pleased to report that the year ended March 31, 2015 has been a milestone in the Company's history with it crossing Rs. 1,100 crores turnover mark on consolidated basis. This coinciding with the Company completing its successful existence for 20 years is a matter of pride for all of us.

We are pleased to report that the financial year 2014-15 resulted in the Company to end the year with good performance, on both standalone as well as consolidated basis.

On consolidated basis, the Total Income for the year 2014-15 was Rs. 11,128,528,639 (previous year Rs. 9,286,275,569) and the Profit Before Exceptional Items and Tax was Rs. 600,448,591 (previous year Rs. 511,061,149). After adjusting for Exceptional Item Rs. Nil (previous year Rs.45,954,516) and Tax Rs. 65,269,383 (previous year Rs. 18,882,731), Net Profit After Tax was at Rs. 535,179,208 (previous year Rs.446,223,902). After accounting for Minority Interest there from the Net Profit After Tax and Minority Interest at Rs. 505,852,897 is higher by 21% as compared to Rs. 419,425,849 of previous year.

The Consolidated Financial Statements (CFS) includes the financial statements of Zicom Electronic Security Systems Limited ("the Company") and its subsidiary companies, namely,

a) Zicom SaaS Private Limited ("Zicom SaaS");

b) Unisafe Fire Protection Specialists Singapore Pte. Ltd. ("Unisafe Singapore") and its subsidiaries, viz. Unisafe Fire Protection Specialists LLC, Dubai ("Unisafe Dubai") and its subsidiaries, and Phoenix International WLL, Qatar ("Phoenix Qatar");

c) Unisafe Fire Protection Specialists India Private Limited ("Unisafe India"); and

d) Zicom Security Projects Pte. Ltd., Singapore ("Zicom Singapore")

On standalone basis, the Total Income for the year 2014-15 was Rs. 3,905,323,251 (previous year Rs. 3,295,082,106). The Other Income also included dividend from subsidiaries received during the year under review amounting to Rs. Nil (previous year Rs. 6,592,000). The Profit Before Exceptional Item and Tax was Rs. 173,491,724 (previous year Rs. 150,676,499). After adjusting for Exceptional Item Rs. Nil (previous year Rs. 51,776,297) and Tax Rs. 60,472,214 (previous year Rs. 17,370,747), Net Profit After Tax at Rs. 113,019,510 is higher by 39% as compared to Rs.81,529,455 of previous year.

Further as can be seen from the Consolidated Financial Results given above, Earnings Before Depreciation, Interest and Tax (EBIDTA) at Rs. 1,446,820,045 (previous year Rs. 1,063,741,496) shows a jump of 36% over previous year, resulting into increased EBIDTA margin from 12% to 13%.

BUSINESS DEVELOPMENTS AND PROSPECTS

A close look at the consolidated performance of the Company for the year under review reveals that the performance of the fire security business of the Company in Middle East has continued to be encouraging, despite slump in global crude prices. This business is being conducted under the two flagship subsidiaries, Unisafe Dubai and Phoenix Qatar, which have successfully achieved all the set targets in terms of financial performance and customer satisfaction. In view of the fact that growth rate of about 20% has been achieved by these businesses despite slowdown; the performance can be rated on higher scale. Another highlight of good performance is performance reported by Zicom SaaS, which shown 93% growth in topline and 130% growth in bottomline. This has been possible due to continued flow of orders from Banks for ATM Surveillance and from Housing Societies in Mumbai and Pune under Make Your City Safe (MYCS) Programme. However, the contribution of Zicom SaaS to the consolidated topline and bottomline is insignificant as compared to that of fire security business, as SaaS business is at take off stage.

As can be seen from the consolidated financial results given above, the Fire Detection and Protection business of Middle East has continued to be main contributor, with consistently improved performance which accounts for more than 50% of topline, has been a driving force behind it. Economies of these countries highly depend on oil and gas. With crude prices ruling around half the level of its peak price reached couple of year back, the economies of these countries could have witnessed recession. However, huge spending by Governments of these countries in infrastructure, tourism, hospitality and related facilities in view of planned commercial and sports events like Dubai World Expo 2020 and Qatar FIFA World Cup 2022 has helped sustaining economic growth there. Both, Unisafe Dubai and Phoenix Qatar have gained from this spending resulting into their sustained growth.

In India, with new Government coming into power, high hopes are raised for economic recovery. With planned heavy spending on infrastructure, smart cities and commercial and industrial developments, outlook for our electronic security business particularly Project Solutions Business under Zicom standalone and Enterprise and MYCS Businesses under Zicom SaaS has been promising. This coupled with various steps being taken by the Company in the form of innovative products and services, helped by government policies and law enforcing agencies, has strong potential to show better performance in the current year.

In Unisafe India, your Company's focus continued to work as Global Design Centre by catering to the design, engineering and estimate needs of all our projects in Gulf Region.

Our two wholly-owned subsidiaries in Singapore, viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) and Zicom Security Projects Pte. Ltd. (Zicom Singapore) continues to hold our investment in Phoenix Qatar and Joint Venture (JV) investment in CiaoZicom Security Systems SA, Brazil respectively.

DIVIDEND

With a view to conserve resources to meet the business requirements, your Directors have recommend a dividend of Rs. 1.20 (Rs. 1.20) per Equity Share of Rs. 10 each (i.e. 12%) on enhanced share capital of 20,199,829 Equity Shares (17,599,829 Equity Shares) of the Company for the financial year 2014-15. This dividend will entail a total outgo of Rs. 29,174,436 (Rs. 24,546,619) which shows increase of 19%. The dividend outgo is higher on account of enhanced share capital and increase in rate of dividend tax.

The dividend will be paid to Members whose names appear in the Register of Members as on September 21, 2015 and in respect of shares held in dematerialized form, it will be paid to Members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

During the year in February 2015, 1,050,000 Warrants were issued and allotted to Promoter Group Companies on preferential basis. These Warrants entitle their holders to acquire equal number of equity shares on the terms and conditions of their issue. If entire of these Warrants or part of them are converted into equal number of Equity Shares, it may create an obligation on the Company to pay dividend for the Financial Year 2014-15 @ Rs.1.20 per Equity Share, on such number of Equity Shares, which may be allotted on or before the record date fixed for deciding entitlement for the said dividend i.e. September 21, 2015.

FINANCE

During the year, the Company raised total Rs. 458,000,000 by preferential issue in accordance with SEBI's Guidelines for Preferential Issue, i.e. Chapter VII of SEBI ICDR Regulations. Under the said preferential issue, allotment of 2,600,000 Equity Shares of Rs. 10 each for cash at a price of Rs. 160 per share, aggregating to Rs. 416,000,000 was made on February 18, 2015 to non-promoter individuals / entity

Further, 1,050,000 Warrants, each Warrant carrying an entitlement to subscribe to one Equity Share of Rs. 10 each of the Company, were issued to Promoter Group Companies in accordance with SEBI's Guidelines for Preferential Issue. The holders of the said Warrants have right to acquire one Equity Share of the Company at a price of Rs. 160 per share, which assuming full conversion of Warrants into Equity Shares amounts to Rs. 168,000,000. The exercise of option to acquire Equity Shares against the said Warrants has to be within eighteen months from the date of allotment of the Warrants. The Company received total Rs. 42,000,000 towards Warrant Application Money in accordance with SEBI's Guidelines for Preferential Issue.

As a result of the above, the Company's Paid-up Share Capital increased to 20,199,829 Equity Shares of Rs. 10 each aggregating to Rs. 201,998,290. Also, it's Securities Premium increased by Rs. 390,000,000. Assuming full conversion and allotment of Equity Shares for the 1,050,000 Warrants outstanding, post allotment Paid-up Share Capital is expected to be Rs. 212,498,290 comprising of 21,249,829 Equity Shares of Rs.10 each.

SUBSIDIARY AND JOINT VENTURE COMPANIES

As on March 31, 2015, your Company had the following subsidiaries:

1. Zicom SaaS Private Limited (wholly owned subsidiary);

2. Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore (wholly owned subsidiary);

3. Unisafe Fire Protection Specialists LLC, Dubai (step-down subsidiary);

4. Phoenix International WLL, Qatar (step-down subsidiary);

5. Unisafe Fire Protection Specialists India Private Limited (wholly owned subsidiary); and

6. Zicom Security Projects Pte. Ltd., Singapore (wholly owned subsidiary)

A statement containing salient features of the financial statement of Subsidiaries for 2014-15 as per the Companies Act, 2013 is provided in Annexure A hereto in prescribed Form AOC-1. In respect of foreign subsidiary companies, figures in rupees are converted from applicable foreign currency at appropriate exchange rate as on year end date. The Policy on Material Subsidiary as approved may be accessed on the Company's website at the link: http://beta.zicom.com/img/pdf/ZESSL- Policy_on_Material_Subsidiary.pdf

The details of key subsidiaries and their workings are given below:

Zicom SaaS Private Limited

With a view to capitalize on changing security environment in the country resulting into evolving consumer needs it was decided to set-up the business of offering Security as a Service (SaaS) under a separate wholly owned subsidiary, namely, Zicom SaaS Private Limited. This subsidiary offers wide range of managed electronic security services (e-SaaS). The two focus areas for Zicom SaaS are Enterprise and Housing and Residential segment.

Under Enterprise Division, main contributors are Banks, Financial Services and Insurance (BFSI companies) which contribute major chunk of the revenue, and the balance comes from Retail and Education. With the use of latest technology platform, business enterprises are offered various customized services under e-SaaS model like Managed Alert Service, Time & Attendance Service, Remote Fire & Intruder Alarm Monitoring Service with use of cloud technology and internet, this business has found speedy acceptance. We have set-up focus on pure monitoring services revenue for the current year, which with support of legislative provisions and government and law enforcing authorities, making CCTV and video surveillance mandatory, has provided good potential for growth. Similar are the reason for our optimism about performance in MYCS covering housing and residential segment.

Zicom SaaS has posted Total Income of Rs. 335,496,922 (previous year Rs. 173,833,923) and Net Profit of Rs. 13,293,907 (previous year Rs. 6,077,070) for the financial year ended March 31, 2015.

Unisafe Fire Protection Specialists LLC, Dubai

Unisafe Dubai, is the leading fire protection company in Dubai, UAE, having its presence in seven emirates, Qatar and Oman, has been consistently surpassing its earlier achievements in terms of topline and bottomline and customer satisfaction. It has got track record of exceptional performance year after year based on the patronization from the unstinted confidence and support of its customers.

Unisafe Dubai caters to large spectrum of clientele from Government to corporate, refineries, shopping malls and multi storey buildings among others, offering comprehensive range of solutions for all fire protection needs, starting from the basic hydrant and sprinkler systems to advance analogue addressable fire alarm systems, specialized gaseous fire suppression systems, dry and wet chemical extinguishing systems and water mist fire extinguishing systems. In the area of project execution and servicing in fire detection and protection in infrastructure projects, Unisafe Dubai has been recognized as one of the top brands for almost two decades.

With corporate restructuring, Unisafe Dubai has become a step- down subsidiary of your Company, in which Unisafe Singapore, our wholly owned subsidiary, hold 41% stake and balance 8% stake is directly held by us. With this, total stake of Zicom Group in Unisafe Dubai is 49% with entitlement in the economic interest being 95%.

Unisafe Dubai has posted Total Income of Rs. 5,350,126,293 (as compared to Rs. 4,472,112,012 in the previous year) and a Net Profit of Rs. 445,286,900 (as compared to Rs. 398,665,132 in the previous year) for the financial year ended March 31, 2015.

Phoenix International WLL, Qatar

Phoenix Qatar, is another step-down subsidiary of your Company which has successfully established itself as one of the leading fire security solutions provider in Qatar.

With main focus on Fire Prevention and Protection, it has exclusive tie-up to market safety and security equipments of leading international supplier. Its offerings includes varied turnkey solutions for fire protection suppression projects like design, engineering, integrating, testing and commissioning of Fire Safety, Security and Building Management Systems. Phoenix Qatar has to its credit large spectrum of clientele from Government to corporate, refineries, shopping malls, multi storey buildings, hotels and resorts, etc. some of which being very prestigious projects in Qatar. Further, it is one of the few to possess a license to operate in petrochemical sector.

Post corporate restructuring of Zicom Group last year, Phoenix Qatar had become a step-down subsidiary of your Company with 49% stake; of which 44% held by Unisafe Singapore and balance 5% held by your Company. Zicom Group's entitlement in economic interest in Phoenix Qatar is 95%.

During the year under review Phoenix Qatar, posted Total Income of Rs. 1,391,230,255 (as compared to Rs. 1,222,147,344 in the previous year) and a Net Profit of Rs. 141,239,321 (as compared to Rs. 137,295,919 in the previous year) for the financial year ended March 31, 2015.

Unisafe Fire Protection Specialists India Private Limited

Working results of Unisafe India for the financial year ended March 31, 2015 shows Total Income of Rs. 169,334,357 (previous year Rs. 155,631,085) and a Net Loss of Rs. 7,238,748 (previous year Net Loss Rs. 1,471,989).

Originally set-up as a wholly owned subsidiary with a view to gain benefit out of the expertise gained from the success of fire safety and security business in Middle East; later on diverted its focus on catering to the needs of design and engineering requirements of fire protection business in Gulf region by acting as a Global Design Centre and also act as trader in fire safety and security equipments.

Unisafe Fire Protection Specialists Singapore Pte.

Ltd., Singapore and

Zicom Security Projects Pte. Ltd., Singapore

Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) and Zicom Security Projects Pte. Ltd. (Zicom Singapore) were set-up as two wholly-owned subsidiaries in Singapore, as a part of global corporate restructuring of Zicom Group with a view to internationally align and consolidate present and future investments of the Group. The Group overseas investment in fire business falls under the umbrella of Unisafe Singapore acting as a holding company for all such ventures, whereas Zicom Singapore, aimed as a holding company for Group investment in international electronic security business. However plans are on hold in view of not so good experience of CiaoZicom Security Systems SA, Brazil.

CONSOLIDATED FINANCIAL STATEMENTS

As per Section 134 of the Companies Act, 2013, your Company has provided the audited Consolidated Financial Statements for the year ended on March 31, 2015; together with Auditors' Report thereon forming part of this Annual Report, which includes financial information of all the subsidiaries. These documents will also be available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. Pursuant to the provisions of the Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Company's Subsidiaries for 2014-15 (in Form AOC-1) is appended as Annexure A hereto. Your Company has placed the audited annual accounts and related information of subsidiary companies on its website and same will be made available to the Members upon request.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors:

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. V. Raman Kumar (DIN: 00245022) is the Director liable to retire by rotation at the ensuing Annual General Meeting and has offered himself for re-appointment.

On March 26, 2015, Ms. Kunjan Trivedi (DIN: 07131011) was appointed as an Additional Director under Section 161 of the Companies Act, 2013, to hold office till the date of the ensuing Annual General Meeting. Further, the Board of Directors at its said meeting also appointed Ms. Trivedi as a Whole-time Director of the Company, designated as "Whole-time Director and Company Secretary", for a period of one year from March 26, 2015 till March 25, 2016. The terms of her appointment as Whole-time Director and Company Secretary including the terms of remuneration shall continue to be governed by the terms of her appointment as Company Secretary, subject however to applicable provisions of Companies Act, 2013 read with Schedule V thereto and subject to approval of Members. Accordingly, resolutions seeking approval of Members have been proposed at the ensuing Annual General Meeting for her appointment as a Director liable to retire by rotation, and also as a Whole-time Director designated as "Whole-time Director and Company Secretary" and the terms and conditions thereof including terms of remuneration. With appointment of Ms. Trivedi on the Board, the Company has complied with the requirements of Clause 49 (II) (A) of the Listing Agreement.

The Company has received requisite notice, pursuant to Section 161 of Companies Act, 2013, in writing from Member proposing the candidature of Ms. Kunjan Trivedi for the office of Director liable to retire by rotation.

The brief profiles of Mr. V. Raman Kumar and Ms. Kunjan Trivedi are given in Notice of the Annual General Meeting and discussed at length in the Corporate Governance Report.

Your Directors recommend the above appointments for your approval.

Besides above, Members are informed that Mr. Prabhakar Dalal (DIN: 00544948) was appointed as an Additional Director on Board on June 27, 2014 and he held office upto the conclusion of Annual General Meeting (AGM) held on September 5, 2014. He was appointed as an Independent Director at the AGM held on September 5, 2014.

Further at the said AGM, the Members also approved the appointments of Mr. Manohar Bidaye (DIN: 00010699) as a Non-Executive Non-Independent Director liable to retire by rotation and Mr. Mukul Desai (DIN: 00015126); Mr. K. D. Hodavdekar (DIN: 00406556) and Mr. Vijay Kalantri (DIN: 00019510) as Independent Directors not liable to retire by rotation.

All Independent Directors of the Company have given declarations confirming that they meet with the criteria of independence as prescribed under provisions of the Companies Act, 2013, Rules thereunder and Clause 49 of the Listing Agreement.

Mr. Pramoud Rao, Managing Director of the Company, whose remuneration package includes commission, is appointed as the Managing Director of Zicom SaaS Private Limited, a wholly owned subsidiary of the Company, w.e.f. March 30, 2015 and is entitled for remuneration from the said subsidiary as per terms of his remuneration approved. However, for the year under review, Mr. Rao has not received any remuneration from the said subsidiary.

Key Managerial Personnel:

During the year under review, the Company has appointed following persons as Key Managerial Personnel pursuant to the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Sr. No. Name of Key Managerial Personnel Designation

1. Mr. Pramoud Rao Managing Director

2. Mr. Hemendra Paliwal Chief Financial Officer

3. Ms. Kunjan Trivedi Whole-time Director & Company Secretary

BOARD EVALUATION

In accordance with the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board evaluation process was carried out. The Board / Nomination and Remuneration Committee of Directors have laid down the criteria for evaluation of the performance of the Board, its Committees and individual Directors. Accordingly, a structured questionnaire containing criteria's such as Board composition and structure, effectiveness of Board processes, information and functioning, etc. was circulated to Directors for the purpose of evaluation.

The Board and Nomination and Remuneration Committee of Directors reviewed the performance of the individual Directors on the basis of set criteria's.

The Independent Directors, at its separate meeting, carried out performance evaluation of Board as a whole, its Committees, Chairman of the Company and Non-Independent Directors. The same was discussed in the Board meeting that followed the meeting of Independent Directors, at which performance of the Board, its Committees and individual Directors was also discussed.

NOMINATION AND REMUNERATION POLICY

The Board of Directors has framed a Policy which lays down the framework in relation to remuneration to Directors, Key Managerial Personnel and Senior Management of the Company. This Policy also lays down criteria for selection and appointment of Board Members. The Policy is provided in Annexure B to this Report.

AUDITORS AND THEIR REPORT

The Statutory Auditors of the Company M/s. Shyam Malpani & Associates, Chartered Accountants, Mumbai, holds their office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

As required under the provisions of Section 139 and Section 141 of the Companies Act, 2013, the Company has obtained a written consent and certificate from M/s. Shyam Malpani & Associates, Chartered Accountants, Mumbai, proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the criteria specified in the said sections. The Auditors' Report does not contain any qualification, reservation or adverse remark. Further, with regard to emphasis of matter as per clause IV in the Auditors' Report, your Directors wish to state that the said emphasis of matter read with Note No. 25.8 of Standalone Financial Statements is self-explanatory and does not require any further explanation. Your Directors would like to add that the said matter will not have any material adverse effect on the functioning of the Company.

The Board recommends their re-appointment for your approval.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules thereunder, the Company has appointed Ganesh Narayan & Co, Company Secretaries in Practice (CP No. 2238) to conduct Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as Annexure C to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013, based on the representations received from the operating management, your Directors hereby state that

a) in preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgements 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 at March 31, 2015 and of the profit of the Company for the year ended on that date;

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

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws that such systems are adequate and operating effectively.

MEETINGS OF THE BOARD

Seven meetings of the Board of Directors were held during the year under review. For further details, please refer Section II (F) - Other provisions related to Board and Committees under the Corporate Governance Report forming part of this Report.

COMMITTEES OF THE BOARD

The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Agreement are given under Section III in the Corporate Governance Report forming part of this Report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of loans given, investments made, guarantees given and securities provided are given in the standalone financial statements. Further following are the purposes for which the loans or guarantees or securities are proposed to be utilized by the recipient:

Name of Recipient Entity Relation Purpose for which the loans, guarantees and securities are proposed to be utilized

Unisafe Fire Protection Subsidiary Business Purpose Specialists LLC, Dubai

Unisafe Fire Protection Specialists Subsidiary Business Purpose Singapore Pte. Ltd., Singapore

Zicom Security Projects Pte. Ltd., Subsidiary Cash Singapore Management

Phoenix International WLL, Qatar Subsidiary Business Purpose

Zicom SaaS Pvt. Ltd., India Subsidiary Business Purpose

Unisafe Fire Protection Subsidiary Business Purpose Specialists India Pvt. Ltd., India

RELATED PARTY TRANSACTIONS

All transactions entered with related parties for the year March 31, 2015 were on arm's length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Hence the particulars to be disclosed in this regards in Form AOC-2 is Nil. Further, during the year under review, there were no material related party transactions.

The Audit Committee and the Board of Directors have approved the Related Party Transaction Policy, which has been prepared in consonance with provisions of Clause 49 of the Listing Agreement and Companies Act, 2013. The same has been uploaded on the Company's website at the link: http://beta.zicom.com/img/pdf/ZESSL- Related_Party_Transaction_Policy.pdf

All Related Party Transactions are being placed before the Audit Committee for approval. Omnibus approvals are also obtained for transactions which are of repetitive nature. Such transactions are placed before the Audit Committee and Board (as required) for periodical review and approval.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to Section 177(9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and employees to report to the management about the unethical behavior, fraud or violation of Company's Code of Conduct. The mechanism provides for adequate safeguards against victimization of employees and Directors who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in exceptional cases. The said Policy as approved may be accessed on the Company's website at the link: http://beta.zicom.com/img/pdf/ZESSL- Whistle_Blower_Policy.pdf

MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company as on March 31, 2015 and the date of this Report.

RISK MANAGEMENT

The Company already has in place the system to inform the Board about the risk assessment and minimization procedure. The risk management system identifies and assesses various risks associated with the Company and its business and finds out and suggests measures to mitigate them. This also includes mechanisms for their proper and timely monitoring and reporting. In this regard, the Company has framed policy to identify and evaluate business risks, and to mitigate them. The Policy defines the risk management approach at various levels including documentation and reporting. The Policy helps in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for each business division of the Company. The risk management system is periodically evaluated by the Audit Committee / Board in the light of changing business scenario. Accordingly, new risks are identified, and modified mechanism and procedure for risk assessment and minimization are adopted to ensure that executive management controls risk by means of properly defined framework. Progress in this regard is periodically reported to Audit Committee / Board for their review and corrective actions, required if any. This is a continuous process which enables the Company to keep its risk management system updated and robust in view of fast changing economic and business scenario affecting the Company.

EXTRACT OF ANNUAL RETURN

The details forming part of the Extract of Annual Return of the Company, in Form MGT-9, as required under Section 92 of the Companies Act, 2013, is appended herewith as Annexure D to this Report.

CORPORATE GOVERNANCE

In pursuance of Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance, together with a certificate from your Company's Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the said Clause is set out separately as Annexure H forming part of this Report.

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

Pursuant to the provisions of Section 134(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relevant information are given hereunder:

A. Conservation of Energy

The Company's operations include selling, distributing, marketing and installing of electronic security systems, gadgets and equipments and monitoring them. As such they do not involve much use of energy. However, your Company makes every possible effort to conserve energy at all levels of its operations.

(i) The steps taken or impact on conservation of energy:

At offices and workplaces, creating awareness among employees, contractual workers and customers about modes and means of energy saving through utilization of energy saving systems, devices and equipments; and inculcating a habit in them to strive for conservation and saving of energy. The above has helped the Company in keeping its energy cost under control.

(ii) The steps taken by the Company for utilizing alternate sources of energy:

As the operations of your Company does not involve much use of energy, the possibility of using alternate source of energy as a measure of conservation of energy in its operations are minimal. However, your Company has initiated certain steps in this direction like attempts are being made to make available affordable CCTV Surveillance Systems using solar power charged batteries, particularly in remote areas where there are frequent disruptions in power, and such other alternate energy using devices.

(iii) The capital investment on energy conservation equipments:

No material capital investment on energy conservation equipments has been made during the year by your Company.

B. Technology Absorption

As your Company has not imported any technology, the required information to be provided in this regard is Nil. Your Company is continuously working on improving its indigenous products and software. Your Company continuously strives to provide electronic security systems, gadgets and equipments based on latest technology. Further, the details of expenditure incurred on the research and development are Nil.

C. Foreign Exchange Earnings and Outgo

Your Company has earned Rs. 59,750,165 (previous year Rs. 52,705,456) in foreign currency and has spent Rs. 2,282,961 (previous year Rs. 1,712,877) in foreign exchange during the year under review. The details of the same are available at Note No. 25.17 being Notes forming part of the Financial Statements.

LOANS AND ADVANCES

The details of loans and advances, which are required to be disclosed in the Financial Statements of the Company pursuant to Clause 32 of the Listing Agreement with the Stock Exchanges, are furnished separately as Annexure E to this Report.

PARTICULARS OF EMPLOYEES

The disclosure required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure F to this Report.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, during the year under review, there was no employee under the employment of your Company, who was in receipt of remuneration of Rs. 6,000,000 or more per annum, if employed for the entire year, or a remuneration of Rs. 500,000 or more per month, if employed during any part of the said year. Hence, the information required to be furnished in this regard is Nil.

At present the Company does not have any Employee Stock Option Plan / Scheme nor does it have any live stock options pending to be exercised.

HUMAN RESOURCES

Human Resource (HR) in Zicom is truly a strategic Business Partner in the growth of your Company. The HR philosophy is developed around the fundamental of creating value through our most valued resource "Zi-Champ" to drive profitable growth and make Zicom a preferred work place. HR has developed & maintained friendly and professional work culture woven into the fabric of the Company's environment with strong business ethics.

HR has time and again used innovation in hiring talent in Zicom. With usage of high end assessment tools and latest hiring channels like social media and online hiring sites, HR has hired the best talent from the industry at competent pay package and benefits. HR has created benchmark in the Fire and Security Industry by hiring the Engineers through Pool Campus Recruitment from Tier III cities and providing them opportunities in the international market with in-depth training.

To fulfill the Company's Vision of value creation number of developmental initiatives have been undertaken which includes Executive Coaching for Leadership Development. Zi-Champs have been trained on behavioral and technical skills through ongoing structure programs which helps them to serve the customer well.

During the year under review, HR had come up with Employee connect programs where Zi-Champs were cross functionally bonded with each other and took up fun activities as a team. The most appreciated initiative was Business Induction where new joinees undergo in-depth training on understanding the Business model, Product and Services. Our team of "Zi-Champs" was the winner of "Corporate Jung" for second consecutive year in the cricket tournament arranged by Fire and Safety Association of India.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Board of Directors of your Company on May 27, 2014 constituted Corporate Social Responsibility Committee in compliance with the requirements of Section 135 of the Companies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. The said Committee has formulated and recommended to the Board a Corporate Social Responsibility Policy (CSR Policy). Based on recommendation of CSR Committee the Board has approved undertaking of CSR activities by the Company as enshrined in the Company's CSR Policy. A brief outline of the said Policy including overview of the Project / Program being undertaken are set out in the Annual Report on Corporate Social Responsibility (CSR) Activities and appended herewith as Annexure G, forming part of this Report.

Towards achieving its CSR objectives, the Company as a humble beginning, has identified a project of construction of a High School building in rural area of Sindhudurg District in Maharashtra with an outlay of Rs. 1.80 crores. This Project aims at assisting a High School which has been in existence since 1964 with a building structure in dilapidated state and in dire need to be reconstructed. The School is being run by a Trust on behalf of five surrounding villages and caters to more than 400 students in 9 divisions from Class V to Class X, majority of them belongs to below poverty line segment and families of farmers and ex-servicemen. With the help of the Company, the new building structure has been completed and the interior works like classrooms, laboratory, other infrastructure such as lighting, sanitation, furniture, sports equipments, etc. are being provided. The Project is expected to be completed by December 2016. During the year, the Company spent a total sum of Rs. 1,700,000 towards contributing to the Project. As the Project for the School is multi-year Project running over a period of more than three years, the amount has to be spent based on completion schedule of construction of School building and subsequent ordering of materials for interiors, furniture, electrical fittings, laboratory and other equipments, etc.

Besides school education, it is also planned to provide the students with vocational courses, which will facilitate their employment after passing Class X. Despite all adversities, the School has been able to maintain its reputation by consistent good performance, which is evident by the fact that the last ten year's average success rate of its students in Class X has been 95%.

INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

Your Company follows current best practices in internal audit and risk management system. Internal Audit System monitors the

adequacy and effectiveness of the internal control under the supervision and guidance of the Audit Committee. It is supported by the enterprise resource planning platform for all business process.

All transactions are properly authorized, recorded and presented to the Management. Your Company observes all the accounting standards prescribed for proper maintenance of books of accounts and reporting of financial statements.

The Internal Control inter-alia facilitates:

- Review of long-term business and annual plans

- Adherence to applicable accounting standards and policies

- Periodic review and rolling forecasts

- Proper accounting and review mechanism

- Compliance with applicable statutes, listing requirement and internal policies and procedures

- Audit on concurrent basis, carried out by an internal auditor covering all statutes and compliance requirements

- IT systems with adequate in-built controls and security

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals that would impact the going concern status of the Company and its future operations.

5. The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation and thanks for the valuable co-operation and support received from the employees of your Company at all levels, Company's Bankers, lenders, suppliers, Government authorities, business partners and Members of the Company; and look forward for the same to even greater extent in the coming year.

For and on behalf of the Board of Directors

Manohar Bidaye

Chairman

Place: Mumbai

Date: May 27, 2015

Registered Office:

501, Silver Metropolis,

Western Express Highway,

Goregaon (East), Mumbai 400063.


Mar 31, 2014

Dear Members,

Your Directors presents their Twentieth Annual Report, together with the Audited Accounts of the Company for the Financial Year ended March 31,2014.

( Amount in Rs )

Particulars March 31, 2014 March 31, 2013 Consolidated Consolidated

Net Sales / Income from Operations 9,260,956,985 6,912,954,653

Other Income" 25,318,584 23,103,814

Total Income 9,286,275,569 6,936,058,467

Total Expenditure 8,176,579,557 6,087,516,230

Gross Profit before Interest and Depreciation 1,109,696,012 848,542,237

lnterest and Finance Charges 349,350,690 251,836,448

Gross Profit before Depreciation and Taxation 760,345,322 596,705,789

Depreciation 249,284,173 180,775,944

Profit Before Tax, Exceptional & Extraordinary Items 511,061,149 415,929,845

Exceptionalltem 45,954,516 -- Extraordinary Items

Profit Before Tax 465,106,633 415,929,845

Provision for Taxation:

Current year 28,967,000 26,078,000

Deferred -10,084,269 20,886,362

Taxation of earlier years -- -- Net Profit After Taxation 446,223,902 368,965,483

Less: Minority Interest 26,798,053 65,765,956

ProfIt for the year 419,425,849 303,199,527

Add: Balance brought forward from previous year 1,256,852,427 990,525,810

Add: Transfer of Economic Interest 202,318,612 --

Profit available for Appropriation 1,878,596,888 1,293,725,337

apPROpRiationS,

Transfer to General Reserve 2,500,000 8,166,191

Provision for Dividend 24,529,430 20,399,795

Provision for Tax on Dividend 3,426,824 3,309,357

Buy Back of Economic Interest 408,500,000 -- Previous Year Dividend and Tax thereon -- 4,997,567

Balance of Profit carried forward to Balance Sheet 1,439,640,634 1,256,852,427

Particulars March 31, 2014 March 31, 2013 Standalone Standalone

Net Sales / Income from Operations 3,230,634,433 2,664,128,159

Other Income" 64,447,673 48,648,234

Total Income 3,295,082,106 2,712,776,393

Total Expenditure 2,969,676,670 2,411,618,155

Gross Profit before Interest and Depreciation 325,405,436 301,158,238

lnterest and Finance Charges 97,265,130 95,857,168

Gross Profit before Depreciation and Taxation 228,140,306 205,301,070

Depreciation 77,463,807 79,048,999

Profit Before Tax, Exceptional & Extraordinary Items 150,676,499 126,252,071

Exceptionalltem 51,776,297 -- Extraordinary Items

Profit Before Tax 98,900,202 126,252,071

Provision for Taxation:

Current year 27,140,000 25,270,000

Deferred -9,769,253 19,935,923

Taxation of earlier years -- -- Net Profit After Taxation 81,529,455 81,046,148

Less: Minority Interest -- --

ProfIt for the year 81,529,455 81,046,148

Add: Balance brought forward from previous year 497,372,088 447,532,659

Add: Transfer of Economic Interest -- -- Profit available for Appropriation 81,529,455 528,578,807 apPROpRiationS,

Transfer to General Reserve 2,500,000 2,500,000 Provision for Dividend 21,119,795 20,399,795 Provision for Tax on Dividend 3,426,824 3,309,357 Buy Back of Economic Interest Previous Year Dividend and -- -- Tax thereon -- 4,997,567 Balance of Profit carried forward to Balance Sheet 551,854,924 497,372,088

OPERATIONAL PERFORMANCE

Your Directors are pleased to report that the Company ended the year 2013-14 with good performance, on both standalone as well as consolidated basis.

On consolidated basis, the Total Income for the year 2013-14 was ' 9,286,275,569 (previous year ' 6,936,058,467) and the Profit Before Exceptional Expenses and Tax was ' 511,061,149 (previous year ' 415,929,845). After adjusting for Exceptional Expenses and Tax ' 64,837,247 (previous year ' 46,964,362), Net Profit After Tax at ' 446,223,902 (previous year ' 368,965,483) was higher by 21%. During the year under review, Zicom Group's entitlement in the economic interest in Unisafe Dubai increased from 80% to 95% as a result of buy-back of economic interest of the local partner, the Net Profit After Tax and Minority interest at ' 419,425,849 has increased substantially by 38% as compared to ' 303,199,527 of previous year.

The Consolidated Financial Statements (CFS) includes the financial statements of Zicom Electronic Security Systems Limited ("the Company") and its subsidiary companies, namely, Zicom SaaS Private Limited ("Zicom SaaS"); Unisafe Fire Protection Specialists Singapore Pte. Ltd. ("Unisafe Singapore") and its subsidiaries, viz. Unisafe Fire Protection Specialists LLC, Dubai ("Unisafe Dubai") and its subsidiaries and Phoenix International WLL, Qatar ("Phoenix Qatar"); Unisafe Fire Protection Specialists India Private Limited ("Unisafe India"); Zicom Security Projects Pte. Ltd., Singapore ("Zicom Singapore") and 2020 Imaging India Limited ("2020 India") (formerly known as Zicom CNA Automation Limited) till the time it was subsidiary of your Company.

On standalone basis, the Total Income for the year 2013-14 was ' 3,295,082,106 (previous year ' 2,712,776,393). The Profit Before Exceptional Expenses and Tax was ' 150,676,499 (previous year ' 126,252,071). After adjusting for Exceptional Expenses and Tax ' 69,147,044 (previous year Rs 45,205,923), Net Profit After Tax (PAT) was Rs 81,529,455 as compared to Rs 81,046,148 in previous year. But for the write off of Rs 51,776,297 under Exceptional item, PAT amount would have been substantially higher.

On March 25, 2014, your Company transferred its entire stake in its wholly owned subsidiary, 2020 Imaging India Limited (formerly known as Zicom CNA Automation Limited) at a consideration of ' 3,675,000. Your Company incurred loss of RS 195,085 on this sale. As a result, 2020 India ceased to be the subsidiary of your Company from the said date. The consolidated financial statements therefore includes financial results of 2020 India upto March 25, 2014.

The consolidated financial statements of the year under review consists of full year's financial results of Phoenix Qatar. However, consolidated financial statements for the year ended 2012-13 consisted of 10 months financials of Phoenix Qatar as Zicom Group acquired it in June 2012. As a result, both are not comparable.

As can be seen from the consolidated financial results given above, the Total Income grew by 35%. EBIDTA at ' 1,109,696,012 is 12% of Total Income vis-a-vis Rs 848,542,237 and 12% in the previous year, which shows consistent performance. The Net Profit After Tax at ' 419,425,849 as compared to Net Profit After Tax of RS 303,199,527 in the previous year shows an increase of 38%.

With the contribution of 61% to the top line and 64% to the EBIDTA of the total consolidated financial results, the Fire Detection and Protection business of Middle East has continued to be the main contributor.

Aided by revival in economy in UAE, Qatar and other Gulf countries, which are the main areas of operations of Unisafe Dubai and Phoenix Qatar, particularly in second half of the financial year 2013-14; both these flagship companies have performed better. Further, post acquisition of Phoenix Qatar various steps were taken to synergize the operations of Phoenix Qatar with the Zicom Group and improve its performance; which has started paying off now, and are reflected in improved performance of Phoenix Qatar.

On revival of economies of Gulf region, Governments, particularly in UAE and Qatar have planned huge expenditure on infrastructure development and real estate, hotels and tourism, education and health care facilities; due to which the construction activities in Middle East are witnessing unprecedented boost. The business of Fire Detection and Protection being derivative of such development activities, the same is also expected to witness robust growth in coming years.

The Company continued the growth in standalone business at 21% and in EBIDTA at 10%-11%. The revised sustainable business model carved out of the residue of the restructuring has further consolidated with excellent customer response and improved performance across all the major business segments. The Indian business comprise mainly of distribution and direct sales business of Electronic Security Systems and Security as a Service (SaaS) under e-SaaS model.

Our two wholly-owned subsidiaries in Singapore, viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) and Zicom Security Projects Pte. Ltd. (Zicom Singapore) continues to hold our investment in Phoenix Qatar and Joint Venture (JV) investment in CiaoZicom Security Systems SA, Brazil respectively. Due to conversion of preference shares into equity, the direct shareholding of your Company in Unisafe Dubai has been reduced from 49% to 8%. Now, your Company, directly hold 8% equity stake in Unisafe Dubai and 5% equity stake in Phoenix Qatar with economic interest of 8% and 10% respectively, while Unisafe Singapore holds 41% equity in Unisafe Dubai with 87% economic interest.

Excellent performance by Zicom SaaS in the year under review has been another highlight of the consolidated working. This established your Company's capability to build innovative business model of service in the domain of security. With encouraging responses from both the business divisions of Zicom SaaS, i.e. Enterprise and Make Your City Safe (MYCS), this business now appears more promising in the long-term.

In Unisafe India, your Company's focus continued to work as Global Design Centre by catering to the design, engineering and estimate needs of all our projects in Gulf Region.

In the current year, as economy is showing sign of revival both in India and Middle East, we expect current year performance to surpass previous year very easily.

Our group company, Institute of Advanced Security Training and Management Private Limited (ASTM) continue to drive our social objective of empowering the people with skill and education in partnership with National Skill Development Corporation (NSDC).

With a view to conserve resources to meet the business requirements, your Directors have recommend a dividend of ' 1.20 per Equity Share of ' 10 each (i.e. 12%) on enhanced share capital of 17,599,829 Equity Shares of the Company for the financial year 2013-14. This dividend will entail a total outgo of Rs 24,546,619.

In 2012-13, your Company had paid the same rate of dividend i.e. RS 1.20 per Equity Share on 16,999,829 Equity Shares, which entailed the total outgo of RS 23,709,152.

During the year under review, on December 2 2013, your Company allotted 600,000 Equity Shares of RS 10/- each at a price of ' 46/- per share to the holders of the Warrants (who are Promoter Group Companies), against exercise of options attached to the said 600,000 Warrants, which formed part of the total 1,600,000 Warrants allotted on July 13, 2012 in accordance with SEBI ICDR Regulations for Preferential Issues.

As a result of the above, the Company's Paid-up Share Capital increased to ' 175,998,290 divided into 17,599,829 Equity Shares of ' 10 each, thereby increasing the Securities Premium by ' 21,600,000.

As on March 31, 2014, your Company had the following subsidiaries:

1. Zicom SaaS Private Limited (wholly owned subsidiary);

2. Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore (wholly owned subsidiary);

3. Unisafe Fire Protection Specialists LLC, Dubai (step- down subsidiary);

4. Phoenix International WLL, Qatar (step-down subsidiary);

5. Unisafe Fire Protection Specialists India Private Limited (wholly owned subsidiary); and

6. Zicom Security Projects Pte. Ltd., Singapore (wholly owned subsidiary)

2020 Imaging India Limited (formerly known as Zicom CNA Automation Limited), ceased to be the wholly owned subsidiary of your Company, effective March 25, 2014 as already discussed earlier.

CiaoZicom Security Systems SA, a company in Brazil, was set-up as a Joint Venture (JV) between Zicom Group through Zicom Singapore (38% stake), Ciao Telecom Inc., USA (44% stake) and IDL Global (18% stake), with a view to manufacturing, marketing, installing and servicing of various security products and solutions in Brazil. However, as the JV could not progress as expected, we are working out modalities with Ciao Telecom Inc., USA, the major partner, to withdraw from this JV.

Information on financials of the subsidiaries for 2013-14 is provided in Annexure A hereto. In respect of foreign subsidiary companies, figures in rupees are converted from applicable foreign currency at appropriate exchange rate.

The details of key subsidiaries and their workings are given below:

Zicom SaaS Private Limited

Zicom SaaS, a wholly owned subsidiary of your Company, offers a range of Remote Managed Electronic Security Services to Banks, Retail chains and residential societies. It is first of its kind Managed Security Services leveraging telecom, internet and power of cloud.

Operations of Zicom SaaS are driven mainly through two business divisions, namely Enterprise division and MYCS division. Zicom SaaS protects remotely located infrastructures / assets using Electronic Security Equipments and offering Security as a Service (SaaS) through state-of-the-art Zicom Command Centre (ZCC) located in Mumbai.

Zicom SaaS has posted Total Income of ' 173,833,923 (previous year ' 64,514,698) and Net Profit of ' 5,791,836 (previous year ' 1,449,637) for the financial year ended March 31,2014.

Unisafe Fire Protection Specialists LLC, Dubai

Unisafe Dubai is now step-down subsidiary of your Company in which Unsiafe Singapore, a wholly owned subsidiary of your Company, hold 41% stake and your Company, directly hold 8% stake, taking total stake of Zicom Group to 49%.

Unisafe Dubai, is the leading fire protection company in UAE and caters to large spectrum of clientele from Government to corporate, refineries, shopping malls, multi storey buildings and resorts among others, offering comprehensive range of solutions for all fire protection needs, starting from the basic hydrant and sprinkler systems to advance analogue addressable fire alarm systems, specialized gaseous fire suppression systems, dry and wet chemical extinguishing systems and water mist fire extinguishing systems. Unisafe Dubai has strong credentials established over last 18 years in the area of project execution and servicing in the domain of fire detection and protection in infrastructure projects.

Unisafe Dubai has its presence in seven emirates, Qatar and Oman. It has continued its momentum growth story and overtook its previous milestone in terms of top line, bottom line and customer satisfaction. It has performed exceptionally well and endures to benefit from the unstinted confidence & support from its customers.

During the year, your Company's entitlement in the economic interest in Unisafe Dubai increased from 80% to 95% as a result of buy-back of economic interest of the local partner.

Unisafe Dubai has posted Total Income of ' 4,472,112,012 (as compared to ' 3,358,411,279 in the previous year) and a Net Profit of ' 398,665,132 (as compared to ' 300,969,770 in the previous year) for the financial year ended March 31, 2014.

Phoenix International WLL, Qatar

Phoenix Qatar, a step-down subsidiary of your Company, in which Unisafe Singapore, a wholly owned subsidiary of your Company, holds 44% stake and your Company directly holds 5% stake, thereby making Zicom Group's total stake at 49% and Zicom Group has 95% entitlement in the economic interest in Phoenix Qatar.

Phoenix, is one of the leading fire security solutions provider in Qatar. It offers turnkey solutions in fire protection and suppression projects, which covers design, engineering, integrating, testing and commissioning of Fire Safety, Security and Building Management Systems, with main focus on Fire Prevention and Protection. It has exclusive tie- up to market safety and security equipments of leading international supplier. Phoenix Qatar has handled many prestigious projects in Qatar and caters to large spectrum of clientele from Government to corporate, refineries, shopping malls, multi storey buildings, hotels and resorts, etc. Further, it has license to operate in petrochemical sector.

The year under review being the first full operational term of Phoenix Qatar, as a step-down subsidiary of the Company, has posted Total Income of ' 1,222,147,344 (as compared to ' 700,811,423 in the previous year) and a Net Profit of ' 137,295,919 (as compared to ' 111,440,046 in the previous year) for the financial year ended March 31,2014.

Unisafe Fire Protection Specialists India Private Limited

Unisafe India, a wholly owned subsidiary of your Company, which was originally set-up to take advantage of our expertise gained from the success of fire safety and security business in Middle East, is primarily catering to the needs of design and engineering requirements of fire protection business in Gulf region by acting as a Global Design Centre.

Unisafe India has posted Total Income of ' 155,631,085 (as compared to Rs 159,968,594 in the previous year) and a Net Loss of Rs -1,471,989 (as compared to Rs 238,165 in the previous year) for the financial year ended March 31,2014.

Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore and Zicom Security Projects Pte. Ltd., Singapore

With a view to align and consolidate present and future investments interest of Zicom Group internationally, your Company had set-up two wholly-owned subsidiaries in Singapore, viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) and Zicom Security Projects Pte. Ltd. (Zicom Singapore). Unisafe Singapore act as a holding company for Group investment in fire business abroad, while Zicom Singapore continue to hold investment in CiaoZicom Security Systems SA, Brazil.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard (AS) 21 on Consolidated Financial Statements read with Accounting Standard (AS) 23 on Accounting for Investments in Subsidiaries, the audited Consolidated Financial Statements are provided in the Annual Report. Further, vide Circular No.

2/2011 dated February 8, 2011, the Ministry of Corporate Affairs (MCA), Government of India, has granted general exemption to Companies under Section 212 (8) of the Companies Act, 1956 from attaching the documents referred to in Section 212 (1) of the said Act pertaining to its subsidiaries, subject to certain terms and conditions.

Accordingly, the Board of Directors of your Company has granted its consent for dispensing with the requirement of attaching to its Annual Report, the annual audited accounts of your Company's subsidiaries. Therefore, the Annual Report of your Company does not contain the individual financial statements of these subsidiaries, but contains the audited Consolidated Financial Statements of your Company and its subsidiaries. The Annual Accounts of these subsidiary companies, along with the related information, are available for inspection at the Company's Registered Office and copies of the same shall be provided on request. The Statement on Financials of the Subsidiaries and Statement on Subsidiaries pursuant to Section 212 of the Companies Act, 1956 are attached hereto as Annexure A and Annexure B respectively.

DIRECTORS

Pursuant to Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Manohar Bidaye and Mr. K. D. Hodavdekar are the Directors liable to retire by rotation at the ensuing Annual General Meeting.

Mr. Manohar Bidaye (DIN: 00010699), being Non- Independent Director and eligible, has offered himself for re-appointment as a Director liable to retire by rotation.

Pursuant to Section 149 of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014, Mr. K. D. Hodavdekar (DIN: 00406556), eligible for being appointed as an Independent Director, has offered himself for appointment as an Independent Director, not liable to retire by rotation.

On June 27, 2014, Mr. Prabhakar Dalal (DIN: 00544948) was appointed as an Additional Director under Section 161 of the Companies Act, 2013, to hold office till the date of the ensuing Annual General Meeting. Mr. Dalal being eligible, has offered himself for the appointment as an Independent Director, not liable to retire by rotation.

In order to comply with the provisions of Sections 149,152 and other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 w.r.t. appointment of Independent Directors, in addition to Mr. K. D. Hodavdekar and Mr. Prabhakar Dalal, your Board has also considered and recommended the appointment of Mr. Mukul Desai (DIN: 00015126) and Mr. Vijay Kalantri (DIN: 00019510), being eligible, as Independent Directors, not liable to retire by rotation.

The Company has received requisite notices in writing from Members proposing the candidature of Mr. Prabhakar Dalal, Mr. K. D. Hodavdekar, Mr. Mukul Desai and Mr. Vijay Kalantri for the office of Independent Director. Their appointments shall be subject to approval of the Members at the forthcoming Annual General Meeting.

The Company has received declarations from all the aforesaid Directors of the Company confirming that they meet with the criteria of Independence as prescribed under provisions of the Companies Act, 2013, Rules thereunder and Clause 49 of the Listing Agreement.

The brief profile of all the Directors are given in Notice of the Annual General Meeting and discussed at length in the Corporate Governance Report.

Your Directors recommend the above appointments for your approval.

AUDITORS

The Statutory Auditors of the Company M/s. Shyam Malpani & Associates, Chartered Accountants, Mumbai, holds their office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

As required under the provisions of Section 139 and Section 141 of the Companies Act, 2013, the Company has obtained a written consent and certificate from M/s. Shyam Malpani & Associates, Chartered Accountants, Mumbai, proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the criteria specified in the said sections.

The Board recommend their re-appointment for your approval.

COST AUDIT

For the year under review, your Company was covered under the Companies (Cost Accounting Records) Rules, 2011 for maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956. This made it mandatory for your Company to obtain Compliance Certificate from a Cost Accountant as prescribed under Rule 5 of the said Rules. In compliance of the same, your Company has obtained Compliance Certificate certified by a Cost Accountant, which does not contain any adverse remarks.

STATUTORY INFORMATION

(a) Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of Energy

Your Company is not required to furnish the prescribed information under Section 217 (1)(e) of the Companies Act, 1956, relating to the Conservation of Energy and Technology Absorption, as your Company does not fall under the industries included in Schedule to the relevant rules. However, your Directors report that the operations of your Company do not involve much use of energy. Your Company makes every possible effort to conserve energy at all levels of its operations.

Technology Absorption

As your Company has not imported any technology, the required information to be provided in this regard is nil. Your Company is continuously working on improving its indigenous products and software.

Foreign Exchange Earnings and Outgo and Export Market Developments

Your Company has earned ' 52,705,456 (previous year ' 38,255,485) in foreign currency and has spent Rs1,712,877 (previous year Rs 2,248,887) in foreign exchange during the year under review. The details of the same are available at Note No. 25.17 being Notes forming part of the Financial Statements.

Particulars of Employees

During the year under review, there was no employee under the employment of your Company, who was in receipt of remuneration of Rs 6,000,000 or more per annum, if employed for the entire year, or a remuneration of Rs 500,000 or more per month, if employed during any part of the said year. Hence, the information required to be furnished in this regard is nil.

(b) Corporate Governance

In pursuance of Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance, together with a certificate from your Company's Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the said Clause is set out separately as Annexure E forming part of this Report.

In December 2009, the Government of India, Ministry of Corporate Affairs ("MCA") had issued Corporate Governance Voluntary Guidelines 2009. The said guidelines, being voluntary, specifies certain Corporate Governance practices, which are to an extent consistent with the provisions of Clause 49 of the Listing Agreement. Your Company being a listed company is required to comply with Corporate Governance requirements as specified under Clause 49 of the Listing Agreement and as such we are in compliance with some of the requirements of the said guidelines.

DEPOSITS, LOANS AND ADVANCES

Your Company has not accepted any fixed deposits, and as such, no principal or interest amount was outstanding on the date of the Balance Sheet. The details of loans and advances, which are required to be disclosed in the Financial Statements of the Company pursuant to Clause 32 of the Listing Agreement with the Stock Exchanges, are furnished separately as Annexure D.

HUMAN RESOURCES

Zicom's Human Resource (HR) department is structured around its business verticals. It has time & again shouldered the responsibility of a strategic Business Partner alongwith the business units and ensured that overall business objects are met to drive the growth of your Company.

HR philosophy is creating value internally through Zi-Champs in terms of hiring people with right competencies, creating happy & encouraging work culture, providing opportunities for training and development, which helps Zi-Champs to create value externally with the customer to provide best products and services.

HR is focused to provide best talent at right time with right competencies. It is using the latest tool and techniques for recruitment and selection, which includes usage of social media and top class assessment tools.

During the financial year under review, HR has taken number of new initiatives that includes DOST (Dedicated On boarding Support and Training) for faster assimilation of the new joinees, Talent Connect - A Employee Referral Program, HR Connect - to enhance communication with Zi-Champs, RACE (Reward & Recognition for Achievement & Contribution towards Excellence) to motivate the achiever Zi-Champs and inspire others to do their best. Team Fundoo has gained popularity in making Zi-Champs emotionally connected with the Company by arranging various events & celebrations like Woman's Day, Diwali, New Year, monthly Birthday bash and other traditional days.

As on March 31,2014 the total number of direct and indirect employees were standing at 1,191. To take engagement to next level, HR has initiated number of new initiatives to create environment which will allow individuals to excel.

EMPLOYEES STOCK OPTION SCHEME

There were two Schemes of the Company viz. Employee Stock Option Scheme 2006 (ESOS 2006) and Employee Stock Option Scheme 2007 (ESOS 2007). Under these Schemes, the employees of the Company were granted Options as per the fixed eligibility criteria. Against each of the Option, an eligible employee was entitled to acquire equal number of Equity Shares of ' 10 each of the Company at a grant price.

The validity of ESOS 2006 was upto August 2011 and ESOS 2007 was upto September 2012. However, the outstanding Options as at beginning of the year under review were as follows: 9,900 Options under ESOS 2006 and 1,800 Options under ESOS 2007 which were effective upto December 26, 2013. During the year under review, no Options were exercised. Accordingly, as on March 31, 2014 there are no outstanding Options.

Necessary disclosures required to be given in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for ESOS 2006 and ESOS 2007 forms part as Annexure C to this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, based on the representations received from the operating management, your Directors hereby confirm that in preparation of the Financial Statements for the year ended March 31,2014:

(i) the applicable accounting standards have been followed and that there are no material departures;

(ii) they have in the selection of the accounting policies, consulted the Statutory Auditors and have 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 of the Company for that period;

(iii) proper and sufficient care was taken, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABILITY

Your Company sincerely believes that a corporate cannot grow without considering the environment, society and economy in which it stays. All has to grow hand in hand. Towards this end your Company is aware about its responsibility to the society in which it lives and the environment surrounding it; which also includes the employees with whose support the Company is able to conduct its business. Your Company is constantly evaluating various options to more effectively contribute to the society and sustainability. The CSR initiatives undertaken by your Company have been enumerated elsewhere in this Report, which are focused on education, skill development, and creating job opportunities in Society.

In order to comply with the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company subsequent to the year end under review, constituted a Corporate Social Responsibility (CSR) Committee. This Committee shall be responsible for formulating a CSR policy, recommending the activities that can be undertaken under CSR, deciding the amount to be incurred on such activities and any other matters related to CSR, which it should consider.

INSURANCE

All the assets of the Company are adequately insured.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation and thanks for the valuable co-operation and support received from the employees of your Company at all levels, Company's Bankers, lenders, suppliers, Government authorities, business partners and Members of the Company; and look forward for the same to even greater extent in the coming year.

For and on behalf of the Board of Directors

Manohar Bidaye Chairman

Place: Mumbai Date:June 27, 2014

Registered Office: 501, Silver Metropolis, Western Express Highway, Goregaon (East), Mumbai 400063.


Mar 31, 2013

To the Members,

The Directors presents their Nineteenth Annual Report, together with the Audited Accounts of the Company for the Financial Year ended March 31, 2013.

FINANCIAL HIGHLIGHTS

(Amount in Rs.)

March 31, 2013 March 31, 2012 Particulars Consolidated Consolidated

Net Sales / Income from Operations 6,912,954,653 4,840,504,463

Other Income 23,103,814 15,673,156

Total Income 6,936,058,467 4,856,177,619

Total Expenditure 6,087,516,230 4,335,706,157

Gross Profit before Interest and Depreciation 848,542,237 520,471,462

Interest and Finance Charges 251,836,448 138,611,350

Gross Profit before Depreciation and Taxation 596,705,789 381,860,112

Depreciation 180,775,944 143,273,784

Profit Before Tax, Exceptional & Extraordinary Items 415,929,845 238,586,328

Exceptional Item 19,386,598

Extraordinary Items

Profit Before Tax 415,929,845 219,199,730

Provision for Taxation:

Current year 26,078,000 5,410,000

Deferred 20,886,362 6,056,491

Taxation of earlier years -2,508,805

Net Profit After Taxation 368,965,483 210,242,044

Less: Minority Interest 65,765,956 41,838,964

Profit for the year 303,199,527 168,403,080

Add: Balance brought forward from previous year 990,525,810 836,882,789

Profit available for Appropriation 1,293,725,337 1,005,285,869

APPROPRIATIONS:

Transfer to General Reserve 8,166,191

Provision for Dividend 20,399,795 12,699,829

Provision for Tax on Dividend 3,309,357 2,060,230

Previous Year Dividend and Tax thereon 4,997,567

Balance of Profit carried forward to Balance Sheet 1,256,852,427 990,525,810

Particulars March 31, 2013 March 31, 2012 Standalone Standalone

Net Sales / Income from Operations 2,664,128,159 2,194,159,063

Other Income 48,648,234 26,694,041

Total Income 2,712,776,393 2,220,853,104

Total Expenditure 2,411,618,155 1,956,700,601

Gross Profit before Interest and Depreciation 301,158,238 264,152,503

Interest and Finance Charges 95,857,168 73,727,745

Gross Profit before Depreciation and Taxation 205.301.070 190,424,758

Depreciation 79,048,999 117,969,202

Profit Before Tax, Exceptional & Extraordinary Items 126.252.071 72,455,556

Exceptional Item 19,386,598

Extraordinary Items 126,252,071 53,068,958

Profit Before Tax 25,270,000 5,410,000

Provision for Taxation: 19,935,923 14,637,235

Current year 2,508,805

Deferred 81,046,148 35,530,528

Taxation of earlier years 81,046,148 35,530,528

Net Profit After Taxation 447,532,659 426,762,190

Less: Minority Interest 528,578,807 462,292,718

Profit for the year 2,500,000

Balance of Profit carried forward to Balance Sheet 497,372,088 447,532,659

OPERATIONAL PERFORMANCE

Your Directors are pleased to inform that, the performance of your Company during the year under review was remarkable.

On standalone basis, the Total Income for the year 2012-13 was Rs. 2,712,776,393 (previous year Rs. 2,220,853,104). The Profit Before Exceptional Expenses and Tax was Rs. 126,252,071 (previous year Rs. 72,455,556). After adjusting for Exceptional Expenses and Tax Rs. 45,205,923 (previous year Rs. 36,925,028), Net Profit After Tax at Rs. 81,046,148 (previous year Rs. 35,530,528) was higher by 128%.

On consolidated basis, the Total Income for the year 2012-13 was Rs. 6,936,058,467 (previous year Rs. 4,856,177,619). The Profit Before Exceptional Expenses and Tax was Rs. 415,929,845 (previous year Rs. 238,586,328). After adjusting for Exceptional Expenses and Tax Rs. 46,964,362 (previous year Rs. 28,344,284), Net Profit After Tax at Rs. 368,965,483 (previous year Rs. 210,242,044) was higher by 76%.

The Consolidated Financial Statements (CFS) includes the financial statements of Zicom Electronic Security Systems Limited ("the Company") and its subsidiaries, namely, Unisafe Fire Protection Specialists LLC, Dubai ("Unisafe Dubai") and its subsidiaries; Phoenix International WLL, Qatar ("Phoenix"); Zicom SaaS Private Limited ("Zicom SaaS"); Unisafe Fire Protection Specialists India Private Limited ("Unisafe India"); Zicom CNA Automation Limited ("ZCNA"); Unisafe Fire Protection Specialists Singapore Pte. Ltd. ("Unisafe Singapore") and Zicom Security Projects Pte. Ltd. ("Zicom Singapore").

As consolidated financials for the year under review also includes 10 months'' financials of Phoenix (acquired in June 2012), the same are not comparable with the consolidated financials for the previous year 2011-12.

BUSINESS DEVELOPMENTS AND PROSPECTS

The year under review witnessed transformation of your Company into a truly Indian Multinational, which is evident from the fact that its international business has contributed almost 59% to the topline and 78% to the bottomline of the consolidated results, whereas the Indian business contributed 41% to the topline and 22% to the bottomline of the consolidated results.

Fire detection and protection business in the Gulf Region has been the main foray of the international business of Zicom Group. Unisafe Fire Protection Specialists LLC, Dubai (Unisafe Dubai) and Phoenix International WLL, Qatar (Phoenix), are flagship subsidiary companies in respective countries, and both carries highly reputed brand and recognition. Phoenix was acquired at a cost of USD 15 million and became a member of Zicom Group in June 2012. Your Company carried out organizational restructuring to synergize the working and operations of Phoenix to bring it in line with Zicom Group, so that it can achieve corporate goals and objectives. In view of promising business scenario for this business in the Gulf Region, particularly with economic recovery in U.A.E. and massive development plans in Qatar, both Unisafe Dubai and Phoenix are expected to end the current year also with remarkable growth.

With a view to align and consolidate present and future investments interest of the Group internationally, your Company had set-up two wholly-owned subsidiaries in Singapore, viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) and Zicom Security Projects Pte. Ltd. (Zicom Singapore). Unisafe Singapore has invested USD 13.42 million towards 44% stake and 85% economic interest in Phoenix; whereas Zicom Singapore has advanced USD 2 million to Brazil joint venture (JV) viz. CiaoZicom Security Systems SA towards investment by way of taking up 38% stake. It has also advanced USD 7.50 million towards investment in Unisafe Dubai''s Preference Shares.

The Indian business comprises mainly of distribution and direct sales business of electronic security systems carried out under your Company.

Encouraging performance of the revised sustainable business model, carved out of the residue of the restructuring, has been the highlight of standalone working for the year under review. The same has been witnessed across all major verticals, i.e. your Company on standalone, Zicom SaaS and Unisafe India.

Achieving breakeven by Zicom SaaS in the year under review has proved the ability of your Company to build a business vertical in the domain of providing Security as a Service. With encouraging responses from both the business verticals of Zicom SaaS, i.e. Enterprise and Make Your City Safe (MYCS), this business now appears more promising in the long-term.

The operations of Unisafe India, which has initially focused on acting as Global Design Centre to support design and estimate needs to all our projects in Gulf Region, has also performed well; thus achieving breakeven in the year under review. With expanding activities in fire detection and protection in Gulf Region, Unisafe India is also expected to grow in tandem.

Considering that the standalone distribution and direct sales business as well as the business based on service model with all-together new organization and infrastructure set-up has proved sustainability in the very second year of its existence; it is a remarkable achievement. In the current year, despite various indicators for economic slowdown and pressure on margin, we expect to end the current year with better results.

Your Company''s venture into the training and education sector in the form of Institute of Advanced Security Training and Management Private Limited (ASTM) has redefined careers in security industry in India; and is in the process of building large-scale educational infrastructure including curriculum and delivery modules. Recognition to ASTM by National Skill Development Corporation (NSDC) and its financial assistance has opened doors of opportunities for ASTM. Besides, as per the goals agreed with NSDC and enthused by initial encouraging response, ASTM is now expanding on Pan-India basis through its retail network of additional training centres. ASTM has now presence in Mumbai and other parts of Maharashtra, Bihar, Madhya Pradesh, Haryana and Uttar Pradesh, and is in advance stage of negotiations for setting-up training centres for skill development and vocation in other States like Odisha, Tripura, Chattisgarh, West Bengal, Karnataka, Kerala, Andhra Pradesh and Rajasthan. Large spending by Central and State Governments on skill development and vocation with assurance of employment post training has unleashed opportunities for ASTM. Besides Government and Public Sector, ASTM has arrangements with various industries for training skill and semi-skilled students in different areas in security and providing them employment as certified security guards with security agencies, corporates, hospitals, hotels and other industries. The course contents, training modules and study materials of ASTM are certified by third party service providers like Security Knowledge Sector Skills Development Council (SKSDC), an affiliate of NSDC.

In view of the excellent response to ASTM''s training programs and certification course with arrangement for post-training placement and looking at ASTM''s plan to impart security training on Pan-India basis, it is expected to post better results year over year.

DIVIDEND

Enthused by the encouraging performance of your Company during the year under review, your Directors have recommended a higher dividend of Rs. 1.20 (Rupee One and Paise Twenty only) per Equity Share of Rs. 10 each (i.e. 12%) as against Rs. 1 per share in the previous year. This higher dividend is payable on 16,999,829 Equity Shares of the Company, which will entail a total payout of Rs. 20,399,795 (previous year Rs. 16,999,829).

As on date, there are 600,000 Warrants outstanding out of total 1,600,000 Warrants issued and allotted to Promoter Group Companies during the year on preferential basis. These Warrants entitle their holders to acquire equal number of equity shares on the terms and conditions of their issue. If all of these Warrants or some of them are converted into equal number of Equity Shares, it may create an obligation on the Company to pay dividend for the financial year 2012-13 @ Rs. 1.20 per Equity Share, on such number of Equity Shares, which may be allotted on or before the record date fixed for deciding entitlement for the said dividend.

FINANCE

During the year, the Company raised total Rs. 204,700,000 by preferential issue in accordance with SEBI''s Guidelines for Preferential Issue, i.e. Chapter VII of SEBI ICDR Regulations. Under the said preferential issue, allotment of 3,300,000 Equity Shares of Rs. 10 each for cash at a price of Rs. 46 per share was made on July 13, 2012 to foreign entities. Further, 1,600,000 Warrants, each Warrant carrying an entitlement to subscribe to one Equity Share of Rs. 10 each of the Company, were issued to Promoter Group Companies in accordance with SEBI''s Guidelines for Preferential Issue. Out of the total 1,600,000 Warrants, the holders of 1,000,000 Warrants, acquired equal number of Equity Shares. Thus, 1,000,000 Equity Shares were allotted at a price of Rs. 46 per share on July 20, 2012.

As a result of the above, the Company''s Paid-up Share Capital increased to 16,999,829 Equity Shares of Rs. 10 each

aggregating to Rs. 169,998,290. Also, it''s Securities Premium increased by Rs. 154,800,000. Assuming full conversion and allotment of Equity Shares for the balance 600,000 Warrants outstanding, post allotment Paid-up Share Capital is expected to be Rs. 175,998,290 comprising of 17,599,829 Equity Shares of Rs. 10 each.

SUBSIDIARY AND JOINT VENTURE COMPANIES

As on March 31, 2013, your Company had following subsidiaries:

1. Unisafe Fire Protection Specialists LLC, Dubai (direct subsidiary);

2. Phoenix International WLL, Qatar (step-down subsidiary w.e.f. June 1, 2012);

3. Zicom SaaS Private Limited (wholly owned subsidiary);

4. Unisafe Fire Protection Specialists India Private Limited (wholly owned subsidiary);

5. Zicom CNA Automation Limited (wholly owned subsidiary);

6. Unisafe Fire Protection Specialists Singapore Pte. Ltd., Singapore (wholly owned subsidiary); and

7. Zicom Security Projects Pte. Ltd., Singapore (wholly owned subsidiary w.e.f. May 2, 2012)

CiaoZicom Security Systems SA, a company in Brazil, has been set-up as a Joint Venture (JV) between Zicom Group through Zicom Singapore (38% stake), Ciao Telecom Inc., USA (44% stake) and IDL Global (18% stake). The JV has taken-up the activities of manufacturing, marketing, installing and servicing of various security products and solutions. The JV is eyeing to benefit from various international sports events like FIFA World Cup 2014 and Olympics 2016 to be held in Brazil.

Information on financials of the subsidiaries for 2012-13 is provided in Annexure A hereto. In respect of foreign subsidiary companies, figures in Rupees are converted from applicable foreign currency at appropriate exchange rate.

The details of key subsidiaries are given below:

Unisafe Fire Protection Specialists LLC, Dubai

Unisafe Fire Protection Specialists LLC, Dubai (Unisafe Dubai), is a leading fire protection company in U.A.E. having operation spread across seven emirates, Qatar and Oman. Unisafe Dubai has strong credentials established over last 17 years in the area of project execution and servicing in the domain of fire detection and protection in infrastructure projects.

Unisafe Dubai caters to large spectrum of clientele from government to corporate, refineries, shopping malls, multi storey buildings and resorts among others, offering comprehensive range of solutions for all fire protection needs, starting from the basic Hydrant and Sprinkler Systems to advance Analogue Addressable Fire Alarm Systems, specialized Gaseous Fire Suppression Systems, Dry and Wet Chemical Extinguishing Systems and Water Mist Fire Extinguishing Systems. Unisafe Dubai has successfully achieved milestone in terms of topline, bottomline and customer satisfaction. It has performed well and continued to enjoy unstinted confidence from its clients despite the slowdown in U.A.E. during the year.

Unisafe Dubai has posted Total Income of Rs. 3,358,411,279 (as compared to Rs. 2,547,386,150 in the previous year) and a Net Profit of Rs. 240,775,816 (as compared to Rs. 209,194,821 in the previous year) for the financial year ended March 31, 2013.

Phoenix International WLL, Qatar

Your Company together with its Singapore based wholly owned subsidiary viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (Unisafe Singapore) acquired 49% stake and complete management control in Phoenix International WLL, Qatar (Phoenix), a Limited Liability Company, at a valuation of USD 15 million. As a part of the Share Sale Agreement, your Company has acquired 5% stake while Unisafe Singapore has acquired 44% stake in Phoenix, while both jointly hold 95% economic interest.

Phoenix, established in 2006, is one of the leading fire security solutions providers in Qatar. It offers turnkey solutions in fire protection and suppression projects and has license to operate in petrochemical sector. It has exclusive tie-up to market safety and security equipments of leading international suppliers.

The portfolio of services offered by Phoenix covers design, engineering, integrating, testing and commissioning of Fire Safety, Security and Building Management Systems, with main focus on Fire Prevention and Protection. Phoenix has handled many prestigious projects in Qatar. Today, Phoenix caters to large spectrum of clientele from government to corporate, refineries, shopping malls, multi storey building, hotels and resorts, etc.

Phoenix is supported by a team of 212 well trained and experienced Engineers, Technicians and other employees competent to carry out installation and maintenance of fire fighting equipments of the international standards.

Qatar is a part of Gulf Co-operation Council (GCC) Countries and has the world''s highest per capita GDP. The Economy of Qatar is one of the fastest growing economies in the world. Large projects in residential and commercial buildings and infrastructure are coming up in Qatar and the construction market is estimated at USD 130 billion for next 10 years which is expected to give big boost to safety and security industry. Qatar is going to host FIFA World Cup in 2022.

Since June 1, 2012, being date of acquisition, till March 31, 2013 Phoenix has posted Total Income of Rs. 700,811,423 and a Net Profit of Rs. 105,868,044.

Zicom SaaS Private Limited

Zicom SaaS Private Limited (Zicom SaaS), a wholly owned subsidiary of your Company, offers a range of Managed Security Services through various schemes. This is another pioneering concept brought in India for the first time by Zicom, leveraging its decade old experience to deliver Managed Security Services. The Security Managed Services are offered under different levels of security, all built into an end to end security solutions.

Zicom SaaS protects remotely located infrastructures / assets using electronic security equipments and offering security services through state-of-the-art Zicom Command Centre located in Mumbai.

Under Make Your City Safe (MYCS) Project, Zicom SaaS offers security services on a monthly / quarterly service fees to Housing and Commercial Co-operative Societies located in Mumbai and Pune Regions.

In the Enterprise Sector, Zicom SaaS offers security servies to retail shops, retail chains, bank branches, ATMs, etc. In an attempt to make its service package easily affordable and relieve its clients from worry of maintenance in up-keeping the security systems and equipments installed, Zicom SaaS has launched a concept of Remote Managed Electronic Security Services called "e-SaaS" (Electronic Security as a Service). It provides client''s aspirations for more value added services like Business Intelligence, Loss Prevention, Comfort and Convenience, etc. bundled them into All-in-One Solution Package. All these are provided at nominal monthly / quarterly fees.

For the financial year ended March 31, 2013, Zicom SaaS has posted Total Income of Rs. 64,514,698 (previous year Rs. 2,185,301) and Net Profit of Rs. 1,449,637 (previous year Rs. -11,420,773).

Unisafe Fire Protection Specialists India Private Limited

Unisafe Fire Protection Specialists India Private Limited (Unisafe India), wholly owned subsidiary of your Company, was set-up to cater to Indian Fire Safety market and to act as a centre for global design and support service for large infrastructure projects in Gulf market, by leveraging the knowledge and experience gained in Gulf market in managing fire protection needs of large infrastructure projects by Unisafe Dubai.

Unisafe India has posted Total Income of Rs. 159,968,594 (as compared to Rs. 96,708,449 in the previous year) and a Net Profit of Rs. 238,165 (as compared to Rs. -6,445,528 in the previous year) for the financial year ended March 31, 2013.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard (AS) 21 on Consolidated Financial Statements read with Accounting Standard (AS) 23 on Accounting for Investments in Subsidiaries, the audited Consolidated Financial Statements are provided in the Annual Report. Further, vide Circular No. 2/2011 dated February 8, 2011 the Ministry of Corporate Affairs (MCA), Government of India, has granted general exemption to Companies under Section 212 (8) of the Companies Act, 1956 from attaching the documents referred to in Section 212 (1) of the said Act pertaining to its subsidiaries, subject to certain terms and conditions.

Accordingly, the Board of Directors of your Company has granted its consent for dispensing with the requirement of attaching to its Annual Report, the annual audited accounts of your Company''s subsidiaries. Therefore, the Annual Report of your Company does not contain the individual financial statements of these subsidiaries, but contains the audited Consolidated Financial Statements of your Company and its subsidiaries. The Annual Accounts of these subsidiary companies, along with the related information, are available for inspection at the Company''s Registered Office and its subsidiaries and copies of the same shall be provided on request. The statement on financials of the subsidiary and statement on subsidiaries pursuant to Section 212 (3) of the Companies Act, 1956 are attached hereto as Annexure A and Annexure B, respectively.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Article 110 of the Articles of Association, Mr. Mukul Desai is the Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment.

On September 1, 2012, Mr. Venu Raman Kumar was appointed as an Additional Director on Board of the Company. As per the provisions of Section 260 of the Companies Act, 1956, he holds office upto the date of the ensuing Annual General Meeting. The Company has received a notice from a Member, pursuant to Section 257 of the Companies Act, 1956, proposing appointment of Mr. Venu Raman Kumar as a Director of the Company liable to retire by rotation at the ensuing Annual General Meeting.

The brief profile of the above two Directors is given in Notice of Annual General Meeting and discussed at length in Corporate Governance Report.

Your Directors recommend the above appointments for your approval.

AUDITORS

The Statutory Auditors of the Company M/s. Shyam Malpani & Associates, Chartered Accountants, Mumbai, holds their office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

Your Company has received necessary consent and eligibility certificate from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

The Board recommends their re-appointment for your approval.

COST AUDIT

For the year under review, your Company was covered under the Companies (Cost Accounting Records) Rules, 2011 for maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956. This made it mandatory for your Company to obtain Compliance Certificate from a Cost Accountant as prescribed under Rule 5 of the said Rules. In compliance of the same, your Company has obtained Compliance Certificate certified by a Cost Accountant, which does not contain any adverse remarks.

STATUTORY INFORMATION

(a) Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of Energy

Your Company is not required to furnish the prescribed information under Section 217 (1) (e) of the Companies Act, 1956, relating to the Conservation of Energy and Technology Absorption, as your Company does not fall under the industries included in Schedule to the relevant rules. However, your Directors report that the operations of your Company do not involve much use of energy. Your Company makes every possible effort to conserve energy at all levels of its operations.

Technology Absorption

As your Company has not imported any technology, the required information to be provided in this regard is nil. Your Company is continuously working on improving its indigenous products and software.

Foreign Exchange Earnings and Outgo and Export Market Developments

Your Company has earned Rs. 38,255,485 (previous year Rs. 15,485,836) in foreign currency, and has spent Rs. 141,013,752 (previous year Rs. 150,235,114) in foreign exchange during the year under review. The details of the same are available at Note No. 27.17 being Notes forming part of the Financial Statements.

During the year under review, your Company started exporting on a moderate scale, its electronic security systems and equipments to Brazil through our JV CiaoZicom Security Systems SA. Besides this direct export, your Company through its overseas subsidiaries is exploring more and more business opportunities overseas.

Particulars of Employees

During the year under review, there was no employee under the employment of your Company, who was in receipt of remuneration of Rs. 6,000,000 or more per annum, if employed for the entire year, or a remuneration of Rs. 500,000 or more per month, if employed during any part of the said year. Hence, the information required to be furnished in this regard is nil.

(b) Corporate Governance

In pursuance of Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance, together with a certificate from your Company''s Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the said Clause is set out separately as Annexure E forming part of this Report. While complying with Corporate Governance practices as prescribed under Clause 49 of the Listing Agreement with Stock Exchanges, your Company is already in compliance with some of the requirements under the Corporate Governance Voluntary Guidelines 2009 of Ministry of Corporate Affairs to the extent that they are in consonance with the provisions of the Clause 49.

DEPOSITS, LOANS AND ADVANCES

Your Company has not accepted any deposits falling within the purview of Section 58A of the Companies Act, 1956, and as such, no principal or interest amount was outstanding on the date of the Balance Sheet. The details of loans and advances, which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement with the Stock Exchanges, are furnished separately as Annexure D.

HUMAN RESOURCES

The Human Resource (HR) department in Zicom is structured around its business verticals. It works more as a business partner with the business units and ensures meeting of overall business objectives.

HR recognizes the contribution and importance of Zi-Champs in growth and goal achievement of your Company finally creating stakeholders'' value. Towards this end entire HR process is focused on selection and placement of right candidate at right places through cost effective way.

Your Company participated in Global Employee Engagement Survey conducted by the International Consulting Firm and the scores of your Company are much higher than the Global and India Scores. Various programs were conducted by HR to keep high the morale and involvement of Zi-Champs. The aim has been to provide them with an environment of oneness and a place where Zi-Champs would like to work with full zeal and enthusiasm, thereby increasing their productivity and contribution, finally benefitting all the stakeholders''. Towards this end, HR conducted training programs on technical and behavioral skills, various events and celebrations like Woman''s Day, Republic Day, Diwali, Kite Festival, Kids Donation, etc. "Auspicious" and "Fundoo" are playing important roles in this regard and helps to build collaborative culture in your Company.

As on March 31, 2013 the total of direct and indirect employees were standing at 948 numbers. To take engagement to next level, HR has initiated number of new initiatives to create environment which will allow individuals to excel.

EMPLOYEES STOCK OPTION SCHEME

There were two Schemes of the Company viz. Employee Stock Option Scheme 2006 (ESOS 2006) and Employee Stock

Option Scheme 2007 (ESOS 2007). Under these Schemes, the employees of the Company have been granted Options as per the fixed eligibility criteria. Against each of the Option, an eligible employee is entitled to acquire equal number of Equity Shares of Rs. 10 each of the Company at a grant price.

The validity of ESOS 2006 was upto August 2011 and ESOS 2007 was upto September 2012. However, the outstanding Options as on March 31, 2013 were as follows: 9,900 Options under ESOS 2006 and 1,800 Options under ESOS 2007 which are effective upto December 26, 2013.

During the year under review, no Options were exercised.

Necessary disclosures required to be given in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for ESOS 2006 and ESOS 2007 forms part as Annexure C to this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, based on the representations received from the operating management, your Directors hereby confirm that in preparation of the annual accounts for the year ended March 31, 2013:

(i) the applicable accounting standards have been followed and that there are no material departures;

(ii) they have in the selection of the accounting policies, consulted the Statutory Auditors and have 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 of the Company for that period;

(iii) proper and sufficient care was taken, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABILITY

Your Company sincerely believes that a corporate cannot grow without considering the environment, society and economy in which it stays. All has to grow hand in hand. Towards this end your Company is aware about its responsibility to the society in which it lives and the environment surrounding it; which also includes the employees with whose support it is able to conduct its business. Your Company is constantly evaluating various options to more effectively contribute to the society and sustainability. The CSR initiatives undertaken by your Company have been enumerated elsewhere in this Report.

INSURANCE

All the assets of the Company are adequately insured.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation and thanks for the valuable co-operation and support received from the employees of your Company at all levels, Company''s Bankers, lenders, suppliers, government authorities, business partners and Members of the Company; and look forward for the same to even greater extent in the coming years.

For and on behalf of the Board of Directors

Manohar Bidaye

Chairman

Place: Mumbai

Date: May 16, 2013

Registered Office:

501, Silver Metropolis,

Western Express Highway,

Goregaon (East),

Mumbai 400063.


Mar 31, 2012

The Directors presents their Eighteenth Annual Report, together with the Audited Accounts of the Company for the Financial Year ended March 31, 2012.

FINANCIAL HIGHLIGHTS: (Amount in Rs.)

Particulars March 31, 20121 March 31, 2011

Consolidated Consolidated

Net Sales / Income from Operations 4,840,504,463 3,733,674,533

Other Income 15,673,156 32,006,858

Total Income 4,856,177,619 3,765,681,391

Total Expenditure 4,335,706,157 3,486,096,102

Gross Profit before Interest and

Depreciation 520,471,462 279,585,289

Interest and Finance Charges 138,611,350 153,880,794 Gross Profit before Depreciation and

Taxation 381,860,112 125,704,495

Depreciation 143,273,784 152,012,753 Profit Before Tax, Exceptional &

Extraordinary Items 238,586,328 -26,308,258

Exceptional Item 19,386,598 85,090,078

Extraordinary Items - 605,258,670

Profit Before Tax 219,199,730 493,860,334 Provision for Taxation:

Current year 5,410,000 33,000,000

Deferred 6,056,491 -3,480,431

Taxation of earlier years -2,508,805 -11,502,724

Net Profit After Taxation 210,242,044 475,843,489

Less: Minority Interest 41,838,964 31,261,843

Profit for the year 168,403,080 444,581,646 Add: Balance brought forward from

previous year 836,882,789 407,110,262

Profit available for Appropriation 1,005,285,869 851,691,908

APPROPRIATIONS:

Transfer to General Reserve - -

Provision for Dividend 12699,829 12,699,829

Provision for Tax on Dividend 2,060,230 2,109,290 Balance of Profit carried forward to Balance Sheet 990,525,810 836,882,789



Particulars March 31, 20121 March 31, 2011 Standalone Standalone

Net/Sale/Income from operations 2,194,159,063 1,157,486,088

Other Income 26,694,041 35,077,274

Total Income 2,220,853,104 1,192,563,362

Total Expenditure 1,956,700,601 1,149,649,503

Gross profit before interes and 264,152,503 42,913,859 Depreciation

Interest and finence chareges 73,727,745 89,839,475

Gross profit before Depreciation and Taxation 190,424,758 -46,925,616

Depreciation 117,969,202 89,457,924

profit before Tax, Exceptional & Extraordiary items 72,455,556 -136,383,540

Exceptional Item 19,386,598 --

Extraordinary items -- 300,190,098

profit Before Tax 53,068,958 163,806,558

provision for Taxation

Current year 5,410,000 33,000,000

Deferred 14,637,235 -3,480,431

Taxation of earlier years -2,508,805 -11,502,724

Net profit After Taxation 35.530.528 145,789,713

Less: Minority Interest - -

profit for the year 35,530,528 145,789,713

Add; Balance brought forward from previous year 462,292,718 295,781,596

profit available for Appropriation 462,292,718 441,571,309



APPROPRIATIONS

Transfer to General Reserve - -

provision for Dividend 12,699,829 12,699,829

provision for Tax on Divided 2,060,230 2,109,290

Balance of profit carried forward to Balance Sheet 447,532,659 426,762,190

OPERATIONAL PERFORMANCE

Your Directors are pleased to inform that, the year under review was a first full year of operations post business restructuring.

The Total Income in 2011-12 of your Company as standalone entity was Rs. 2,220,853,104 as against Rs. 1,192,563,362 in 2010-11. Before providing for Tax, Exceptional and Extraordinary Items, there was a Profit of Rs. 72,455,556 in 2011-12, as compared to Loss of Rs. 136,383,540 in 2010-11. After adjusting for Exceptional and Extraordinary Items and Taxation for Rs. 36,925,028 compared to Rs. 282,173,253 in 2010-11, Net Profit After Tax was Rs. 35,530,528 in 2011-12 as compared to Rs. 145,789,713 in 2010-11.

On consolidated basis, the Total Income in 2011-12 of your Company was Rs. 4,856,177,619 as against Rs. 3,765,681,391 in 2010-11. Before providing for Tax, Exceptional and Extraordinary Items there was a Profit of Rs. 238,586,328 in 2011-12, as compared to Loss of Rs. 26,308,258 in 2010-11. After adjusting for Exceptional and Extraordinary Items and Taxation for Rs. 28,344,284 compared to Rs. 502,151,747 in 2010-11, Net Profit After Tax was Rs. 210,242,044 in 2011-12 as compared to Rs. 475,843,489 in 2010-11.

However, in view of the fact that the results of your Company for the Financial Year 2010-11 were having impact of the business restructuring exercise, the standalone and consolidated results of your Company for the year under review cannot be compared with the respective results of the previous year.

The Consolidated Financial Statements (CFS) includes the financial statements of Zicom Electronic Security Systems Limited ("the Company") and its subsidiaries, namely, Zicom CNA Automation Limited ("ZCNA") and Unisafe Fire Protection Specialists LLC, Dubai ("Unisafe") and its subsidiaries. The CFS also includes the financial statements of Zicom SaaS Private Limited ("Zicom SaaS") for full financial year and Unisafe Fire Protection Specialists India Private Limited ("Unisafe India") from February 9, 2012, i.e. the date it became the subsidiary of the Company.

BUSINESS DEVELOPMENTS AND PROSPECTS

Consequent to business restructuring exercise, your Directors have worked to build long term sustainable business model out of the remaining structure. Further, with a view to accelerate the growth, your Directors are also looking for some overseas acquisitions and joint venture opportunities in security and safety domain, and hope to conclude them soon.

With the restructuring, the Company was relieved of major debt burden of itself and of its subsidiaries. As a result, it gained the most needed flexibility to grow the retained businesses and pursue new growth opportunities. With long term perspective in mind, your Directors decided to explore your Company's ability to build a business of services in the domain of security, such as Central Monitoring Station services, Video Monitoring Station services, and Remote Asset Monitoring services, Fire Safety Business and Education and Training in Security.

With a view to provide managed security services to protect remote assets and infrastructure through Central Monitoring Station and Video Monitoring Station facilities with special focus on Small and Medium Enterprises (SME), Banks, Retail Stores, etc.; your Company formed a wholly owned subsidiary Zicom SaaS Private Limited (Zicom SaaS).

Further, to leverage in India from the reputation and experience gained in the business of fire safety in U.A.E. through Unisafe Fire Protection Specialists LLC, Dubai (Unisafe Dubai), a successful venture of Zicom in Gulf region, Unisafe Fire Protection Specialists India Private Limited (Unisafe India) was made a wholly owned subsidiary of your Company. The subsidiary has advantage of "Unisafe" brand name, which has many prestigious projects in Gulf to its credit. This will give an edge to the subsidiary in bidding for large infrastructure projects in India. To start with, Unisafe India will act as Global Design Centre, to support design and estimate need of all our projects in Gulf region. Looking at delays in executing large infrastructure projects, it is thought prudent to proceed cautiously in taking up projects in India.

India has big challenge to provide vocational training to its large unskilled labour force, if it has to sustain its economic growth. There is a skill gap which is being experienced by all large industries in the country. On one hand, we have huge young work force and on other hand, industries are struggling to get competent workers and employees. Manpower security industry in India is the largest employer in the world. However, employees engaged in this industry lack credible knowledge and skills to perform their duties. The security personnel of tomorrow need to know about physical security, fire security and electronic security. Today all infrastructure projects, business houses, hotels, resorts and amusement places, industrial establishments, power plants etc. have huge demand for quality security manpower. To bridge this gap through vocational training and education, your Company decided to venture into training and education sector by setting up Institute of Advanced Security Training and Management Private Limited (ASTM). ASTM aims to redefine careers in security industry by building large scale educational infrastructure, curriculum and delivery modules. It also aims to drive best practices in Security Management through high quality training programs targeted at student education and corporate training. It is recognized by National Skill Development Corporation (NSDC) through financial assistance. The initial response to ASTM is quite encouraging.

Your Company has ambition to transform itself into a truly Indian Multinational Company. With expanding business worldwide, it has become necessary to control and monitor the fire detection and protection, and electronic security businesses of the subsidiary companies. Towards this end, two wholly owned subsidiaries have been formed in Singapore, viz. Unisafe Fire Protection Specialists Singapore Pte. Ltd. and Zicom Security Projects Pte. Ltd.

DIVIDEND

With a view to conserve resources for implementing the business plans of the Company, your Directors have recommended a dividend of Rs. 1 (Rupee One only) per Equity Share of Rs. 10 each (i.e. 10%), on 12,699,829 Equity Shares of the Company for the Financial Year 2011-12. This dividend will entail a total payout of Rs. 14,760,059. In the previous year also, your Company had paid the same dividend of Rs. 1 per Equity Share on 12,699,829 Equity Shares, which entailed the total outgo of Rs. 14,809,119.

However, in view of the proposal approved by the Board at its meeting held on May 17, 2012 to issue in aggregate upto 3,300,000 Equity Shares to a foreign company and a Non-Resident Indian (NRI), and to issue in aggregate upto 1,600,000 Warrants, carrying entitlement to subscribe to equal number of Equity Shares, to Promoter Group Companies, both on preferential basis, on the terms and conditions as mentioned in the respective Special Resolutions in the Notice of the Postal Ballot seeking your approval; if approved, may create an obligation on the Company to pay dividend for the Financial Year 2011-12 @ Rs. 1 per Equity Share, on such number of Equity Shares, which may be allotted on or before the record date fixed for deciding entitlement for the said dividend.

FINANCE

As a result of the business restructuring, your Company could substantially reduce its debt burden. This made a way to raise funds for future business plans. In this direction, already a proposal for raising fund through further issue of Equity Shares and Warrants are being put up for your approval through Postal Ballot. If approved, it would considerably help the Company by influx of non-cost bearing fund.

The present capital structure of your Company comprises of

12.699.829 Equity Shares of Rs. 10 each aggregating to Rs. 126,998,290. Assuming full allotment of Equity Shares in the proposed issue of Equity Shares and Warrants, post allotment paid-up capital is expected to be Rs. 175,998,290 comprising of 17.599.829 Equity Shares of Rs. 10 each.

SUBSIDIARY AND JOINT VENTURE COMPANIES

As on March 31, 2012, your Company had following subsidiaries:

1. Unisafe Fire Protection Specialists LLC, Dubai;

2. Zicom SaaS Private Limited (wholly owned subsidiary);

3. Unisafe Fire Protection Specialists India Private Limited (wholly owned subsidiary);

4. Unisafe Fire Protection Specialists Singapore Pte. Ltd. (wholly owned subsidiary); and

5. Zicom CNA Automation Limited (wholly owned subsidiary)

Subsequent to the year end, on May 2, 2012, Zicom Security Projects Pte. Ltd., Singapore was formed as a wholly owned subsidiary. Further, on May 17, 2012 your Board has approved entering into a joint venture agreement with Ciao Telecom Inc., USA for setting up of a Joint Venture (JV) Company in Brazil for manufacturing, marketing, installing and servicing various security products and solutions in the name and style "Ciao-Zicom Security Systems SA". The Board has also approved venturing into fire detection, protection, safety and related services businesses in Qatar.

Information on financials of the subsidiaries for 2011-12 is provided in Annexure A hereto. In respect of foreign subsidiary companies, figures in Rupees are converted from applicable foreign currency at appropriate exchange rate.

The details of key subsidiaries are given below:

Unisafe Fire Protection Specialists LLC, Dubai

Unisafe Fire Protection Specialists LLC, Dubai (Unisafe), is a leading fire protection company in U.A.E. having operation spread across seven Emirates, Qatar and Oman. Unisafe has strong credentials established over last 15 years in the area of project execution and servicing in the domain of fire detection and protection in infrastructure projects.

Unisafe caters to large spectrum of clientele from government to corporate, refineries, shopping malls, multi storey buildings and resorts, among others, offering comprehensive range of solutions for all fire protection needs, starting from the basic Hydrant and Sprinkler Systems to advance Analogue Addressable Fire Alarm Systems, specialized Gaseous Fire Suppression Systems, Dry and Wet Chemical Extinguishing Systems and Water Mist Fire Extinguishing Systems. Unisafe has successfully achieved milestone in terms of top line, bottom line and customer satisfaction. It has performed well and continued to enjoy unstinted confidence from its clients despite the slowdown in U.A.E. during the year.

Unisafe has posted Total Income of Rs. 2,547,386,150 (as compared to Rs. 2,096,490,799 in the previous year) and a Net Profit of Rs. 209,194,821 (as compared to Rs. 157,278,440 in the previous year) for the Financial Year ended March 31, 2012.

Zicom SaaS Private Limited

Zicom SaaS Private Limited (Zicom SaaS), a wholly owned subsidiary of your Company, offers a range of Managed Security Services through various solutions for Security Resource Planning (SRP) on an Easy-Pay Monthly Service Charges. This is another pioneering concept brought in India for the first time by Zicom, leveraging its decade old experience to deliver Managed Security Services. The Security Managed Services are offered under different levels of security, all built into an end to end security solutions.

Zicom SaaS protects remotely located retail shops, retail chains, bank branches, ATMs, residencies, etc. using electronic security equipments and offering security services through state-of-the-art Command and Control Centre located in Mumbai.

It also offers security services on the monthly service charges for Housing and Commercial Co-operative Societies located in the Mumbai Region (Mumbai, Thane and Navi Mumbai). On the banking and retail side, it has received order for more than 600 locations for the CMS services.

For the Financial Year ended March 31, 2012, Zicom SaaS has posted Total Income of Rs. 2,185,301 and a Net Loss of Rs. 11,420,773. This is mainly on account of setting-up, initial team building and brand building expenses.

Unisafe Fire Protection Specialists India Private Limited

Unisafe Fire Protection Specialists India Private Limited (Unisafe India), which became the wholly owned subsidiary of your Company during the year under review, was set-up to bring in India, knowledge and experience gained in Gulf market for managing fire protection needs of large infrastructure projects. Unisafe India will also act as support service to design large infrastructure projects for Gulf market.

Unisafe India has posted Total Income of Rs. 96,708,449 (as compared to Rs. Nil in the previous year) and a Net Loss of Rs. 6,445,528 (as compared to Rs. Nil in the previous year) for the Financial Year ended March 31, 2012.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard (AS) 21 on Consolidated Financial Statements read with Accounting Standard (AS) 23 on Accounting for Investments in Subsidiaries, the Audited Consolidated Financial Statements are provided in the Annual Report.

The Ministry of Corporate Affairs (MCA), Government of India, has issued a Circular No. 2/2011 dated February 8, 2011 granting general exemption to Companies under Section 212 (8) of the Companies Act, 1956 from attaching the documents referred to in Section 212 (1) of the said Act pertaining to its subsidiaries, subject to approval by the Board of Directors of the Company and furnishing of certain financial information in the Annual Report.

The Board of Directors of your Company has accordingly granted its consent to the Company, dispensing with the requirement of attaching to its Annual Report, the annual audited accounts of your Company's subsidiaries.

Accordingly, the Annual Report of your Company does not contain the individual financial statements of these subsidiaries, but contains the audited consolidated financial statements of your Company and its subsidiaries. The Annual Accounts of these subsidiary companies, along with the related information, are available for inspection at the Company's Registered Office and its subsidiaries and copies of the same shall be provided on request. The statement on financials of the subsidiary and statement on subsidiaries pursuant to Section 212 (3) of the Companies Act, 1956 are attached hereto as Annexure A and Annexure B, respectively.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Article 110 of the Articles of Association, Mr. Manohar Bidaye and Mr. Vijay Kalantri are the Directors liable to retire by rotation at the ensuing Annual General Meeting. The brief profiles of the Directors retiring by rotation are given in Notice of Annual General Meeting and discussed at length in Corporate Governance Report.

The above Directors being eligible have offered themselves for re-appointment. Your Directors recommend their re-appointments for your approval.

Mr. K. D. Hodavdekar was appointed as an Additional Director on Board of the Company w.e.f. August 4, 2011 as per the provisions of Section 260 of the Companies Act, 1956. At the Annual General Meeting held on September 15, 2011 the Members appointed him as a Director of the Company liable to retire by rotation in pursuance of the notice received u/s 257 of the Companies Act, 1956.

AUDITORS

M/s. Malpani & Associates, Chartered Accountants, Mumbai, holds the office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

Your Company has received necessary consent and eligibility certificate from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

The Board recommends their re-appointment for your approval.

COST AUDIT

For the year under review, your Company was covered under the Companies (Cost Accounting Records) Rules, 2011 for maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956. This made it mandatory for your Company to obtain Compliance Certificate from a Cost Accountant as prescribed under Rule 5 of the said Rules. In compliance of the same, your Company has obtained Compliance Certificate certified by a Cost Accountant and the same does not contain any adverse remarks. The said Certificate will be submitted to the Central Government within the prescribed time.

The Ministry of Corporate Affairs (MCA) has introduced The Companies (Cost Audit Report) Rules, 2011 vide its Notification No. GSR 430(E) dated June 3, 2011. These rules make it mandatory for industries to appoint a Cost Auditor within 90 days of the commencement of the Financial Year. The Cost Audit Order No. 52/26/CAB/2010 dated January 24, 2012 covers engineering machinery (including electrical and electronic products) due to which Company's manufacturing operations will get covered w.e.f. April 1, 2012.

Based on the Audit Committee recommendations at its meeting held on May 17, 2012, the Board has approved the appointment of M/s. Pooja Bomb, Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2012-13, subject to approval of the Central Government.

STATUTORY INFORMATION

(a) Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of Energy

Your Company is not required to furnish the prescribed information under Section 217 (1) (e) of the Companies Act, 1956, relating to the Conservation of Energy and Technology Absorption, as your Company does not fall under the industries included in Schedule to the relevant rules. However, your Directors report that the operations of your Company do not involve much use of energy. Your Company makes every possible effort to conserve energy at all levels of its operations.

Technology Absorption

As your Company has not imported any technology, the required information to be provided in this regard is nil. Your Company is continuously working on improving its indigenous products and software.

Foreign Exchange Earnings and Outgo and Export Market Developments

Your Company has earned Rs. 15,485,836 (previous year Rs. 11,429,422) in foreign currency, and has spent Rs. 318,771 (previous year Rs. 340,991) in foreign exchange during the year under review. The details of the same are available at Note No. 28.22 being Notes forming part of the Financial Statements.

During the year under review, there was no direct export of materials and services from India; however, your Company is looking for export avenues through its subsidiaries and joint ventures.

Particulars of Employees

During the year under review, there was no employee under the employment of your Company, who was in receipt of remuneration of Rs. 6,000,000 or more per annum, if employed for the entire year, or a remuneration of Rs. 500,000 or more per month, if employed during any part of the said year. Hence, the information required to be furnished in this regard is nil.

(b) Corporate Governance

In pursuance of Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance, together with a certificate from the Company's Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the said Clause is set out separately as Annexure E forming part of this Report. While complying with Corporate Governance practices as prescribed under Clause 49 of the Listing Agreement with Stock Exchanges, your Company is already in compliance with some of the requirements under the Corporate Governance Voluntary Guidelines 2009 of Ministry of Corporate Affairs to the extent that they are in consonance with the provisions of the Clause 49.

DEPOSITS, LOANS AND ADVANCES

Your Company has not accepted any deposits falling within the purview of Section 58A of the Companies Act, 1956, and as such, no principal or interest amount was outstanding on the date of the Balance Sheet. The details of loans and advances, which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement with the Stock Exchanges, are furnished separately as Annexure D.

HUMAN RESOURCES

At the start of the year under review, the Human Resource (HR) Department was facing challenge to make Zi-Champs adept to the changed organization scenario, which emerged post business restructuring. To ensure this, need was felt to build and maintain a culture of "High Performance and Engagement" in the organization. For success of this, "Auspicious" Program was launched with ten point agenda, with active support of core team of managers. It had entire focus on creating a 'Change' environment in the organization. Successive sessions were conducted on the theme 'Let's Adapt with the Changing Times', which helped your Company to achieve this.

As a part of this Program, one important aspect established successfully was "Communication rhythm", which helped speedy dissemination of accurate information within the organization.

Your Company has also started hiring 'Engage-able' talent. The intent is that the talents hired are the ones who are going to be successful in the jobs assigned to them.

The employee strength of Zicom group as on March 31, 2012 stood at 279 comprising of five nationalities.

Based on the average age, Zicom has relatively younger talent base, and they require to be kept 'Enthused and Engaged' all the time. Towards this end, your Company conducted employee engagement activities round the year. One of the events introduced was gifting a plant on the birthday of each Zi-Champ, which could be taken home. It has become a very popular practice in the organization.

Your Company is developing an inclusive culture. In this direction, family members of Zi-Champs are involved in participation in corporate programs. A "Kool Kids Day" was hosted at the office wherein kids coming and spending a day at office turned to be a fun environment. To help Zi-Champs to improve financial position and inculcate saving habits in them, a program on Wealth Management was conducted with the help of a Financial Institution. This turned out to be quiet useful for Zi-Champs.

EMPLOYEES STOCK OPTION SCHEME

There are two Schemes of the Company viz. Employee Stock Option Scheme 2006 (ESOS 2006) and Employee Stock Option Scheme 2007 (ESOS 2007). Under these Schemes, the employees of the Company have been granted Options as per the fixed eligibility criteria. Against each of the Option, an eligible employee is entitled to acquire equal number of Equity Shares of Rs. 10 each of the Company at a grant price.

During the year under review, no Options were granted under any Schemes, nor any Options were exercised.

Necessary disclosures required to be given in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for ESOS 2006 and ESOS 2007 forms part as Annexure C to this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, based on the representations received from the operating management, your Directors hereby confirm that in preparation of the annual accounts for the year ended March 31, 2012:

(i) the applicable accounting standards have been followed and that there are no material departures;

(ii) they have in the selection of the accounting policies, consulted the Statutory Auditors and have 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 of the Company for that period;

(iii) proper and sufficient care was taken, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

INSURANCE

All the assets of the Company are adequately insured.

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABILITY

Your Company sincerely believes that a corporate cannot grow without considering the environment, society and economy in which it stays. All has to grow hand in hand. Towards this end your Company is aware about its responsibility to the society in which it lives and the environment surrounding it; which also includes the employees with whose support it is able to conduct its business. Some of the activities carried out by your Company forms part of its CSR initiatives and have been briefly described below. Your Company is constantly evaluating various options to more effectively contribute to the society and sustainability.

Social initiatives - Spreading awareness for security, protection and care: It is said that "Prevention is better than Cure". Zicom believes that an alert citizen can help to prevent and avert occurrence of disasters on account of casualties, accidents, theft, burglary, terrorism etc. In this direction, your Company pioneered formation of Fire and Security Association of India (FSAI), and as a founder member continued supporting various activities under the banner of FSAI, which are mainly, aimed at educating common masses on safety measures in case of fire and other casualties.

During the year, your Company along with its wholly owned subsidiary Zicom SaaS Private Limited had launched one such mass awareness movement, which has become very popular among Mumbaikars, viz. "Make Mumbai Safe", or MMS for short. Under this Movement, we conducted various awareness and educational programs for masses with particular focus on Mumbai city. We covered wide spectrum of Mumbai city including schools, housing societies, senior citizen homes, commercial complexes, corporate parks, public gathering places like joggers parks and nana-nani parks, etc. More than 150 programs have since been conducted under this Movement. As a result, thousands of Mumbaikars have Pledged to Make Mumbai Safe. Also, there are thousands of other followers who have voted and liked the Movement on various social forums. With more and more programs being planned and conducted across the Mumbai city, MMS is getting further momentum. Enthused by the success to MMS Movement, we have decided to conduct such Movement in other adjoining cities like Pune, Thane and Navi Mumbai. Later we have plans to take it across the country.

MMS exposure has taught us how public involvement makes a noble cause a Movement. Besides, to make various festivals celebrations involving mass gathering safer and secure, like Ganesh festival, Durga Pooja festival etc. your Company held various awareness meetings with Mumbai Police and Mumbai Fire Brigade. Your Company has also held various career guidance workshops in Maharashtra through ASTM to support economically backward students in their career development.

Employee Care and Betterment: In post restructuring business scenario, we are now more focused on services. Human resources have therefore become a key factor for us. With a view to create and maintain a healthy workforce of highly productive Team, Zicom follows such human resource policies, which are considered best amongst industry. Our HR policies are for the benefit and betterment of our employees. This includes providing better work place and working atmosphere, practicing humanitarian and personalized approach, non-discriminating policies, endeavoring continuous development of skill and career of our employees by providing opportunities for in-house and on the job trainings, lecture sessions and seminars. Our HR department has adopted new approach of involvement to improve lifestyle of our employees and help them to become a responsible citizen. Various steps have been taken by your Company to achieve this, which are summarized below:

- For enlightening and building team spirit, unity and involvement amongst employees vis-a-vis with the Company and its objectives through employees participation in various ways like social and occasional functions; event celebrations, picnics, participation and contribution in corporate magazines etc. are encouraged;

- For creating awareness towards pollution free environment and its protection, we have conducted programs to encourage employees to celebrate Diwali without crackers and Holi with eco-friendly colours;

- To create better understanding for nature and develop a habit of plantation and tree growing, your Company conducted inter-department plant care-taking initiative; wherein each department was given plants with responsibility to grow within a fixed period of time. At the end of the period, department with best grown plant was felicitated;

- Towards better health of employees a program "Healthy DinCharya" was organized, wherein employees were guided on yoga exercises, diet habits and food tips for better well-being;

- For creating fire safety and protection awareness among employees, a program on fire training was conducted; and

- Wealth management program was organized with the support of a Financial Institution, with a view to help employees to improve their financial position and inculcate saving habits in them.

These activities have helped your Company in improvement of morale, zeal, enthusiasm and belongingness among its employees.

Environment and Energy Conservation: According to an English saying, "A penny saved is a penny earned", the same principle is applied in our business. We are in the business of providing electronic security solutions and related services, which are non-palliative in nature. Our activities require minimum use of energy. On the contrary our business facilitates energy conservation through various advanced security systems and solutions. We have gradually introduced security equipments and gadgets which consumes substantially less energy. Not only this, when integrated with related software and building management systems, they facilitate lot of energy saving by automatically reducing operations of various electronic and electrical equipments like air conditioners, lights etc. They sense weather conditions, level of light, temperature inside and outside premises and accordingly adjust the usage; and thereby substantially reduce electricity consumption. These security systems, equipments and gadgets are made / marketed by us and thereby helping in energy conservation at large. In our offices also, we have installed such systems, equipments and gadgets, which conserves energy and protects environment.

Water Conservation: Water has usage in every aspects of human life. With increasing population, urbanization and industrialization, water is becoming more and more scarce. Our activities do not involve much use of water. However, we have taken various steps for educating our employees in minimizing water usage and avoid its wastage. Employees are educated to conserve water wherever possible, by increasing awareness for water conservation. Graphics, designs and messages are displayed at various points of water usage like water coolers and dispensers, washrooms, basins and gardens.

Efficiency in Material Usage: Material cost is an important cost factor in our business and therefore we need to control it. Effective material usage facilitates cost controls, implementation of which differs from industry to industry and organization to organization. The same also vary with the size and scale of a unit.

In the restructured business scenario, we are now focused on Retail and SME segments and service sector. Therefore, our requirements for systems, gadgets and equipments are different, which are now aimed at meeting the needs of our new class of customer base.

With a view to have better material management, we have developed our own engineering capabilities through in-house R&D. We constantly endeavour to find out alternative sources for cost effective materials as well, to avail various benefits of economies of scale, vocational tax benefits and cost cutting due to in-house making and assembling. We have now reworked our entire channel strategy, with implementation of which, we hope to save on material cost.

Creating job opportunity: In our last Annual Report, while discussing on the subject, we had informed on our efforts in setting-up an Institute for conducting various training courses in different areas of securities, viz. Institute of Advanced Security Training and Management Private Limited (ASTM). Since then, we have successfully scaled up these activities with support of NSDC, which can now cater to larger spectrum of the Society.

We believe that a good corporate citizen should contribute in well being and prosperity of the society and people with whom it lives. Towards this end, ASTM impart training to students by offering various security related courses, which offers them enormous job opportunities in Corporates, Hotels, Malls, Offices of Public Sector Enterprises and Places of Strategic Importance, Theatres, Stadiums, Places of Devotion and other Places of Public Gatherings. Upon successful completion of training, the students can get employment opportunities as security executive, security officer or expert advisor depending upon the type of training obtained.

We have made sizable investment in developing ASTM and our Directors are actively involved in its management and operations. We are attempting to expand activities of ASTM by setting-up more training centers across the country. To start with, we are in the process of setting-up larger training facilities in Mumbai, Noida and Patna. Further, for offering more training facilities and courses, to meet required fund for infrastructure, we have tied up with NSDC, which has supported us by agreeing to fund up to Rs. 150,000,000 financial assistance.

Through ASTM, we also help needy students by sponsoring their training, providing scholarships, finding suitable job opportunities, either at its owned establishment or that of its associates, customers and other stakeholders. We are confident that in the long run many families will be benefited with availability of job opportunities, thereby raising family income, eradication of poverty and upliftment of standard of living.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation and thanks for the valuable co-operation and support received from the employees of the Company at all levels, Company's Bankers, lenders, suppliers, government authorities, business partners and Members of the Company; and look forward for the same to even greater extent in the coming years.

For and on behalf of the Board of Directors

Manohar Bidaye

Chairman

Place: Mumbai

Date: May 17, 2012

Registered Office:

501, Silver Metropolis,

Western Express Highway,

Goregaon (East), Mumbai 400063.


Mar 31, 2010

The Directors presents their Sixteenth Annual Report, together with the Audited Accounts of the Company for the financial year ended March 31, 2010.

FINANCIAL HIGHLIGHTS (Rs. in million)

Particulars March31,2010 March31,2009 March31,2010 March31,2009 Consolidated Consolidated Standalone Standalone

Net Sales/Income from Operations 5,279.70 3,757.55 2,447.68 1,952.53

Other Income 6.16 7.05 0.76 4.44

Total Income 5,285.86 3,764.60 2,448.44 1,956.97

Total Expenditure 4,740.76 3,252.36 2,175.06 1,702.99

Gross Profit before Interest and Depr- eciation 545.10 512.24 273.38 253.98

Interest and Finance Charges 235.92 163.62 148.06 96.97

Gross Profit before Depreciation and Taxation 309.18 348.62 125.32 157.01

Depreciation 121.75 108.40 34.99 25.95

Profit Before Tax 187.43 240.22 90.33 131.06

Provision for Taxation:

Current year 3.00 18.00 3.00 18.00

Deferred 11.68 (3.91) 26.80 12.11

Fringe Benefit Tax Nil 2.70 Nil 1.80

Taxation of earlier years (5.00) 0.56 Nil 0.56

Net Profit After Taxation 177.75 222.87 60.53 98.59

Less: Minority Interest 27.46 26.98 Nil Nil

Profit for the year 150.29 195.89 60.53 98.59

Add: Balance brought forward from previous year 340.19 161.31 315.39 227.20

Profit available for Appropriation 490.48 357.20 375.92 325.79 APPROPRIATIONS:

Transfer to General Reserve 9.33 6.61 6.10 Nil

Provision for Dividend 63.50 8.89 63.50 8.89

Provision for Tax on Dividend 10.54 1.51 10.54 1.51

Dividend including taxes for earlier year Nil Nil Nil Nil

Balance of Profit carried forward to Balance Sheet 407.11 340.19 295.78 315.39

OPERATIONAL PERFORMANCE

Your Directors are pleased to inform that the year under review witnessed achievement of milestone by the Company, in terms of its Total Income, both on standalone and consolidated basis. While standalone Total Income of Rs. 2,448 million crossed Rs. 2,000 million mark, the consolidated Total Income at Rs. 5,286 million crossed Rs. 5,000 million mark for the first time in the history of the Company. The growth in Total Income on standalone and consolidated basis were 25% and 40% respectively. However, the profitability could not cope up with this growth, mainly on account of high operating and finance costs.

As a result, the Profit Before Tax on standalone basis decreased to Rs. 90 million (previous year Rs. 131 million) and on consolidated basis the Profit Before Tax decreased to Rs.187 million (previous year Rs. 240 million). While, Net Profit After Tax on standalone basis decreased to Rs. 60 million (previous year Rs. 99 million) and the same on consolidated basis after Minority Interest, was Rs. 150 million (previous year Rs. 196 million).

The Consolidated Financial Statements include the financial statements of Zicom Electronic Security Systems Limited ("the Company") and its subsidiaries, namely, Zicom Retail Products Private Limited ("ZRPPL"), Zicom Manufacturing Co. (HK) Ltd., Zicom CNA Automation Limited ("Zicom CNA") and Unisafe Fire Protection Specialists LLC, Dubai ("Unisafe") and its subsidiaries.

BUSINESS DEVELOPMENTS AND PROSPECTS

As the Members are aware, on March 5, 2010, the Company had entered into a Business Transfer Agreement (BTA) with Schneider Electric India Private Limited (Schneider) for sale, transfer, disposal of its Electronic Security Systems Business comprising of two groups viz. Building Solutions Group (BSG) and Special Projects Group (SPG) and the business of Zicom CNA Automation Limited, as a going concern on slump sale basis for a total consideration of Rs. 2,250 million, subject to adjustments on Escrow and other accounts of Rs. 120 million as mutually agreed between the Company and Schneider. However, the said transfer excluded the retail business, business of Central Monitoring Station and Video Monitoring Station with right to continue the business of fire

detection and suppression on a stand alone basis. The said BTA received the Members approval through Postal Ballot on April 16, 2010.

Your Directors are pleased to inform that during the current year, your Company has successfully effected the business transfer transaction as per terms of the BTA. The transaction resulted into Net Profit of Rs. 965 million in the first quarter of the financial year 2010-11. The discontinued business contributed Rs. 2,434 million to the total turnover (99%) and Profit After Tax of Rs. 91 million.

The transaction has not only enabled your Company to repay its major debt burden and that of subsidiaries, but has also enhanced its flexibility to grow the retained businesses and pursue new growth opportunities.

Your Company has decided to move away from project business in long term perspective. The sale of Electronic Security Systems Business, being project business of the Company, was first step in this direction. The Company is bullish on its ability to build a business of services in the domain of security, such as Central Monitoring Station services, Video Monitoring Station services, asset tracking services, education and training in security, etc. Today many assets and infrastructure such as mobile towers, windmills, construction sites which are remotely located, are in need of such security services. Considering the past experience and goodwill earned, the Company is confident of building this business model successfully, which will give sustained annuity revenue with higher margin. In this regard, the Company may opt for both organic and inorganic growth. Also, the Company will continue to drive its growth in the remaining business with new enthusiasm.

DIVIDEND

In view of the above, your Directors recommend a payment of dividend of Rs. 5 (Rupees Five only) per Equity Share of Rs. 10 each (i.e. 50%), as compared to Re. 0.70 per share (7%) declared in previous year on 12,699,829 Equity Shares (previous year 12,699,829 Equity Shares) of the Company for the financial year 2009-10, thereby entailing the total payout of Rs. 74 million (previous year Rs. 10 million).

FINANCE

During the year under review, the Company forfeited and transferred to Capital Reserve, total sum of Rs. 73.50 million received towards application money for 3,675,000 warrants issued in the financial year 2007-08 on preferential basis to Promoters Group Companies and other entities; as they failed to exercise their respective options to acquire equivalent number of fully paid equity shares of Rs. 10 each at a price of Rs. 200 per share before the prescribed dates.

SUBSIDIARY AND JOINT VENTURE COMPANIES

During the financial year, the Company had four subsidiaries viz. Zicom Retail Products Private Limited, Unisafe Fire Protection Specialists LLC, Dubai, Zicom CNA Automation Limited and Zicom Manufacturing Co. (HK) Ltd. Information on financials of the subsidiaries for 2009-10, are provided in Annexure B hereto. In respect of foreign subsidiary companies, figures in rupees are converted from applicable respective foreign currencies at appropriate exchange rate. Brief of each subsidiary company is as under:

Unisafe Fire Protection Specialists LLC, Dubai

Unisafe, subsidiary of the Company in U.A.E., leader in providing Fire Detection and Fire Fighting systems, equipments and services, has its presence in Dubai, Abu Dhabi and Qatar, operating for over a decade. It has proved to be a very promising venture of your Company in the GCC countries. Unisafe caters to large spectrum of clientele from government to corporate, refineries, shopping malls, multi storey buildings and resorts, among others. Offering comprehensive range of solutions for all Fire Protection needs, starting from the basic Hydrant and Sprinkler Systems to advance Analogue Addressable Fire Alarm Systems and specialized Gaseous Fire Suppression Systems, Unisafe has achieved its milestone in terms of top line, bottom line and customer satisfaction. It has performed well and continued to enjoy unstinted confidence from its clients despite the slowdown in U.A.E. during the year. Also, your Company acquired additional 1,960 shares of AED 1,000 each, thereby increasing its investment to 2,450 shares of AED 1,000 each in Unisafe. However, as the other JV partner has also increased his investment in the Company proportionately the holding ratio of both JV Partners in Unisafe has remained unchanged.

On consolidated basis, Unisafe has posted Total Income of Rs. 1,819 million and a Net Profit of Rs. 149 million.

Zicom Retail Products Private Limited

Zicom Retail, wholly owned subsidiary, focuses on security needs of separate verticals of fastest growing Small and Medium Business (SMB), Retail and Residential segments in the country.

SMB is one of the fastest growing segments in India and as per available research report; India has the 2nd largest SMB population compared to peer nations such as Brazil, Russia, China and USA. Zicom Retail sales in the SMB segment are very healthy and it is expected to grow rapidly in this segment in the coming years. SMBs are installing electronic security systems with dual objectives – productivity monitoring and surveillance.

The other segment which saw increased adoption of electronic security systems was the mid-format Retail Chains. The expectations from the customers in this segment are very demanding and Zicom Retails product mix and services portfolio addresses the specific needs of such customers. The Company had added very big names during the year to its already huge customer base in the country.

Riding on the back of aggressive growth rates of building and residential segments during the year, Zicom Retail registered better growth in the segment.

In its second year of operations, Zicom Retail has achieved Total Income of Rs. 944 million and incurred a Net Loss of Rs. 12 million. This was mainly due to higher operating and finance costs incurred during the year. With various cost cutting measures undertaken, the Company is expected to break even in the current financial year.

Zicom Manufacturing Co. (HK) Ltd.

Zicom Manufacturing Co. (HK) Ltd., a subsidiary of the Company with 76% of stakeholding, was initiated with a multiple purpose of promoting international marketing and sale of Zicom branded products, enabling the Company to source equipments at competitive prices and supporting customers in India for their imports who enjoy tax benefits. The growth of this subsidiary remains stagnant due to change in strategy on procurement. In the second year of its operations, the subsidiary has posted Net Income

of Rs. 65 million with Net Profit of Rs. 3 million.

In view of the sale of domestic business to Schneider, the utility of this subsidiary for the growth strategy has been significantly reduced.

Zicom CNA Automation Limited

Zicom CNA Automation Limited, a Company which is a 51%-49% JV between your Company and CNA Group Ltd., Singapore and its Associates had access to superior automation technologies. It was aimed to enable your Company to capitalize on emerging opportunities into iBMS coupled with security integration. However, this JV did not deliver as expected, as it took off at the same time when the global slowdown commenced.

In view of the above, your Company decided to acquire the balance equity holding of 49% from CNA Group Ltd. and its Associates and sale and transfer the entire business under BTA dated March 5, 2010 with Schneider. The same has been successfully completed alongwith the sale and transfer of your Companys BSG and SPG business, as informed earlier in this Report.

In its second year of operations, Zicom CNA had achieved Total Income of Rs. 20 million and incurred a Net Loss of Rs. 6 million.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard (AS) 21 on Consolidated Financial Statements read with Accounting Standard (AS) 23 on Accounting for Investments in Subsidiaries, the Audited Consolidated Financial Statements are provided in the Annual Report. The Company has been exempted by Central Government under Section 212 of the Companies Act, 1956, from attaching a copy of financial statements of Zicom Retail Products Private Limited, Unisafe Fire Protection Specialists LLC, Dubai, Zicom Manufacturing Co. (HK) Ltd. and Zicom CNA Automation Limited. Accordingly, the financial statements of the subsidiaries are not attached with this Annual Report. The statement on subsidiaries pursuant to Section 212 (3) of the Companies Act and statement on financials of the subsidiary pursuant to Central Governments approval are attached hereto as Annexure B and Annexure C respectively. Further, as required by the Central Government, the Annual Accounts of the subsidiary companies and related information shall be made available to the investors of the Company and its subsidiaries seeking such information; and the same are also available for inspection by any investor at the Registered Office of the Company and its subsidiaries.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Article 110 of the Articles of Association, Mr. Mukul Desai and Dr. B. Samal are the Directors liable to retire by rotation at the ensuing Annual General Meeting. The brief profile of the Directors retiring by rotation is given in Notice of Annual General Meeting and discussed at length in Corporate Governance Report.

Both the above Directors being eligible, have offered themselves for re-appointment. Your Directors recommend their re-appointments for your approval.

GROUP

As required under Clause 3 (1) (e) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons constituting "Group" as defined under the Monopolies and Restrictive Trade Practices ("MRTP") Act, 1969, for availing exemption from applicability of provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations are disclosed in Annexure A to this Report.

AUDITORS

The term of office of M/s. P. Raj & Co., Chartered Accountants and Statutory Auditors of the Company will expire at the conclusion of the ensuing Annual General Meeting. However, M/s. P. Raj & Co. has intimated their unwillingness to be

re-appointed as Statutory Auditors of the Company. The Company has received a Special Notice for appointment of M/s. Walker, Chandiok & Co, Chartered Accountants, as Statutory Auditors in place of the retiring Auditors M/s. P. Raj & Co., to hold the office from conclusion of ensuing Sixteenth Annual General Meeting of the Company till conclusion of the subsequent Annual General Meeting. The Company has also received consent and certificate of eligibility under Section 224 (1B) of the Companies Act, 1956 from M/s. Walker, Chandiok & Co, Chartered Accountants. The Directors

recommend the appointment of M/s. Walker, Chandiok & Co, Chartered Accountants, as Auditors of the Company for your approval.

STATUTORY INFORMATION

(a) Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of Energy

The Company is not required to furnish the prescribed information under Section 217 (1) (e) of the Companies Act, 1956, relating to the Conservation of Energy and Technology Absorption, as the Company does not fall under the industries included in Schedule to the relevant rules. However, your Directors report that the operations of the Company do not involve much use of energy. The Company makes every possible effort to conserve energy at all levels of its operations.

Zicom CNA Automation Limited, the Companys subsidiary, is aimed to offer solutions to support conservation of energy by users.

Technology Absorption

The Company has not imported any technology and therefore no information is provided in this regard. However, the Company is continuously working on improving its indigenous products and software.

Foreign Exchange Earnings and Outgo and Export Market Developments

The Company has earned Rs. 40 million (previous year Rs. 8 million) in foreign currency, and has spent Rs. 0.15 million (previous year Rs. 0.75 million) in foreign exchange during the year under review. The details of these foreign exchange expenditures are available at Note Nos. 21 and 22 of Schedule 16, being Notes forming part of the Accounts.

Export of material and services by the Company has been on a very moderate scale to the Gulf region and UK. Your Company is exploring possibilities of developing other export markets. In addition, the Company through its subsidiary in Dubai is catering to fire safety related requirements of Gulf region and has registered very strong presence there.

(b) Particulars of Employees

The Company had three employees including Managing Director, who were in receipt of remuneration of not less than Rs. 2,400,000 during the year ended March 31, 2010 or not less than Rs. 200,000 per month during any part of the said year. Details in respect of remuneration paid to employees as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, in pursuance of Section 219 (1) (b) (iv) of the Companies Act, 1956, this Report is being sent to all the Members of the Company excluding the aforesaid information and the said details will be made available on request, and also made available for inspection at the Registered Office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

(c) Corporate Governance

In pursuance of Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance, together with a certificate from the Companys Auditors confirming compliance of the conditions of Corporate Governance as stipulated under the said Clause, is set out separately as Annexure F forming part of this Report.

DEPOSITS, LOANS AND ADVANCES

Your Company has not accepted any deposits falling within the purview of Section 58A of the Companies Act, 1956, and as such, no principal or interest amount was outstanding on the date of the Balance Sheet. The details of loans and advances, which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement with the Company, are furnished separately as Annexure E.

HUMAN RESOURCES

As on March 31, 2010, the total strength of the Company along with its subsidiaries was around 385 employees at various locations in India and abroad. Subsequent to year end, under BTA with Schneider, 92 employees of the Company have joined Schneider on May 1, 2010.

Every year the Company introduces new initiatives. During the year, the Company introduced a very successful employee engagement initiative – The 3C Business Promotion Program.

This Program was manned by the HR Department and the intent was to get all the employees in the Company connected to the business. Employees were encouraged to contribute potential business leads under this Program, which were forwarded to the respective sales team to follow up with the potential customers. On successful closure of the business lead, the concerned employee was awarded ‘stars which were redeemable for rewards.

Your Company continues to maintain a very diverse workforce which also manifests a diverse culture to support the successful growth of various businesses.

EMPLOYEES STOCK OPTION SCHEME

In accordance with Employees Stock Option Scheme (ESOS) of the Company, the employees have been offered options as per eligible criteria fixed under the Scheme. Against each of the above, an eligible employee is entitled to acquire equal number of equity shares of Rs. 10 each of the Company at a price as may be decided by the Board / Compensation Committee. There are two Schemes of the Company viz. ESOS 2006 and ESOS 2007.

Further as under BTA, 92 employees of the Company have joined Schneider on May 1, 2010, all the unexercised Stock Options granted to such employees lapsed, changing substantially the status of outstanding Employee Stock Option under ESOS 2006 and ESOS 2007 of the Company.

Necessary disclosures required to be given in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for ESOS 2006 and 2007 forms part as Annexure D to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors hereby confirm that in preparation of the annual accounts for the year ended March 31, 2010:

(i) The applicable accounting standards have been followed along

with proper explanation relating to material departures, if any;

(ii) Reasonable and prudent judgment and estimates were made, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on March 31, 2010;

(iii) Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

INSURANCE

All the assets of the Company are adequately insured.

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009

With a view to enhance economic value of corporate enterprises in India and also to enhance value for every stakeholders connected with the Indian corporate world, as also to bring corporate governance in India at par with global benchmarks, the Ministry of Corporate Affairs (MCA) had issued Corporate Governance Voluntary Guidelines in December 2009. MCA has proposed that after considering the experience and feedback of Indian corporates in adopting these Guidelines, it would review the Guidelines for further improvements after one years period.

Your Company fully supports this initiative of MCA, which it believes will greatly help the Indian corporate world to achieve global standards in Corporate Governance. Your Company strongly believes in forming and adopting best practices for good Corporate Governance and its corporate philosophy hovers around the same. While complying with Corporate Governance practices as prescribed under Clause 49 of the Listing Agreement with Stock Exchanges, your Company is already in compliance with some of the requirements under the Voluntary Guidelines of MCA to the extent that they are in consonance with the provisions of the Clause 49.

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY – A HUMBLE BEGINNING

The Ministry of Corporate Affairs has released Voluntary Guidelines on Corporate Social Responsibility (CSR) in December 2009. The Company has already been carrying activities in relation to its responsibility to the society in which it lives and the environment surrounding it, which also includes the employees with whose support it is able to conduct its business. Some of the activities carried out by the Company forms part of its CSR initiatives and have been briefly described below. Your Company is constantly evaluating various options to play its role more effectively in its contribution to the society and sustainability.

Social initiatives – Spreading awareness for security, protection and care: During the year under review, the Company has initiated various programs to build awareness amongst the citizens on disaster management and fire safety. In this regard, the Company had run an awareness program through Fire and Safety Association of India to make Ganesh festival in Maharashtra more safe and secure. Also, during the year, the Company has conducted various complimentary programs in schools and colleges to help students to manage any disaster due to fire, earthquake or terrorism. In the current financial year, Company initiated program to support students in their career.

At Zicom, we sincerely believe that a corporate cannot grow without considering the environment, society and economy in which it stays. All has to grow hand in hand.

Employee Care and Betterment: Best human resource policies are being followed for the benefit and betterment of its employees. It includes better work place atmosphere, humanitarian and personalized approach, development of skill and career through continuous opportunities for in-house and on the job trainings, lectures, sessions and seminars. Enlightening and building of team spirit, unity and involvement amongst employees vis-a-vis with the Company and its objectives. This is being achieved through employees participation in various ways like social and occasional functions, event celebrations, picnics, participation and contribution in corporate magazines, etc.

Employees are also encouraged to grow the business through a reward scheme for providing lead to the Company in getting orders and business. Under the Scheme employees get pre-determined incentives against successful orders procured through business leads provided by them. Further, employees are also trained in security and first aid and provided free medical assistance under insurance cover.

All the above steps have helped your Company in morale boosting of its employees and to improve their zeal, enthusiasm and belongingness, which finally helps your Company in its growth and prosperity.

Environment and Energy Conservation: Your Company is in the business of providing total security solutions through electronic systems and gadgets, which are non-pollutive and consume very less energy. Its business also caters to energy conservation and waste management through the concept of green building and intelligent building solutions under the roof of its subsidiary Zicom CNA Automation Limited. Further, the security equipments like sensors, control panels integrated with related software facilitates energy saving by automatically reducing operations of various electronic and electrical equipments like air conditioners, lights, etc. which senses weather conditions, level of light, temperature inside and outside premises and accordingly adjust the usage, thereby substantially reducing electricity consumption. These security systems, equipments and gadgets are made and marketed by your Company to its various customers thereby helping in energy conservation at large. At our offices also, with the installation of such systems, equipments and gadgets, we endeavor to minimize the energy usage and thereby directly and indirectly help in environmental protection.

Water Conservation: Water is becoming more scarcer resource with increasing population, urbanization and industrialization. Water finds usage in every aspects of human life. Realizing importance of the water, we at Zicom have taken various initiatives to manage its usage. Some of them are minimizing consumption by educating employees to avoid its wastage and conserve water wherever possible. To inculcate the awareness for water conservation for every employee we have resorted to educate them to that effect by

displaying graphics, designs and messages at every point of water usage like water coolers and dispensers, washrooms, basins and gardens. We feel that we have been successful in our motive, thereby helping the society at large to conserve the scarce water resources.

Efficiency in material usage: Material usage is a very important factor in business cost control. It can lift or sunk an enterprise depending upon the management of material usage. Effective material usage facilitates cost controls. However, its implementation differs from industry to industry, organization to organization and the same also vary with the size and scale of a unit. Your Company being in electronic security industry in India, its requirements for systems, gadgets and equipments are different from that of the other countries in the world.

As we have been in custom build system integration, automation and SOHO segment where customized pre-configurated systems are required to meet the needs of various classes of retail customers, your Company cannot rely merely on imported material. Keeping view the long term approach and also to facilitate cost reduction and strengthening the margin the Company has set up on a moderate scale a manufacturing unit at Parwanoo in Himachal Pradesh. This will benefit us in better material management, as we can have flexibility in timely sourcing of required materials to meet our customer needs, enable us to take advantage of our engineering capabilities developed through in-house R&D, avail various benefits of economies of scale, locational tax benefits and cost cutting due to in-house manufacturing using material sourced more economically. Also, to take advantage of better material management, both at sourcing and distribution ends; we have reworked our entire channel strategy, with implementation of which, we are hopeful to have sizable saving in material cost.

Creating job opportunity: Your Company strongly believes that as a good corporate citizen, it should contribute in well being and prosperity of the society and people with whom it lives. Even the business activities of the Company are directed towards this motive. In this direction, the Company has taken initiatives in setting up an institute where students will be imparted training in various aspects of security, so that at the end of the training they can be moulded as security executive, security officer or expert advisor. This is an uncultivated job area, where enormous job opportunities lie ahead in corporates, hotels, malls, offices of public sector enterprises and places of strategic importance, theatres, stadiums, places of devotion and other places of public gatherings. Your Company has contributed to this honest cause by making some initial investment in setting up of the institute and is closely associated for its further development.

In furtherance to achieve this objective, your Company has planned to help needy students by sponsoring their training, providing scholarships, finding suitable job opportunities, either at its owned establishment or that of its associates, customers and other stakeholders. We are confident, that in the long run many families will be benefited with availability of job opportunities, thereby raising family income, eradication of poverty and upliftment of standard of living.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation and thanks for the valuable co-operation and support received from the employees of the Company at all levels, Companys Bankers, lenders, suppliers, government authorities, business partners and Members of the Company and look forward for the same in greater measure in the coming years.

For and on behalf of the Board of Directors

Manohar Bidaye Chairman

Place: Mumbai Date : August 14, 2010

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