Mar 31, 2016
To the Members,
The Board of Directors submits the Annual Report of the Company along with the audited financial statements for the financial year ended March 31, 2016:
1. FINANCIAL RESULTS
Rs. in lakhs except per share data
Standalone |
Consolidated |
|||
2016 |
2015 |
2016 |
2015 |
|
Operating revenue |
13,940.84 |
31,308.46 |
22,880.02 |
41,101.37 |
Other Income |
272.06 |
2,022.03 |
301.39 |
2,103.34 |
Operating Profit (PBDIT) |
-3,996.97 |
-2,439.45 |
-47.55 |
-764.74 |
Interest |
49.83 |
443.23 |
49.83 |
1,556.41 |
Depreciation |
948.64 |
16,095.68 |
1,655.73 |
17,407.20 |
Prior period adjustments |
12,076.24 |
46,967.17 |
20,660.84 |
106.19 |
Profit before tax (PBT) |
-16,799.62 |
-63,923.50 |
-22,112.56 |
-64,625.55 |
Taxes |
1,455.38 |
1,083.03 |
2,608.04 |
896.25 |
Profit after tax (PAT) |
-15,344.24 |
-62,840.47 |
-19,504.52 |
-63,729.30 |
Paid up capital |
2,949.64 |
2,949.64 |
2,949.64 |
2,949.64 |
Reserves & Surplus |
-88,391.93 |
-14,492.35 |
-98,240.87 |
-21,082.89 |
Net Worth |
-85,442.29 |
-11,542.75 |
-95,291.23 |
-18,133.34 |
Earnings per Share |
-26.01 |
-106.52 |
-33.06 |
-108.03 |
Negative figures are given in sign
2. RESULTS OF OPERATION
The company has been under great challenges during past few years. The company has been in continuous turbulence for the past few years due to the acute financial difficulties faced by the company. The promoters of the company have been removed from their directorship by the shareholders. The Administrator of the Company appointed by the Madras High Court, has reconstituted the Board with new set of directors in Novâ 15 whose appointments were subsequently approved by the shareholders of the company in Mar â16. Presently, the company is in the process of consolidating its businesses including its subsidiaries. The net loss at the consolidated level has reduced from Rs. 637.29 cr in the previous year to Rs. 195.05 crores. Total Revenue for Zylog Systems Limited was Rs. 228.80 cr as against Rs. 411.01 cr in the previous year.
At standalone level, the net loss amounted to Rs. 153.44 as against Rs. 628.40 cr. The revenue recorded during the year is Rs. 139.41 cr as against Rs. 313.08 cr.
3. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
There are no significant events after balance sheet date.
4. INFORMATION ABOUT THE FINANCIAL PERFORMANCE/ FINANCIAL POSITION OF SUBSIDIARIES/ASSOCIATES/JVs/
The shares of the Canadian subsidiary M/s. Zylog Systems (Canada) Limited have been pledged with ICICI Bank for availing loan for acquiring this company. Due to defaults in the payments to the bank, ICICI Bank has sold the pledged shares and recovered the money. However, the company is pursuing this legally.
Secondly, the acquired entity M/s. Matrix Primus Partners, Inc was also under financial turbulence for last five years. The company has defaulted all its payments to its lenders, vendors, employees, etc. Due to this, the company lost its businesses, employees and reputation in the market and as on date the company is virtually closed.
Considering the present scenario of these companies, the investment in these subsidiaries has been written off fully as loss of investments.
The company has provided diminution value of 95% on the investments made in its Indian subsidiaries viz. Vishwa Vikas Services Limited, Zylog Systems (India) Limited and Algorithm Solutions Private Limited. The revenue of these companies have fallen steeply and considering the marketable price of these companies the provisions have been made. Other than these there has been no material change in the nature of the business of the Subsidiaries. A statement containing brief financial details of the subsidiaries is included in the Annual Report.
Information in form AOC-1 with respect to the subsidiary company as required under Section 129(3) of the Companies Act, 2013 is also forming part of the Boardâs Report.
5. SHARE CAPITAL
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:
a) Issue of equity shares with differential rights as to dividend, voting or otherwise;
b) Issue of Shares (including Sweat Equity Shares and ESOS) to employees of the Company under the scheme.
At the end of the financial year the Companyâs Equity Share Capital stands at Rs. 2949.64 Lakhs consisting of 5,89,92,840 Equity Shares of Rs. 5/- each.
6. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134 of the Companies Act 2013 read with the Companies (Accounts) Rules 2014, on energy conservation, technology absorption, foreign exchange earnings and outgo, is given in Annexure 2 and forms an integral part of this report.
7. DIVIDEND
Based on the Companyâs performance, the Directors have not recommended any dividend during the year.
8. TRANSFER TO RESERVES
During the year, the company has not transferred any amount to the general reserve due to the loss it booked.
9. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6).
10. EXTRACT OF ANNUAL RETURN
An extract of annual Return in form MGT - 9 is forming part of this report.
11. PARTICULRS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts and arrangements with related parties are on arms length basis and in the ordinary course of business. Form AOC-2 as required under section 134(3) (h) is enclosed as annexure-4 to this report.
12. CORPORATE GOVERNANCE
Pursuant to Schedule V of the SEBI (LODR) Regulation the following Reports/Certificates form part of the Annual Report:
- the Report on Corporate Governance;
- the Certificate duly signed by the CEO on the Financial Statements of the Company for the year ended March 31, 2016 as submitted to the Board of Directors at their meeting held on April 29, 2016;
- the declaration by the CEO regarding compliance by the Board members and senior management personnel with the Companyâs Code of Conduct ; and
- The Auditorsâ Certificate on Corporate Governance
13. MANAGEMENT DISCUSSION AND ANALYSIS:
Pursuant to Regulation 34 and other applicable regulations of SEBI (LODR) Regulations 2015, a Statement on Management Discussion and Analysis forms part of the Boards report.
A cautionary note: Certain statements in the Management Discussion and Analysis section may be forward looking and are stated as required by applicable laws and regulation. Many factors may affect the actual results, which could be different from what we envisage in terms of future performance and outlook.
14. ADVISORY COMMITTEE
The company is presently managed by Retd. Justice Mr. S. Rajeswaran appointed by Honâ ble High Court of Madras who has appointed Mr. Srikanth Parthasarathy, Mr. Srihari S P, Mr. Vimalesh Kumar S, Mr. Mehrotra M P, Mr. Krishna Kishore and Mr. K.S.M. Rao to advise him on the operations of the business and to oversee the day to day functions.
15. QUALITY INITIATIVES
Quality and best practices define the foundation of a company. Your company is an ISO 9001:2015 now. It is a great achievement considering the present status of the company. It shows that the company continues to maintain its quality standards and living up to the clientsâ needs, despite all the odds. Your company continuously leverages cutting edge tools, methodologies and benchmark standards to exceed the expectations of our customers. We, as an IT Solution provider, will continue to strive for excellence in all areas of business, guarantee the quality of its software products at all stages of development and build the highest quality standards. Your Company follows the most widely used paradigms for QA management, PDCA (Plan-Do-Check-Act) approach, also known as the Shewhart cycle. The main goal of QA is to ensure that the product / service fulfills or exceeds customer expectations. An independent audit team, who reports directly to the Managing Director, ensures proper implementation of all the control functions. The audit team conducts regular internal audits, intimates the non-conformities found during such audits, ensures that necessary corrective and preventive actions are taken and furnishes necessary summary reports to the Senior Management.
Your Company have developed and implemented control systems for software development, for information security and for managerial functions. Policies, processes and procedures have been developed for each control system and these are placed in the companyâs network to ensure their availability to all the employees at all times.
16. PUBLIC DEPOSITS
The company has not accepted any deposits from the public during the financial year 2015-2016 within the meaning of Section 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014 and there is no outstanding amount on account of principal or interest as on date.
17. DIRECTORS
During the financial year ended 31st March, 2016 under review, the following directors were inducted in the Board by the Administrator
1) Mr. M P Mehrotra
2) Mr. KSM Rao
3) Mr.Krishna Kishore
4) Mr. Srikanth Parthasarathy
5) Mr. Srihari S P
6) Mr. S Vimalesh Kumar
And Mr. Ramanujam Sesharathnam Managing Director & COO who was ousted by shareholders in AGM held during 2014-2015.
The Company appreciated and thank him for the services rendered during his tenure as Managing Director of the Company.
18. DIRECTORSâ RESPONSIBILITY STATEMENT
In terms of section 134(3) (c) read with section 134(5) of the Companies Act 2013 the Directors to the best of their knowledge and belief and according to information and explanation obtained by them, confirm that,
(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to any material departures;
(b) Such accounting policies have been selected and applied consistently and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year 31st March 2016 and of the profit of the company for the year ended 31st March 2016.
(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) The annual accounts have been prepared on a âgoing concernâ basis.
(e) Proper internal financial controls to be followed by the company have been laid down and such internal financial controls were adequate and were operating effectively
(f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and were operating efficiently
19. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION
186 OF THE COMPANIES ACT 2013
The company has not given loans, guarantees nor made any .investments during the financial year under consideration.
20. CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business of the company during the year under review
21. REMUNERATION OF KEY MANAGERIAL PERSONNAL
There is no remuneration paid to the Key Managerial Personnel in FY 2015-16.
22. BOARD EVALUATION
Pursuant to the provisions of Rule 4 of the Companies (Accounts) Rules, 2014, the Board has carried out an annual performance evaluation of its directors individually as well as the working of its Committees (Audit, Nomination & Remuneration Committee and Stakeholders Relationship Committee) and Independent Directors (without participation of the relevant Director). The Company is in process selecting the candidate for Women Director to full the compliance of the Companies Act, 2013 and as stated provisions in SEBI (LODR) Regulations, 2015.
23. BOARD MEETINGS
During the year 9 meetings of the Board of Directors were held. The details of the meeting are furnished in the Corporate Governance Report.
24. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
Your company has no employees covered in terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) of the Companies (Appointment and Remuneration of Management Personnel) Rules, 2014.
Your company has not paid any remuneration to the Managing Director Disclosure pertaining to remuneration and other details as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable .
25. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
This is discussed in details in the Management Discussion and Analysis Report.
26. RISK MANAGEMENT POLICY
The Company has taken adequate steps towards management and mitigation of risks in a timely and effective manner. Your company has ensured that, with proper Risk Company mechanism, timely detection of risks is possible and effective control measures could be adopted for easy resilience of any damage arising thereof. Management Discussions and Analysis Report contained more details on the risk management policy of the Company.
27. MATERIAL CHANGES
There were no material changes and commitments occurred after the Closure of the financial year 2015-2016 that affect the financial positions of the Company.
28. PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has in place a Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.
29. AUDITORS
M/s Ramadoss & Co, Chartered Accountants, Chennai have expressed their unwillingness to continue. We appreciate their dedicated services rendered so far and your Directors appointed Mr. T.R. Sarathy, Chartered Accountant, Chennai have expressed willingness to accept office. who will retire as the Auditors of the Company at the conclusion of the ensuing Annual General Meeting and being eligible pursuant to Section 139 of the Companies Act, 2013 and other applicable provisions and rules made there under. The Audit Committee in their meeting held on 22nd June, 2016 has recommended the appointment of Mr. T.R. Sarathy, Chartered Accountant, Chennai.
30. SECRETARIAL AUDITOR
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the company has appointed Mr. V. Sudindhar, Practicing Company Secretary as Secretarial Auditor of the company to undertake Secretarial audit of the company. The report of the secretarial auditor is annexed as Annexure 5. It does not contain any qualification reservation, adverse remark or disclaimer.
31. HUMAN RESOURCES
As this is a people business, employees are vital and most valuable assets possessed by the company. Despite the financial difficulties and even after major changes happened in the company, the employees who have been associated with the company for so many years have not left their services, which shows their commitment and confidence they have. The ISO certification which we got during the year after 2-3 years shows the commitment to their work, which is one of the major inherent strength the company possesses. Your company continues to attract highly talented individuals possessing skill sets with an âxâ factor. Your company rightly appeals to young, qualified people who want to make a difference in their contribution and be at the forefront of change which is very much the hallmark that we pursue to the highest degree, as we cross several pioneering frontiers in our pursuit of perfection. Employee strength was 450 at the end of the year continues to be on an upward trend, given the challenges we have. The effective and optimal utilisation of precious onsite and offshore staff resources remains one of the key near term objectives, going forward.
32. ENVIRONMENTAL AWARENESS
âGo Greenâ initiatives to conserve resources has been initiated in the Company. Steps required for conserving power across all delivery centres are being undertaken. The Company has also taken initiatives within its office buildings to reduce electrical power, water and paper consumption. These initiatives shall be taken forward at a sustained pace.
33. ACKNOWLEDGEMENTS
Your directors profusely thank the clients, vendors, investors and bankers for their continued support of Companyâs growth. Your directors place on record their immense appreciation of the contribution made by every employee at all levels, who through their commitment, competency, hard work, solidarity, cooperation and support have enabled the company to achieve this growth. Your directors sincerely thank the Government of India, particularly the Department of Electronics, the Customs and Excise Departments, Software Technology Park - Chennai, the Ministry of Commerce, Reserve Bank of India, Department of Telecommunications, State Government and other Government agencies for their support during the year, and look forward to their continued support in the future.
For and on behalf of the Board of Directors
of Zylog Systems Limited
Place: Chennai Retd. Justice S Rajeswaran
Date: 20.10.2016 Administrator
Mar 31, 2015
The Directors hereby present the Twentieth Annual Report together with
the audited accounts of the company for the year ended 31st March 2015.
1. FINANCIAL HIGHLIGHTS
The performance of the company for the year ended 31st March 2015 is as
follows:
Consolidated Financials (Rs. In lakhs)
Particulars For the year ended
31.03.2015 31.03.2014
Gross Revenue 41,101.34 172,900.39
Net Revenue (excluding
Excise Duty) 41,101.34 172,900.39
Total Expenditure 41,866.09 206,795.56
Operating Income (764.75) (33,895.17)
Other Income 2,103.32 9,754.32
Profit before Interest,
Tax & Depreciation 1,338.57 (24,140.85)
Interest 1,556.41 5,214.66
Deferred Revenue Expenses - -
Depreciation 17,407.21 25,784.94
Profit before Tax &
Exceptional item
Exceptional item (17,625.05) (55,140.45)
47,000.54 (117.79)
Profit before Tax &
Exceptional item
Tax Expense (64,625.59) (55,022.66)
Profit after Tax/Net Profit (896.25) 893.95
Balance of profit brought
forward from last year (63,729.34) (55,916.62)
Amount Available for
Appropriations 42,646.36 94,076.23
Appropriations: (21,082.98) 38,159.61
Transfer to General Reserve
Depreciation transferred
to retained earnings - -
Dividend - -
Tax on Dividend - -
Balance Carried to
Balance Sheet - -
(21,082.98) 38,159.61
2. PERFORMANCE
Generally the performance of the company has substantially reduced. The
problems faced by the company are due to various reasons enumerated in
the previous annual report as well. During the year under review, the
Canadian subsidiary was sold by ICICI Bank Limited . Due to this there
is steep reduction in turnover . The turnover of the Canadian
subsidiary for the accounting year 2013-14 was Rs 478.84 Crs.
During FY 2014-15, the company has posted a muted financial
performance, both at the standalone and consolidated level. Net Loss at
the consolidated level has increased from Rs. 559.17 crores in the
previous year to a net loss of Rs. 637.29 crores.
Charges to the extent of Rs. 174.07 crores, which constitutes 42.4% of
the revenue from operations at standalone level, our loss after tax
amounted to Rs. 628.41 crores as against the previous year loss of Rs.
437.91 crores. On consolidated basis, our profit / (loss) after tax
amounted to (Rs. 637.29 crores) as against loss Rs. 559.17 crores of
the previous year. This is principally due to four factors. (1)
Increase in Depreciation/Amortization compared to the previous year's
14.9%. (2) Employee benefit expenses forms 36.4% of the operating
revenue as against 51.8% in the previous year. (3) Project related
expenses stands at 45.4% on the revenue from operations compared to the
previous year's ratio of 37.4%. (4) The cost escalation on Operations
and other expense rose to 20.1% on operating revenue compared to the
previous year's recorded ratio of 30.4%. This is primarily due to the
provision of doubtful debts amount on account receivables amounting to
Rs. 468.94 crores.
These four factors coupled with losses suffered due to acute shortage
of human resources. Offshore has lost the technical engineer's strength
of 2,107 during the FY 2013-14 and further recruitment of engineers has
been standing as a challenge due to the prevailing financial challenges
and instability arising out of liabilities with the lenders/banks. This
originated in the previous financial year due to the foreign currency
fluctuation that caused a severe flow to P&L account. The Indian rupee
which was at levels of Rs. 42 to a US dollar in October 2011 started to
depreciate sharply to levels of Rs. 55 within a short period and again
from Rs. 55 it steadily depreciated to levels Rs. 68 before settling to
current levels of Rs. 65 to a USD. The working capital PCFC loan limits
was fixed in INR but a ailment & repayment was in USD. Steep Rupee
depreciation caused overdrawn situation in the account. Banks either
adjusted or sent letters to adjust the overdrawn immediately without
any delay irrespective of whether the receivables are overdue or not,
thus the Rupee depreciation effected in PCFC limit shrinkage. This
explains the huge Rs. 200 crores four loss suffered by the company
cumulatively during the period starting from October 2011 until
September 2013 i.e. spread over three financial years of FY 2012, FY
2013 & FY 2014. The company had no option but to request the bank
either to fix the limits in US$ or increase the limit by the
depreciated portion as the a ailment has always been PCFC as majority
of expenses being in US$. Unfortunately, both the requests were not
considered and thus leading to overdrawn situation. Due to prior
customer contractual commitments, the company had to borrow outside
consortium by way of unsecured loan from banks/NBFCs to tie up the WC
deficit. This created an increased expense in interest costs. Further
lot of capex items which were in WIP the previous year went on stream
this year for which Depreciation/amortization expenses had to be taken.
The net worth of the company at the standalone level has decreased to
Rs. -115.43 crores from Rs. 512.98 crores and the group net worth has
decreased to Rs. -181.33 crores from Rs. 411.09 crores. The EPS stood
at - 108.03 (Rs. -94.79 PY) for standalone and Rs. -106.52 (Rs. -74.23
PY) for the group for the FY ending 31st March 2015.
Liquidation proceedings: Few creditors have filed winding-up petition
against the company in the High court. Against one of such petition,
High court had given an order for winding up, which we have contested
with the prayer to stay the said order. Hearings are happening at
regular intervals. In the recent hearing, the bench in which we
appealed for the stay have categorically instructed, that the company
should not be wound-up by OL and the case be transferred to a single
Judge company's court to hear further on this case. However, the bench
further instructed that regular statutory compliances and operations of
the company should not be curtailed in any manner
3. DIVIDEND
Your Company does not have sufficient profits, hence your company does
not declare dividend.
4. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:
There are no significant events after balance sheet date. However the
company embarked on corporate Debt Restructuring even before the
balance sheet date. This continued after the balance sheet date in
significant measure and likely to continue in the near future . Your
Directors want to appraise you on the restructuring of debts attempted
by your company.
CORPORATE DEBT RESTRUCTURING (CDR)
The company is filing the required paperwork towards the CDR initiative
and is taking the required steps to address the financial
restructuring. In this regard, steps are being taken to form the Joint
Lender's Forum (JLF).
5. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
During the financial year under review, there was no appointment,
re-appointment in the Board except for resignation of following
Directors of the Company.
1. Mr. Sudarshan Venkatraman
2. Mr. M.P Mehrotra
3. Mr. R. Siva Subramaniam
The Board placed on record appreciation of their services.
6. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent
Director of the Company under Section 149(7) of the Companies Act, 2013
that the Independent Directors of the Company meet with the criteria of
their Independence laid down in Section 149(6)
7. VIGIL MECHANISM
Pursuant to section 177(9) of the Companies Act, 2013 read with Rule 7
of the Companies (Meetings of Board and its Powers) Rules, 2014 and
Clause 49 of the Listing Agreement, the Board of Directors had approved
the Policy on Vigil Mechanism/ Whistle Blower and the same is being
hosted on the website of the Company. This Policy inter-alia provides a
direct access to the Chairman of the Audit Committee.
Your Company hereby affirms that no Director/Employee have been denied
access to the Chairman of the Audit Committee and that no Complaints
were received during the year.
8. AUDITORS
M/s Ramadoss & Co, Chartered Accountants, Chennai were appointed as
Statutory Auditors for a period of 5 years in the Annual General
Meeting held on 19th November 2014, Their continuance of appointment
and payment of remuneration are to be ratified and approved in the
ensuing Annual General Meeting. The Company has received a certificate
from the above Auditors to the effect that if they are reappointed, it
would be in accordance with the provisions of Section 141 of the
Companies Act, 2013.
9. SECRETARIAL AUDITOR
Pursuant to the provisions of section 204 of the Companies Act 2013 and
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules 2014, the company has appointed Mr. V. Sudindhar, Practicing
Company Secretary as Secretarial Auditor of the company to undertake
Secretarial audit of the company. The report of the secretarial auditor
is annexed. It does not contain any qualification reservation, adverse
remark or disclaimer.
10. INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF
THE SUBSIDIARIES / ASSOCIATES/ JV:
Particulars Vishwa Zylog Zylog Zylog
Vikas Systems Systems Systems
Services (Europe) (India ) Asia Pacific
Limited Limited Limited Pte Ltd
Financial year
of the
Subsidiary March 31, March 31, March 31, March 31,
2015 2015 2015 2015
1.Share capital 25.00 1,065.65 3150.00 625.99
2.Reserves
and surplus 581.45 2013.00 (5158.74) 399.85
3.Total assets 766.66 5,020.63 15,081.82 2,794.38
4.Total
liabilities 160.21 1,941.95 17,090.51 1,768.57
5.Details of
investments
including
goodwill - - 231.09 388.76
6.Net Sales
including
other income 31.70 1,305.83 198.08 1,289.63
7.Profit/(loss)
before tax (27.30) 216.51 (1,805.94) 55.86
8.Provision
for taxation - - 28.73 -
9.Profit/(loss)
after Tax (27.30) 216.51 (1,834.67) 55.86
10.Proposed
dividend
11. Reporting
currency INR GBP INR SGD
12. Exchange
rate - 92.9921 - 45.6251
Particulars Zylog BV Algorithm
limited Solutions Pvt
Limited
Financial year of
the Subsidiary March 31, March 31,
2015 2015
1.Share capital 62.99 1.00
2.Reserves and surplus 2745.55 (125.95)
3.Total assets 10,473.40 562.61
4.Total liabilities 7,664.91 687.59
5.Details of investments
including goodwill - -
6.Net Sales including
other income 6,921.26 806.78
7.Profit/(loss) before tax 755.27 103.52
8.Provision for taxation 106.08 51.97
9.Profit/(loss) after Tax 649.19 51.55
10.Proposed dividend
11. Reporting currency USD INR
12. Exchange rate 62.6788 -
The Financial Statements of Subsidiaries whose reporting currencies are
other than Indian Rupees were converted into Indian Rupees on the basis
of appropriate exchange rates.
Statement of Subsidiaries under Section 212 of the Companies Act, 1956
Amount in Rs.
Name of the
Subsidiary Vishwa Zylog Zylog Zylog
Vikas Systems Systems Systems
Services (Europe) (India) Asia
Pacific
Limited Limited Limited Pte
Limited
The Financial
Year of
the Subsidiary
Company March 31, March 31, March 31, March 31,
ended on 2015 2015 2015 2015
Holding
Company Zylog Zylog Zylog Zylog
Systems Systems Systems Systems
Limited Limited Limited Limited
Holding
Company
Interest 100% 100% 100% 100%
Shares held
by the
holding
Company in
the 2,50,000 15,64,701 3,15,00,000 19,06,389
Subsidiary
Company
Net aggregate
amount of profit
/ (Losses) of
the subsidiary
so far as it
concerns the
members of
holding company
and is not
dealt within
the Accounts of
Holding Company
a)For the
Financial
year ended on
March 31, (27,29,230) 2,16,52,734 (18,34,62,636) 55,85,507
b)For the previous
financial years
of the 6,08,74,065 11,58,43,431 (33,24,06,584) 4,17,84,278
subsidiary since
it became a
subsidiary.
Name of the Subsidiary Zylog BV Algorithm
Limited Solutions
Private
Limited
The Financial Year of
the Subsidiary Company March 31, March 31,
ended on 2015 2015
Holding Company Zylog Zylog
Systems Systems
Limited Limited
Holding Company Interest 100% 100%
Shares held by the
holding Company in the 1,25,000 100,000
Subsidiary Company
Net aggregate amount of
profit / (Losses) of the
subsidiary so far as
it concerns the members
of holding company and
is not dealt within the
Accounts of Holding
Company
a)For the Financial
year ended on March 31, 51,53,920 51,53,920
2015
b)For the previous
financial years of the 17,59,61,900 (1,77,50,457)
subsidiary since
it became a subsidiary.
11. DIRECTORS' RESPONSIBILITY STATEMENT
In terms of section 134(3) (c) read with section 134(5) of the
companies Act 2013 the directors to the best of their knowledge and
belief and according to information and explanation obtained by them,
confirm that,
(a) In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to any material departures;
(b) Such accounting policies have been selected and applied
consistently and such judgments and estimates have been made that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the company as at the end of the financial year 31st
March 2015 and of the profit of the company for the year ended 31st
March 2015.
(c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities;
(d) The annual accounts have been prepared on a "going concern" basis.
(e) Proper internal financial controls to be followed by the company
have been laid down and such internal financial controls were adequate
and were operating effectively
(f) Proper systems have been devised to ensure compliance with the
provisions of all applicable laws have been devised and such systems
were adequate and were operating efficiently
12. EXTRACT OF ANNUAL RETURN
An extract of annual Return in form MGT Â 9 is annexed and forms part
of this report
13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
OF THE COMPANIES ACT 2013
The company has not given loans , guarantees nor made any .investments
during the financial year under consideration.
14. PARTICULRS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts and arrangements with related parties are on arms length
basis and in the ordinary course of business. Form AOC-2 as required
under section 134(3) (h) is enclosed as annexure to this report.
15. CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business of the company during the
year under review
16. PUBLIC DEPOSITS
The company has not accepted any deposits from the public during the
financial year 2014-2015 within the meaning of Section 73 of the
Companies Act 2013 read with Companies (Acceptance of Deposits) Rules
2014 and there is no outstanding amount on account of principal or
interest as on date
17. REMUNERATION OF KEY MANAGERIAL PERSONNAL:
There is no remuneration paid to the Key Managerial Personnel in FY
2014-15.
18. SHARE CAPITAL:
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:
(a) Issue of equity shares with differential rights as to dividend,
voting or otherwise;
(b) Issue of Shares( including Sweat Equity Shares and ESOS) to
employees of the Company under the scheme.
19. BOARD EVALUATION
Pursuant to the provisions of Rule 4 of the Companies (Accounts) Rules,
2014, the Board has carried out an annual performance evaluation of its
own, the directors individually as well as the working of its
Committees (Audit, Nomination & Remuneration Committee and Stakeholders
Relationship Committee) and Independent Directors (without
participation of the relevant Director)
20. BOARD MEETINGS
During the year, 6 meetings of the Board of Directors were held. The
details of the meeting are furnished in the Corporate Governance
Report.
21. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE
Your company has no employees covered in terms of the provisions of
Section 197(12) of the Companies Act, 2013 read with Rules 5(2) of the
Companies (Appointment and Remuneration of Management Personnel) Rules,
2014.
Your company has paid any remuneration to the Managing Director
Disclosure pertaining to remuneration and other details as required
under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1)
of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 is not applicable .
S Name of the Director Median Remune-
ration Per Ratio(Remune-
ration to Remarks
No Remuneration
Per Annum Annum (INR) Director to
Median
(INR) Remuneration
Attached as
annexure
22. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
This is discussed in details in the Management Discussion and Analysis
Report.
23. RISK MANAGEMENT POLICY
The Company has taken adequate steps towards management and mitigation
of risks in a timely and effective manner. Your company has ensured
that, with proper Risk Company mechanism, timely detection of risks is
possible and effective control measures could be adopted for easy
resilience of any damage arising thereof. Management Discussions and
Analysis Report contained more details on the risk management policy of
the Company.
24. MATERIAL CHANGES
There were no material changes and commitments occurred after the
Closure of the financial year 2014-2015 that affect the financial
positions of the Company.
25. PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has in place a Prevention of Sexual Harassment policy in
line with the requirements of the Sexual Harassment of Women at the
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
26. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
Information required under Section 134 of the Companies Act 2013 read
with the Companies (Accounts) Rules 2014, on energy conservation,
technology absorption, foreign exchange earnings and outgo, is given in
Annexure and forms an integral part of this report.
27. CORPORATE GOVERNANCE
The Company adheres to the requirements of the code of corporate
governance as stipulated in clause 49 of the listing agreement with the
stock exchanges as well as to the standards set by the Securities and
Exchange Board of India. A report on corporate governance along with
certification of the managing director is attached in Annexure. A
certificate from the auditors of the company regarding compliance of
the conditions of corporate governance as stipulated by clause 49 of
the listing agreement is attached in Annexure. The Management
Discussion and Analysis Report is attached in Annexure.
28. ACKNOWLEDGEMENT
The Board acknowledges with gratitude the cooperation of its employees,
customers and bankers, the of the support of its vendors and suppliers
and the assistance of governmental agencies. The Board is particularly
grateful to the shareholders for continuing to support the company and
for continuing to repose their confidence in the company.
For and on behalf of the Board
s/d
Place: Chennai Ramanujam Sesharathnam
Date: 29-05-2015 Managing Director
Mar 31, 2014
The Members,
The Directors submit the 19l Annual Report of the Company along With
the audited financial statements for the financial year ended March 31,
20.14.
FINANCIAL RESULTS AND REVIEW OF OPERATION
During FY 2013-14, the company has posted a muted financial
performance, both at the standalone and consolidated level. Net Profit
at the consolidated level has come down from Rs. 2.99 crores in the
previous year to a net loss of Rs. 559.17 crores.
At standalone level, our loss after tax amounted to Rs. 437.91 crores
as against the previous year profit of Rs. 8.09 crores. On
consolidated basis, our profit/(loss) after tax amounted to (Rs. 559.17
crores) as against Rs. 2.99 crores of the previous year. This is
principally due to four factors. (1) Increase in
Depreciation/Amortization Charges to the extent of Rs. 71.96 crores,
which constitutes 14.9% of the revenue from operations compared to the
previous year''s 7.4%. (2) Employee benefit expenses forms 51.9% of the
operating revenue as against 43.0% in the previous year. (3) Project
related expenses stands at 37.4% on the revenue from operations
compared to the previous year''s ratio of 29.2%. (4) The cost escalation
on Operations and other expense rose to 30.4% on operating revenue
compared to the previous year''s recorded ratio of 13.3%. This is
primarily due to the write-off amount on account receivables amounting
to Rs. 213.11 crores.
These four factors coupled with losses suffered due to acute shortage
of human resources. Offshore has lost the technical engineer''s strength
of 2,107 during the FY 2013-14 and further recruitment of engineers has
been standing as a challenge due to the prevailing financial challenges
and instability arising out of liabilities with the lenders/banks. This
originated in the previous financial year due to the foreign currency
fluctuation that caused a severe flow to P&L account. The Indian rupee
which was at levels of Rs. 42 to a US dollar in October 2011 started to
depreciate sharply to levels of Rs. 55 within a short period and again
from Rs. 55 it steadily depreciated to levels Rs. 68 before settling to
current levels of Rs. 62 to a USD. The working capital PCFC loan limits
was fixed in INR but availment & repayment was in USD- Steep Rupee
depreciation caused overdrawn situation in the account. Banks either
adjusted or sent-letters to adjust the overdrawn immediately without
any delay irrespective of whether the receivables are overdue or not,
thus the Rupee depreciation effected in PCFC limit shrinkage. This
explains the huge Rs. 200 crores forex loss suffered by the company
cumulatively during the period starting from October 2011 until
September 2013 ie spread over 3 financial years of FY 2012, FY 2013 &
FY 2014. The company had no option but to request the bank either to
fix the Jimits in US$ or increase the limit by the depreciated portion
as the availment has always been PCFC as majority of expenses being in
US$. Unfortunately, both the requests were not considered and thus
leading to overdrawn situation. Due to prior customer contractual
commitments, the company had to borrow outside consortium by way of
unsecured loan from banks/NBFCs to tie up the WC deficit. This created
an increased expense in interest costs. Further lot of capex items
which were in WIP the previous year went on stream this year for which
Depreciation/amortization expenses had to be taken.
The net worth of the company at the standalone level has decreased to
Rs. 512.98 crores from Rs. 819.53 crores and the group net worth has
decreased to Rs. 411.09 crores from Rs. 911.57 crores. The EPS stood at
- 2.46 (Rs. 52.86 PY) for standalone and Rs. 0.91 (Rs. 62.14 PY) for
the group for the FY ending 31st March 2014.''
Liquidation proceedings:_Few creditors have filed winding-up petition
against the company in the High court. Against one of such petition,
High court had given an order for winding up, which we have contested
with the prayer to stay the said order. Hearings are happening at
regular intervals. In the recent hearing, the bench in which we
appealed for the stay have categorically instructed, that the company
should not be wound-up by OL and the case be transferred to a single
judge company''s court to hear further on this case. However, the bench
further instructed that regular statutory compliances and operations of
the company should not be curtailed in any manner
CORPORATE DEBT RESTRUCTURING (CDR)
¦ The company is filing the required paperwork towards the CDR
initiative and is taking the required steps to address the financial
restructuring. In this regard, steps are being taken to form the Joint
Lender''s Forum (JLF). -
SUBSIDIARIES
The Company has 7 Subsidiaries as on March 31, 2014.
There has been no material change in the nature of the business of the
Subsidiaries. A statement containing brief financial details of the
subsidiaries is included in the Annual Report.
As required under the Listing Agreements entered into with the Stock
Exchanges, a consolidated financial statement of the Company and all
its subsidiaries is attached. The Consolidated financial statements
have been prepared in accordance with the relevant accounting standards
as prescribed under Section 211(3C) of the Act. These financial
statements disclose the assets, liabilities,, income, expenses and
other details of the Company and its subsidiary companies.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the balance sheet, statement of profit
and loss and other documents of the subsidiary companies with the
balance sheet of the Company. A statement containing brief financial
details of the Company''s subsidiaries for the financial year ended
March 31, 2014 is included in the Annual Report. The annual accounts of
these subsidiaries and the related detailed information will be made
available to any member of the Company seeking such information at any
point of time and are also available for inspection by any member of
the Company at the registered office of the Company. The Company shall
furnish a copy of the details of annual accounts of subsidiaries to any
member on demand.
SHARE CAPITAL
At the end of the financial year 2013-14, the Company''s Equity share
capital stands at Rs. 2949.64 lakhs consisting of 5,89,92,840 equity
shares of Rs. 5/- each compared to the previous years'' share capital of
Rs. 1644.64 lakhs consisting of 3,28,92,840 equity shares of Rs. 5/-
each.
DIVIDEND
Considering the net loss of Rs. 437.91 crores, the Board of Directors
has not recommended any dividend for the FY ending 31.03.2014.
CORPORATE GOVERNANCE
A separate section on Corporate Governance forming part of the
Directors Report and the certificate from the Company''s auditors
confirming compliance of Corporate Governance norms as stipulated in
Clause 49 of the Listing Agreement with National Stock Exchange of
India (NSE) and Bombay Stock Exchange of India (BSE) are included in
the Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to clause 49 of the''Listing Agreement with the Stock
Exchanges, we annex herewith a Statement on Management Discussion and
Analysis which forms part of the Directors report.
A cautionary note: Certain statements in the Management Discussion and
Analysis section may be forward looking and are stated as required by
applicable laws and regulation. Many factors may affect the actual
results, which could be different from what we envisage in terms of
future performance and outlook.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Section 217 (l)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of particulars in the
report of the Board of Directors) Rules, 1988, are provided in the
Annexure 2 to the directors'' report section.
PARTICULARS OF EMPLOYEES
- The information required under Section 217(2A) of the Act and the
Rules made thereunder, will be provided to the Share Holder upon
receiving specific request Hence in terms of Section 219(l)(b)(iv) of
the Act, the report and accounts are being sent to the shareholders
excluding.the aforesaid information.
FIXED DEPOSITS
The Company has not accepted any public deposits and, as such, no
amount on account of principal or interest was outstanding as on date
of balance sheet.
DIRECTORS
In accordance with Article 99 of the Articles of Association, Mr. K.S.
Subramanian, Director retires by rotation at the ensuing Annual General
Meeting and being eligible offers himself for reappointment.
Mr. M. Gajhanathan and Mr. K.S. Subramanian, Independent Directors of
the Company has been proposed for appointment for a tenure of three
years with effect from the ensuing Annual General meeting having regard
to comply with the provisions of Section 149 of the Companies Act,
2013.
The Board of Directors seeks your support for passing of the
resolutions for appointment/ re-appointment of the above Directors.
During the Financial year 2012-13 Mr. M.P. Mehrotra was appointed
as''director., Mr. R. Sivasubramanian was appointed as director in
financial year 2013-14 and both have resigned from the Board during the
financial year 2013-14.
The Board took on record its appreciation the valuable services
rendered by all the above persons during their tenure as Directors of
the Company.
After the resignations/appointment of the above Directors all the
committees viz Audit Committee, Remuneration Committee & Share Holders
& Investor Grievance Committee have been duly reconstituted where ever
necessary as detailed in the Corporate Governance Report attached with
this report.
DIRECTORS'' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA)
OF THE COMPANIES ACT, 1956
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that:
(a) In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(b) Such accounting policies have been selected and applied
consistently and such judgments and estimates have been made 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 31st March
2014 and of the profit of the company for the year ended 31st March
2014;
(c) Proper and sufficient care has been 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;
(d) The annual accounts have been prepared on a "going concern" basis.
AUDITORS
M/s Ramadoss & Co Chartered Accountants, Chennai retire as the Auditors
of the Company at the conclusion of the ensuing Annual General Meeting
and are eligible for reappointment. As required under Section 139 & 141
of the Companies Act, 2013 and the Rules made thereunder, the Company
has obtained the written confirmation from M/s Ramadoss & Co Chartered
Accountants that their appointment, if made, would be in conformity
with the limits specified in the said section.
Directors Reply to the Auditor''s Remarks:
A substantial loss of Rs. 200 Crores due to appreciation of US Dollar
Vs the Indian rupee created shrinkage in working capital limits as the
Loans.were in dollar denomination but limit was set in INR. Further the
company couldn''t tie up additional sanctioned working capital limit in
the subsequent year creating a deficit of additional Rs. 130 crores.
This happened during the period when Zylog was in parallel investing in
expansion plans across different regions most of which were highly
capital intensive in nature, but had the capability to provide solid&
consistent returns after couple of years. Naturally the holding
capacity of the company got deteriorated^ due to the losses suffered
during the period & hence it had to abandon some plans mid-way which
created further losses.
This mismatch in cash flow resulted in slippage in pay roll processing,
vendor payment & payments related to statutory dues like Dividend, TDS
etc. The management is taking several measures on the operational
front, lots of optimization/consolidation measures was put across all
projects across the globe to manage and improve the cash flow, the
results of which will naturally take some time to fructify but the
management is confident of steering the company back on track in
another few quarters.
The Company shall take necessary Initiative to file Form-2 for the
allotment of shares during the year to the tune of Rs.131.36 crores in
respect of GDR issue.
The Board of Directors of the Company wish to state that the Company
has duly obtbined all the necessary approvals for issuance of GDR and
has all sufficient evidences towards the utilization of funds. The
Company shall take all necessary initiatives to produce all the
evidences to the satisfaction of the Auditors. ''
The Board of Directors of the Company has duly met and has minuted the
events of the Meetings of the Company. The Company shall make necessary
arrangements to produce the copy of the minutes for the verification of
the Auditors.
HUMAN RESOURCES
Despite the crisis the company faced due to working capital mismatch it
did not resort to retrenchment of employees. The employees were briefed
on the crisis and were requested to provide the company with a
breathing period for cash flows to get stabilized but those who wanting
to leave the organization were allowed to do so. A number of resources
at the offshore locations in Chennai & Hyderabad & Bangalore left the
organization while the Onsite offices has gone through relatively a
lesser impact.
ENVIRONMENTAL AWARENESS
"Go Green" initiatives to conserve resources has been initiated in the
Company. Steps required for conserving power across all delivery
centers are being undertaken. The Company has also taken initiatives
within its office buildings to reduce electrical power, water and paper
consumption. These initiatives shall be taken forward at a sustained
pace.
ACKNOWLEDGEMENTS
Your directors profusely thank the stakeholders, clients, vendors,
investors and bankers for their continued support of Company''s growth.
Your directors place on record their immense appreciation of the
contribution made by every employee atall levels, who through their
commitment, competency, hard work, solidarity, cooperation and support
have enabled the company to achieve this growth. Your directors
sincerely thank the Government of India, particularly the Department of
Electronics, the Customs and Excise Departments, Software Technology
Park - Chennai, the Ministry of Commerce, Reserve Bank of India,
Department of Telecommunications, State Government and other Government
agencies for their support during the year, and look forward to their
continued support in the future.
For and on behalf of the Board of Directors
of Zylog Systems Limited
s/d
Place: Chennai Ramanujam Sesharathnam
Date : May 30, 2014 Managing Director & Co .
Mar 31, 2013
The Directors submit the Annual Report of the Company along with the
audited financial statements for the financial year ended March 31,
2013.
FINANCIAL RESULTS AND REVIEW OF OPERATION
During FY 2012-13, the company has posted a muted financial
performance, both at the standalone and consolidated level. Net Profit
at the consolidated level has come down from Rs. 204.40 crores in the
previous year to Rs. 2.99 crores.
At standalone level, our loss after tax amounted to Rs. 8.09 crores as
against the previous year profit of Rs. 173.89 crores. On consolidated
basis, our profit after tax amounted to Rs. 2.99 crores as against Rs.
204.40 crores. This is principally due to three factors. Increase in
Finance (interest) Costs to the tune of Rs. 63 Crores when compared to FY
2012. Increase in Depreciation/Amortization Charges to the extent of Rs.
118 crores & Bad debts written off to the tune of Rs. 20 Crores. These
three factors coupled with losses suffered due to foreign currency
fluctuation dealt a severe flow to P&L account. The Indian rupee which
was at levels of Rs. 42 to a US dollar in October 2011 started to
depreciate sharply to levels of Rs. 55 within a short period and again
from Rs. 55 it steadily depreciated to levels Rs 68 before settling to
current levels of Rs. 62 to a USD. The working capital PCFC loan limits
was fixed in INR but a ailment & repayment was in USD. Steep Rupee
depreciation caused overdrawn situation in the account. Banks either
adjusted or sent letters to adjust the overdrawn immediately without
any delay irrespective of whether the receivables are overdue or not,
thus the Rupee depreciation effected in PCFC limit shrinkage. This
explains the huge Rs. 200 crores forex loss suffered by the company
cumulatively during the period starting from October 2011 until
September 2013 ie spread over 3 financial years of FY 2012, FY 2013 &
FY 2014. The company had no option but to request the bank either to
fix the limits in US$ or increase the limit by the depreciated portion
as the a ailment has always been PCFC as majority of expenses being in
US$. Unfortunately, both the requests were not considered and thus
leading to overdrawn situation. Due to prior customer contractual
commitments, the company had to borrow outside consortium by way of
unsecured loan from banks/NBFCs to tie up the WC deficit. This created
an increased expense in interest costs. Further lot of capex items
which were in WIP the previous year went on stream this year for which
Depreciation/amortization expenses had to be taken.
The net worth of the company has decreased to Rs. 819.53 crores from Rs.
827.61 crores whereas the group net worth has increased to Rs. 911.57
crores from Rs. 909.00 crores. The EPS stood at -2.46 (Rs. 52.86 PY) for
standalone and Rs. 0.91 (Rs. 62.14 PY) for the group for the FY ending 31st
March 2013.
CORPORATE DEBT RESTRUCTURING (CDR)
The Board of Directors are striving hard to bring out the Company from
the present severe financial crises through CDR. The Directors are in
the process of approaching the Consortium bankers on this matter
through the Professional Consultants.
SUBSIDIARIES
The Company has 8 Subsidiaries as on March 31, 2013.
There has been no material change in the nature of the business of the
Subsidiaries. A statement containing brief financial details of the
subsidiaries is included in the Annual Report.
As required under the Listing Agreements entered into with the Stock
Exchanges, a consolidated financial statement of the Company and all
its subsidiaries is attached. The Consolidated financial statements
have been prepared in accordance with the relevant accounting standards
as prescribed under Section 211(3C) of the Act. These financial
statements disclose the assets, liabilities, income, expenses and other
details of the Company and its subsidiary companies.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the balance sheet, statement of profit
and loss and other documents of the subsidiary companies with the
balance sheet of the Company. A statement containing brief financial
details of the Company''s subsidiaries for the financial year ended
March 31, 2013 is included in the Annual Report. The annual accounts of
these subsidiaries and the related detailed information will be made
available to any member of the Company seeking such information at any
point of time and are also available for inspection by any member of
the Company at the registered office of the Company. The Company shall
furnish a copy of the details of annual accounts of subsidiaries to any
member on demand.
SHARE CAPITAL
At the end of the financial year 2012-13, the Company''s Equity Share
Capital stands at Rs. 1,644.64 Lakhs consisting of 3,28,92,840 Equity
Shares of Rs. 5/- each. The Board of Directors of the Company in their
meeting held on May 25, 2012 approved sub-division of each and every
existing equity share of Rs. 10/- each fully paid up into 2 equity shares
of Rs. 5/- each fully paid up, for which the approval of the share
holders been obtained in the Extraordinary General Meeting held on June
20, 2012.
DIVIDEND
Considering the sharp dip in profitability, The Board of Directors has
not recommended any dividend for the FY 31.03.2013.
CORPORATE GOVERNANCE
A separate section on Corporate Governance forming part of the
Directors Report and the certificate from the Company''s auditors
confirming compliance of Corporate Governance norms as stipulated in
Clause 49 of the Listing Agreement with National Stock Exchange of
India (NSE) and Bombay Stock Exchange of India (BSE) are included in
the Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to clause 49 of the Listing Agreement with the Stock
Exchanges, we annex herewith a Statement on Management Discussion and
Analysis which forms part of the Directors report.
A cautionary note: Certain statements in the Management Discussion and
Analysis section may be forward looking and are stated as required by
applicable laws and regulation. Many factors may affect the actual
results, which could be different from what we envisage in terms of
future performance and outlook.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Section 217 (1)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of particulars in the
report of the Board of Directors) Rules, 1988, are provided in the
Annexure 2 to the directors'' report section.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Act and the Rules
made there under, will be provided to the Share Holder upon receiving
specific request. Hence in terms of Section 219(1)(b)(iv) of the Act,
the report and accounts are being sent to the shareholders excluding
the aforesaid information.
FIXED DEPOSITS
The Company has not accepted any public deposits and, as such, no
amount on account of principal or interest was outstanding as on date
of balance sheet.
DIRECTORS
In accordance with Article 99 of the Articles of Association, Mr.M.
Gajanathan, Director retire by rotation at the ensuing Annual General
Meeting and being eligible has offered himself for re- appointment.
Further, Mr.K.S.Subramanian was appointed as the Additional Director by
the Board of Director in the Board meeting held on February 14, 2014 in
accordance with the provisions of section 260 of the Companies Act,
1956.
Pursuant to Section 161 of the Companies Act, 2013 he holds office up to
the date of this Annual General Meeting. In this regard the Company has
received request in writing from a member proposing his candidature for
appointment as Director of the Company in accordance with the
provisions of section 257 and other applicable provisions of the
Companies Act, 1956.
During the Financial year 2012-13 and up to the date of this Report the
following directors were resigned from the Board.
1. Mr. S.Rajagopal
2. Mr. V.K.Ramani
3. Mr. A.P. Vasanth Kumar
4. Mr. P. Srikanth
During the Financial year 2012-13 Mr. M.P. Mehrotra was appointed as
director, Mr. R. Sivasubramanian was appointed as director in
financial year 2013-14 and both have resigned from the Board during the
financial year 2013-14.
The Board took on record its appreciation the valuable services
rendered by all the above persons during their tenure as Directors of
the Company.
After the resignations/appointment of the above Directors all the
committees viz Audit Committee, Remuneration Committee & Share Holders
& Investor Grievance Committee have been duly reconstituted where ever
necessary as detailed in the Corporate Governance Report attached with
this report.
DIRECTORS'' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA)
OF THE COMPANIES ACT, 1956
Pursuant to Section 217(2AA) of the Companies Act, 2000, the Directors
confirm that:
(i) they accept responsibility for the integrity and objectivity of
these accounting statements;
(ii) the financial statements are prepared in accordance with the
guidelines and standards of the ICAI and Companies Act 1956, to the
extent applicable. There are no material departures from the
above-mentioned standards;
(iii) such standard accounting policies have been applied consistently,
except as otherwise stated;
(iv) the judgments and estimates have been made on a reasonable and
prudent basis so that the financial statements provide a true and fair
view of the state of affairs of the Company at the end of the financial
year;
(v) the directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(vi) the Annual Accounts are prepared on a going concern basis and on
an accrual basis.
AUDITORS
M/s. Brahmayya & Company, the statutory Auditor of the company,
expressed their unwillingness to continue as a Statutory Auditors, The
Board has appointed M/s Ramadoss & Company as Statutory Auditor of the
Company after obtaining the share holders approval at Extra General
Body Meeting held on February 5, 2014. The Company has already
submitted the Restated audited Financial results for Quarter and year
ended 31st March 2013 authenticated by M/s Ramadoss & Company, the new
statutory Auditor to all the stock exchanges.
M/s Ramadoss & Co Chartered Accountants, Chennai retire as the Auditors
of the Company at the conclusion of the ensuing Annual General Meeting
and being eligible pursuant to Section 224 (1B) of the Companies Act,
1956, have expressed willingness to accept office, if re-appointed.
Directors Observation on Auditor''s Remarks
NON PAYMENT OF DIVIDEND & TDS:
A substantial loss of Rs. 200 Crores due to appreciation of US Dollar Vs
the Indian rupee created shrinkage in working capital limits as the
Loans were in dollar denomination but limit was set in INR. Further the
company couldn''t tie up additional sanctioned working capital limit in
the subsequent year creating a deficit of additional Rs. 130 crores. This
happened during the period when zylog was parallelly investing in
expansion plans across different regions most of which were highly
capital intensive in nature, but had the capability to provide solid &
consistent returns after couple of years. Naturally the holding
capacity of the company got deteriorated due to the losses suffered
during the period & hence it had to abandon some plans mid way which
created further losses.
This mismatch in cash flow resulted in slippage in pay roll processing,
vendor payment & payments related to statutory dues like Dividend, TDS
etc. The management is taking several measures on the operational
front, lots of optimization/consolidation measures was put across all
projects across the globe to manage and improve the cash flow, the
results of which will naturally take some time to fructify but the
management is confident of steering the company back on track in
another few quarters.
HUMAN RESOURCES
Despite the crisis the company faced due to working capital mismatch it
did not resort to retrenchment of employees. The employees were briefed
on the crisis and were requested to provide the company with a
breathing period for cash flows to get stabilized but those who wanting
to leave the organization were allowed to do so. A number of resources
at the off shore locations in Chennai & Hyderabad & Bangalore left the
organization while the Onsite employees more or less remained intact.
ENVIRONMENTAL AWARENESS
"Go Green" initiatives to conserve resources has been initiated in the
Company. Steps required for conserving power across all delivery
centres are being undertaken. The Company has also taken initiatives
within its office buildings to reduce electrical power, water and paper
consumption. These initiatives shall be taken forward at a sustained
pace.
ACKNOWLEDGEMENTS
Your directors profusely thank the stakeholders, clients, vendors,
investors and bankers for their continued support of Company''s growth.
Your directors place on record their immense appreciation of the
contribution made by every employee at all levels, who through their
commitment, competency, hard work, solidarity, cooperation and support
have enabled the company to achieve this growth. Your directors
sincerely thank the Government of India, particularly the Department of
Electronics, the Customs and Excise Departments, Software Technology
Park - Chennai, the Ministry of Commerce, Reserve Bank of India,
Department of Telecommunications, State Government and other Government
agencies for their support during the year, and look forward to their
continued support in the future.
For and on behalf of the Board of Directors
of Zylog Systems Limited
-s/d -s/d-
Sudarshan Venkatraman Ramanujam Sesharathnam
Chairman & CEO Managing Director & COO
Place: Chennai
Date: February 14, 2014
Mar 31, 2012
The Directors submit the Annual Report of the Company along with the
audited financial statements for the financial year ended March 31,
2012:
FINANCIAL RESULTS
Rs.in lakhs except per share data
Year ended March 31, Standalone Consolidated
2012 2011 2012 2011
Operating revenue 1,21,876.16 91,584.34 2,27,285.49 1,91,567.76
Other Income 1,352.76 240.11 1,834.12 491.88
Operating Profit (PBDIT) 32,365.51 22,425.39 41,343.44 29,318.87
Interest 2,455.06 2,371.70 4,523.86 4,080.39
Depreciation 3,806.65 3,023.20 6,769.68 5,150.86
Prior period adjustments - - 56.41 13.76
Profit before tax (PBT) 27,456.56 17,270.60 31,827.61 20,565.74
Taxes 10,067.93 5,158.68 11,290.87 6,075.47
Profit after tax (PAT) 17,388.63 12,111.93 20,536.74 14,490.27
Less: Minority interest - - - -
Add: Share of profit
of associate - - (96.83) 24.35
Net Profit for the year 17,388.63 12,111.93 20,439.91 14,514.62
Dividend recommended 1,644.64 1,315.71 1,644.64 1,315.71
Dividend tax 266.80 218.53 266.80 218.53
Transferred to
general reserve 2,000.00 1,500.00 2,000.00 1,500.00
Balance carried forward to
balance sheet 52,554.54 39,077.37 58,913.03 42,411.89
Paidupcapital 1,644.64 1,644.64 1,644.64 1,644.64
Reserves & Surplus 81,116.84 65,639.67 89,255.65 69,268.91
Net Worth 82,761.49 67,284.31 90,900.29 70,913.55
Earnings per Share 105.73 73.64 124.28 88.25
RESULTS OF OPERATION
During FY 2011-12, the company posted an excellent financial
performance, both at the standalone and consolidated level.The
prospects for the company have improved immeasurably in spite of
challenging global economic climate. Each of the subsidiaries has
incrementally added value in its area of operation, both in the
geographical sense and also in the particular niche offering that is
the hallmark of the subsidiary in question. Net Profit at the
consolidated level has continued to climb steeply at the rate of 41%
from Rs. 145.15 crores in the previous year to Rs. 204.40 crores. Total
Revenue for Zylog Systems Limited was Rs. 1,218.76 crores as against Rs.
915.84 crores in the previous year, representing a growth of 33%.
At standalone level, our profit after tax amounted to Rs. 173.89 crores
(14.27% of revenue) as against Rs. 121.12 crores (13.22% of revenue),
thus representing an increase of 43.57% over the previous year. On
consolidated basis, our profit after tax amounted to Rs. 204.40 crores
(8.99% of revenue) as against Rs. 145.15 crores (10.29% of revenue).The
net worth of the company has increased to Rs. 827.61 crores from Rs. 672.84
crores whereas the group net worth has increased to Rs. 909 crores from Rs.
709.14 crores.The EPS has improved to Rs. 105.73 (Rs. 73.64 PY) for
standalone and Rs. 124.28 (Rs. 88.25 PY) for the group.
Tax benefits extended to 100% Export Oriented Unit ("EOU") registered
with SoftwareTechnology Parks of India (STPI) have been fully withdrawn
by the Government. Hence, tax burden on the software exports has
substantially increased for the offshore revenue. However, the company
having set up an Offshore Development Centre in Special Economic Zone
in Siruseri,Chennai to implement new projects, has helped in reducing
the tax burden to some extent. However, the full effect of the tax
benefits emanating from this move can be seen only in the forthcoming
years.
SUBSIDIARIES
The Company had 8 Subsidiaries at the beginning of the year. One
Subsidiary, Zylog Systems M.E. FZE was incorporated in tax free zone at
Sharjah, during the year.The total number of Subsidiaries as on March
31, 2012 is 9.
There has been no material change in the nature of the business of the
Subsidiaries.A statement containing brief financial details of the
subsidiaries is included in the Annual Report.
Consolidated financial statement of the Company and all its
subsidiaries is attached.The Consolidated financial statements have
been prepared in accordance with the relevant accounting standards as
prescribed under Section 211(3C) of the Act.These financial statements
disclose the assets, liabilities, income, expenses and other details of
the Company and its subsidiary companies.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of
Corporate Affairs vide its circular dated February 8, 2011 has granted
general exemption from attaching the balance sheet, statement of profit
and loss and other documents of the subsidiary companies with the
balance sheet of the Company.A statement containing brief financial
details of the Company's subsidiaries for the financial year ended
March 31, 2012 is included in Annexure 1 to this report.The audited
annual accounts of these subsidiaries and the related detailed
information will be made available on request and are also available
for inspection by any member of the company during business hours at
the registered office of the Company.
SHARE CAPITAL
At the end of the financial year the Company's Equity Share Capital
stands at Rs. 1,644.64 Lakhs consisting of 1,64,46,420 Equity Shares of Rs.
10/- each.The Board of Directors of the Company in their meeting held
on May 25, 2012 approved sub-division of each and every existing equity
share of Rs. 10/- each fully paid up into 2 equity shares of Rs. 5/- each
fully paid up, subject to approval of shareholders in the Extraordinary
General Meeting held on June 20, 2012.
DIVIDEND
Based on the Company's performance, the Directors are pleased to
recommend for approval of the members a final dividend of Rs. 10/- per
share for the financial year 2011-12 on the capital of 1,64,46,420
equity shares of Rs. 10/- each.The final dividend, if approved by the
members would involve a cash outflow of Rs. 1,911.44 lakhs including
dividend tax.
TRANSFERTO RESERVES
Your Directors propose to transfer Rs. 2,000 Lakhs to the general reserve
out of the amount available for appropriations and an amount of Rs.
52,554.54 Lakhs is proposed to be retained in the statement of profit
and loss.
STRATEGIC INVESTMENTS & ACQUISITIONS
The Company continues to invest heavily in its Products & solutions
space which is the main differentiator vis - a à vis other companies in
the IT Software Development space.We now have customers in newer
geographies such as the Carribean, South Africa, the Middle East and
Australia. Our flagship solutions such as Field Power, Smart Migrator
and Bank.Companion have won increasing traction, entirely based on
existing customer references. So this goes to show the exemplary
performance that Zylog is notching up in the market amongst the
stiffest competition offered by our peers who are mainly based in North
America and Europe. It is also gratifying to know that, despite our
relative size, we command huge respect by means of representation on
the Technology Committee/Board of industry leaders such as Sun
MicroSystems.As our forte is increasingly innovation and how to
leverage it by making use of cutting edge technology to solve business
problems, this kind of involvement at the highest level brings us kudos
and ensures that we are noticed in the marketplace.We have opened up
development centres in Dubai and Malaysia to serve better our existing
customers in those regions and also to take advantage of
investor-friendly tax regimes offered by the said countries.Thus we
will be in a better position to consolidate and expand our client base
as both Dubai and Malaysia are very much implementing to be regional
hubs to vast prosperous hinterlands such as Saudi Arabia and other
wealthy oil-rich states and also latterly, South East Asia as a region
in its own right with huge potential, to attract inward investment by
providing high class infrastructure and other benefits to global
corporations such as Zylog.
Much of our vision comes from wanting to be the kind of business that
accommodates several objectives including innovative excellence,
customer care, attention to detail, attending to complementary markets
and verticals and giving fullest respect to specialized tools or
solutions within the software technological arena, however small by
acquiring companies with those solutions and integrating them within
their stable of offerings. Our growth strategy has always been by means
of the twin methods of organic and inorganic means which subsequently
complement each other over a period of time. Following an acquisition,
the customer pools of both acquiring and acquired entity get enlarged,
thereby enlarging the revenue pool and gradually removing the
previously clear lines of demarcation between the two entities.
Customer mining is a very large source of our revenue as we always look
to work existing customers in prospecting for new ones, either by
geography or business vertical.We continue to look to acquire suitable
target companies with unfulfilled potential which will pay full justice
to our various objectives outlined above.
CORPORATE GOVERNANCE
A separate section on Corporate Governance forming part of the
Directors Report and the certificate from the Company's auditors
confirming compliance of Corporate Governance norms as stipulated in
Clause 49 of the ListingAgreement with National Stock Exchange of India
(NSE) and Bombay Stock Exchange of India (BSE) are included in the
Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to clause 49 of the Listing Agreement with the Stock
Exchanges, we annex herewith a Statement on Management Discussion and
Analysis which forms part of the Directors report.
A cautionary note: Certain statements in the Management Discussion and
Analysis section may be forward looking and are stated as required by
applicable laws and regulation. Many factors may affect the actual
results, which could be different from what we envisage in terms of
future performance and outlook.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Section 217 (1)(e) of the Companies
Act, 1956,read with the Companies (Disclosure of particulars in the
report of the Board of Directors) Rules, 1988, are provided in the
Annexure 2 to the directors' report section.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Act and the Rules
made thereunder,is provided in annexure forming part of the report. In
terms of Section 219(1)(b)(iv) of the Act, the report and accounts are
being sent to the shareholders excluding the aforesaid annexure.Any
shareholder interested in obtaining copy of the same may write to the
Company Secretary.
ADVISORY COMMITTEE
The Advisory Committee of the Company is headed by Mr.S. Rajagopal, who
is also an Independent Director of the Company and comprises of eminent
persons viz., Mr. Ratnakar Hegde, former Executive Director of Union
Bank of India and Mr.T. Valliappan, Director, Oriental Bank of
Commerce Ltd.The Advisory Committee met 3 times during the current
fiscal to review the business.
QUALITY INITIATIVES
Quality and best practices define the foundation of a company.Your
company is an ISO 9001:2008 qualities certified Company and CMM Level 3
assessed Company.Your company continuously leverages cutting edge
tools, methodologies and benchmark standards to exceed the expectations
of our customers.We, as an IT Solution provider, will continue to
strive for excellence in all areas of business, guarantee the quality
of its software products at all stages of development and build the
highest quality standards.Your Company follows the most widely used
paradigms for QA management, PDCA (Plan-Do-Check-Act) approach, also
known as the Shewhart cycle.The main goal of QA is to ensure that the
product / service fulfills or exceeds customer expectations. An
independent audit team, who reports directly to the Managing Director,
ensures proper implementation of all the control functions.The audit
team conducts regular internal audits, intimates the non-conformities
found during such audits, ensures that necessary corrective and
preventive actions are taken and furnishes necessary summary reports to
the Senior Management.
We have developed and implemented control systems for software
development, for information security and for managerial functions.
Policies, processes and procedures have been developed for each control
system and these are placed in the company's network to ensure their
availability to all the employees at all times.
AWARDS AND RECOGNITION
During the year, the Company has received various awards and
recognitions which marked Company's accomplishments in various fields.
Some of the awards and accolades received during the year have been
listed in Annexure 3 to this report.
FIXED DEPOSITS
The Company has not accepted any public deposits and, as such, no
amount on account of principal or interest was outstanding as on date
of balance sheet.
DIRECTORS
In accordance with Article 99 of the Articles of Association, Mr. S.
Rajagopal , Director retire by rotation at the ensuing Annual General
Meeting and being eligible has offered himself for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA)
OF THE COMPANIES ACT, 1956
Pursuant to Section 217(2AA) of the Companies Act, 2000, the Directors
confirm that:
(i) they accept responsibility for the integrity and objectivity of
these accounting statements;
(ii) the financial statements are prepared in accordance with the
guidelines and standards of the ICAI and Companies Act 1956, to the
extent applicable.There are no material departures from the
above-mentioned standards;
(iii) such standard accounting policies have been applied consistently,
except as otherwise stated;
(iv) the judgments and estimates have been made on a reasonable and
prudent basis so that the financial statements provide a true and fair
view of the state of affairs of the Company at the end of the financial
year;
(v) the directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(vi) the Annual Accounts are prepared on a going concern basis and on
an accrual basis.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai retire as the
Auditors of the Company at the conclusion of the ensuing Annual General
Meeting and being eligible pursuant to Section 224 (1B) of the
Companies Act, 1956, have expressed willingness to accept office, if
re-appointed.The Audit Committee in their meeting held on May 25, 2012
has recommended the re- appointment of M/s Brahmayya & Co., Chartered
Accountants,Chennai. The Audit Committee has also approved
re-appointment of M/s Ketan Pathak, CPA, USA as USA Branch Auditor of
the Company for the year ended March 31, 2013.
HUMAN RESOURCES
Employees are vital and most valuable assets possessed by the company,
as this business is people-centric.Your company continues to attract
highly talented individuals possessing skill sets with an'x'
factor.Your company rightly appeals to young, qualified people who want
to make a difference in their contribution and be at the forefront of
change which is very much the hallmark that we pursue to the highest
degree, as we cross several pioneering frontiers in our pursuit of
perfection. Employee strength was 5137 at the end of the year compared
to 4302 last fiscal and continues to be on an upward trend,given the
challenges we have set ourselves. The effective and optimal
utilisation of precious onsite and offshore staff resources remains one
of the key near term objectives, going forward.
ENVIRONMENTAL AWARENESS
"Go Green" initiatives to conserve resources has been initiated in the
Company. Steps required for conserving power across all delivery
centres are being undertaken.The Company has also taken initiatives
within its office buildings to reduce electrical power, water and paper
consumption.These initiatives shall be taken forward at a sustained
pace.
ACKNOWLEDGMENTS
Your directors profusely thank the clients, vendors, investors and
bankers for their continued support of Company's growth.Your directors
place on record their immense appreciation of the contribution made by
every employee at all levels, who through their commitment, competency,
hard work, solidarity, cooperation and support have enabled the company
to achieve this growth.Your directors sincerely thank the Government of
India, particularly the Department of Electronics, the Customs and
Excise Departments, Software Technology Park à Chennai, the Ministry of
Commerce, Reserve Bank of India, Department of Telecommunications,
State Government and other Government agencies for their support during
the year, and look forward to their continued support in the future.
For and on behalf of the Board of Directors
of Zylog Systems Limited
Sudarshan Venkatraman
Chairman & CEO
Ramanujam Sesharathnam
Managing Director & COO
Place : Chennai
Date : May 25, 2012
Mar 31, 2011
To the Members,
We are delighted to present the report on our business and operations
for the year ended March 31, 2011.
FINANCIAL RESULTS
Rs. in lakhs except per share data
Year ended March 31, Standalone Consolidated
2011 2010 2011 2010
Operating revenue 91,584.34 78,352.16 1,91,567.76 97,994.17
Other Income 240.11 439.40 491.88 459.92
Operating Profit (PBDIT) 22,665.50 15,825.66 29,783.86 17,955.12
Interest 2,371.70 1,167.97 4,053.49 1,449.08
Depreciation 3,023.20 2,842.36 5,150.86 3,370.39
Prior period adjustments - - 13.76 32.13
Profit before tax (PBT) 17,270.60 11,815.33 20,565.74 13,103.52
Taxes 5.158.68 2,600.70 6,075.47 2,857.85
Profit after tax (PAT) 12,111.93 9,214.63 14,490.27 10,245.68
Less: Minority interest - - 153.54
Less: Share of profit of associate - - 24.35 -
Net Profit for the year 12,111.93 9,214.63 14,514.62 10,092.14
Dividend recommended 1,315.71 986.79 1,315.71 986.79
Dividend tax 218.53 167.70 218.53 167.70
Transferred to general
reserve 1,500.00 1,000.00 1,500.00 1,000.00
Balance carried forward to
balance sheet 39,077.37 29,999.68 42,411.89 30,931.50
Paid up capital 1,644.64 1,644.64 1,644.64 1,644.64
Reserves & Surplus 65,639.67 55,061.98 69,268.91 55,886.27
Net Worth 67,284.31 56,706.63 70,913.55 57,876.07
Earnings per Share 73.64 56.03 88.25 62.30
RESULTS OF OPERATION
During FY 2010-11, the company posted an excellent financial
performance, both at the standalone and consolidated level. The
prospects for the company have improved immeasurably in spite of
challenging global economic climate. The full effect of the two
acquisitions, namely Brainhunter Inc, Canada and Matrix Primus Partners
Inc, USA during the tail end of the previous financial year was fully
brought out in the consolidated numbers, as total income almost doubled
from Rs 979.94 crores in the previous year to Rs 1915.6)8 crores in the
year ended March 2011. Net Profit at the consolidated level has
galloped at the rate of 44% from Rs 100.92
crores in the previous year to Rs 145.15 crores. Total Revenue for
Zylog Systems Limited was Rs 915.84 crores as against Rs 783.52 crores
in the previous year, representing a growth of 17%.
At standalone level, our profit after tax amounted to Rs 121.12 crores
(13.22% of revenue) as against Rs 92.15 crores (11.76% of revenue),
thus representing an increase of 31.44% over the previous year. On
consolidated basis, our profit after tax amounted to Rs 145.15 crores
(7.58% of revenue) as against Rs 100.92 crores (10.29% of revenue).The
net worth of the company has increased to Rs 672.84 crores from Rs
567.07 crores whereas the group net worth has increased to Rs 709.14
crores from Rs 578.76 crores.The EPS has improved to Rs 73.64 (Rs 56.03
PY) for standalone and Rs 88.25 (Rs 62.30 PY) for the group.
The Company continues to be a 100% Export Oriented Unit ("EOU")
registered with the Software Technology Parks of India ("STPI").The
Company also proposes to take up an office space at Siruseri, SIPCOT,
Chennai (a SEZ Unit) for its operation.The Company was enjoying tax
holiday for its export earnings under Section 10B of the Income tax
1961 till the financial year 2010-11 by virtue of being 100% EOU
registered with STPI. However the unit proposed to be set up in SEZ may
get its tax benefits as applicable. Funds raised during the IPO of the
company has been fully utilized towards the objects of the issue as per
the prospectus dated July 31st ,2007.
SUBSIDIARIES
As per Section 212 of the Companies Act, 1956, we are required to
attach the Directors' report, Balance Sheet, and Profit and Loss
account of our subsidiaries. The Ministry of Corporate Affairs,
Government of India vide its circular no.2/2011 dated February 8, 2011
has provided an exemption to Companies from complying with Section 212,
provided such companies publish the audited consolidated financial
statements in the Annual Report. Accordingly, the Annual Report 2010-11
does not contain the financial statements of our subsidiaries. The
audited annual accounts and related information of our subsidiaries,
where applicable, will be made available upon request. These documents
will also be available for inspection during business hours at our
registered office in Chennai, India.
The Company has eight subsidiaries. A brief description of the
performance of subsidiaries is given below:
- VishwaVikas Services Limited
Vishwa Vikas Services Limited has generated revenue of Rs 322.67 lakhs
(PY Rs 254.74 lakhs) with a net profit of Rs 25.04 lakhs (PY Rs 20.03
lakhs).
- Zylog Systems (Europe) Limited
Zylog Systems (Europe) Limited has recorded revenue of Rs 5,134.36
lakhs (PY Rs 4,115.45 lakhs) with a net profit of Rs 477.73 lakhs (PY
Rs 169.36 lakhs). During the year an investment of Rs 29, 09,672 was
made as Share capital of the Subsidiary.
- Zylog Systems (India) Limited
Zylog Systems (India) Limited has achieved revenue of Rs 4,560.86 lakhs
(PY " 1,163.35 lakhs) with a net profit of Rs 322.19 lakhs (PY Rs 39.92
lakhs). During the year the paid up share capital of Zylog Systems
(India) Limited was increased by Rs 3,140 lakhs and the authorized
share capital was increased to Rs 500 Llkhs.
- Zylog Systems Asia Pacific Pte Limited
Zylog Systems Asia Pacific Pte Limited has generated revenue of Rs
1,218.04 lakhs (PY Rs 884.84 lakhs) with a net profit of Rs 94.25 lakhs
(PY Rs 79.98 lakhs).
- Zylog BV Limited
Zylog BV Limited has generated revenue of Rs 6,665.22 lakhs (PY Rs
2,578.50 lakhs) with a net profit of Rs 133.28 lakhs (PY Rs 418.74
lakhs).
- Matrix Primus Partners Inc, USA
Matrix Primus Partners Inc, USA has recorded revenue of Rs 9,123.39
lakhs (PY Rs 810.06 lakhs) with a net profit of Rs 133.28 lakhs (PY Rs
93.18 lakhs).
- Algorithm Solutions Private Limited
Algorithm Solutions Private Limited has recorded revenue of Rs 558.84
lakhs (PY Rs 0.06 lakhs) with a net profit of Rs 18.97 lakhs (PY net
loss Rs 0.04 lakhs).
- Zylog Systems (Canada) Limited
Zylog Systems (Canada) Limited has generated revenue of Rs 76,481.44
lakhs (PY Rs 10,325.81 lakhs) with a net profit of Rs 236.73 lakhs (PY
Rs 184.44 lakhs).
The statement of subsidiaries under Section 212 (l)(e) has been
attached as Annexure to the Directors' Report.
SHARE CAPITAL
At the end of the financial year the Company's Equity Share Capital
stands at Rs. 1,644.64 Lakhs consisting of 16446420 Equity Shares ofRs.
10/- each.
DIVIDEND
Your Directors recommend a dividend of 80% i.e. Rs 8 per Equity Share
for the year ended March 31,2011 on 1,64,46,420 fully paid up Equity
Shares of Rs 10 each (PY Rs 6 per share on 1,64,46,420). If the
recommended Dividend is approved by the Members at the forthcoming
Annual General Meeting, the Dividend including the Dividend Tax will
absorb Rs 15.34 crores (Rs 11.54 croresPY).
TRANSFER TO RESERVES
Your Directors propose to transfer a sum of Rs 15 crores to General
Reserves (Rs 10 crores PY) out of the amount available for
appropriation and a sum of Rs 390.77 crores (Rs 299.99 crores PY) is
carried forward in the profit and loss account for standalone and a sum
of Rs 424.12 crores (Rs 309.32 crores PY) at the group level.
STRATEGIC INVESTMENTS & ACQUISITIONS
One of the largest acquisitions of the Company during the previous year
was M/s. Brainhunter Inc, Canada.The benefits that were envisaged
include access to new clients, new geographical areas and new service
and product offerings. This company was endowed with a superb client
base to which Zylog could market and sell its own products and
solutions. The other main plus point of the acquisition was that Canada
represented a stable and prosperous economy into which any business
that had a significant presence in the US like Zylog would want to add
its own footprint in Canada as a natural extension of its operations.
Integration of Brainhunter indeed had its own challenges which have
been successfully overcome, as the synergy of leveraging
Zylog's top management, business development, marketing and other
operational expertise has been fully put into practice. The
'Brainhunter' business that was acquired was purely an asset purchase
and not an equity purchase. This purchase was through our wholly owned
subsidiary, Zylog Systems (Canada) Limited. The business is now
recognized under the name of Zylog Systems (Canada) Limited. Once the
Company completely leverages Brainhunter's customer base to cross-sell
its own products and services, the benefits will accrue in subsequent
periods.This is entirely in line with Zylog's strategic vision that
seeks out target companies for acquisition which have substantial
untapped potential in their business prospects or have some
operational, financial or geographical constraints. During the year,
Zylog Systems (Canada) Limited has acquired 100% of the share capital
of Mindwire Inc. for a net consideration amounting to Rs 5,83,68,125.
This was an operational decision implemented to facilitate the running
of Business with Government Departments which contribute 30% of total
revenues of the subsidiary. Mindwire was a locally registered Canadian
company which had an excellent track record in conducting business with
Government Departments in Canada. One other acquisition during the
previous year, M/s Matrix Primus Partners Inc., USA has also performed
well contributing revenue of Rs. 91.23 cr with a net profit of Rs.
10.95 cr.
Your company has been doing well in various acquisitions from previous
financial years and has successfully integrated the acquired products,
solutions and services into its suite of offerings. These acquisitions
have helped the Company to penetrate the market deeper and cross-sell
its newly-acquired offerings to complementary markets, thus enlarging
its reach. Your Company continues to look out for suitable acquisitions
that shall be a leading edge in business and has potential to yield
substantial business benefits. Acquiring a company in a niche space
will have its own attractions amongst existing offerings. Also,
building up economies of scale in our product and service capabilities
proves to be a very important strategy as we target larger size
contracts with premier companies and governments around the world.
CORPORATE GOVERNANCE
Your Directors benchmark its corporate governance policies with the
best in the world. Your directors have reiterated your company's
philosophy on corporate governance. The increasing diversity of the
investing community and the integrated nature of global capital markets
render corporate governance a vital issue for investors. A separate
section on Corporate Governance forming part of the Directors Report
and the certificate from the Companys auditors confirming compliance of
Corporate Governance norms as stipulated in Clause 49 of the Listing
Agreement with National Stock Exchange of India (NSE) and Bombay Stock
Exchange of India (BSE) is included in the Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to clause 49 of the Listing Agreement with the Stock
Exchanges, we annex herewith a Statement on Management Discussion and
Analysis which forms part of the Directors report.
A cautionary note: Certain statements in the Management Discussion and
Analysis section may be forward looking and are stated as required by
applicable laws and regulation. Many factors may affect the actual
results, which could be different from what we envisage in terms of
future performance and outlook.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Sub-section (l)(e) of Section 217
of the Companies Act, 1956, read with the Companies (Disclosure of
particulars in the report of the Board of Directors) Rules, 1988, are
provided in the Annexure 2 to the directors' report section.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies
(Particulars of Employees) Rules, 1975, the names and other particulars
of employees are set out in the Annexure to the directors' report.
However, having regard to the provisions of Sec 219 (l)(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the aforesaid
information is being sent to all the members of the Company and others
entitled thereto. Any member interested in obtaining such particulars
may write to the Company Secretary at the registered office of the
Company.
ADVISORY COMMITTEE
The Advisory Committee of the Company is headed by Mr.S. Rajagopal, who
is also an Independent Director of the Company and comprises of eminent
persons viz., Mr. Ratnakar Hegde, former Executive Director of Union
Bank of India, Mr.T.Valliappan, Director, Oriental Bank of Commerce
Ltd. and Mr.Nanjappa, former Executive Director, Reserve Bank of India.
The Advisory Committee met 4 times during the current fiscal to review
the business.
QUALITY INITIATIVES
Quality and best practices define the foundation of a company. Your
company is an ISO 9001:2008 qualities certified Company and are being
assessed for CMMI Level 4.Your company continuously leverages cutting
edge tools, methodologies and benchmark standards to exceed the
expectations of our customers. We, as an IT Solution provider, will
continue to strive for excellence in all areas of business, guarantee
the quality of its software products at all stages of development and
build the highest quality standards .Your Company follows the most
widely used paradigms for QA management, PDCA (Plan-Do-Check-Act)
approach, also known as the Shewhart cycle. The main goal of QA is to
ensure that the product / service fulfills or exceeds customer
expectations. An independent audit team, who reports directly to the
Managing Director, ensures proper implementation of all the control
functions. The audit team conducts regular internal audits, intimates
the non- conformities found during such audits, ensures that necessary
corrective and preventive actions are taken and furnishes necessary
summary reports to the Senior Management.
We have developed and implemented control systems for software
development, for information security and for managerial functions.
Policies, processes and procedures have been developed for each control
system and these are placed in the company's network to ensure their
availability to all the employees at all times.
AWARDS AND RECOGNITION
In 2010-11, awards and recognition marked our accomplishments in
various fields.
- Won NJTC's Mid-Atlantic Innovation Award for its Knowledge Management
& Collaboration Solution.
- Recognized on the Everything Channel CRN Fast Growth 100 List. The
ranking is based on two years' growth of net sales and the Company is
winning this award 4 years in row.
- Earned a Spot on 2010 InformationWeek 500 List ofTop Technology
Innovators Across America for the Business Technology Innovation
Leadership.
- Named as one of the "30 Cloud VARs That Get It" by Everything
Channel's CRN Magazine
- ZSL Inc. was honored with the prestigious Judges Award for its Wound
Care Mobile Assistant, an app that replaces the manual process of
taking measurements of wounds and lesions and updating the patient
record. NJTC also recognized the company's SmartPrise BI Mobile app,
which brings enterprise business analytics to a mobile environment.
- The Company's Enterprise Mobile Applications Suite won Mobile
Innovation Award from Research In Motion (RIM) and NJTC.
FIXED DEPOSITS
We have not accepted any fixed deposits and, as such, no amount of
principal or interest was outstanding as of the Balance Sheet date.
DIRECTORS
In accordance with Article 99 of the Articles of Association, Mr. M.
Gajhanathan, Director is liable to retire by rotation at the ensuing
Annual General Meeting and being eligible offers for reappointment as
Director.
The Board inducted Mr.V. K. Ramani into the Board of Directors. We seek
your support in confirming his appointment as director liable to retire
by rotation.
Mr. A.V. Raj wade has resigned as a Member of the Board and the Board
of Directors considered and accepted his resignation with effect from
03rd August 2010 .We place on record our deep sense of appreciation for
the services rendered by Mr. A.V. Rajwade as a Board member.
Mr.V. Chandramouly has resigned as a Member of the Board and the Board
of Directors considered and accepted his resignation with effect from
31.03.2011.We place on record our deep sense of appreciation for the
services rendered by Mr.V. Chandramouly as a Board member.
DIRECTORS'RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA)
OF THE COMPANIES ACT, 1956
Pursuant to Section 217(2AA) of the Companies Act, 2000, the Directors
confirm that:
(i) they accept responsibility for the integrity and objectivity of
these accounting statements;
(ii) the financial statements are prepared in accordance with the
guidelines and standards of the ICAI and Companies Act 1956, to the
extent applicable. There are no material departures from the above-
mentioned standards;
(iii) such standard accounting policies have been applied consistently,
except as otherwise stated;
(iv) the judgments and estimates have been made on a reasonable and
prudent basis so that the financial statements provide a true and fair
view of the state of affairs of the Company at the end of the financial
year;
(v) the directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(vi) the Annual Accounts are prepared on a going concern basis and on
an accrual basis.
AUDITORS
M/s Brahmayya & Co., Chartered Accountants, Chennai retire as the
Auditors of the Company at the conclusion of the ensuing Annual General
Meeting and being eligible pursuant to Section 224 (IB) of the
Companies Act, 1956, have expressed willingness to accept office, if
re-appointed .The Audit Committee in their meeting held on May 27,2011
has recommended the re-appointment of M/s Brahmayya & Co., Chartered
Accountants, Chennai.
HUMAN RESOURCES
As this is a people business, employees are vital and most valuable
assets possessed by the company. Your company continues to attract
highly talented individuals possessing skill sets with an 'x' factor.
Your company rightly appeals to young, qualified people who want to
make a difference in their contribution and be at the forefront of
change which is very much the hallmark that we pursue to the highest
degree, as we cross several pioneering frontiers in our pursuit of
perfection. Employee strength was 4302 at the end of the year compared
to 3394 last fiscal and continues to be on an upward trend, given the
challenges we have set ourselves. The effective and optimal utilisation
of precious onsite and offshore staff resources remains one of the key
near term objectives, going forward.
ENVIRONMENTAL AWARENESS
"Go Green" initiatives to conserve resources has been initiated in the
Company. Steps required for conserving power across all delivery
centres are being undertaken. The Company has also taken initiatives
within its office buildings to reduce electrical power, water and paper
consumption.These initiatives shall be taken forward at a sustained
pace.
ACKNOWLEDGEMENTS
Your directors profusely thank the clients, vendors, investors and
bankers for their continued support of Company's growth.Your directors
place on record their immense appreciation of the contribution made by
every employee at all levels, who through their commitment, competency,
hard work, solidarity, cooperation and support have enabled the company
to achieve this growth.Your directors sincerely thank the Government of
India, particularly the Department of Electronics, the Customs and
Excise Departments, Software Technology Park - Chennai, the Ministry of
Commerce, Reserve Bank of India, Department of Telecommunications,
State Government and other Government agencies for their support during
the year, and look forward to their continued support in the future.
For and on behalf of the Board of Directors
of Zylog Systems Limited
Sudarshan Venkatraman
Chairman & CEO
Ramanujam Sesharathnam
Managing Director & COO
Place : Chennai
Date : 27th May 2011
Mar 31, 2010
The Directors present their Fifteenth Annual Report and the Audited
Accounts of the company for the financial year ended March 31, 2010.
FINANCIAL RESULTS
Rupees in lakhs except
per share data
Year ended March 31, Standalone
2010 2009
Operating revenue 78,352.16 73,493.51
Operating profit(PBDIT) 15,386.27 7,260.58
Interest 1,167.97 557.53
Depreciation 2,842.36 1,937.05
Prior period adjustments
Profit before tax(PBT) 11,815.33 9,660.79
Taxes 2,600.7 1,143.93
Profit after tax( PAT) 9,214.63 8,516.85
Less: Minority interest - -
Net profit for the year 9,214.63 8,516.85
Dividend recommended 986.79 493.39
Dividend tax 167.7 83.85
Transferred to general
reserve 1,000.00 1,000.00
Balance carried
forward to balance sheet 29,999.68 22,939.53
Paid up capital 1,644.64 1,644.64
Reserves & surplus 55,061.98 47,001.84
Net worth 56,706.63 48,646.48
Earnings per share 56.03 51.79
Year ended March 31, Consolidated
2010 2009
Operating revenue 97,994.17 75,103.91
Operating profit(PBDIT) 17,392.69 7,282.56
Interest 1,449.08 604.71
Depreciation 3,370.39 2,106.20
Prior period adjustments 32.13 (5.65)
Profit before tax(PBT) 13,001.02 9,652.97
Taxes 2,755.34 1,197.42
Profit after tax( PAT) 10,245.68 8,455.55
Less: Minority interest 153.54 68.83
Net profit for the year 10,092.14 8,386.72
Dividend recommended 986.79 493.39
Dividend tax 167.70 83.85
Transferred to
general reserve 1,000.00 1,000.00
Balance carried
forward to balance sheet 30,931.50 22,925.03
Paid up capital 1,644.64 1,644.64
Reserves & surplus 55,886.27 46,995.47
Net worth 57,876.07 48,925.22
Earnings per share 62.30 51.41
RESULTS OF OPERATION
FY 2009-10 showed a strong performance both at the standalone and group
level. A tight grip on the business and skilful financial management in
the face of challenging economic conditions throughout the global areas
of Zylogs operation made possible the excellent results for the year
ended 31 March 2010 and paved the way for many more successful years to
come off the back of this solid platform. Total income for Zylog
Systems Limited was Rs. 78352.16 lakhs (Rs. 73493.51 lakhs PY) and the
consolidated income was R^. 97994.17 kkhs (Rs. 75103.91 lakhs PY).
The operating profit of the standalone entity was Rs. 15386.27 lakhs
(Rs. 7,260.58 lakhs PY) (30% growth) while at the consolidated level
Rs. 17392.69 lakhs (Rs. 7282.56 lakhs PY).The net worth of the company
has increased to Rs. 56706.63 lakhs from Rs. 48646.48 lakhs whereas the
group networth has increased to Rs. 57876.07 lakhs (Rs. 48925.22 lakhs
PY).The EPS has improved to Rs. 56.03 (Rs. 51.79 PY) for standalone and
Rs. 62.30 (Rs. 51.41 PY) for the group. DIVIDEND
Your Directors recommend a Dividend of 60%, i.e. Rs. 6 per Equity Share
for the year ended March 31,2010 on 1,64,46,420 fully paid up Equity
Shares of Rs. 10 each (PY Rs. 3 per share on 1,64,46,420). If the
recommended Dividend is approved by the Members at the forthcoming
Annual General Meeting, the Dividend including the Dividend Tax will
absorb Rs. 1154.49 lakhs (Rs. 577.24 lakhs PY).
TRANSFER TO RESERVES
Your Directors propose to transfer a sum of Rs. 1000 lakhs to General
reserves (Rs. 1000 lakhs PY) out of the amount available for
appropriations and a sum of Rs. 29999.68 lakhs (Rs. 22939.53 lakhs PY)
is carried forward in the profit and loss account for standalone and a
sum of Rs. 30931.50 lakhs (Rs. 22925.03 lakhs PY) at the group level.
LISTING
During the financial year the company continued to be listed in both
BSE & NSE.
STRATEGIC INVESTMENTS
Your company had announced earlier its intention to make selective
investments in leading-edge companies that have the potential to yield
substantial business benefits. Your companys philosophy of acquisition
is as follows:-l. Acquisition based on Business strategy and not on
financial 2. Strategy and based on what acquirer contributes to the
acquisition 3.The both entity must have common core of unity, such as
markets and marketing and technology or core competency. 4. The
acquirer to respect the business product, customers of the acquired
company 5. Acquirer must provide top management within a short period
of time and 6. Acquisitions must rapidly create visible opportunities
for advancement for both people in acquiring business and the people in
the business acquired.
We acknowledge that our chosen markets are still in the very early
stages, and as a result we need to continue to invest in the
organization, in order to meet the challenges the growing markets will
bring. This will involve adding to our existing product portfolios as
well as evolving our current technology offerings.
ACQUISITIONS
Your company, during the financials 2009-10, has acquired directly M/s.
Matrix Primus Partners Inc, USA, M/s. Algorithm Solutions Private
Limited, India and acquired M/s. Brainhunters Inc, Canada, through our
WOS Zylog Systems (Canada) Ltd. Benefits from such acquisitions, as
envisaged, include access to new clients, new geographical areas and
new service offerings as well as an increase in per-capita revenue
productivity. Further, the ability to leverage your companys Global
Delivery Model to improve the margins of the acquired business is an
important means for unlocking value from the transaction. Availability
of proven methodologies, tools and other intellectual property (IP)
would be a key criterion since the IP would be scalable across a large
group of people in your company and will help enhance skill levels and
productivity.
CORPORATE GOVERNANCE
Your Directors benchmark its corporate governance policies, with the
best in the world.Your directors have reiterated your companys
philosophy on corporate governance. The increasing diversity of the
investing community and the integration of global capital markets make
corporate governance a vital issue for investors. A detailed report on
Corporate Governance is given as a part of the Annual Report along with
Statutory Auditors Certificate on its Compliance. The company is in
full compliance with the requirements and disclosures that have to be
made in this regard.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to clause 49 of the Listing Agreement with the Stock
Exchanges, your directors annex herewith a Statement on Management
Discussion and Analysis which forms part of the Directors report.
A cautionary note: Certain statements in the Management Discussion and
Analysis section may be forward looking and are stated as required by
applicable laws and regulation. Many factors may affect the actual
results, which could be different from what your Directors envisage in
terms of future performance and outlook.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Statement showing the particulars ofTechnology Absorption pursuant
to Section 217(1) (e) of the Companies Act, 1956,read with the
Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988, are set out in the annexure included in this
report. SUBSIDIARIES
Ministry of Corporate Affairs, Government of India has granted approval
that the requirements to attach various documents in respect of
subsidiary companies, as set out in Section 212(1) of the Companies
Act, 1956 shall not apply to your company and accordingly the Balance
Sheet, Profit & Loss account and various other documents of the
subsidiaries are not attached.
The annual accounts of these subsidiaries will be made available for
inspection to the members of the Company/ its subsidiaries upon request
at the registered office of the Company.
A brief performance of the subsidiaries is given below:
- VishwaVikas Services Limited
VishwaVikas Services Limited has generated revenue of Rs.254.74 lakhs
(PY Rs. 209.25 lakhs) with a net profit of Rs. 20.03 lakhs (PYRs.
144.84 lakhs).
- Zylog Systems (Europe) Limited
Zylog Systems (Europe) Limited has recorded revenue of Rs. 4,115.45
lakhs (PY Rs. 1,720.45 lakhs) with a net profit of Rs. 169.36 lakhs (PY
Loss of Rs. 93.26 lakhs).
- Zylog Systems (India) Limited
Zylog Systems (India) Limited has achieved revenue of Rs. 1,163.35
lakhs (PY Rs. 124.98 lakhs) with a net profit of Rs. 39.92 lakhs (PYRs.
8.15 lakhs).
- Zylog Systems Asia Pacific Pte Limited
Zylog Systems Asia Pacific Pte Ltd has generated revenue of Rs. 884.84
lakhs (PY Rs. 248.03 lakhs) with a net profit of Rs. 79.98 lakhs (PYRs.
40.55 lakhs).
- Zylog BV Limited
Zylog BV Ltd has generated revenue of Rs. 4,833.05 lakhs (PY Rs.
2,578.50 lakhs) with a net profit of Rs. 418.74 lakhs (PY loss Rs.
61.89 lakhs).
- Matrix Primus Partners Inc, USA
Matrix Primus Partners Inc, USA has generated maiden revenue of Rs.
810.06 lakhs with net profit of Rs. 93.18 lakhs
- Algorithm Solutions Private Limited
Algorithm Solutions Private Limited has generated maiden revenue of Rs
0.06 lakhs with net loss of Rs 0.04 lakhs.
- Zylog Systems (Canada) Limited
Zylog Systems (Canada) Limited has generated revenue of Rs 10,325.81
lakhs with net profit of Rs 184.44 lakhs.
PARTICULARS OF EMPLOYEES
As required under the provisions of Section 217(2A) of the Companies
Act, 1956, read with the Companies (Particulars of employees) Rules,
1975, as amended, the detailed notes are annexed in this report.
ADVISORY BOARD
The Advisory board of your Company is headed by Mr. S Rajagopal, who is
also an Independent Director of the Company and comprises of eminent
persons like Mr. Ratnagar Hegde, former Executive Director of Union
Bank of India, and Mr.TValliappan, Director, Oriental Bank of Commerce
Ltd. The Advisory board met four times during the current fiscal to
review the business
QUALITY INITIATIVES
Quality and best practices define the foundation of a company. Your
company is an ISO 9001:2000 qualities certified Company for the seventh
year in succession and are being assessed for CMM1 Level 4. Your
company continuously leverages cutting edge tools, methodologies and
benchmark standards to exceed the expectations of our customers. We, as
an IT Solution provider, will continue to strive for excellence in all
areas of business, guarantee the quality of its software products at
all stages of development and build the highest quality standards. Your
Company follows the most widely used paradigms for QA management, PDCA
(Plan-Do-Check-Act) approach, also known as the Shewhart cycle. The
main goal of QA is to ensure that the product / service fulfills or
exceeds customer expectations. An independent audit team, who reports
directly to the Managing Director, ensures proper implementation of all
the control functions. The audit team conducts regular internal audits,
intimates the non-conformities found during such audits, ensures that
necessary corrective and preventive actions are taken and furnishes
necessary summary reports to the Senior Management.
Your company has developed and implemented control systems for software
development, for information security and for managerial functions.
Policies, processes and procedures have been developed for each control
system and these are placed in the companys network to ensure their
availability to all the employees at all times.
FIXED DEPOSITS
Your company has not accepted any fixed deposits and, as such, no
amount of principal or interest was outstanding as of the balance sheet
date.
DIRECTORS
In accordance with Article 99 of the Articles of Association of the
Company, Mr. M Gajhanathan, Mr. P Srikanth and Mr. S Rajagopal, retire
by rotation and being eligible, offers them for reappointment.
Mr. A PVasantha Kumar was appointed as an additional Director effective
29th of January, 2010. In terms of Section 260 of the Companies Act,
1956 he shall hold office only up to the date of ensuing Annual General
meeting of the Company. The Company has received requisite notice in
writing from a member proposing his candidature for the office of
Director.
Mr.Ajay Mittal, Director has resigned from the Board effective 29th
ofjanuary, 2010 and Mr. A.V. Rajwade effective 3rd of August, 2010. The
Board placed on record its deep sense of appreciation for the
invaluable contribution made by Mr.Ajay Mittal and Mr. AV Rajwade
during their tenure as the directors of the Company.
None of the Directors of your company is disqualified under Section 274
(1) (g) of the Companies Act, 1956. As required by law, this fact is
reported in the Auditors Report.
GROUP Pursuant to intimation from the Promoters, the names of the
Promoters and entities comprising "group" are disclosed in the Annual
Report for the purpose of the SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997.
DIRECTORS RESPONSIBILITY STATEMENT
As required by the provisions of Section 217 (2AA) of the Companies
Act, 1956, Directors Responsibility Statement is set out in the
annexure included in this report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has proper and adequate systems of internal control to
ensure protection of assets, proper financial & operating functions and
compliance with the policies and procedures applicable to Acts and
Rules.The Companys internal controls are supplemented by sound
internal audit practices. The Audit committee at their meetings
regularly reviews the financial, operating, internal audit & compliance
reports to improve the performance. The heads of various monitoring
/operating divisions / departments are present for Audit Committee
meetings to answer queries raised by Audit Committee.
AUDITORS
The auditors. M/s Brahmayva cV Co., Chartered Accountants, retire at
the conclusion of the forthcoming Annual General Meeting and the
company has received the requisite certificate pursuant to Section
224(1 B) of the Companies Act, 1956 from them regarding their
eligibility for reappointment as Auditors of the company and
willingness to accept office, if re-appointed. CONSOLIDATED FINANCIAL
STATEMENTS
As directed bv the Central Government under Section 211(3C) of the
Companies Act, 1956, and pursuant to the Listing Agreement prescribed
bv Securities Exchange Board of India, consolidated financial
Statements have been prepared in accordance with the requirements of
Accounting Standard 21 on "Consolidated Financial Statements ", issued
by the Institute of Chartered Accountants of India. The audited
consolidated financial statement duly audited by the Statutory Auditors
form part of this Annual Report.
HUMAN RESOURCES
Your companv has retained the appeal to qualified, ambitious and able
people who strive towards achieving the objective of the company. Your
company has streamlined the objectives for employee attitude and
employee skills.Your companys decision step for picking up people is
that the person and the assignment fit each other. To improve the
utilization of Manpower resources, stringent measures were taken to
reduce idle time, to reduce the cost incurred on non-billable technical
staff at offsite front. Optimization of talents on the offsite/ onsite
front brought higher expectation on offshore. Hence, investments were
made to hire senior talents with specific experience on relevant
industry verticals. ACKNOWLEDGMENTS
Your directors profusely thank the clients, vendors, investors and
bankers for their continued support of your companys growth. Your
directors place on record their immense appreciation of the
contribution made by every employee at all levels, who, through their
commitment, competence, hard work, solidarity, cooperation and support,
have enabled the company to achieve this growth.Your directors
sincerely thank the Government of India, particularly the Department of
Electronics, the Customs and Excise Departments, Software Technology
Parks - Chennai. the Ministry of Commerce, the Reserve Bank of India,
the Department ofTelecommumcations, the state governments, and other
government agencies for their support during the year, and look forward
to their continued support in the future.
SUDARSHAN VENKATRAMAN S P SRIHARI
Chairman and CEO Global Chief Financial Officer
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