DIRECTORS' REPORT To the Members, The Board of Directors of your Company take pleasure in presenting the 20th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended 31st March 2015. FINANCIAL RESULTS 2014-15 During the year under review, your Company has achieved a turnover of Rs.1053.77 lakhs as against Rs.895.12 lakhs in the previous year. There is a net Profit ofRs.93.90 lakhs as against the net profit ofRs.65.06 lakhs in the previous year. GLOBAL REVENUE The global revenues for the Company including the business done by the Wholly Owned Subsidiary for the year under review was Rs.3906 lakhs as compared to Rs.3153 lakhs in the previous year . STATE OF AFFAIRS OF THE COMPANY The contributions of business from various Geographical areas were: North America contributed to 86% and Rest of the World 14% of business. Business from Offshore Software Services during the year 2014-2015 was Rs.1053.77 lakhs as against Rs.895.12 lakhs in the previous year. The increase has been at 17.72% compared with previous year. FUTUREOUTLOOK The global market for IT services is expected to expand and corporations are increasingly using offshore service providers to meet their IT service needs. This increases the addressable market for offshore software service providers like us. The company has been growing positively in the offshore software services business and this momentum is likely to continue this year. Our client retention and client satisfaction levels have been growing steadily. We have received many client appreciations and significant amount of repeat business. In addition to North America, our business and customer base from Australia, Africa and Europe is also expanding as planned. Our Social, Mobility and Cloud practice has been growing significantly and we expect a good growth in this offering. The company will continue its focus on the in OPD (Out-sourced Product development) market space where it has achieved significant success. Geographically the company is planning to strengthen its presence in the markets it is operating. We expect a positive growth this year and the Company should perform better in the ensuing year 2015-16. QUALITY Your company has a strict quality assurance and control programs to ensure that high level of Quality service is delivered to the customers. Matured and proven quality management systems are in place based on the requirements of ISO 9001:2008 standards. DIVIDEND Your Directors recommended a dividend of Rs. 0.50 per equity share (i.e. 5% on each equity share having Face value of Rs. 10 each), subject to the approval by the shareholders at the ensuing Annual General Meeting. The total dividend payout will be of Rs.30.42 lakhs inclusive of tax amount of Rs.5.14 lakhs. During the previous year ended 2013-2014, your Company has paid a dividend of Rs.25.27 lakhs. The dividend, if approved by the shareholders, will be paid to those members whose names appear in the Register of Members as on the date of the Annual General Meeting TRANSFER TO RESERVES Your company propose to Transfer Rs.2,81,693/- to the General Reserve. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and on the date of this report. DEPOSITORY SYSTEM The trading in the Equity Shares of your Company is under compulsory dematerialization mode. As on 31st March, 2015, Equity Shares representing 89.70% of the equity share capital are in dematerialized form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company's shares. LISTING OF SHARES The Equity Shares of your Company continue to remain listed with BSE Limited. The listing fees for the year 2015-16 have been paid to the Stock Exchange. The Shares of the companies are compulsorily tradable in dematerialized form. INSURANCE The assets of the Company are adequately insured against fire and such other risks, as are considered necessary by the Management. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements of the Company are prepared in accordance with the applicable Accounting Standards forms a part of this Annual Report. CORPORATE GOVERNANCE Your Company is committed to maintain the highest standards of Corporate Governance. Company continues to be compliant with the requirements enshrined in clause 49 of the Listing Agreement which relates to Corporate Governance. Pursuant to SEBI Circular No.CIR/CFD/POLICY CELL/7/2014 dated 15th September 2014, compliance with the provisions of Clause 49 is not mandatory for your Company since your Company's paid up capital is not exceeding Rs.10 crore and Net worth is not exceeding Rs.25 crore as on 31st March, 2014. A Report on Corporate Governance as stipulated under clause 49 of the Listing Agreement forms part of the Annual Report. A certificate from the Statutory Auditors of the Company, confirming compliance with the conditions of Corporate Governance, as stipulated under clause 49 forms part of this Report. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the Listing Agreement is presented in a separate section forming part of the Annual Report. NUMBER OF MEETINGS OF THE BOARD The board met Five times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the periods prescribed by the Companies Act, 2013. AUDIT COMMITTEE The Audit committee comprises of Independent Directors namely Mr.S.Muthukumar (Chairman), Mr.S.Mohan and Mr.A.Sankar as other Members. All the recommendations made by the Audit Committee were accepted by the Board. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO As per the requirement of Section 134 (3)(m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given below. Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Companies (Accounts) Rules, 2014: A) CONSERVATION OF ENERGY Your Company uses electrical energy for its equipment such as air-conditioners, computer terminals, lighting and utilities at work places. As an ongoing process, the company continued to undertake various measures to conserve energy B) TECHNOLOGY ABSORPTION a) Research & Development The nature of the business of software development involves inbuilt, constant Research and Development as a part of its process of manufacturing (development). The Company is developing applications engines, re-usable codes and libraries as a part of its R&D activities. b) Technology Absorption The Company has not absorbed technology from outside. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES In terms of the provisions of Section 197(12) of Act read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report. Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure -1. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY The Company has adopted a Risk Management Policy for identifying and managing risk at the strategic, operational and tactical level. The Risk Management policy has been placed on the website of the Company. At present the Company has not identified any element of risk which may threaten the existence of the Company. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 There were no loans and guarantees given or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS There were no qualifications, reservations or adverse remarks made either by the Auditors or by the Practicing Company Secretary in their respective reports. Your Directors have provided explanation in Annexure 2 for the matter of emphasis in the Auditor's Report. CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES. All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also in the Board for approval. The disclosure on related party is annexed herewith as Annexure 3. POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION The current Policy is to have an appropriate mix of executive and independent directors to maintain the Independence of the Board and separate its functions of the governance and management. As on 31st March, 2015, the Board consists of 7 members, Two of whom are Executive or Whole Time DrrectorsfOne of whom is Non Executive Women Director and Four are Independent Directors. The Board periodically evaluates the need for change in its composition and size. The policy of the Company on Directors' appointment and remuneration, including Criteria for determining Qualification, positive attributes, independence of a director and other matters provided under sub-section(3) of Section 178 of the Companies Act,2013 adopted by the Board, is appended as Annexure 4 to the Board's Report. We affirm that the remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the company. WHOLLY OWNED SUBSIDIARY: CG-VAK SOFTWARE USA INC. As on 31st March, 2015, your Company has only one wholly owned subsidiary. Your Company's Wholly Owned Subsidiary CG-VAK Software USA Inc. at USA, has made a Sales Turnover of US$ 4.65 Million during this year, compared to the US$ 3.93 Million during the previous year. During the year, the Board of Directors reviewed the affairs of the wholly owned subsidiary. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and the wholly owned subsidiary, which forms part of the Annual Report. Further, a statement containing the silent features of the financial statement of our wholly owned subsidiary in the prescribed format AOC-1 is appended as Annexure - 5 to the Board's Report. The statement also provides the details of performance, financial positions of the wholly owned subsidiary. In accordance with Section 136 of the Companies Act, 2013, the audited financial statement, including the Consolidated Financial Statements and related information of the Company and the wholly owned subsidiary are available on our website. These documents will also be available for inspection during the business hours at our Registered office. EXTRACT OFANNUALRETURN In accordance with section 134(3)(a) of the Companies Act,2013,an extract of annual return in the prescribed format is appended as Annexure - 6to Board's Report. DIRECTOR'S RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3)(C) OF THE COMPANIES ACT, 2013 In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors would like to state that: i In preparation of annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed. ii The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period. iii The directors have taken proper and sufficient care towards 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. iv The directors have prepared the annual accounts on a going concern basis. v The directors have laid down internal financial controls, which are adequate and are operating effectively vi The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively SIGNIFICANT AND MATERIAL ORDERS There are no significant and material order passed by regulations or courts or tribunals impacting the going status and Company's operations in future. INSPECTION UNDER SECTION 209A OF THE COMPANIES ACT, 1956 During the financial year (2012-13), inspection under Section 209A of the Companies Act, 1956 was carried out by the office of Ministry of Corporate Affairs and the company has provided the reply for the clarifications sought by MCA. SEBI - SECURITIES APPELLATE TRIBUNAL ORDER During the financial year, SEBI Securities Appellate Tribunal had upheld the orders of the SEBI Adjudicating Officer dated 17th December, 2013 and imposed a penalty of Rs.3 lakhs on the company for delayed disclosure/reporting of purchase of shares under the SEBI PIT regulations. The Company had paid the penalty amount on 08* May, 2014. PUBLIC DEPOSIT During the year, your Company has not accepted/renewed any Deposits. The Company has repaid all the Deposits on or before 31st March, 2015. DIRECTORS AND KEY MANAGERIAL PERSONNEL As per the provisions of the Companies Act, 2013, Mr.G.Suresh (DIN 00600906) retire from office by rotation, and being eligible offer himself for re-appointment at the ensuing Annual General Meeting of the Company. Brief particulars of the Director eligible for reappointment in terms of Clause 49 of the Listing Agreement are annexed to the Notice dated 29* May, 2015 convening the 20* Annual General Meeting. Pursuant to provisions of Section 203 of the Companies Act, 2013, Mr.C.Ganapathy, Executive Chairman, Mr.G.Suresh, Managing Director & CEO, Mr.P.S.Subramanian, Chief Financial Officer and Mr.Shainshad Aduvanni, Company Secretary are the Key Managerial Personnel of the Company. DECLARATION BY INDEPENDENT DIRECTORS The company has received necessary declaration from each independent Director under section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149(6) of the Companies Act 2013 and Clause 49 of the Listing Agreement. BOARD EVALUATION The evaluation framework for assessing the performance of Directors comprises of the following key areas: 1. Attendance of Board Meeting and Board Committee Meetings 2. Quality of Contribution to Board deliberations 3. Strategic perspectives or inputs regarding future growth of Company and its performance 4. Providing perspectives and feedback going beyond information provided by the management 5. Commitment to shareholders and other stakeholder interests The evaluation involves self-evaluation by the Board Members and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation. VIGIL MECHANISM/ WHISTLE BLOWER POLICY The Company has adopted a Whistle Blower Policy as a mechanism for employees to report to the management, their concern about unethical behaviour, actual or suspected fraud or violation of the company's code of conduct and it affirms that no personnel have been denied access to the Audit Committee. A copy of Whistle Blower Policy has been placed at our website at www.cgvak.com for reference. AUDITORS The Statutory Auditors of the Company M/s. S.Lakshminarayanan Associates, Chartered Accountants, Coimbatore, retire at the conclusion of the ensuing Annual General Meeting. The Statutory Auditors have confirmed their eligibility and willingness to accept the office on re-appointment. The Board recommends their re-appointment for the next term. SECRETARIAL AUDITOR Mrs.Manimekala V Raj, Practising Company Secretary was appointed to conduct the secretarial audit of the company for financial year 2014-15, as required under Section 204 of the Companies Act, 2013 and Rules made there under. The secretarial audit report for FY 2014-15 forms part of the Annual Report as Annexure 7 to the Board's Report. INTERNAL FINANCIAL CONTROLS The Company has in place adequate internal financial controls with reference to Financial Statements. Such controls were tested during the financial year and no material weakness in the design or operation was observed. DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (Prevention, Prohibition and Redressal) Act, 2013. The Company has in this place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been setup to redress the complaints received regarding Sexual Harassment. All employees are covered under this policy. The following are the complaints received and disposed off during the financial year 2014-15: A. No.of complaints received: NIL B. No.of complaints disposed off : NIL ACKNOWLEDGEMENT The Directors of your Company would like to take this opportunity to thank one and all associated with it enabling it to scale greater heights and emerge as a recognized software solutions vendor in the industry. The faith and confidence shown on your Company by banks, global clients, government authorities and shareholders has propelled our enthusiasm and strengthen our determination to achieve our vision. Finally your Directors would like to express their sincere thanks to the dedication and committed hard work of the employees working in India, USA and at various client locations to reach our corporate vision. (By Order of the Board) for CG-VAK SOFTWARE AND EXPORTS LIMITED C.Ganapathy Chairman DIN 00735840 Place: Coimbatore Date : 29th May, 2015 |