DIRECTORS' REPORT To The Members, Frontier Informatics Limited, Hyderabad. Your Directors hereby present the Twenty Seventh Annual Report together with the audited accounts of the Company for the year ended March 31, 2015. DIVIDEND In view of the accumulated losses your directors express their inability to declare any dividend. BUSINESS OPERATIONS 1. Health Care Software Development. During the year the company has developed a few additional modules for Indo American Cancer Research Institute. 2. US Consulting Business There were no consulting Business Operations in US/other countries during the year 2014-15. FURTHER ISSUE OF SHARES ETC The company has not issued further shares or any other instruments by way of rights, debentures whether convertible or not, during the financial year. FUTURE OUTLOOK 1. eGovernance Projects: Company intends to focus its attention on domestic e-Governance Projects which are growing in number and value 2.Advanced Education and Training Company is exploring opportunities in the area of advanced Computer Education and Training. FIXED DEPOSITS The Company has not accepted any fixed deposits from the public within the meaning of section 73/74 of the Companies Act, 2013 (earstwhile section 58A of the Companies Act, 1956). RELATED PARTY TRANSACTIONS AS PER COMPANIES ACT 2013. The company does not have any related party transactions during the year, other than unsecured, interest free loans given by the Directors, which are reported vide notes to accounts. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO Particulars pursuant to the provisions of section 217(1)(e) of the Companies Act,1956 read with the Companies (Disclosures of Particulars in the report of Board of Directors) Rules,1988 are given in the Annexure - A. DIRECTORS In accordance with the requirements of the Companies Act 2013, read with the Articles of Association of the company, Mr. Potail Yadav Varun, Mrs Dharamkar Mamatha Nandan, and Mr Singh B.Yalamanchih, Directors are liable to retirement by rotation. Mrs Dharamkar Mamatha Nandan and Mr Singh B.Yalamanchili have not offered themselves for reappointment. Mr. Potail Yadav Varun being eligible offers himself for re-appointment. The Board recommends for his reappointment. Mr Sudheer Anand Verma, Pakalapati, an independent director, whose term as director expires as on 30th September, 2015 will vacate his office from the conclusion of this Annual General Meeting. The committees of the Board have been reconstituted and also renamed in line with the requirements, the details of which are provided elsewhere in this report. The Managing Director is discharging the functions, duties and responsibilities of the CFO. The information required under Clause 49 IV (G) of the Listing Agreement is given in the Corporate Governance Report. AUDITORS The Statutory Auditors of the company M/s Niranjan & Narayan, Chartered Accountants, Hyderabad, retire at the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from the Auditors for their re-appointment, if made will be in conformity with Section 139 of the Companies Act 2013 and also in compliance of the Listing Agreement regarding Peer Review. The board and the Audit committee recommend the re-appointment of M/s. Niranjan & Narayan Chartered Accountants, Hyderabad as Statutory Auditors to hold office till conclusion of the Next Annual General Meeting. Comments of Auditors in their report, and the respective Explanation of the Board of Directors: (i) Auditors Comment: (a) The company is due to pay certain statutory dues payable as under : Provident Fund dues Rs. 5,64,268 Dividend Distribution Tax Rs 9,75,000 Director's Statement: The dues to PF Department represents balance of interest levied on delayed payments and the company requested for allowing payment through installments. The company has paid the installments during the FY 2014-15 and reduced the liability from Rs. 6.19 laks to Rs 5.64 lakhs and the Board of Directors hope to clear the installments in the current Financial Year. Dividend Distribution Tax relates to FY 1999-2000. (ii) Auditors Comment: (b) According to the information and explanation given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31.03.2015 for a period of more than six months from the date they became payable excepting undisputed dividend tax payable by the company amounting to Rs.9,75,000/- as on that date. Director's Statement: The amount represents unpaid Tax on Dividend Distribution made in the year 2000. The company could not repay the same due to paucity of funds. Further the company has not provided interest charged on the tax to the extent of Rs 10.91 lakhs. CODEOFCONDUCT The Board has laid down a code of conduct for all Board Members, senior management and employees of the Company. The relevant Declaration is enclosed as an attachment to the Directors' Report. CORPORATE GOVERNANCE Pursuant to the provisions of the Listing Agreement and the Companies Act, 1956, Report on Corporate Governance together with the Auditors' Certificate on the compliance of the conditions of Corporate Governance are furnished in this Annual Report LISTING WITH STOCK EXCHANGES The equity shares of the Company are listed at the Mumbai Stock Exchange Limited. The listing fee is paid for the financial year 2013-14. EXTRACT OF ANNUAL RETURN: As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report as ANNEXURE I . PARTICULARS OF EMPLOYEES There are no such employees requiring disclosure pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement of particulars of employees. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES The company does not have any Subsidiary/ Joint Venture/ Associate Companies requiring disclosure pursuant to sub-section (3) of section 129 of the Act. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report Material changes occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of the report like settlement of tax liabilities, operation of patent rights, depression in market value of investments, institution of cases by or against the company, sale or purchase of capital assets or destruction of any assets etc. The company received no objection letter from BSE for reduction of capital dated 07.05.2015. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future There are no such events. Details in respect of adequacy of internal financial controls with reference to the Financial Statements. The company recorded turnover of Rs 4.89 lakhs during the year and necessary controls are implemented. STATUTORY DISCLOSURES In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors' Report. However, as per the provisions of Section 219 (b) (iv) of the said Act read with Clause 32 of the Listing Agreement, 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 at the registered office of the Company. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 In order to prevent sexual harassment of women at work place a new act The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on 9th December, 2013. Under the said Act every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee. Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment. REDUCTION OF CAPITAL The company has received in principal approval for reduction of share Capital from Bombay Stock Exchange. The Exchange noted the confirmation given by the company stating that the scheme does not in way violate or override or circumscribe the provisions of the SEBI Act, 1992, the Securities Contracts (Regulation) Act, 1956, the companies Act 2013, the rules, regulations and guidelines made under these Acts, and the provisions of the Listing Agreement or the requirements of BSE Limited (BSE). DIRECTOR'S RESPONSIBILITY STATEMENT In accordance with sub-section section 134 of the Companies Act, 2013, the Directors of the Company state: a. That in the preparation of the accounts for the ffnanciaf year ended 31st March 2015; the applicable accounting standards have been followed along with proper explanation relating to material departures. b. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review. c. That the Directors have taken proper and sufficient care 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. That the Directors have prepared the accounts for the financial year ended 31st March 2015 on a 'going concern basis'. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A. Industry Structure and Development IT Business of most Indian Software Development companies can be classified into Onsite Consulting Services, Offshore Software Services, Product Sales and IT Enabled Services. While Onsite Consulting Services has witnessed a steady growth, Offshore Software business has experienced a significant change either through Dedicated Development Centers for overseas partners or Joint Ventures. The product sales of Indian companies in the international markets has been miniscule, while IT enabled services business has seen a strident growth during the last 4 to 5 years. The future direction clearly favors Offshore Software Services and IT enabled Services. B. Opportunities a. Offshore Software Maintenance and Enhancements b. IT Enabled Services/BPO Operations. c. Increased IT spending within India. C. Threats, Risks and Concerns a. Competition from countries like China and East European Countries in the medium to long term. b. Large international companies establishing their own subsidiaries instead of depending on fndian Companies. c. Countries like USA bringing in legislation to prevent work from going to outside Countries. fnspite of certain negative factors in the international markets, company believes that there are enough global opportunities to be tapped. Countries like China will take a few more years before they can provide wide ranging Software Services of high quality. Company intends to concentrate on Offshore opportunities in Software Maintenance and fT enabled services space as well as computer education and training in the coming few years. D. Segment wise Performance Statement of Accounting Standard - AS 17 issued by The fnstitute of Chartered Accountants of fndia on Segment Reporting is not applicable to the company as there is no reportable segment which meets the criteria laid down under this standard. E. Outlook The management is planning to make reasonable business in the areas of Health Care, and Training and put more marketing efforts to secure Business. The company however suffers from lack of working capital and overseas presence. The company is not able to raise finances due to the losses incurred by the company over the past few years, which have reduced the company to negative net worth. Your directors are contemplating various measures for improving the strength of the balance sheet and to enable the company to raise investment and other form of funding. F. Risk and Concerns The slowdown situation in USA and Europe may lead to more restrictions on off-shore projects and stringent norms for Onsite Consulting services. G. Internal control system and their adequacy The Company has established adequate internal control systems and procedures both in financial and operational areas that are commensurate with the size and nature of the business of the Company. The constitution of Audit Committee with independent non-executive Directors is instrumental in ensuring mainly the following: 1. Oversight of Company's financial reporting process and the disclosures of its financial information to ensure that the financial statements are correct, sufficient and credible. 2. Reviewing with management the annual financial statements before submission to the Board, focusing primarily on any changes in accounting policies, compliances with accounting standards etc. 3. Discussion with the senior management to ensure adherence to the internal Control systems and processes. 4. To ensure that appropriate controls are established and are effective throughout every software development project and conforming to fSO 900f requirements. H. Discussion on financial performance with respect to operational performance Financial statements are prepared under the Historical Cost Convention in accordance with the fndian Generally Accepted Accounting Principles and the provisions of the Companies Act, f956. The company suffered huge losses during the past several years. Most of the losses are on account of depreciation loss incurred over the years representing depreciation written off on software products developed by the company during the years f995 to 2003. The company could not exploit the software products developed for various reasons including paucity of working capital resources. I. Material development in human resources/Industrial relations front, including number of people employed Human Resource Development is a key area for growth and smooth functioning of any organization. The management recognized two major areas, which will lead to achieve this goal, namely, creating good working environment and imparting continuous training in latest technologies. Continuous up gradation of skills plays a key role in employee's retention and job satisfaction and company has taken adequate measures in this regard. The company has cordial relations with its employees and staff. Efforts of the company are well recognized in fndia as well as abroad. Cautionary Statement Statements in this management discussion and analysis describing the company's objectives, projections, estimates, expectations may be considered to be forward looking statements and actual results could differ materially from those expressed or implied. Factors which could make a significant difference to the Company's operations include demand supply conditions, market prices, input component costs and availability, changes in Government regulations and tax laws besides other factors such as litigations, over which the Company may not have any control. ACKNOWLEDGEMENTS Your Directors wish to acknowledge the valuable support and cooperation, extended by Bank of India and State Bank of India and all other Government Agencies. Your Directors also express their appreciation to the shareholders of the Company for their forbearance during a difficult period and for reposing confidence in the future ahead. Your Directors wish to place on record their appreciation of the hard work, dedication and commitment exhibited by its employees at all levels. By order of the Board For Frontier Informatics Limited V.K. Premchand Managing Director Place: Hyderabad. Date: 03.09.20I5 |