DIRECTORS' REPORT Dear Members, The Directors have pleasure in presenting the 25th Directors' Report on the business and operations of your Company, for the year ended March 31, 2015. Review of Operations During the year under review, your Company recorded income of Rs. 498.41 from export of software in comparison with previous year's income of Rs. 563.99 Lakhs. Your company achieved net profit of Rs. 121.28 Lakhs for the year in comparison with the previous year's net profit of Rs. 178.24 Lakhs. Review of operations of Wholly owned subsidiary SoftSol Resources Inc., (SRI) a wholly owned subsidiary of your Company, recorded total revenue of US$ 10.2 Millions for the year 2014 in comparison with the previous year's revenue of US$ 9.37 Millions. SRI recoded net profit of US$ 88,422 for the year 2014 in comparison with the previous year's net profit of US$ 1,94,874. Outlook and Business: Softsol India Limited is an IT services company that focuses on enabling businesses to achieve their strategic objectives. The tech industry is being reshaped in numerous ways. Disruption is evident in software and services delivery, business models, the vast amount of money being poured into startups of all stripes, the cloud, big data, - 9 - entrepreneurialism, and constant innovation. Against that backdrop, companies can no longer rely on one-note value strategies. Analysts indicate which immediate path holds the most chance for short-term success, but over time, both improving margins and finding new revenue streams are critical for success. The Company is taking planned steps to diversify its revenue sources by changing its strategic growth plan to move to a hybrid outsourcing model with a focus on products and platforms in addition to services offerings. This strategy enables the Company to capitalize onthe opportunities as the world transitions to digital commerce. This transition is prone to challenges as well opportunities which bring potential volatility with it. Fortunately, the Company with its 20+ years of experience has demonstrated success in navigating volatility and achieving managed transition to strengthen its long-term foundation. The Company is committed to use this opportunity to diversify its business and expand its reach to geographies beyond North America. The Company's approach to focus on strategic accounts, continue to differentiate its service offerings within its focus area, attracting & retaining top talent, focus towards enhancing operational efficiency and scale-up towards building a delivery capability & excellence has established the Company as a preferred partner for its clients within its focused verticals. The client's response towards its solution offering was encouraging. The Company shall continue to propel further in its area of strength through alliances, developing customer center of excellence and by readying its clients to be prepared for digital age. The Company believes that its efforts in becoming a reliable partner to its clients will make it a leader in digital solution provider in the years to come. The Company will enhance its cutting-edge proposition to address new customers, strengthening its emphasis on marketing to small and medium-sized firms. Management Discussions and Analysis Report Management Discussions and Analysis Report, as required under the Listing Agreement with the Stock Exchanges is forms part of the Report. Dividend In view of the financial performance of your Company during the year 2014-15, your Directors have not recommended any dividend for this financial year. Amounts transferred to Reserves: During the year under review the Board carried Rs. 5792794/- to the Reserves. Extract of the Annual Return The details forming part of the extract of the Annual Return in form MGT 9 is annexed to this report. Directors: None of the directors of the company is disqualified under the provisions of the Companies Act, 2013 or under the Listing Agreement with the BSE. As per the provisions of the Companies Act, 2013 read with Articles of Association of the Company, Mr. Srinivasa Rao Madala, retire by rotation and being eligible offer himself for re-appointment at this Annual General Meeting. The existing composition of the Company's board is fully in conformity with the applicable provisions of the Act 2013 and Clause 49 of the Listing Agreement having the following directors as non-executive Independent Director's, namely Dr T. Hanuman Chowdhary, Mr. B. S. Srinivasan, Mr. P. Venkatramaiah and Mrs. Thota Neelima. Number of meetings of the Board During the year Four Board Meetings and Four Audit Committee Meetings were convened and held. The details of these are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. Board Committees: Details regarding the composition, terms and references, number of meetings and attendance of respective members of the various committees of board are provided separately in the Corporate Governance Report. Statement on declaration given by Independent Directors All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Company's policy on Directors' appointment and remuneration The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178 of the Companies Act, 2013 relating to the remuneration for the Directors, key managerial personnel, and other employees. Explanations or comments by the Board on every qualification, reservation or adverse remark There is no qualification, reservation or adverse remark or disclaimer made - (i)by the auditor in his report; and (ii)by the Company Secretary in practice in her secretarial audit report. Particulars of Loans, Guarantees or Investment There are no loans given, guarantees issued or investments made to which provisions of Section 186 of the Companies Act, 2013 are applicable to the Company. Corporate Governance: The Company will continue to uphold the true spirit of Corporate Governance and implement the best governance practices. A report on Corporate Governance pursuant to the provisions of Clause 49 of the Listing Agreement forms part of the Annual Report. As required under Clause 49 of the Listing Agreement, the Certificate regarding compliance of conditions of corporate governance is enclosed to the Report. WTD and CFO Certification In accordance with the provisions of the Clause 49 of the Listing Agreement, the Whole time Director and Chief Financial Officer of the Company have submitted a certificate for the year ended 31st March, 2015, to the Board of Directors. Listing at Stock Exchange: The Equity Shares of the Company continue to be listed on Bombay Stock Exchange Limited and the annual listing fees for the year 2015-16 have been paid to the Exchange. Auditors: In accordance with the provisions of Section 139 of the Companies Act, 2013 and the transition period mentioned therein, M/s. JVSL & Associates, Chartered Accountants, Hyderabad were appointed as Statutory Auditors of the Company for a period of three years at the 24th Annual General Meeting of the Company held on 30th September 2014 and they will continue in office upto the conclusion of the 27th Annual General Meeting. However, in accordance with the provisions of Section 139 of the Companies Act, 2013, their continuance of office as Auditors shall be subject to ratification of members at the forthcoming Annual General Meeting. The Company has obtained necessary certificate under Section 141 of the Companies Act, 2013 from the Auditors conveying their eligibility for the above appointment. The Audit Committee and Board reviewed their eligibility criteria, as laid down in Section 141 of the Companies Act, 2013 and recommended their appointment as auditors for the aforesaid period. Secretarial Auditors During the year under review the Board of Directors had appointed M/s VBM Rao & Associates, Company Secretaries, Hyderabad for conducting secretarial audit in accordance with the provisions of Companies Act, 2013 and the rules framed there under. The Secretarial Audit Report is annexed and forms part of this report. Fixed Deposits During the year the Company has not accepted any deposit under Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. As on 31st March, 2015, there are no unclaimed deposits with the Company. Further the Company has not defaulted in repayment of deposits or payment of interest thereon. Particulars of contracts or arrangements 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 who may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. Conservation of energy, technology absorption, foreign exchange earnings and outgo: A. Conservation of energy: a)The Company continues to work on reducing carbon footprint in all its areas of operations through initiatives like (a) green infrastructure, (b) green IT (data centers, laptops and servers etc, (c) operational energy efficiency. b)The steps taken by the Company for utilising alternate sources of energy: NIL c) The capital investment on energy conservation equipments: NIL B.Technology absorption: a)The Company continues to use the latest technologies for improving the productivity and quality of its services and products. The Company's operations do not require significant import of technology. b)The efforts made towards technology absorption: A continuous interaction and exchange of information in the industry is being maintained with a view to absorbing, adapting and innovating new methods that may be possible. (ii) The expenditure incurred on Research and Development: Nil. C.Foreign Exchange earnings and outgo: Total foreign exchange earnings during the year were Rs. 444.91 Lakhs (Previous year Rs. 181.20 Lakhs) and foreign exchange outgo was: NIL (previous year: NIL). Report on Risk Management Policy The Company has formed the Risk Management Committee with its members as Mr. T. Hanuman Chowdhary, Mr. B. S. Srinivasan and Mr. P. Venkatramaiah and the committee will perform its activities according to the Risk Policy finalized by the Board indicating the development and implementation of Risk Management. Corporate Social Responsibility (CSR) Initiatives Pursuant to Section 135 Companies Act, 2013 read with Rules and General Circular No. 21/2014 dated 18th June 2014 issued by MCA Corporate Social Responsibility is not applicable to the Company for the financial year 2014-15. Particulars of Employees The information required pursuant to Section 197 of the copanies Act, 2013 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. Annual Evaluation by the Board of its Own Performance Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committee. Transfer of Unpaid/Unclaimed amounts to IEPF Pursuant to the provisions of Section 125 of Companies Act, 2013 the Unclaimed Dividend and interest thereon which remained unpaid/unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125 of the Companies Act, 2013. Directors' Responsibility Statement: Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that: a)in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; b)the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2015 and of the profit and loss of the company for that period; c)the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d)the directors had prepared the annual accounts on a going concern basis; e)the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; "Internal Financial Controls" means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including the adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information; f)the directors had devised proper systems to ensure compliances with the provisions of the applicable laws and that such systems were adequate and operating effectively. Vigil Mechanism / Whistle Blower Policy The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company. Subsidiaries, Joint Venture or Associate Companies Your company has prepared the consolidated financial statements in accordance with the relevant accounting standards and the provisions of the Companies Act, 2013 (Act). Pursuant to the provisions of the Act, documents in respect of the subsidiary company M/s. SoftSol Resources Inc., USA viz., Directors' Report, Auditor's Report, Balance Sheet and Profit and Loss Account, are attached the Annual Report. Details of Significant and Material Orders passed by the Regulators There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. Details in respect of Adequacy of Internal Controls The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has put in place a Prevention, Prohibition and Redressal of Sexual Harassment at Workplace in accordance with the requirement of the 'Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013'. All employees of the Company are covered under the aforementioned Policy. The summary of complaints received and disposed off upto 31st March 2015 were as under: Number of complaints received: Nil Number of complaints disposed off: Not Applicable Acknowledgements: Your Directors take this opportunity to thank all investors, business partners, clients, banks, regulatory and governmental authorities, stock exchanges and employees for their continued support. On behalf of the Board of Directors Bhaskar Rao Madala Whole time Director Place: Hyderabad Date: 13-08-2015 |