BOARD'S REPORT Dear Members, Your Directors are pleased to present the Twentieth Annual Report together with the Audited Financial Statements of the Company for the year ended March 31, 2015. This report includes both standalone results of the Company (CyberTech Systems and Software Ltd.) as well as the consolidated results of the Company and its subsidiary CyberTech Systems and Software Inc., USA. DIVIDEND Your Directors have the pleasure of recommending Dividend @10% (Re.1/-) per Equity Share of Rs.10/- each for the Financial Year ended March 31, 2015, amounting to Rs.32,251,448/- (inclusive of tax of Rs.5,455,105), subject to approval of members at the ensuing Annual General Meeting. The dividend will be paid to members whose names appear in Register of Members on September 18, 2015 and in respect of shares held in dematerialized form, it will be paid to members whose names that may be furnished by the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as the beneficial owners as on that date. No amount was transferred to Reserves for the year under review. RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS The Company's primary focus continues to be delivering offshore development and support services in the Company's core technology areas. We are happy to inform that during the year the Company has made an effort to develop a product suite that is useful for all Municipalities' requirements. There was a slight reduction in the Offshore and Domestic revenue compared to the previous year. The Company continued to receive income from surplus office premises that earned rental income. The Company's performance for the year on standalone basis is as follows: • Total revenue during the year 2014-15 amounted to Rs.440.00 million as compared to Rs.459.51 million during the previous year. Total revenue is comprised of revenue from operations and other income, as follows: Revenue from operations for the year ended March 31, 2015 amounted to Rs.396.95 million as against Rs.406.57 million for the previous year. Operating revenue includes both software support and development activities. Revenue is reduced by 2.37% due to marginal reduction in domestic business as well as Offshore business. • Other Income amounted to Rs.43.05 million as against Rs.52.94 million in the previous year. CyberTech continues to strive for growth. The Company has grown its GIS Business substantially over the past few years. Many of the Application Maintenance projects are transformed into long term annuity projects. To allow the Company to continue this evolution, the top management of the Company has realigned the organization, established autonomy in a few new business units and streamlined the business model. The consolidated group continues to focus on delivering services to its identified market segments in its core technology areas. It continues to align its sales and delivery organizations to an offshore centric model as well as sustainable entry in to Domestic GIS market. CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements of the Company, including its wholly owned US subsidiary are prepared in accordance with Accounting Standard 21 (Consolidation of Accounts) as prescribed by the Institute of Chartered Accountants of India and in compliance with the terms of the listing agreement with the Stock Exchanges. Together, these comprise part of the Annual Report and Accounts. The summarized consolidated results are given alongside the financial results of your Company. WHOLLY OWNED SUBSIDIARY IN USA The Company owns 100% interest in CyberTech Systems and Software Inc., USA (CSSI) which was formed on June 12, 2003 in the State of Delaware in the United States of America, whose results are consolidated herein. During the year, CyberTech Systems and Software, Inc. (USA) reported an operating loss of Rs.22.32 million before interest and depreciation on total revenue of Rs.565.42million The net loss of the subsidiary for F.Y. 2014-15 aggregated to Rs.30.19 million. The Company is taking steps to increase the revenue of CyberTech Systems and Software, Inc. (USA) and the Board is of the opinion that it will be able to wipe off the accumulated losses of CyberTech Systems and Software, Inc. (USA) gradually. The Statement in form AOC-1 containing salient features of the financial statements of Company's Subsidiary is attached to the Board's Report as Annexure 1 . BUSINESS OPERATIONS OVERVIEW AND OUTLOOK During the year GeoCivic® Property Tax Management solution was considered for development, stabilization and product maturity. This decision is based on the initial market study and ongoing mission mode projects of Government of India like Smart cities and Amrut (formerly known as JNNURM) and exposure to the domain area. GeoCivic® is under implementation with some of the Municipal Corporations and GeoCivic® specifications are part of many tenders floating across many municipal corporations . The development and evolution of GeoCivic® is almost in last stages and based on the initial demonstrations, many Municipal corporations have shown interest in implementation of this application to leverage their geographic intelligence and to optimize civic planning and development. Considering the amount of interest shown by these Local Civic Bodies, your Company expects to grow its business in this area considerably in the next few years. On March 5, 2014, CyberTech's India Business Unit, announced the launch of 'CyberTech Risk Center' that offers advanced Risk Visibility Solutions dedicated to the Indian Public and Corporate sector. The risk center has been formed under an MOU between CyberTech and NC4 - the world leader in risk management and situational awareness solutions. CyberTech Risk Center provides Indian organizations with geo-coded information on incidents that are likely to impact them, in near-real time, thus helping Indian organizations ensure business continuity, while safeguarding their employees and physical assets. Risk Centre business has already seized first customer in India which is the IT Giant namely Infosys. There are many more customers in the pipelines. Also India Risk centre feed are used by several customers in U.S.A. which has started generating recurring revenue for the Company. AWARDS AND RECOGNITIONS Awards CyberTech received the "Skoch Order of Merit" in the 37th Skoch Summit on "Minimum Government, Maximum Governance" held at the India Habitat Centre, New Delhi on 19-20th September 2014. CyberTech has received this prestigious recognition as "India's best governance projects 2014" for the excellent project conceptualized and delivered for the city of Bangalore. The project has been awarded this appreciation in two categories: 'Smart Governance' & 'Advanced Technology' The Skoch Digital Inclusion awards is a highly renowned and prestigious platform instituting India's highest independent civilian honors in the field of Governance, Finance, Technology, Economics, and the Social Sector. CyberTech's selection has come after a fierce competition among more than 1000 entries from across the country, including leading national and international IT and technology companies. CyberTech's selection for this 'Order of Merit' speaks volumes for the customer acceptance and quality of its GeoCivic® solution. It is a reflection of the success that CyberTech has had at building market-driven solutions on leading ESRI technologies. This achievement will not only help in creating a stronger GeoCivic® brand, but will also create better opportunities for CyberTech to reach out to its target market and deliver better value to its customers. Recognition CMMI Recognition CyberTech has been assessed for CMMI for Software Development and has been successfully appraised for Level 3. CMMI is an Internationally recognised and accepted model by IT industry for the software development. It assures process oriented approach for delivering Quality Product and timeliness in delivery. Through CMMI, CyberTech now has detailed processes to guide the product lifecycle from its conception to final delivery. CMMI Institute, USA, has now officially published on its website about CyberTech achieving this prestigious status of CMMI Level 3. EXPANSION ACTIVITIES During the year under review, the Company received Occupancy Certificate from the Thane Municipal Corporation for the construction of the 4th floor, which has expanded an additional capacity of 35,000 sq.ft. and can accommodate around 250 IT professionals. SHARE CAPITAL The paid up share capital of the company as on March 31, 2015 was Rs.267,963,430. During the year under review, the Company has issued 325,000 equity shares under Employee Stock Option Scheme. FIXED DEPOSITS The Company has not accepted any public deposit and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of Balance Sheet. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in the prescribed form AOC-2, is appended as Annexure 2 to the Board's Report. Further, in terms of the requirement under AS-18, the detail of the Transactions with the Related Parties are provided under Note No. 26 of the Audited Financial Statements for the Financial Year ended March 31, 2015. The Directors further report that there are no materially significant related party transactions made by the Company with the 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 that were entered into during the financial year were made on an arm's length basis and were in the ordinary course of business. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website: www.cybertech.com. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has not granted any loan, guarantee, investment to any person, other than its wholly owned subsidiary. The detail or given in the Notes to Financial Statement. RISK MANAGEMENT POLICY Pursuant to the requirements of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives.Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The Company's internal control systems with reference to the Financial Statements are adequate and commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested by Statutory as well as Internal Auditors. Significant audit observations, if any, and follow up actions thereon, are reported to the Audit Committee. The policy on Risk Management as approved by the Board is uploaded on the Company's website www.cybertech.com. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are given in Annexure-3 and are forming part of this Report. DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013 Your Company is committed to creating and maintaining a secure work environment where its employees, agents, vendors and partners can work and pursue business together in an atmosphere free of harassment, exploitation and intimidation. To empower women and protect women against sexual harassment, a policy for prevention of sexual harassment has been rolled out and Internal Complaints Committee as per legal guidelines has been set up. This policy allows employees to report sexual harassment at the workplace. The Internal Committee is empowered to look into all complaints of sexual harassment and facilitate free and fair enquiry process with clear timelines. During the year 2014-15, no complaints were received regarding Sexual harassment. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management Discussion and Analysis Report, appearing in this Annual Report, review the operations of the Company in more detail and forms part of this Report. CORPORATE GOVERNANCE As per the Listing Agreement with the Stock Exchange(s), the Company has complied with the requirements of the Corporate Governance provisions of the Listing Agreement. A report on Corporate Governance is attached to this report. DIRECTORS In compliance with the provisions of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Mr. Prakash Kenjale, Mr. Sudhir Joshi, Dr. Shreepad Karmalkar Dr. N.L. Sarda were appointed as Independent Directors on the Board of Directors of your Company at the 19th AGM held on September 30 , 2014 to hold office up to five (5) consecutive years upto September 29, 2019. Ms. Amogha Tadimety was appointed as a Woman Director retiring by rotation at the 19th Annual General Meeting held on September 30, 2014 to comply with provision of Section 149 of the Companies Act, 2013 read with Rule 3 of Companies (Appointment and Qualification of directors) Rules, 2014. The Board at its meeting held on March 30, 2015 appointed Mr. A.V. Rajwade as an Additional Director of the Company, who holds office upto the date of the ensuing Annual General Meeting. The Nomination and Remuneration Committee has recommended his appointment as an Independent Director of the Company for period of five years. Mr. M.P. Bharucha, the solicitor of the Company, was appointed as a Director liable to retire by rotation. As the total payment made by the Company to his firm M/s. Bharucha and Partners is less than 10% of the gross turnover of his firm during last three years, the Board of Directors appointed him as an Independent Director for a period of 5 years ending on September 30, 2019. Mr. Steven Jeske, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. On the recommendation of the Nomination & Remuneration Committee, Mr. Ramasubramanian Sankaran was reappointed as the Executive Director with effect from 4th August, 2015 for a period of three years subject to the approval of shareholders in ensuing Annual General Meeting. The brief resume of the Directors seeking appointment or re-appointment and other related information has been detailed in the Notice convening 20th Annual General Meeting. Necessary resolution seeking the approval of the members for appointment / re-appointment of above Directors have been proposed in the Notice convening the ensuing Annual General Meeting. Your Directors recommend their appointments . NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE The details of the number of Board and Audit Committee meetings of your Company are set out in the Corporate Governance Report which forms part of this Report. DECLARATION BY INDEPENDENT DIRECTORS The Company has received necessary declaration from each independent director under section 149(7) of the Companies Act, 2013 that he meets the criteria of independence laid down in section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. BOARD EVALUATION Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS Every new independent director of the board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of our Company, the Chairman makes presentation to the inductees about the company's strategy, operations, product and service offerings, markets, software delivery, organization structure, finance, human resources , technology, quality, facilities. Further, at the time of appointment of an Independent Director, the Company issues a formal letter of appointment outlying his role, functions, duties and responsibilities as an independent director. The format of the letter of appointment is available on the website of the Company, www.cybertech.com. COMMITTEES OF THE BOARD Currently, the Board has five committees: the Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee and Executive Committee. DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 (3) (C) AND SECTION 134 (5) OF THE COMPANIES ACT, 2013 The financial statements are prepared in accordance with the Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 , the provision of the Act ( to the extent notified) and guidelines issued by Securities and Exchange Board of India (SEBI). There are no material departures from the prescribed accounting standards in adoption of these standards. The Directors' confirm that: i) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any; ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; iii) 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 frauds 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; and 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. AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE As required by clause 49 of the Listing agreement, the auditors' certificate on corporate governance is enclosed as to the Board's report. AUDITORS At the 19th Annual General Meeting held on September 30, 2014 M/s. Lodha & Co. (ICAI Firm Registration No. 301051E), Chartered Accountants (CAs), Mumbai were appointed as the statutory auditors of the Company to hold office up to the conclusion of Twenty Second Annual General Meeting to be held in the year 2017. In terms of the first proviso to section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for the ratification at every annual general meeting. Accordingly appointment of M/s. Lodha & Co., Chartered Accountants as Statutory Auditors of the Company is placed for ratification by the shareholders. In this regard the Company has received a certificate from the auditors to the effect that their appointment is in accordance with the provisions of section 141 of the Companies Act, 2013. AUDITORS' REPORT There are no adverse remark or disclaimer, qualification or reservation in the Auditors' Report. SECRETARIAL AUDITOR Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. S. Anantha & Co., Practising Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure -3" to this Report. Necessary explanation to the observations made in the Secretarial Audit Report is as given below: a) Non-Filing of E-Form-MGT10 i.e., Return to be filed with Ministry of Corporate Affairs, whenever there is an increase or decrease of two percent or more in the shareholding of the Promoters and top ten shareholders within 15 days of such change by the Company: Reply: The Company is required to file e-form MGT-10, in case of any change of increase / decrease of 2% or more in the shareholding of the Promoters and the top ten shareholders, and the 2% or more is calculated on the paid-up share capital of the Company. During the year the change (increase) in the shareholding of the promoters is less than 2% of the paid-up share capital and the change, if any, in the shareholding of the top ten shareholders 2% or more of the paid-up share capital of the Company, have been filed. SIGNIFICANT AND MATERIAL ORDERS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operation in future. EXTRACT OF ANNUAL RETURN In accordance with Section 92(3)(a) read with section 134(3)(a) of the Companies Act,2013, an Extract of the Annual Return in the prescribed format is attached as Annexure 4 to the Board's Report. INTERNAL FINANCIAL CONTROL The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of business , including adherence to the company's policies, safeguarding of its assets, prevention and detection of frauds and errors , the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. INFORMATION PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013 There were no employees in receipt of remuneration during the year requiring disclosure under section 197(12) of the Companies Act, 2013. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed pursuant to Section 134(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules , 2014 are given in Annexure 5. For and on behalf of the Board of Directors Viswanath Tadimety Chairman DIN : (00008106) Place : Trevose, PA, USA Date : August 13, 2015 |