DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting you the 26th Directors' Report on the business and operations of your company, for the financial year ended 31st March, 2015. RESULTS OF OPERATIONS: Following are the results of operations for the financial year 2014-15 BUSINESS PERFORMANCE Consolidated Revenues: The total Consolidated income of the Company for the FY 2014-15 Rs. 14120.26Lacs as against Rs. 11445.62 Lacs in FY 2013-14 Standalone Revenues: The total income of the Company for the FY 2014-15 Rs. 8070.59 Lacs as against Rs. 6533.14 Lacs in FY 2013-14 Consolidated Profits: Profit before Tax (PBT) stood at Rs. 1106.60 Lacs as against Rs. 629.26 Lacs for the previous year. Profit after Tax (PAT) stood at Rs.828.81 lacs as against Rs. 387.63 Lacs for the previous year. Standalone Profits: Profit before Tax (PBT) stood at Rs. 401.41 Lacs as against Rs. 220.94 Lacs for the previous year. Profit after Tax (PAT) stood at Rs. 361.35 Lacs as against Rs. 140.14 Lacs for the previous year. Your Company is primarily engaged in the business of providing IT Products & Services to its customers in US. The financial results of the Company on consolidated basis have been encouraging despite the challenges faced in terms of unfavorable business conditions in our primary market of US. RESERVES AND SURPLUS During the year the Company has transferred an amount of Rs.361.35 Lakhs to Reserves and Surplus. DIVIDEND Your directors did not recommend any dividend on shares for this year. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES 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 Material changes and commitments; There are no material changes and commitments occurred between the end of the financial year of the company and the date of the report affecting the financial position of the company Directors None of the directors of the company is disqualified under the provisions of the act or under the Listing agreement with the stock exchanges. Appointments: In accordance with the provisions of the Companies Act, 2013 K Sri Kalyan retire by rotation at the Annual General Meeting and being eligible offer themselves for reappointment at the ensuing Annual General Meeting. Brief resume of the Directors proposed to be reappointed, nature of their expertise in specific functional areas, directorships in other companies as stipulated under clause 49 of the listing agreement with the stock exchanges in India are provided in the report on corporate governance. Cessations: None of the Directors ceased to Director of the company during period under review. Allotment of Shares: The Company has not allotted any shares during the period under review. Internal control systems and their adequacy: 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 function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman. 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 recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. CODE OF CONDUCT: The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "code of business conduct" which forms an Appendix to the Code. The Code has been posted on the Company's website www.virinchi.com . The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard. VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has a vigil mechanism named Fraud and Risk Management Policy to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility. The Company has a Fraud Risk and Management Policy to deal with instances of fraud and mismanagement, if any. The FRM Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. A high level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board. PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. 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 theCompanies Act, 2013 ('the Act'), read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). There are no material departures from prescribed accounting standards in the adoption of these standards The Directors Confirm that: i) In the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards had been followed and there are no material departures. ii) The directors have selected appropriate accounting policies and applied them consistently and have 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 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 Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities iv) We have prepared the annual accounts for the financial year ended 31st March, 2015 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 the applicable laws and such other systems are adequate and are operating effectively. AUDITOR'S CERTIFICATE ON CORPORATE GOVERNANCE As required by clause 49of Listing Agreement, Auditor's certificate on corporate governance is enclosed as Annexure to Board's Report. AUDITOR'S REPORT/ SECRETARIAL AUDIT REPORT: The observation made in the Auditors' Report read together with relevant notes thereon are self explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. As required under section 204 (1) of the Companies Act, 2013 the Company has obtained a secretarial audit report. Certain observations made in the report with regard to non filing of some forms were mainly due to ambiguity and uncertainty of the applicability of the same for the relevant period. However, the company would ensure in future that all the provisions are complied to the fullest extent. AUDITORS M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The company has received consent letter from the Statutory auditors and certificate indicating satisfaction of criteria sated in Section 141 of Companies Act, 2013 . SECRETARIAL AUDIT: N V S S Suryanarayana Rao, Practicing Company Secretary was appointed to conduct Secretarial Audit of the company for the financial year 2014-15, as required under section 204 of the Companies Act, 2013 and rules framed there under.The Secretarial Audit report for Financial year 2014-15 forms part of board's report as Annexure The Board has appointed Mr. N V S S Suryanarayana Rao, Practicing Company Secretary as Sectretarial Auditor of the Company for financial year 2015-16. 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 Company's operation in future. EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO. The Particulars as required under Sub- section (3)(m)of Section 134 of the Companies Act,2013, read with the Companies(Accounts) Rules 2014 are enclosed in Annexure BUSINESS RISK MANAGEMENT: Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement , the company has constituted a business risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report. FIXED DEPOSITS Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 Performing Subsidiaries Virinchi Learning Private Ltd Virinchi Learning Private Ltd incorporated in the year 2010 as wholly owned subsidiary of Virinchi Technologies Ltd. The primary objective of incorporating Virinchi Learning is to promote technology based, for profit, quality education services to the different student categories in India, both by creation of new content & infrastructure and also by partnering with existing content providers by leveraging the strength of Information technology The company has been granted a loan of Rs.5.5 crores by NSDC towards training of youth in the specified skills as notified by the NSDC in healthcare and bio tech sectors. The company has tied up with some training institutes and has developed the training content and the Company has trained 370 students in various courses viz., healthcare, Bio Technology, IT as per the NSDC Programme. KSoft Systems Inc M/s. KSoft Systems Inc is in the business of software development and consulting. M/s. KSoft Systems Inc provides consulting services to various clients in the US in the domains of SAP, Oracle and other technologies. M/s. KSoft Systems Inc., has taken 5000 Sft office premises on lease in Edison, NJ and had set up state of art infrastructure facility for serving the existing and new customers. During the year around 100 people travelled and joined in various projects of the company and total head count is around 120 employees in KSoft as on 31st March, 2015 Virinchi Health Care Private Ltd Virinchi Helath Care private Ltd is incorporated in the year 2013 with the main objective of delivering quality health care to end users on an asset-heavy model connecting the whole eco-system including Hospitals, Doctors, Para-medics , Medical & Imaging Equipment, pharmacists and patients on a robust IT back bone. To achieve this objective, The company has leased a building at Banjara hills, in the city of Hyderabad, by way of long term lease agreement. Tyohar Foods Pvt. Ltd. The company had planned to take up a project under Tyohar Foods Pvt Ltd and had purchased a 50,000 square feet of building in 4047 Square meters of land by participating in an open auction conducted by Canara Bank on 16thAugust 2012 and registered the said property located at Survey No 15, Suraram Village. However, post purchase, a petition was filed against the company and the bank, in Debts Recovery Tribunal vide S.A.No.370/2012 and I.A.No.1437/2012 and the DRT directed to maintain Status Quo orders pending detailed hearing. As the Sale was done through Auction which was conducted under the SARFESI act, the company and the Bank are hopeful of clearing the litigation favourably. However due to the delay in settlement, the proposed project at the scheduled property has been suspended by the company. Consolidated Financial Statements In accordance with the Accounting Standards AS-21 and AS-27 on Consolidated financial Statements read with the Accounting Standard AS-23 on Accounting for investments in Associates, the Audited consolidated financial statements are provided in the annual report. Particulars of Employees The information required pursuant to Section 197 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 reports 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 ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the company secretary in advance. PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTFLOW REQUIRED UNDER COMPANIES (ACCOUNTS) RULES, 2014 a) Conservation of Energy: Company's operations require electrical energy for its use in air conditioning the premises, for power supply to computer systems and lighting which are not energy intensive. However, adequate measures have been taken to reduce energy consumption, wherever possible. To decrease the carbon footprint, company transportation is extended to associates from different parts of the city; the occupation is 100% in all the buses on all the working days. Also, to conserve the natural resources, STP plan is installed and the waste water and solid material emitted out, after processing is being used for landscaping. The company has adopted laudable practices like reducing the carbon foot prints, maximizing the utilization of natural light and reducing the electric light fitments, reduction of size of work station partitions. use of recycled material for the work stations' wood boards, provision of task lights for every work station to minimize the power consumption, central control switch for entire work station and automated water control taps in the rest rooms. As part of energy conservation, LED lighting is being use for the new areas, which are undergoing interior renovation works. b) Research and Development Your company will continue to focus and invest in its R & D activities in software engineering, technologies and products. Your company leverages its excellence in technology for producing World Class Products and solutions. The continual exposure to new technologies has helped maintain high motivation levels in employees and to generate higher levels of productivity, efficiency and quality. Your company continues to give due importance to research and development to maintain its leadership in the field of leading edge technologies. c) Foreign Exchange Earnings and Outgo: Most of your Company's earnings are from the export of Computer Software and Services. In order to promote product sales and services, your Company participated in various exhibitions and carried product promotion activities. d) Technology Absorption, Adaptation and Innovation Your company continues to use state-of-the-art technology for improving the productivity and quality of its products and services. To create adequate infrastructure, your Company continues to invest in the latest hardware and software. To support its growth plans, the company continues to invest in global solutions that are configured consistently for its core business processes. Report on Corporate Governance Corporate Governance Report is set out as separate Annexure to this Report. Management Discussion and Analysis Report Management's Discussion and Analysis report for the year under review as stipulated under Clause 49 of the Listing Agreement with the stock exchanges is presented in a separate section forming part of the Annual report. Acknowledgments Your directors would like to place on record their appreciation of support, co-operation and assistance received from the company's clients, Central Government authorities, bankers, shareholders and suppliers. The board wishes to convey its appreciation for hard work, solidarity, cooperation and support put in by the company's employees at all levels in enabling such growth. BY ORDER OF THE BOARD For VIRINCHI TECHNOLOGIES LIMITED M. Santi Priya Chairperson & Whole Time Director PLACE : HYDERABAD DATE : 31-08-2015 |