The Members of
ALLIED DIGITAL SERVICES LIMITED
Your Directors present herewith the Annual Report together with the Audited Statementof Accounts and Auditors Report thereon for the Financial Year ended March 31st,2013:
RESULTS OF OPERATIONS:
( Rs. In Lacs)
|PARTICULARS ||2012-13 || |
|Total Operational Income ||23,625.54 || |
|Other Income ||544.34 || |
|Total Income ||24,169.88 || |
|Less: Operating Expenditure ||20,781.91 || |
|Profit before Interest, Depreciation, Amortization Tax & Exceptional Item ||3,387.97 || |
|Less: Depreciation ||2,132.41 || |
|Less: Interest ||1,355.92 || |
|Profit before Tax and Exceptional Item ||(100.36) || |
|Exceptional Item ||576.44 || |
|Profit before Tax ||(676.80) || |
|Less: Provision for Taxation ||- || |
|Less: Deferred Tax Liability ||341.01 || |
|Net Profit for the year ||(1,017.81) || |
|Add: Balance brought forward from the Previous Year ||28,444.16 || |
|Amount Available for Appropriation ||27,426.36 || |
|Less: Transfer to General Reserve || || |
|Proposed Dividend Including Dividend Tax ||- || |
|Short provision of Tax of earlier years (Net) ||- || |
|Add: Excess provision of Tax of earlier years ||- || |
|Balance carried to Balance Sheet ||27,426.36 || |
Your Company is an IT Infrastructure Management and Technical Support ServicesOutsourcing Company, with an impeccable track record for designing, developing, deployingand delivering end-to-end IT Infrastructure services with an objective to provide end toend IT Solutions, outcomes of which have always resulted into a positive change in theorganization. Your Company is an experienced entity having sufficient knowledge of thelocal market which assists them in organizing manpower for diverse tasks and contractualworks. It has over more than two decades of experience in enterprise IT Infrastructure,Management and Implementation and consulting on complex IT Solutions for differentBusiness Verticals.
Your Companys inherent capabilities built on the philosophy of 3S(Smart People, Smart Processes, Smart Technology); provides the strong foundation for abest-in-class Integrated Service Delivery Framework which consistently augments ouroverall value creation proposition to our clients; both effectively and efficiently.
Your Company provide credible, high class and customer oriented services and solutionsto its clients, actively participate to fulfill the needs and-cated manner. We seek longterm partnership with clients while addressing their IT requirements. Our customer centricapproach has resulted in high levels of client satisfaction and retention. Moreover weencourage a warm and cordial environment in our organization which will add to the skilledworkforce and also improve the work culture.
The global economic environment remains subdued, although key economies such as the USare showing stability and some improvement, with a yet unresolved crisis in the Euro zoneand signs of slower growth in many emerging economies. In such business conditions theCompanys gross income for the financial st, 2013 decreased by 43% to Rs. 241.70Crore, from Rs. 421.72 Crore in the previous year. The operating profit (PBDIT) of theCompany decreased toRs. 33.88 Crore during the year, from Rs. 47.51 Crore in the previousyear. Interest & Depreciation was at Rs.34.88 Crore as against Rs.32.77 Crore in theprevious year. The provision for taxation during the year was Rs.3.41 Crore which includesdeferred tax liability for the year. The net loss for the year was Rs.(10.18) Crore. Likeseveral other major technology companies, Allied Digital has also been hurt by the recenteconomic turmoil, margin pressure, increase in competition, spending curbed on IT cost bythe customer. The Companys Net worth as on March 31st, 2013, stood at Rs.677.21Crore, as against Rs.687.39 Crore last year.
During financial year 2014, the company aims to deepen its engagements with existingclients, draw repeat business, and emerge as the First Choice andthe preferred partner for its marquee global customers.
The Company sees its eco-system of critical partnerships and alliances with reputedglobal companies as an important asset and will continue to explore opportunities tofurther expand it.
The Companys differentiated business model with strong capabilities in its chosenverticals, programme management track-record, investments in intellectual property, and areinforced leadership team are great advantages in the prevailing macro-environment thatremains volatile.
In recognition of the fact that the economy is recovering and in view of theCompanys performance the Directors do not recommend any Dividend for the financialyear 2012-2013.
Your Company maintains sufficient cash to meet its strategic objectives. As on March31st 2013, your Company has liquid assets including investment in mutual funds of Rs.15.74Crore as against Rs.34.56 Crore at the previous year end. These funds are lying in currentbank account, fixed deposits with banks and in mutual funds.
In accordance with the Articles of Association of the Company and provisions of theCompanies Act, 1956 at least two-third of our Directors shall be subject to retirement byrotation. One- third of these retiring Directors must retire from office at each Directorsare eligible for re-election.
As stipulated under clause 49 of the Listing Agreement entered into with the stockexchanges, brief resumes of the Directors proposed to be appointed / reappointed, natureof their expertise in specific functional areas is as stated above and the names ofcompanies in which they hold directorships and membership / chairmanship of BoardCommittees are provided in the Report on Corporate Governance forming part of the AnnualReport.
The Board recommends to the members the resolutions for appointment and re appointment of the Directors mentioned above.
Your Directors have not recommended any Dividend for the financial year 2012-2013.
The Company is not required to undertake the cost audit as required under Section 233 Bof the Companies Act, 1956.
COMMITTEES OF THE BOARD:
The details of the Committees of the Board including their composition are provided inthe Corporate Governance Section of this Annual Report.
Your Company has Seven subsidiaries:-
1. Allied Digital Services, LLC;
2. Allied Digital INC;
3. Allied Digital Singapore Pte. Ltd;
4. Allied Digital Asia Pacific PTY LTD;
5. *Digicomp Complete Solutions Limited;
6. En Pointe Technologies India Private Limited ;
7. Allied-eCop Surveillance Private Limited.
* Your Company has divested its entire 52.6% holding in its subsidiary,Digicomp Complete Solutions Limited as per Share Purchase and Shareholders agreement DatedAugust 14th, 2013.
Pursuant to Section 212 of the Companies Act, 1956 ("the Act"), the Companyis required to attach to its Annual Report, the Balance Sheet, Profit and Loss Account,Directors Report and the Report of the Auditors (collectively refereed to as"the accounts and reports), of its subsidiaries for the year ended March 31st ,2013.
As required under the Listing Agreement with the stock exchange(s) a consolidatedfinancial statement of the Company and all its subsidiaries has been prepared and attachedhereto.
The Ministry of Corporate Affairs has granted a general exemption to the companies fromattaching financialsof the subsidiaries, subject to the laid down conditions. The Board ofDirectors has also given their consent for not attaching the accounts and reports of itssubsidiary to the Annual Report under the provisions of Section 212 of the Companies Act,1956. Therefore, the Company shall not be attaching the audited accounts of thesubsidiaries to the annual accounts of the Company for the current year. The annualaccounts of the subsidiary companies and related detailed information will be madeavailable to any member of the Company or subsidiary company upon request and are alsoavailable for inspection by any member of the Company, during the business hours, at theregistered office of the Company and that of the subsidiary company concerned.
The statement containing the list of subsidiaries along with brief financial details ofthe subsidiaries is given on page numbers 121 of the Annual Report.
UTILISATION OF FUNDS RAISED THROUGH QIP AND ISSUE OF SHARE WARRANTS:
The Company has raised funds through the issue of shares to the Qualified InstitutionalBuyers pursuant to Qualified Institutional Placement and Issue of Share Warrants toBennett Coleman and Company Limited. Out of the above issues proceeds as on March 31st2013, the company is having balance of Rs. 5.17 cores pending for deployment.
Your Company recognizes the importance of people in its growth and has been progressingwith the unflinching commitment of the dedicated team of employees. The Companysrecruitment practices that suitable candidates with merit are recruited and provided withright opportunities to grow within the Organisation. The Company has developed an HRstrategy comprising need base training. Employees are encouraged to attend seminars,lectures and training. Key performance indicators by department heads were subject toregular management review meetings.
Developing a learning culture has always been and will continue to be our uppermostpriority. Our efforts in coming years will be to enable our employees to grow continuallyand build a competitive edge by translating the learnings into positive actions. Severaltrainings were conducted during the year under review. We believe that together we can andwill make the Company achieve its corporate mission.
QUALITY & CERTIFICATION:
We continue our excellence in journey with a critical focus on quality and processesand significant investment in quality processes. Pursuant to our ISO 9001 certification,since last 15 years, we contin -ued further certifications for our other activities. YourCompanys Remote Management Services (RMS) center at Navi Mumbai has got ISO 27001:2005 Certification in a year 2007 and has gone through One successful renewal and threesuccessful surveillance audit. By this certification, we have protected IT infrastructureby means of right infrastructure and process deployment so that the customers are in safehands. We have further completed certifications of this RMS by ISO 20000-1:2005 which iscertification of excellence in IT Service Management and has gone through One successfulrenewal and one successful surveillance audit and recently we have up-scaled thiscertification to ISO 20000-1:2011. The IT services that we thus provide from this RMS arecertified to be one of the best in the world requirements of that standard. We havefurther initiated movements towards green IT and offer green data center consultancy toour prospects. In this initiative we intend to voluntarily reduce energy consumption ofhardware and offer consultancy to our prospects to reduce consumption of that data centerthus improving carbon footprint and one more step towards precious energy conservation. Wehave registered for getting our software activities certified under CMMI certificationlevel 3 which is expected to be completed in a years time.
As part of sustainability journey, Allieds various businesses have adoptedsustainability approach encompassing initiatives covering natural & energy resourceconservation, water efficiency, waste reduction and product innovation. This isstrengthened through commitment of top management, robust processes and policyformulation.
The company actively works towards development of underprivileged communitiesespecially around our area of operations. Mother & child health, primary education andskill building are the key thrust areas for community welfare.
The investments of the Company as on March 31st, 2013 were to the tune of Rs.151.93Crore as compared to the last years investment of Rs.152.46 Crore.
The Book value of the quoted investments for the year under review was Rs. 5.17 Crore(previous year Rs. 13.17 Crore) and its realizable value as at March 31st, 2013 forthis investment was same as book value.
In terms of the provisions of Section 58A of the Companies Act, 1956 read with theCompanies (Acceptance of Deposit Rules), 1975, the Company hasacceptedfixeddeposits duringthe year. As on date no Principal or Interest amount is outstanding.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION:
The information on Conservation of Energy required under Section 217 (1) (e) of theCompanies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988 are not applicable to the Company. Althoughoperations of the Company are not energy intensive, steps are being taken to conserveenergy in all possible areas.
PARTICULARS OF EMPLOYEES:
In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, the names and other particulars ofemployees are to be set out in the Annexure to the Directors Report and the same arenil as no employees of the Company come under the purview of the aforesaid provisions.However, having regard to the provisions of Section 219 (1) (b) (iv) of the Companies Act,1956 and Companies (Particulars of Employees) Rules, 1975, the Annual Report is being sentto all Members of the Company excluding the aforesaid information. Any Member interestedin obtaining such particulars may write to the Company Secretary at the Registered Officeof your Company.
FOREIGN EXCHANGE EARNINGS AND OUTGO:
| || ||(Rs. In Lacs) |
|PARICULARS ||2013 ||2012 |
|Earnings ||1871.71 || |
|Outflow (including Capital imports) ||1268.70 || |
|Net Foreign Exchange Earnings (NFE) ||603.01 || |
|NFE / Earnings (%) ||32 || |
DIRECTORS RESPONSIBILITY STATEMENT:
To the best of their knowledge and belief and according to the information andexplanation obtained by them, your Directors make the following statements in terms ofSection 217(2AA) of the Companies Act, 1956, that:
a) In the preparation of the Annual Accounts for the year ended March 31st, 2013, theapplicable accounting standards have been followed alongwith proper explanation relatingto material departures, if any;
b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year endedMarch 31st, 2013;
c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956, forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) The Directors have prepared the Annual Accounts for the year ended March 31st, 2013,on a going concern basis.
M/s. K. M. Kapadia & Associates, Chartered Accountants, Mumbai, Statutory Auditorsof your Company hold office till the conclusion of the forthcoming Annual General Meetingof the Company. He has signified his willingness to accept office, if re-appointed. TheCompany has also received his eligibility under Section 224 (1B) of the Companies Act,1956.
At present the Company has an Option plan for its employees called, "ESOP2010".
"ESOP 2010", was approved by the members at their meeting held on September29th, 2010. The Company had granted total 502,500 options under "ESOP 2010" tothe eligible employees in tranches out of total 3,000,000 grants allocated under the ESOPscheme. During the financial year ended March 31st, 2013, 60,000 options were granted toemployee of the Company or its Subsidiary. Each option entitles the holder thereofto apply for and be allotted Equity Shares of the Company upon payment of the exerciseprice during the exercise period.
The details of present ESOP are given in the table:-
|PARICULARS ||ESOP 2010 GRANT |
|Total Options granted by the plan (no.) ||502,500 |
|Pricing formula on date of grant ||Fair Market Value |
|Options granted during the year (no.) ||60,000 |
|Weighted average price per Option granted (Rs. ) ||28.00 |
|Variation in terms of Options ||NA |
|Options exercised during the year (no.) ||Nil |
|Money raised on exercise of Options (Rs. Lakhs) ||Nil |
|Options forfeited and lapsed during the year (no.) ||112,500 |
|Total number of Options in force at the end of the year. (no.) ||342,000 |
|Grant to senior management ||Nil |
|Employees receiving 5% or more of the total number of Options granted during the year* ||1 |
|Employees granted Options equal to or exceeding 1% of the issued capital ||Nil |
|Diluted EPS in accordance with [AS-20] ||N.A. |
*60000 shares granted to an employee of Subsidiary Company during financial year underreview.
Your Company has taken appropriate steps and measures to comply with all the applicablemandatory provisions of Clause 49 of the Listing Agreement entered with the StockExchanges and Section 292A of the Companies Act 1956. The Companys governancepractices are described separately in the Corporate Governance section from pages 22 to 38of this Annual Report. We have obtained certification from a Practicing CharteredAccountant on our compliance with Clause 49 of the Listing Agreement with Indian StockExchanges, described in the separate section forming a part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year under review, as stipulatedunder Clause 49 of the Listing Agreement with the Stock Exchange in India, is presented ina separate section forming a part of this Annual Report.
AWARDS AND RECOGNITION:
During the year Company has received various awards & recognitions. The awards arelisted below:
First Runner-up in the category Best Exporter Service (Small) at the ECGC- D&B Indian Exporters Excellence Awards 2012.
Maharashtra Information Technology Award 2012
Allied Digital grabs EMERSON Network Power Presents "Critical DifferencePartner Award 2012" CRN
Channel World Premier 100 Award - Channel World Inc. India 500 Award
Spirit of Partnership by Dell at the Dell-GDF India Annual Partner Summit
BEST VAR 2013 AWARD- VAR India
Top Solutions Provider and Solution Champ Managed SecurityServices by DQ Channels
Allied Digital wins MSP of the Year 2012 Award LANDesk Software USA.
We thank our customers, vendors, investors and bankers for their continued supportduring the year. We place on record our appreciation of the contribution made by employeesat all levels.
We thank the Government of India, the Ministry of Communication and InformationTechnology, the State Government, various government agencies and the Government of UnitedStates of America where we have operations, for their immense support, and look forward totheir continued support in the future.
|For and on behalf of the Board of Directors || |
|sd/- ||sd/- |
|Nitin D. Shah ||Prakash D. Shah |
|Chairman & Managing Director ||Executive Director- Commercial |
|Mumbai || |
|August 14th, 2013 || |