To the members,
We are pleased to present the results of business and operations for the financial yearending March 31 2011. This year has been a year of recovery from the challenges that yourcompany had to witness during the preceeding two years. The company has regained itsgrowth and has achieved a modest 28% growth in sales at Rs. 52.11 crores as against theprevious year's sales that was at Rs. 40.77.
Management of your company have taken measures to improve profitability and there hasbeen a growth of 69% growth in Y-O-Y of EBIDTA and 125% growth in Y-O-Y PAT.
During the Financial Year 2010-11, the Company recorded a Total Income of Rs. 5,211.56lakhs (out of which Export Income accounted for Rs. 4443.45 compared to Rs. 3,386.01 lakhsfor the previous Financial Year). The Profit before Interest, Depreciation and Tax is Rs.1478.69 Lakhs compared to Rs. 876.43 Lakhs and the Earning per Equity Share to Rs. 7.25from Rs. 3.22 in the previous year.
FINANCIAL HIGHLIGHTS 2010-11
| || ||(Rs. in Lakhs) |
|FINANCIAL HIGHLIGHTS ||2010-11 ||2009-10 |
|Income from Operations ||5,211.56 ||4,077.95 |
|Other income ||9.03 ||2.90 |
|Total Income ||5,220.59 ||4,080.86 |
|Total Expenses ||3,741.90 ||3,204.43 |
|Earning before Depreciation || || |
|Interest and Tax ||1,478.69 ||876.43 |
|Depreciation ||303.68 ||248.15 |
|Interest ||391.48 ||208.40 |
|Profit Before Tax ||783.53 ||419.89 |
|Provision for Tax ( Incl FBT) ||156.16 ||71.36 |
|other provision ||0.00 ||62.88 |
|Prior Period Excess income written back ||11.28 ||12.00 |
|Profit after Tax ||616.09 ||273.66 |
|Earning Per Share ||7.25 ||3.22 |
Your company has registered a significant win of the State Bank eLearning project. Theorder is to be executed in two parts the first part was successfully completed in timeduring this financial year.
This is the first foray of your company into the highly competitive BFSI segment. Yourcompany successfully faced stiff competition from most of the major Indian andInternational IT solutions providers who bid for this prestigious contract. Over 300,000employees of State Bank group spread across the globe are covered with the solutionprovided by Sankhya. According to one report, this is the largest eLearning applicationever implemented in the globe in the BFSI sector.
Your company has signed a memorandum of understanding with defence public sectorcompany Bharat Electronics Limited to collaborate in the field of Simulation and VirtualTraining.
We have reported in our last year Annual report about securing a defence contract forsupply of Simulation and Virtual Training suite. We are delighted to announce that yourcompany has successfully implemented the project in the current financial year andreceived payment for the project.
During the year, your company has won new clients in the Middle East. Gulf Air and GulfAviation Academy have become the new clients for your company from Bahrain.
During this year, the company has recorded a successful execution of its SILICON™suite of products for the Indian Army.
Your company has been maintaining cordial relationship with all the existing clients.New work orders and extension of the existing work orders have been executed during thisyear. Your company has been able to successfully renew long term contracts with some ofthe existing clients.
The order book of the company stood at Rs. 149.17 crores to be executed in a maximumperiod of five years. The order pipeline is extremely good with an expectation of somelarge contracts that are expected within the FYE12.
RESEARCH AND DEVELOPMENT FUNCTIONS:
The company has a clear objective for Research and Development and is captured in itsR&D vision statement as to Create a breakthrough technology that will improveperformance, is extremely affordable environmentally progressive and has enduringsustainability.
As reported in the Annual Report of last year your company has completed all therequisite paper work and presentations to the Ministry of Science and Technology forobtaining the recognition for its R&D center.
Your company was particularly focused in upgrading and improving the product portfoliothrough close interactions with prospective and existing clients, and has added severalnew functionality for existing products, and enhanced them to cater to a wider marketaudience.
As per a well-planned strategy, your company has built several configurable softwaremodules that can be used in the main activity of Simulation and Virtual Training.
These configurable modules would be used in future projects for clients.
FINANCIAL CRISIS MANAGEMENT
During the financial year, the company faced a continuation of the financial challengesthat affected the company in the previous years. Business growth, new contracts andexecution of existing contracts was normal and the company was able to show modest growth.However, as the Institute of Chartered Accountants of India has invoked the bank guaranteeof Rs. 60 lakhs issued to them. State Bank of India has debited our account and paid toICAI despite an injunction from the Hon'able High Court of Andhra Pradesh against theinvocation of the bank guarantee.
Consequently, the company has taken up the matter with SBI and lodged a formal claim,along with its claim for refund of excess interest that was wrongly debited to our accountof over Rupees one crore.
Even while the company was regularizing the account SBI has classified the company'saccounts as Stressed Managed Account without resolving the pending claim for refund ofexcess interest and resolving the dispute over payment of bank guarantee against theorders of the High Court.
The company was able to close all the loan accounts with State Bank of India with thehelp of an unsecured loan.
The company also faced further crisis due to the default in payment from the clientKingfisher Airlines. An amount of Rupees five crores was raised as per the contract.However, Kingfisher could not make the payment in time and consequently the company wasforced to withdraw software license provided to Kingfisher. Consequently, Kingfisherproposed a phased payment plan with an initial Rupees sixty lakhs payment. This proposalwas accepted and the company has signed a revised contract with Kingfisher. Subsequentlythe company is pleased to inform that payments from Kingfisher are being received as perschedule.
CHANGE OF REGISTERED OFFICE & SOFTWARE DEVELOPMENT CENTRE
Your company has moved to a modern business park developed by the Government of IndiaNational Small Industries Corporations in the month of December 2010. Situated in asprawling campus with ample parking space, clean environment and 24 hours uninterruptedpower supply the new office has tremendously improved the ambiance and working conditionsfor the employees.
Besides the new premises is also close to the talent pool of large residential areasand therefore it has been easy to quickly attract good talent to the company.
The complete address is given in the COMPANY INFORMATION section of this Annual Report.
During the year, your company has issued 37,94,600 Share Warrants to Promoter andNon-Promoter at Rs. 32.03 each. An amount of Rs. 401.54 Lakhs is received towards firstcall money.
The amount received towards first call money has been utilised as stated in the PostalBallot Notice.
The Financial details of the subsidiary companies as well as the extent of holdingstherein are provided in a separate section of the Annual report at Annexure 1.
Under Section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairs hasexempted from attaching a copy of Balance Sheet, Profit and Loss Account and schedulesthereof, Director's Report and Auditors Report of the subsidiary Companies and otherdocuments required to be attached under section 212(1) of the Act to the Balance Sheet ofthe Company. Accordingly the said documents are not attached with the Balance Sheet of theCompany. The Annual Accounts of the subsidiary Companies are available for inspection byany member / investor and the Company will make available these documents / details uponrequest by any member of the Company or its subsidiaries interested in obtaining the same.However the data of the subsidiaries has been furnished along with the statement pursuantto Section 212 of the Companies Act, 1956 forming part of the Annual Report. Further,pursuant to Accounting Standard (AS)-21 issued by the Institute of Chartered Accountantsof India, your company has presented the Consolidated Financial Statements which includefinancial information relating to its subsidiaries and forms part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements have been prepared by your Company in accordancewith the requirements of the Accounting Standards 21, 23 & 27 issued by the Instituteof Chartered Accountants of India. The Audited Consolidated Financial Statements togetherwith Auditors' Report thereon forms part of the Annual Report.
The Company has not accepted any Deposits from the Public during the year pursuant toSection 58A of the Companies Act, 1956.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'Responsibility Statement, it is hereby confirmed that:
1. In the preparation of Annual Accounts, the applicable Accounting Standards have beenfollowed and that there are no material departures from the same.
2. Directors have selected the appropriate Accounting Policies and applied consistentlyand have made judgments and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company as at 31st March 2011, and of theprofit of the Company for that period.
3. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
4. The Annual Accounts have been prepared on a going concern basis
BOARD OF DIRECTORS
Ms. M. Kavita Prasad is retiring by rotation at the ensuing Annual General Meeting andis offering herself for re-appointment.
The Company's auditors M/s. P. Murali & Co., Chartered Accountants retire at theensuing Annual General Meeting and expressed their willingness to continue as Auditors ofthe Company.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
I. Conservation of Energy Your Company's operations are software oriented and notenergy intensive. Adequate measures are taken to conserve energy wherever possible.
II. Foreign exchange earnings and outgo
| || |
(Rs. in Lacs)
| ||Year ended |
|Particulars ||31- Mar-11 ||31-Mar-10 |
|Earnings ||4443.45 ||3386.01 |
|Expenditure ||2736.24 ||2746.54 |
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Clause 49 of the Listing Agreement, a report onManagement Discussion & Analysis is enclosed as Annexure 2 to this Report.
Pursuant to the provisions of Clause 49(I)(D)(ii) of the Listing Agreement, adeclaration by the Chairman & Managing Director of the Company declaring that all themembers of the Board and the Senior Management Personnel of the Company have affirmedcompliance with the Code of Conduct of the Company, is enclosed as Annexure 3 to thisReport.
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate Reporton Corporate Governance is enclosed as Annexure 4 forming part of the Annual Report.
A Certificate from a firm of Chartered Accountants in whole time practice confirmingcompliance with conditions of Corporate Governance as stipulated under Clause 49 of theListing Agreement is annexed to this Report as Annexure 5.
PARTICULARS OF EMPLOYEES
No employee of the Company was in receipt of remuneration during the financialyear 2010-11 in excess of the sum prescribed under Section 217(2A) of the Companies Act,1956 read with the Companies (Particulars of Employees) Rules, 1975.
Your Company enjoys cordial employee relations, marked by empowerment and delegation.
Your Directors gratefully acknowledge the unstinted support extended by the esteemedCustomers, Bankers and Institutions.
Your Directors also are pleased to record their appreciation for the services renderedby the Employees at all levels in bringing about a better performance.
Your Directors express their thanks to the Company's Shareholders, and the Investorsfor their sustained confidence in the Management of the Company.
| ||For and on behalf of the Board of Directors |
|Place: Hyderabad ||N.Sridhar |
|Dated: 5th August 2011 ||Chairman & Managing Director |
(Amount in Rs. )
|S.No. ||Particulars ||1 ||2 ||3 |
|1 ||Name of Subsidiary || |
SANKHYA SARL FRANCE
|MAHASENA INFO TECHNOLOGIES (INDIA) PVT LTD (MITPL) * ||SANKHYA US CORPORATION |
|2 ||Financial year end ||31st March,2011 ||31st March,2011 ||31st March,2011 |
|3 ||Extent of interest of the Holding Company in the capital of the Subsidiary. ||100% ||100% ||100% |
|4 ||Date from which it became a subsidiary ||13th April,2005 ||01st May,2006 ||17th August,2006 |
|5 ||Net aggregate amount of Subsidiary’s profit or loss not dealt with in the Holding Company’s accounts. || || || |
| ||Current year ||* ||* ||34,22,798 |
| ||Previous year ||* ||* ||1,55,19,703 |
|6 ||Net aggregate of the Subsidiary’s profit less losses dealt with in the Holding Company’s Accounts: || || || |
| ||Current year ||Nil ||Nil ||Nil |
| ||Previous year || |
* MITPL (formerly known as Sankhya Information Technologies India Private Ltd) is yetto commence its commercial operations.
| ||For and on behalf of the Board of Directors |
|Place: Hyderabad ||N.Sridhar |
|Dated: 5th August 2011 ||Chairman & Managing Director |