boston education and software technologies ltd Directors report

BOSTON EDUCATION & SOFTWARE TECHNOLOGIES LIMITED ANNUAL REPORT 2000-2001 DIRECTORS REPORT Dear Shareholders, Your Directors have pleasure in presenting the Twenty First Annual Report on the business together with the audited financial statements for the year ended March 31, 2001. PERFORMANCE REVIEW Business The Companys education business performed exceedingly well. During the year, the Company embarked upon going National as well as International. The network of its training centres expanded to 185 as against 115 at the beginning of the year. The Company signed up for setting up Franchise Centres in Nepal and Gulf Countries. The Companys premium course "SAE" (Software Application Engineering) continued to evoke excellent response from Software Industry. In the later part of the year, the Company opened its IT skill testing site edupertal "testvarsity.com" and educational multi-media CDs. Both these have commenced contributing to the revenues during the current financial year. The Company also signed an Acquisition Agreement with M/s. Infinity Software Inc., a Florida, U.S.A, based Company engaged in on-site consulting business having a revenue base of US $ 1.5 in million for the year 2000. The Company also executed, though small, but significant projects including highly commended "White House Project" for University of North Carolina, U.S.A. Revenue Total income of the Company registered sharp jump to Rs. 2,459.93 lacs, 51.5% higher than last year. Education business continued to be major contributor, having 98% share in the total revenue. Profits Profits after tax substantially increased by over 191% to Rs.270.32 lacs as against Rs.92.77 lacs in the previous year. This has been possible due to significant improvement in operating margins on account of the Company attaining critical mass.. Dividend With a view to conserve the resources by ploughing back the profits into the business, your Directors have decided to skip the dividend for the year 2000-01. SHARE CAPITAL Consequent upon issue of new Equity Shares to the shareholders of erstwhile Boston Education & Software Technologies Pvt.Ltd.(BESTPL), pursuant to the merger scheme, the Equity Share Capital of the Company increased to Rs.466.80 lacs on April 11, 2000. The Company had also issued, pursuant to the merger scheme, 9,000 new Equity Warrants of Series "A" and 91,500 Series "B" to the employees of BESTPL entitling to the Equity Shares of the Company. Members are aware that in the last year the Company had proposed a Public Issue. In view of the adverse conditions prevailing in the Capital Markets, the Directors have dropped the Public Issue proposal. Instead, plans are being worked out, to raise funds, to meet the working capital requirement and also to fund the new business activities. The exact modality, the nature of instruments and the quantum of funds to be raised, are being finalised, which will be subject to approval of the Members. INDUSTRY / COMPANY OUTLOOK Industry Scenario Members are aware that recent US slow down has severely affected the Indian IT Industry. Further, closure of Dotcom Companies have rendered programmers particularly in Java Programming, surplus. This has resulted in almost drying up the demand for professional courses such as Java, E-commerce etc. Your Directors believe that this will result in big shake out in the IT Training Industry which will make surviving quality brands and training centres, the major gainers. Further, on U.S. coming out of recession coupled with Indian Software Companies efforts in European Countries may even create bigger opportunities. Company Outlook Companys revenue currently is under severe pressure, in view of the current down turn in the Industry. Company has initiated various strategic measures to counter the recessionary effect, subject to raising additional funds. Some of them are-- - Addition of new IT training segments, i.e. Embedded technologies, - Foray into IT enabled services, which will be recession free, - Substantially expanding the business of development and sale of Multi- media educational CDs, The Company has also taken various steps to conserve its resources by substantially reducing its overheads and achieving higher efficiency at all levels. RESEARCH AND DEVELOPMENT The Companys technology team continuously is in the process of developing new products and delivery methods to support the education business. The Company could launch its two portals namely "testvarsity.com" and "eduunlimited.com" due to their aggressive efforts. Having already developed and launched three titles of educational multi-media CDs under the brand name Toppers Series, the team is currently in the process of adding a few more new titles to its range of products. HUMAN RESOURCES The Company gives paramount importance to its human capital. It has been its continuous endeavour to recruit, train, and institute various motivational practices for its employees to enhance their skills and competencies. This helps achieving the organisational commitment and value to its customers. As a part of this process, an incentive plan has already been introduced to reward the best talents in the Company. Further, the Company, currently is in the process of finalising an innovative Employees Stock Option Scheme. Particulars of the employees, required to be furnished pursuant to the provisions of Section 217(2A) of the Companies Act,1956, read with the Companies (Particulars of Employees) Rules,1975, as amended, is annexed to this Report. SUBSIDIARY COMPANY The Companys Wholly Owned Subsidiary, Nexus Infotech Limited, incurred loss of Rs.10.93 lacs for the financial year ended March 31,2001. This has been mainly due to lack of software projects. This Company has been exploring the opportunities to source projects for software development. A statement pursuant to Section 212 of the Companies Act,1956, relating to the Subsidiary Company is enclosed. FIXED DEPOSITS The Company has not accepted any deposits from the public during the year under review. DIRECTORS The Board, at its meeting held on September 22, 000, appointed Mr. Bipin R Shah as an Additional Director of the Company. Mr.Bipin R Shah brings with him rich experience with Lever Group. He held the Directorships of various companies of repute including MNCs. He is currently,the President of Indus Venture Management Limited. Mr. Bipin R Shah, will hold office of Director upto the date of the forthcoming Annual General Meeting and is eligible for re-appointment. Dr. Arvind A Shah and Mr. Dipankar Mukhopadhyay retire from the Board of Directors by rotation and being eligible, offer themselves for re- appointment. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 217(2AA) of the Companies Act,195G with respect to Directors Responsibility Statement, it is hereby confirmed: (i) That in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures; (ii) That 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 or loss of the Company for the year under review; (iii) That the Directors have 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; (iv) That the Directors have prepared the accounts for the financial year ended March 31, 2001 on a going concern basis. AUDITORS & AUDITORS REPORT The Auditors, M/s. Deloitte Haskins and Sells, retire at the forthcoming Annual General Meeting. They have consented to accept the office, if re- appointed. With regard to Auditors comments, under para 2(f) of their Report, in connection with the excess remuneration paid to the Managing Director, the Directors would like to inform the Members that the Company has made representation to the Central Government for their approval. CORPORATE GOVERNANCE Although, currently the provisions of Clause 49 of the Listing Agreement with the Stock Exchange, are not applicable to your Company, the Directors, have taken initiative to comply with and implement most of the requirements of the Corporate Governance code. FOREIGN EXCHANGE EARNINGS AND OUTGO The details of foreign exchange earnings and outgo are mentioned in under para 14 & 15 of Schedule 20, which form part of the Annual Accounts. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION The Company, being in the Software Industry consumes very low energy. On an ongoing basis, the existing processes and techniques are being reviewed to make the infrastructure most energy efficient. Companys Technology Team continuously endeavour to develop new methods of software educational products. for and on behalf of the Bard Dr. Arvind A Shah Chairman Place: Mumbai Dated: July 20, 2001