Allied Digital Services Ltd

BSE: 532875 | NSE: ADSL | ISIN: INE102I01027 
Market Cap: [Rs.Cr.] 99.75 | Face Value: [Rs.] 5
Industry: Computers - Software - Medium / Small

Director's Report
Directors' Report

To,

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,2014:

RESULTS OF OPERATIONS:

(Rs. In Lakhs)

PARTICULARS 2013-14

2012-13

Total Operational Income 14,938.06

23,625.54

Other Income 3,250.95

544.34

Total Income 18,189.01

24,169.88

Less: Operating Expenditure 13,492.09

20,781.91

Profit before Interest, Depreciation, Amortization Tax & Exceptional Item 4,696.92

3,387.97

Less: Depreciation 2,325.24

2,132.41

Less: Interest 1,437.98

1,355.92

Profit before Tax and Exceptional Item 933.69

(100.35)

Exceptional Item -

576.44

Profit before Tax 933.69

(676.79)

Less: Provision for Taxation 194.80

-

Less: Deferred Tax Liability (542.28)

341.01

Net Profit for the year 1,281.18

(1,017.80)

Add: Balance brought forward from the Previous Year 27,426.36

28,444.16

Amount Available for Appropriation 28,707.53

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 28,707.53

27426.34

BUSINESS OPERATIONS:

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 Company’s 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 preferences of thecustomers, their requirements in a dedicated manner. We seek long term partnership withclients while addressing their IT requirements. Our customer centric approach has resultedin high levels of client satisfaction and retention. Moreover we encourage a warm andcordial environment in our organization which will add to the skilled workforce and alsoimprove 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 theCompany’s gross income for the Financial Year ended March 31st, 2014 decreased by 25%to Rs. 181.89 Crore from Rs. 241.70 Crore in the previous year. The operating profit(PBDIT) of the Company increased to Rs. 46.97 Crore during the year, from Rs. 33.88 Crorein the previous year. Interest & Depreciation was at Rs. 37.63 Crore as against Rs.34.88 Crore in the previous year. The provision for taxation during the year was Rs.(3.47) Crore which includes deferred tax Asset for the year. The net Profit for the yearwas Rs. 12.81 Crore. Like several other major technology companies, Allied Digital hasalso been hurt by the recent economic turmoil, margin pressure, increase in competition,spending curbed on IT cost by the customer. The Company’s Net worth as on March 31st,2014, stood at Rs. 690.02 Crore, as against Rs. 677.21 Crore last year.

OUTLOOK:

During Financial Year 2015, 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 Company’s 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.

APPROPRIATIONS:

a. DIVIDEND:

In recognition of the fact that the economy is recovering and in view of theCompany’s performance the Directors do not recommend any Dividend for the FinancialYear 2013-2014.

b. LIQUIDITY:

Your Company maintains sufficient cash to meet its strategic objectives. As on March31st 2014, your Company has liquid assets including investment in mutual funds of Rs.19.20 Crore as against Rs. 15.74 Crore at the previous year end. These funds are lying incurrent bank account, fixed deposits with banks and in mutual funds.

BOARD OF DIRECTORS

RE-APPOINTMENT/ APPOINTMENT:

In accordance with the Articles of Association of the Company and provisions of theCompanies Act, 2013, 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 AnnualGeneral Meeting of the Shareholders. Mr. Paresh Shah will retire by rotation at theensuing Annual General Meeting and being eligible, offers himself for re-appointment. YourDirectors recommend his re–appointment.

Pursuant to provision of Section 149, 152 read along with Schedule IV and all otherapplicable provisions of the Companies Act, 2013 and the Companies (Appointment andQualification of Directors) Rules, 2014 and Clause 49 of the Listing Agreement,

Ms. Shubhada Jahagirdar who has consented to act as Independent Director and in respectof whom the Company has received a notice in writing under Section 160 of the Act from amember proposing her candidature for the office ofindependent Director, be and is herebyappointed as an Independent Director of the Company to hold office for 5 (five)consecutive years effective from October 01st, 2014, not liable to retire by rotation.

Pursuant to the provisions of the Companies Act, 2013, the Company has decided the termofindependent Directors as below:

Pursuant to provision of Section 149, 152 read along with Schedule IV and all otherapplicable provisions of the Companies Act, 2013 and the Companies (Appointment andQualification of Directors) Rules, 2014 (including any statutory modification(s) orre-enactment thereof for the time being in force) and Clause 49 of the Listing Agreement,Prof. Venugopal Ramaswami Iyengar (DIN 02591297), Dr. Shrikant Navnitlal Parikh (DIN01735830), and Dr. Roopkishan Sohanlal Dave (DIN 2800417), who was appointed as a Directorliable to retire by rotation and in respect of whom the Company has received a notice inwriting under section 160 of the Companies Act, 2013 from a member proposing hiscandidature for the office of Director, be and is hereby appointed as an IndependentDirector of the Company to hold office for 5(five) consecutive years for the term uptoMarch 31st, 2019, not liable to retire by rotation.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria ofindependence as prescribed both under sub section(6) of Section 149 of the Companies Act, 2013 and under clause 49 of the Listing Agreementwith the Stock Exchanges.

As stipulated under clause 49 (IV)(G) of the Listing Agreement entered into with thestock exchanges, the following informations are provided in the Report in explainatorystatement to Notice forming part of the Annual Report:

A brief resumes of the Directors proposed to be appointed / reappointed;

Nature of their expertise in specific functional areas is as stated above;

The names of companies in which they hold directorships and membership/ chairmanship ofCommittees of the Board;

Shareholding of Non-Executive Directors as stated in clause 49(IV)(E)(V) of the ListingAgreement.

DIVIDEND:

Your Directors have not recommended any Dividend for the Financial Year 2013-2014.

COST AUDIT:

The Company is not required to undertake the cost audit as required under Section 148of the Companies Act, 2013.

CONSOLIDATED FINANCIAL STATEMENT:

In accordance with the Accounting Standard (AS) – 21 on Consolidated FinancialStatements, the Audited Consolidated Financial Statement is provided in the Annual Report.

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.

• Nomination and Remuneration Committee – Companies Act 2013.

Pursuant to the provisions of Section 178 of Companies Act, 2013, the Board ofDirectors of the Company has consented the change in nomenclature of existing RemunerationCommittee to ‘Nomination and Remuneration Committee’ as provided under CompaniesAct, 2013 and has also approved the revised terms of reference of the Nomination andRemuneration Committee as per the provisions of the Companies Act, 2013 (effective from01/04/2014).

As per the said terms of reference approved by the Board the Nomination andRemuneration Committee shall formulate the criteria for determining the qualifications,positive attributes and independence of a director and recommend to the Board a policyrelating to the remuneration for the Director, KMP and other employees. The Company’spolicy on Directors appointment and remuneration and other specifications as mentionedabove will be disclosed in the Boards’ Report as provided under Section 134 (3) (e)once the same is formulated by the Committee.

SUBSIDIARIES:

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 it’s entire 52.6% holding in it’s subsidiary,Digicomp Complete Solutions Limited as per Share Purchase and Shareholders agreement onAugust 14th, 2013.

Pursuant to the provisions of Section 212 of the Companies Act, 1956 ("theAct"), the Company is required to attach to its Annual Report, the Balance Sheet,Profit and Loss Account, Directors’ Report and the Report of the Auditors’(collectively referred to as "the accounts and reports’), ofits subsidiaries forthe year ended March 31st, 2014.

As required under the Listing Agreement with the stock exchange(s) a consolidatedfinancial statement of the Company and all its subsidiaries have been prepared andattached hereto.

The Ministry of Corporate Affairs has granted a general exemption to the companies fromattaching financials of the subsidiaries, subject to the laid down conditions. The Boardof Directors has also given their consent for not attaching the accounts and reports ofitssubsidiary 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 122 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 31st2014, the company is having balance of Rs. 5.01 cores pending for deployment.

HUMAN RESOURCES:

Your Company recognizes the importance of people in its growth and has been progressingwith the unflinching commitment of the dedicated team of employees. The Company’srecruitment practices ensure that suitable candidates with merit are recruited andprovided with right opportunities to grow within the Organization. The Company hasdeveloped an HR strategy comprising need base training. Employees are encouraged to attendseminars, lectures and training. Key performance indicators by department heads weresubject to regular management review meetings.

Developing a learning culture has always been and will continue to be our uppermostpriority. Our efforts in the coming years will be to enable our employees to continuallygrow and build a competitive edge by translating the learning into positive actions.Several trainings were conducted during the year under review. We believe that together wecan and will 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 continued further certifications for our other activities. YourCompany’s 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 fivesuccessful surveillance audit. It is planned to get this certified against ISO 27001:2013in Aug 2014. By this certification, we have protected IT infrastructure by means of rightinfrastructure and process deployment so that the customers are in safe hands. We havefurther completed certifications of this RMS by ISO 20000-1:2005 which is certification ofexcellence in IT Service Management and has gone through one successful renewal and twosuccessful surveillance audits and recently we have up-scaled this certification to ISO20000-1:2011. The IT services that we thus provide from this RMS are certified to be oneof the best in the world meeting requirements of that standard. We have further initiatedmovements towards green IT and offer green data center consultancy to our prospects. Inthis initiative we intend to voluntarily reduce energy consumption of hardware and offerconsultancy to our prospects to reduce consumption of that data center thus improvingcarbon footprint and one more step towards precious energy conservation. We haveregistered for getting our software activities certified under CMMI certification level 3which is expected to be completed in a year’s time.

SUSTAINABILITY INITIATIVES:

As part of sustainability journey, Allied Digital’s various businesses haveadopted sustainability approach encompassing initiatives covering natural & energyresource conservation, 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.

INVESTMENTS:

The investments of the Company as on March 31st, 2014 were to the tune of Rs. 152.46Crore as compared to the last year’s investment of Rs. 151.93 Crore. The Book valueof the quoted investments for the year under review was Rs. 5.01 Crore (previous year Rs.5.17 Crore) and its realizable value as at March 31st, 2014 for this investment was sameas book value.

FIXED DEPOSITS:

In terms of the provisions of Section 58A of the Companies Act, 1956 read with theCompanies (Acceptance of Deposit Rules), 1975, the Company has accepted fixed depositsduring the 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 Lakhs)
PARICULARS 2014 2013
Earnings 2,748.95 1,871.71
Outflow (including Capital imports) 151.52 1,268.70
Net Foreign Exchange Earnings (NFE) 2,597.43 603.01
NFE / Earnings (%) 94 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:

In the preparation of the Annual Accounts for the year ended March 31st, 2014, theapplicable accounting standards have been followed alongwith proper explanation relatingto material departures, if any;

The Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year ended March31st, 2014;

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;

The Directors have prepared the Annual Accounts for the year ended March 31st, 2014, ona going concern basis.

STATUTORY AUDITORS:

At the Annual General Meeting, members will be requested to appoint M/s. Shah &Taparia, Chartered Accountant, Mumbai (Firm Registration No. 109463W) as Auditors of thecompany in place of retiring auditors M/s. K.M. Kapadia & Associates, CharteredAccountant, Mumbai (Firm Registration No. 104777W), to hold office for a period of fiveyears i.e. from conclusion of Twentieth Annual General Meeting until conclusion of Twenty- Fifth Annual General Meeting of the Company subject to ratification in every AnnualGeneral Meeting and to fix their remuneration.

M/s. Shah & Taparia, Chartered Accountants, have given their consent forappointment. The Company has also received a certificate of eligibility from them underSection 139(1) of the Companies Act, 2013 and notice from a shareholder moving resolutionof their appointment.

SECRETARIAL AUDITOR:

Pursuant to the provisions of the Section 179(3) and 204 of the Companies Act, 2013read with Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 and as ameasure of good corporate governance practice, the Board of Directors of the Companyhereby appoint M/s. Pramod S. Shah & Associates (Membership No. 334), PracticingCompany Secretaries as a Secretarial Auditors of the Company for the Financial Year2014-2015 on such remuneration as may be decided by the Board in consultation with theSecretarial Auditor.

ESOP 2010:

At present the Company has an Option plan for its employees, "ESOP 2010"."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 theeffective ESOP scheme. During the financial year ended March 31st, 2014, No options weregranted to employee of the Company or it’s Subsidiary. Each option entitles theholder thereof to apply for and be allotted Equity Shares of the Company upon payment ofthe exercise price 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.) Nil
Weighted average price per Option granted (Rs.) N.A.
Variation in terms of Options NA
Options exercised during the year (no.) Nil
Money raised on exercise of Options (Lakhs) Nil
Options forfeited and lapsed during the year (no.) Nil
Total number of Options in force at the end of the year. (no.) 487500
Grant to senior management Nil
Employees receiving 5% or more of the total number of Options granted during the year N.A.
Employees granted Options equal to or exceeding 1% of the issued capital Nil
Diluted EPS in accordance with [AS-20] N.A.

CORPORATE GOVERNANCE:

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. The Company’s governance practices are described separately in theCorporate Governance section from pages 33 of this Annual Report. We have obtainedcertification from a Practicing Chartered Accountant on our compliance with Clause 49 ofthe Listing Agreement with Indian Stock Exchanges, described in the separate sectionforming 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.

THE COMPANIES ACT, 2013:

The Companies Act, 2013 (the Act) came into force as on April 1st, 2014 (in the manner,to the extent notified by the Ministry of Corporate Affairs). The Act has replaced theCompanies Act, 1956 and has brought a new set of compliances for companies. The newLegislation will facilitate greater transparency, more disclosures and enhanced corporategovernance. The Company is taking necessary steps for implementation of the provisions ofthe Act.

AWARDS AND RECOGNITION:

During the year Company has received various awards & recognitions. The awards arelisted below:

• Certificate of Excellence from India Inc Innovative 100, for smart innovation–ADiTaaS platform

• "Best VAR 2013’ – Western India

• Winner of the Channel World Premier 100 Awards, 2014

ACKNOWLEDGMENT:

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 ofindia, 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 future.

For and on behalf of the Board of Directors
sd/- sd/-
Nitin D. Shah Prakash D. Shah
Chairman & Managing Director Executive Director- Commercial
Place: Mumbai
Date: August 14th, 2014
   
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Nitin D Shah , Chairman & Managing Director

Prakash D Shah , Executive Director(Commercial)

Paresh Shah , Executive Director & CEO

Venugopal Iyengar , Director


Company Head Office / Quarters:

Premises No 13A 13th Floor,
Earnest House NCPA Rd BlockIII,
Mumbai,
Maharashtra-400021
Phone : Maharashtra- / Maharashtra-
Fax : Maharashtra- / Maharashtra-
E-mail : investors@alliedindia.com
Web : http://www.alliedindia.com

Registrars:


 
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