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CORE Education & Technologies Ltd

BSE: 512199 | NSE: COREEDUTEC ISIN: INE247G01024
Market Cap: [Rs.Cr.] 74.93 Face Value: [Rs.] 2
Industry: Computers - Education

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Director's Report
DIRECTORS

Dear Members,

Your Directors have pleasure in presenting the 29th Annual Report of your Company along with the audited financial statements for the year ended 31st March, 2014.

RESULTS FROM OPERATIONS

(Amt Rs. in Million)

Standalone
2013-14 2012-13
Income from Operations 6,275.32 11,228.40
Other Income 25.94 49.58
Variation in Inventory 530.03 (762.97)
Expenses 7,748.01 9,269.06
Exceptional Items 3,807.42 -
Profit Before tax (5,254.16) 2,008.91
Less: Provision for tax (current) - 402.03
Excess/(Short) Provision for earlier years - -
Provision for tax (deferred) (232.84) 20.86
Profit after Tax (5,021.32) 1,586.03
Add: Balance B/F from Previous Year 5,942.03 4,713.67
Excess/(Short) Provision for Earlier years - -
Profit Available for appropriations (5021.32) 1,586.03
Debenture Redemption Reserve - 87.83
Transfer to General Reserve - 190.00
Proposed Dividend (68.69) 68.69
Provision for Taxes on Dividends (11.14) 11.14
Minority Interest - -
Balance C/F to Balance Sheet 1,000.54 5,942.03

Overview

The year 2013-14 was very challenging for the Company. We continued with the existing ongoing projects and were not in a position to bid for any new projects. As reported previously, the Company’s Corporate Debt Restructuring (CDR) proposal for restructuring its debts was admitted for approval and was finally approved by CDR Empowered Group (CDR EG) on 23rd July, 2014. Your Company achieved a total operating income of Rs. 6,275.32 million as compared to Rs. 11,228.40 million during the previous financial year with a loss of Rs. 5,254.16 million as compared to profit of Rs. 2,008.91 million during the previous financial year. Loss after tax was Rs. 5,021.32 million as compared to the profit of Rs. 1,586.03 million during the previous financial year.

The financial stress still continues to haunt the Company, but strategies are being worked for resurrecting the business and realizing funds from sale of non-core assets and investment in subsidiaries, for repayment of debts.

The losses are mainly attributed towards the writing off of certain expenses incurred on ICT projects, Trade receivables and Impairment of IPRs. ICT Projects for five states having project contract value of Rs. 5,471.70 million were awarded to the Company. However, the Company was unable to achieve financial closure for these projects. As a result, the projects were left incomplete and consequently the contracts were terminated by the respective State Governments. Since implementation of majority of the projects had already commenced and was in progress, the Company had already incurred an expenditure of Rs. 614.59 million for this partial implementation. On the termination of the contract, the company had to write off the expenditure incurred on these projects. Also, the bank guarantees of Rs. 131.37 million given for these projects has been invoked by the respective State Governments which has been charged off as project expenses written off. The Haryana Government had issued termination order of the ICT Project in that state and also had issued notice for invocation of Bank Guarantee of Rs. 295 million. The Company has filed a Special Leave Petition with the Hon’ble Supreme Court against the termination order and invocation of the Bank Guarantee. The matter is subjudice and pending outcome of the legal proceedings, no adjustments has been made to the carrying value as at 31st March, 2014 for the receivable of Rs. 748.31 million and of the fixed assets of Rs. 1,002.14 million at this stage, for this project. These has been drawn as an attention to the audit report for the year ended 31st March, 2014.

On the exports and overseas operations, many customers had raised quality issues relating to assessment and intervention segment of the products. A management committee was formed to analyse and suggest the future course of action. Customers in this segment would, generally make additional improvements on the products sold to them and further sell the upgraded/final products to their customers. During negotiations, these customers had alleged that due to defective products received, they had lost their contracts with reputed clients and have claimed compensation. To avoid any legal claims and disputes in future and to have continuity in overseas business operations, the committee decided to write off the receivables of Rs. 1,769. 92 milllion and for settlement with the customers.

The management also reviewed the carrying value of it’s IPR in view of the adoption of Common Core States Standard Initiative (CCSSI) in the United States of America (USA) where these assets were substantially used. The CCSSI is an education initiative in the USA that seeks to establish consistent education standards across the states as well as ensure that students graduating from high school are prepared to either two or four year college programs or enter the workforce. Prior to the CCSSI, each state had its own education standards and Company had the required resources and capability to deliver the solutions. However, with the change in regulations and requirements, company had been investing in upgrading to the CCSSI to deliver the solutions consistently and as per requirement. With the CCSSI now in place, all the old products of the company that were aligned to the erstwhile State Standards have become partially redundant. Whilst the erstwhile State Standards will run parallel with the CCSSI for a few years, thus making the old products still commercially relevant, the company has, out of abundant caution, and with a conservative view, decided to fully write down these products. Therefore, management has made provisions for impairment of Rs. 1,291.52 million towards the carrying cost of such IPRs and treated as an exceptional item.

To mitigate the financial stress, the Company has taken various steps including cost cutting exercise and bidding for low capital intensive projects with high margin. Also rationalization is done in terms of number of employees. The No. of employees have reduced to 106 from 277.

A fire accident occured on 18th July, 2014 at the Corporate office of the Company situated at 10th Floor, Lotus Business Park, Off Link Road, Andheri (West), Mumbai – 400 053. Because of this incident the Company has lost some important data, both in the physical & the digital form though there are no major financial losses other than damage to property. The Company is in the process of assessing the extent of the damage caused to the data and rebuilding / recoupment of such data.

Dividends and Appropriations

In view of the losses incurred and the Company admitted for Corporate Debt Restructuring Plan, your Directors do not recommend any dividend for the financial year 2013-14.

Transfer to reserves:

There are no transfer of funds to General Reserves during the financial year 2013-14.

Changes in Capital Structure

There is no change in Capital Structure of the Company during the year under review.

SUBSIDIARY COMPANIES AND PARTICULARS REQUIRED UNDER SECTION 212 OF THE COMPANIES ACT, 1956

The consolidated financial statement includes the financial statements of the subsidiaries of the Company and forms part of this report. The Consolidated Financial Statement has been prepared in accordance with applicable Accounting Standards issued by The Institute of Chartered Accountants of India. Details of the subsidiary companies are discussed in the Management Discussion & Analysis, forming part of this report. As per the provisions of Section 212 of the Companies Act, 1956

(hereinafter referred to as ‘the Act’), your Company is required to attach the Directors’ Report, Balance Sheet, Profit and Loss Account and other information of the subsidiaries to its Balance Sheet. Government of India (Ministry of Corporate Affairs), vide General Circular 2/2011 dated 8th February, 2011 has granted general exemption to all the companies from attaching to its Balance Sheet, the individual Annual Reports of all its subsidiary companies, as required under Section 212 of the Act, subject to Board approval and fulfillment of certain other conditions. Your Directors believe that the audited consolidated accounts present a full and fair picture of the state of affairs and financial conditions of the Company and its subsidiaries, as is done globally. A statement pursuant to Section 212 of the Companies Act, 1956 relating to the Company’s interest in subsidiaries is attached to the financial statement and forms part of this Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any Member of the Company seeking such information and are also available for inspection by any Member of the Company at the Registered Office of the Company.

BOARD OF DIRECTOR

Board of Directors of the Company comprises of Non-Executive Promoter Chairman, Mr. Sanjeev Mansotra; two Executive Directors namely, Mr. Naresh Sharma, Executive Director, Mr. Nikhil Morsawala, Director-Finance; and two Independent Directors, namely Mr. S. S. Dua and Mr. Harihar Iyer. Mr. Pundi L. Narasimham, Independent Director, resigned from the Board with effect from 18th July, 2014. In accordance with the provisions of the Companies Act, 2013, Mr. Naresh Sharma, Executive Director, of your Company is retiring by rotation at the ensuing Annual General Meeting and expressed his willingness to be reappointed as the Executive Director of the Company for a period of 5 years from the date of this Annual General Meeting. Brief resume of Mr. Naresh Sharma proposed to be reappointed as Executive Director, nature of his expertise in specific functional areas and names of companies in which he holds Directorships and Memberships of the Board Committees, as stipulated in Clause 49 of the Listing Agreement with the stock exchanges are provided in the Corporate Governance forming part of the Annual Report.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Director’s Responsibility Statement, it is hereby confirmed: (a) that in preparation of the Annual Accounts, the applicable accounting standards have been followed and that no material departures have been made from the same; (b) that we have selected such accounting policies and applied them consistently and made judgements 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 loss of the Company for the year; (c) that we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) that we have prepared the annual accounts on a going concern basis.

Material developments in human resources and industrial relations

The past year has been a challenging year with the slowdown in economy coupled with the education sector also facing a slump. This required the company to manage its cost more efficiently without compromising on its productivity. Core understands the business needs to adapt to the economic realities and had taken steps like cutting the strength of its India team across functions to maintain the equilibrium in terms of right fit for right skill. Recognizing the necessity to maintain its core team of skilled and competent work force every effort would be made to ensure the perfect balance in terms of employees’ skills and demand and nurture a core team of dedicated employees to face the economic turnaround in the future.

BEST PRACTICES

Your Company continues to be a CMMI Level 5 certification and an ISO 9001:2008 organization.

CORPORATE GOVERNANCE

The Company endeavours to attain highest values of Corporate Standards. The Company has adhered to the requirements set out by the Securities and Exchange Board of India’s Corporate Governance practices and has implemented all the stipulations prescribed, in the Clause 49 of the Listing Agreement with Stock Exchanges. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The Chairman’s declaration regarding compliance with CETL Code of Conduct for Directors and Senior Management personnel forms part of report on Corporate Governance.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented as a separate section forming part of this Annual Report.

AUDITORS & AUDITORS’ REPORT

M/s. Chaturvedi & Shah, Chartered Accountants and M/s. Asit Mehta & Associates, Chartered Accountants, the Joint Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting. The new Companies Act, 2013 has laid down a policy of rotation of auditors to ensure appropriate Corporate Governance. The present auditors have held office for more than five years. In keeping with the spirit of new legislation, the Board of Directors recommend the appointment of M/s. Sushil Budhia Associates as the Auditor for the FY 2014-15.

The Company has received confirmations from the new auditors to the effect that their appointment, if made would be within the prescribed limits under Section 139 of the Companies Act, 2013 and that they are not disqualified for such reappointment within the meaning of Section 141 of the said Act.

The notes to Accounts referred to in the Auditor’s Report are self- explanatory and therefore do not call for any further Comments.

FIXED DEPOSITS

The Company has not accepted any deposits from the public within the meaning of Section 58A of the Companies Act, 1956 and as such, no amount of principal or interest was outstanding on the date of the Balance Sheet.

EMPLOYEE PARTICULARS

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees forms part of the Directors’ Report.

However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto,. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo as required under Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are provided in the Annexure I to this report.

TRANSFER OF UNPAID/UNCLAIMED AMOUNTS TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)

During the year 2013-14, the company has transferred the Unclaimed Dividend declared for the Year 2005-06 to the Investors Education and Protection Fund (IEPF) established by the Central Government. The dividend declared for the year 2006-07 has also been transferred to the IEPF established by the Central Government in terms of Section 205C of the Companies Act 1956. The Unclaimed Dividend for the year 2007-08 & onwards can be claimed by the members by Corresponding the same to the Company or the Registrar & Transfer Agent of the Company. Members are requested to note that dividends not encashed or claimed within 7 years from the date of transfer to the Company’s unpaid dividend account will, as per Section 205A of the Companies Act, 1956, be transferred to the IEPF. Pursuant to the provisions of the Investor Education & Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 27th September, 2013 (date of last Annual General Meeting) on the company’s website www.core-edutech.com and also on the Ministry of Corporate Affairs website.

Acknowledgements

We thank our customers, investors, bankers and other stakeholders for their continued support during the year. We place on record our sincere appreciation of the contribution made by employees at all levels. Our consistent growth was made possible by their hardwork, solidarity, cooperation and support and look forward to their continued support.

For and on behalf of the Board
Sanjeev Mansotra
Date: 14th August, 2014 Chairman

ANNEXURE TO THE DIRECTORS’ REPORT

Particulars pursuant to Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988:

Annexure I

A) Details on Conservation of Energy

Though the operations of your Company are not energy-intensive, significant measures are taken to reduce energy consumption. We constantly evaluate new technologies and invest to make our infrastructure more energy-efficient.

Some of the energy efficient practices adopted across the facilities of the Company to reduce consumption of power are:

- Installation of energy efficient lighting.

- Use of energy efficient computers and by purchasing energy- efficient equipment.

- Energy monitor and controlling system.

- Incorporating new technologies in the air-conditioning systems at all upcoming facilities to optimize power conservation.

- Identification and replacement of outdated and low-efficient UPS systems in a phased manner.

- Installation of LCD monitors (Energy Efficient) in place of normal CRT monitors, thereby saving energy.

- Turning of lights in all floors when COREans are not working.

- Turning off the Air conditioners during non peak hours and on weekends.

- Toughened glass windows to reduce infrared radiation.

- Effective management of ventilation to ensure acceptable air quality.

Our strategy to adopt the best practices, latest technologies and high levels of efficiency in our operations will help us build an environment where energy is conserved.

B) Technology Absorption and Research & Developments

Research and Development for new solutions and services, designs, frameworks, processes, and methodologies continue to be of top priority for us. This allows us to enhance quality, productivity and customer satisfaction through continuous innovation. The Company believes that technological obsolescence is a reality. Only progressive research and development will help us to accomplish future challenges and opportunities. We invest and encourage continuous innovation.

C) Foreign Exchange Earnings and outgo:

The Company continued to be net foreign earner during the year. Total foreign exchange earned by the Company during the year under review was Rs. 1,261.94 million as compared to Rs. 3,391.73 million during the previous year.

Total foreign exchange outflow during the year under review was Rs. 287.63 million, as against Rs. 301.94 million during the previous year.

Annexure II

Disclosure pursuant to the provisions of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as on 31st March, 2014

Sr. No. Scheme-1: ESOS 2007 Scheme-2: ESOS 2009
1 Date of grant 14.06.2007 13.03.2008 22.05.2008 27.06.2008 31.07.2008 15.10.2009 12.08.2010 11.11.2010 11.02.2011 26.05.2011 30.07.2011 24.10.2011 09.02.2012 30.08.12
2 Options granted 1,421,500 1,179,340 170,690 77,960 109,755 4,200,000 978,000 351,000 474,000 997,000 583,000 630,000 576,000 261,000
3 Pricing Formula Exercise price shall be the latest available closing market price of the Equity Shares of the Company on BSE or NSE, where the highest volume of shares are traded, prior to the date of grant.
4 Price of the share in market at the time of option grant (Rs.) 136.80 204.85 222.75 181.45 214.70 192.00 261.90 306.30 267.50 288.65 301.25 281.50 277.70 290.80
5 Outstanding options as at 1st April, 2013 (Nos.) - - 27,229 - 5,839 1,384,761 356,433 153,000 288,000 618,850 258,000 430,000 481,000 244,000
6 Options granted during the year ended 31st March, 2014 (Nos.) - - - - - - - - - - - - - -
7 Options vested during the year ended 31st March, 2014 (Nos.) - - - - - - - - - 144,250 37,250 148,750 131,500 44,250
8 Options exercised during the year ended 31st March, 2014 (Nos.) - - - - - - - - - - - - - -
9 Total no. of shares arising as a result of exercise of options (Nos.) - - - - - - - - - - - - - -
10 Options lapsed / surrendered during the year ended 31st - - 27,229 - 5,839 1,014,636 221,100 33,000 165,000 450,850 207,000 299,000 395,000 210,000
March, 2014 (Nos.)
11 Options in force as at 31st March, 2014 (Nos.) - - - - - 370,125 135,333 120,000 123,000 168,000 51,000 131,000 86,000 34,000
12 Variation of terms of options Nil Nil Nil Nil NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL
13 Money realised by exercise of options (Rs.) Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
14 Employee-wise details of options granted to:
i) Senior Managerial Personnel Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2 Refer Note 2
ii) Employees
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Sanjeev Mansotra , Chairman

Nikhil Morsawala , Director (Finance)

Sunder Shyam Dua , Director

Ganesh Umashankar , Company Secretary


Company Head Office / Quarters:

UnitNo 1-4 Bldg No4 Sector III,
Millennium Business Park Mahap,
Navi Mumbai,
Maharashtra-400710
Phone : Maharashtra-91-22-27782373 / Maharashtra-
Fax : Maharashtra-91-22-27782374 / Maharashtra-
E-mail : info@core-edutech.com
Web : http://www.core-edutech.com

Registrars:

Adroit Corp. Services Pvt Ltd
19/20 Jaferbhoy Ind,1st Floor Makwana Rd,Marol Naka,Mumbai - 400 059

 
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