To the Members,
Your Directors are pleased to place before the shareholders the Fifteenth Annual Report of Palred Technologies Limited (formerly Four Soft Limited) (herein after referred to as Palred or the Company) together with the audited financial statements for the year ended March, 31, 2014.
(Rs. In millions except per share data)
|1. Standalone Financial Results||For the year ended 31stMarch|
|Depreciation and amortization||5.63||11.50|
|Profit before Tax||7.86||(12.43)|
|Profit/(Loss) After tax and before exceptional items||(329.87)||(12.43)|
|Profit/(Loss) after tax and Exceptional Items||1271.61||(12.43)|
|Basic and diluted Earnings per share (in Rs.)||32.57||(0.32)|
2. Business Performance
During the year under review, the total income of the Company is Rs. 221.19 million as compared to Rs. 341.68 Million of the previous year. The operating profit stood at Rs. 13.92 Million as compared to a loss of Rs. 0.44 Million in the previous year 2012-13. The profit after tax of the Company stood at Rs. 1271.61 Million during the year under review compared to a loss of 12.43 million during the previous year.
Your Company is into providing IT solutions and IT services for Media and Entertainment and Online e-commerce portals after the sale of IT business and investments in the foreign subsidiaries. Your Company conducting its operations in online sale of Laptops, computers, Mobile accessories and computer peripherals through its website www.latestone.com.
3. Declaration of Interim Dividend
The Company has declared an interim dividend of Rs.29/- per share during the year under review. The interim dividend has been paid out of the profits on slump sale of the IT business and investments in the foreign subsidiaries.
In view of the requirement of funds for the expansion of business after the sale of IT business and investments in the foreign subsidiaries, the directors do not recommend dividend for the financial year 2013-14.
4. Transfer to reserves
The Company proposes the entire amount of profit after tax for an amount of Rs. 1271.61 Million to be retained in profit and loss account.
5. Fixed Deposits
Your Company has not accepted any fixed deposits and, as such, no principal or interest was outstanding as of the balance sheet date.
6. Issue of equity shares under Employee Stock Option Scheme
During the year under review, your Company has allotted 77,226 shares under the Employee Stock Option scheme to the eligible employees. The Board of Directors had approved allotment of 65,228 shares under ESOP Scheme- 2009 on their Board Meeting held on 30th May, 2013 and 11,938 shares on their Board Meeting held on 10th August, 2013. The Companys paid-up capital is Rs.195, 184,850/- consisting of 39, 036, 970 equity shares of Rs. 5/- each as on 31st March, 2014. There has been no change in the Authorized capital of the Company during the year under review.
7. Reservation of 20,00,000 shares to the new management team
The Company has reserved 20, 00,000 shares to the new management team, under the Employee Stock Option Scheme. The Board of Directors had given their approval on their meeting held on 13th October, 2013 and the members had given their approval at their general meeting held on 27th November, 2013.
8. Slump sale of business
During the year under review, your Company had sold the IT business and Investments in foreign subsidiaries to Transport I.T Solutions Private Limited, a Kewill Group Company, for a lumpsum consideration of USD 43.4 Million subject to customary price purchase adjustments. The respective sale of business had been approved by the Board of Directors at their meeting held on 10th August, 2013 and the shareholders had given their consent by way of postal ballot on 18th September, 2013.
As a part of slump sale of business, the entire investments in the share capital of foreign subsidiaries, Four Soft B.V, Four Soft Singapore Pte Ltd., and Four Soft USA Inc. including the step down subsidiaries have been sold off to Kewill Group. During the year under review, Four Soft Malaysia SDN applied for liquidation. As on 31st March, 2014 there are no subsidiaries for your Company.
10. Change in the registered office of the Company
During the year under review, the registered office of the Company has been shifted from 5Q1, A3, Cyber Towers, HITECH City, Madhapur, Hyderabad- 500081 to Plot No.2, 8-2-703/2/B, Road No.12, Banjara Hills, Hyderabad- 500034 with effect from 07th October, 2013.
During the year under review, your Company has acquired on January 8th 2014, Deals15.com from Premium Web Services which provides internet services and software services/solutions to business to business e-commerce and website development for the purpose of business operations in online e-commerce as it is being emerged as a profitable area of business and it would be an effective way to initiate the business post sale of Four Soft Limited.
12. Technology - Solutions offered
Presently your Company, after selling 4S products to Kewill, is focusing on three different verticals. The first vertical is online e-commerce solutions. Your Company is focusing on occupying the online electronics accessories e-commerce niche area in India. Your Company is doing Dry Run for your online electronics accessories e- commerce site called LatestOne.com which is powered by Palred Stores. Your Company also offers solution called Palred Stores for e-commerce industry, which would like to open their online store and focus on their business rather than worrying about the technology platform. Your Company is focusing on implementing processes to improve overall shipment delivery turn around, quality of service and better automations. The backend solution has been implemented using Microsoft Dynamics AX 2012 R2. The LatestOne.com site integrates with CCAvenue payment gateway and many of the 3PLs (Bluedart, Aramex, Delhivery, DotZot and EMS) for shipment delivery. The Second vertical, your Company offers IT-services on high-end solutions like enterprise application integration, data analytics, big data and master data management. The third vertical, your company offers solutions for media and entertainment.
13. Corporate Governance
Your Company has been making every effort to improve governance and transparency in the conduct of business.
Your Company is committed to good Corporate Governance coupled with good corporate practices. A detailed report on corporate governance is available as a separate section in this Annual Report. Certificate by a Practicing Company Secretary on compliance with the code of Corporate Governance under Clause 49 of the Listing Agreement is enclosed as an annexure in this Annual Report.
The Company has well framed policies such as Whistle Blower Policy, Fraud Detection Policy and Code of Conduct for prevention of Insider Trading. The Company has internal controls and documented procedures and continues to ensure compliance with the said policies.
14. Management Discussion and Analysis
A report on the Management Discussion and Analysis for the year under review is annexed hereto and forms part of the Annual Report.
With effect from 1st September, 2014, Ms. Amala Mudhapuram has been appointed as Additional Director by the Board of Directors of your Company.
As per the requirements of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the Stock Exchanges, the Independent Directors are not liable to retire by rotation and are to be appointed for a period of Five (5) consecutive years. Hence, Ms. Amala.M, Mr. E. Srinivas Prasad, Mr. A. Mohan Krishna Reddy and Dr. T.R. Sivarama Krishnan are being appointed for a period of five (5) years.
16. Corporate Social Responsibility
At Palred we strongly believe in improving the quality of life of the communities we serve. To achieve this objective, the Palred Technologies CSR team has been actively working on improving the welfare of the socially and economically disadvantaged communities, especially those that exist in and around its areas of primary operation.
Your Company CSR policy encompasses initiatives to encourage sustainable socio-economic development of the community and to improve the quality of life of the people living in the areas in which it operates. In line with the values of all its stakeholders and most importantly, based on a genuine concern for people and the community, we at Palred donated an amount of Rs. 5 Lakhs to Bhupati Raju Sita Devi Charitable Trust, for the education of the children of the trust.
17. Statutory Auditors
The retiring Statutory Auditors of the Company, M/s Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N) hold office as Statutory Auditors till the conclusion of Fifteenth Annual General Meeting and they have confirmed their eligibility and willingness to accept office and be re-appointed as the Statutory Auditors to hold office until the conclusion of sixteenth Annual General Meeting.
The Audit Committee and the Board of Directors recommend the re-appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, as the Statutory Auditors to hold office until the conclusion of sixteenth Annual General Meeting.
The Company has received a certificate from M/s Walker Chandiok & Co., LLP to the effect that their re- appointment, if made, would be in accordance with the limits as specified under Section 139 of the Companies Act, 2013 and that they meet the criteria of independence. The proposal of their re-appointment is included in the notice of the ensuing Annual General Meeting.
A report of Auditors on the financials of the Company is appended to this annual report. There are no qualifications in the report.
18. Particulars of Employees
As required under the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended thereon, no employees other than Managing Director are drawing more than rupees sixty lakhs per financial year or rupees Five Lakh per month, as the case may be for the year 2013-14.
The particulars are mentioned in annexure II to the Directors Report.
19. Disclosures as per Listing Agreement Clause 32
The cash flow statement under indirect method is in accordance with the Accounting Standard on cash flow statement (AS-3) as notified by the Companies (Accounting Standards) Rules, 2006, as amended is appended to this Annual Report.
20. Directors Responsibility Statement
Your Companys Directors make the following statement in terms of Section 217 (2AA) of the Companies Act, 1956 which is to the best of their knowledge and belief and according to the information and explanations obtained by them:
I. The financial statements have been prepared in conformity with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and requirements of the Companies Act, 1956. There are no material departures in the adoption of applicable Accounting Standards.
II. 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 true and fair view of the Company at the end of the financial year ended 31st March, 2014 and of the profit and loss of the Company for the year.
III. We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
IV. We have prepared the annual accounts for the financial year ended 31st March, 2014 on a going concern basis.
The Board of Directors and the management of your Company accepts responsibility for the integrity and objectivity of these financial statements. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order to that the financial statements reflect in a true and fair manner; the form and substance of transactions, and reasonably present the Companys state of affairs and profit for the year.
The financial statements have been audited by Walker Chandiok & Co., LLP Chartered Accountants, the Statutory Auditors.
The Audit Committee of the Company meets periodically with the Statutory Auditors to review the manner in which the auditors are discharging their responsibilities, and to discuss auditing, internal control and financial reporting issues. To ensure complete independence, Statutory Auditors have full and free access to the members of the Audit Committee to discuss any manner of substance.
Your Directors wish to express their gratitude to the Central and State Governments, investors, Securities and Exchange Board of India, the stock exchanges, analysts, financial institutions, banks, associates, and customers for their support. Your directors commend all the employees of your company for their continued dedication, significant contributions, hard work and commitment.
|Place: Hyderabad||For and on behalf of the Board of Directors|
|Palem Srikanth Reddy|
|Chairman & Managing Director|
ANNEXURE I TO THE DIRECTORS REPORT
Particulars pursuant to Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988.
1. Conservation of energy
The business operations of your company are not energy intensive. However, significant measures are taken to reduce energy consumption by using energy efficient computers and equipment. Your Company continuously evaluates new technologies and invests for making infrastructure more energy efficient. As the facility is located at Banjara Hills, Air-conditioners, Computers used are highly energy efficient. As energy costs comprise a nominal part of Companys total expenses, the financial impact of these measures are not material.
2. Research and Development & Technology absorption
In continuation with our strategy of Technology Management as the centre piece of our business model, we have taken various initiatives and steps. Technology has a bigger part in solving the business problems that leads to various improvements for the customers and society at large. Such overlapping confluence can happen in the field of Analytics, Big Data, and Master Data Management. We would continue to explore and invest in such area.
We would also explore open source solutions holds numerous other compelling advantages for business, some of them even more valuable than the softwares low price. The Open Source model harnesses the power of distributed peer review and transparency to create high-quality, secure and easily integrated software at an accelerated pace and lower cost.
Today companies must offer applications that run on a range of devices, and connect to an exploding set of backend data. We would continue to invest in research and develop in new mobile reality solutions, quickly delivering native cross-platform apps, mobilizing any data source, and driving success with real-time mobile analytics.
3. Benefits derived as a result of R&D activity
R&D initiatives of Palred Technologies Limited create intellectual and intangible assets which are monetized by way of a) additional customization revenue from product improvements and enhancements and b) sale of new products to existing and new customers. In the year, your company will be initiating R&D on Apache OfBiz solution, Talent open source solutions and business analytics.
4. Foreign exchange earnings and outgo
( in Million)
|For the year ended|
|Particulars||31st March 2014||31st March 2013|
|Outflow (including imported software)||8.89||19.12|
|Net Foreign Exchange (NFE) Earnings||7.16||317.28|
|NFE/Gross Earnings %||44.61%||94%|
ANNEXURE II TO THE DIRECTORS REPORT SHOWING THE PARTICULARS OF EMPLOYEES REQUIRED TO BE ATTACHED PURSUANT TO THE PROVISIONS OF SECTION 217 (2A) OF THE COMPANIES ACT, 1956
|Name & Age||
|Remuneration (Rs. in Rs.)||Qualification||Experience||Date of Joining||% of shareholding in the company|
|Mr. Palem Srikanth Reddy (51 years)||
Chairman & Managing Director
|97 lacs||Industrial Engineering Graduate from REC, Trichy and Post Graduate in Industrial Engineering from Stanford University, USA||24years||24.12.1999||22.85%|
The Company has applied for Central Government approval for increase in the remuneration of Mr. Palem Srikanth Reddy of Rs. 98 lacs per annum. The said approval from the Central Government is awaited.
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Palem Srikanth Reddy , Chairman & Managing Director
Atul Sharma , Additional Director
S Vijaya Saradhi , Additional Director
Richa Patnaik , Independent Director
Company Head Office / Quarters:
Plot No 2 8-2-703/2/B,
Road No 12 Banjara Hills,
Phone : Telangana-91-40-66384915/66384916 / Telangana-
Fax : Telangana-040-6384915 / Telangana-
E-mail : firstname.lastname@example.org
Web : http://wwwplared.com
Karvy Computershare Pvt Ltd
Plot No 17-24 ,Vittal Rao Nagar ,Madhapur ,Hyderabad-500081