To,
The members of Acropetal Technologies Limited.
Your Directors are pleased to present 14th Directors’ Report of the Company along
with the Audited financial Statements for the year ended 31st March 2015.
Rs in lakhs
| Particulars |
2015 |
2014 |
| Total revenue |
2510.53 |
11879.98 |
| Total expenses |
20942.01 |
19266.48 |
| Profit / (loss) before tax |
(18431.48) |
(7386.50) |
| Provision for deferred tax |
598.08 |
(26.13) |
| Net Profit / (loss) carried |
|
|
|
(17833.40) |
(7412.64) |
| to Balance Sheet |
|
|
The Company has drastically reduced its export business where the payments are delayed
abnormally and where the profit margins are low. During the year the company has made an
export turnover of Rs. 1075.07 lakhs. The total revenue of the Company from operations,
for the year ended 31st March, 2015 was Rs. 1841.23 lakhs, the total revenue of the
previous year was Rs. 10655.32 lakhs. The gain on foreign exchange fl uctuations accounts
majorly for the difference. The company has written off receivables as bad debts which are
pending and the company has initiated legal proceedings to recover the amount. The net
loss booked for the year under review is Rs. 18431.48 as compared to Rs. 7386.50 lakhs
during the previous year.
Future Outlook
The company is now in the process of streamlining and stabilizing the business
activities. The Indian market is very conducive but the Company intends to focus and
increase the business stage by stage in the years to come.
Dividend
In view of the loss incurred during the year, your directors are not recommending any
dividend for the year ended 31st March, 2015.
Disclosures of amounts, if any, transfer to any reserves
It is not proposed to carry any amount to any reserves from the profits of the Company.
Hence, disclosure under Section 134 (3) (j) of the Companies Act, 2013 is not required.
Directors
Pursuant to the provisions of Section 152 of the
Companies Act, 2013 and the Articles of Association of the Company, Mr. Ravi Kumar D is
retiring by rotation at the conclusion of the ensuing Annual General Meeting and being
eligible, offers himself for re-appointment.
Dr. Subramanya Reddy and Dr. Madhu Sudhana Reddy M continued to be the Independent
Directors in accordance with the provision of Section 149, 150 & 152 of the Companies
Act, 2013 and they are not liable to retire by rotation.
Auditors
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder,
M/s. K. Gopalakrishnan & Co, Chartered Accounts, #120, Infantry Road, Bangalore 560
001, were appointed as statutory auditors of the Company from the conclusion of the
Thirteenth annual general meeting (AGM) of the Company held on September 29, 2014 till the
conclusion of the Sixteenth AGM to be held in the year 2017, subject to ratification of
their appointment at every AGM.
Auditors’ Report
The Statutory Auditors in their report and in its annexure have reported inter-alia as
follows.
The Statutory auditors have expressed in their Report that the following events cast a
doubt on going concern as per para 10 SA 570 ‘Going Concern’. However, the
company is of the view that the issues may have created this doubt in the accounting
perspective but in the business perspective these issues have strong and valid reason
behind and some of these are due to the strategies adopted by the company. The issues
creating the doubt of going concern for the auditors are given below in italics and our
views are given thereunder.
1. (a) As referred in Note 7(a) to the Financial Statements, company is facing
difficulties in paying the statutory dues such as Service Tax and TDS amount of
Rs.3,34,42,351 and Rs.3,72,09,345 on 31.03.2015 out of which Rs.1,72,27,765 and
Rs.3,30,82,033 outstanding for more than one year.
The company’s cash flow from operations was better than previous year because of
the strategies adopted by the company to recover the company. With the cash flow
available, the company could address some of the dues to the extent of Rs. 326.73 lakhs
and also continue to pay during the current financial year as well. The collateral
securities given to the bank are auctioned by the banks as the facilities availed from
them are classified as Non-Performing Assets. The company is planning to address the
remaining dues to the government departments from the surplus cash left from the sale of
properties after settling the banks’ dues. The company has been paying salary and has
paid in full to its existing employees
(b) Note 2(c) in the financial statements which indicates that the company has
accumulated losses and its net worth has been substantially eroded, the company incurred a
net loss during the current year (Rs.178.33 crores) and previous year (Rs.74.12 crores)
and, the company’s current liabilities (Rs.158.41 crores) exceed its current assets
(Rs.10.25 crores) as at the balance sheet date. These conditions indicate the existence of
a material uncertainity that may cast significant doubt about the company’s ability
to continue as a going concern. However, the financial statements of the company have been
prepared on a going concern basis.
The company has written off some of the debtor receipts which are pending for a very
long time and are disputed by the clients. Due to this, the company has been booking
losses in the last two years. For this loss, the net worth has been eroded and the current
assets have come down drastically and the current liabilities have exceeded the current
assets. However, the net worth and the current assets are expected to improve in the
coming years.
2. Out of the unsecured advances given to staff & ex-employees referred in Note
10(d) of the financial statements, there is uncertainity about recover of about Rs.
22,78,206 as there is no recovery during the year and these are outstanding for more than
a year.
The company has advanced this amount to one of its ex-employee for foreign travel. He
did not settle the accounts for this advance amount and the company owes his settlement
amount. While doing his full and final settlement, the amount will get accounted
automatically.
3. During the year the company has written off Rs.139.87 crores as Bad debts
referred in Note 11 of the financial statements of the company which are outstanding for
more than a year and the management is not confident of realization from its customers.
The company has witnessed an unprecedented high employees’ attrition in the
previous years due to the severe cash flow strain the company was paying. Several
employees engaged in the projects left abruptly without proper knowledge transfer. Because
of this, we could not continue some of the projects and this has created some gaps which
we could not resolve immediately. The customers have not only stopped our payments for
these projects but also stopped the payments to the other projects where there are no
issues. The company wrote off some of the export debtors but the company has initiated
legal actions against these clients to recover the dues which are rightfully receivable by
the company.
4. The company borrowings outstanding to the tune of Rs. 10,455.51 lakhs (with
accrued interest) has been classified as Non-Performance Assets by the financial
institutions and has become payable in full.
This is due to the sequential effect of the cash flow crisis faced by the company
during the past three years. But, all the borrowings are properly secured by collateral
securities by way of land & buildings. The market value of these properties are much
more than the banks’ outstanding. The banks have initiated recovery actions by
auctioning the properties. The company is hopeful of getting these banks’ dues
addressed soon.
5 . During the quarter, the parent company has written off Rs. 1123.62 Lakhs paid to
its subsidiary for development of product.
One of the debtor receipts wrote off by the company is from a client in Dubai. The
wholly owned subsidiary company in Dubai is also having business relations with this
client. The common client to both the parent and subsidiary companies gone insolvent and
the receivables from this client could not be recovered by both the companies. This has
resulted in a huge loss for both the companies and got into severe cash flow crisis. In
this circumstance, it would be highly impossible to continue the development of product by
the subsidiary company which was assigned by the parent company. Hence, the amount
received from the parent company for developing the product has been written off in the
books of subsidiary and the same way in the books of parent company.
6. During this quarter intangible assets worth of Rs.713.62 lakhs has been
transferred to reserves account, since it has served its economic life.
Net asset value of the computer software (Rs.713.62 lakhs) has been transferred to the
Reserves Account as per the Schedule II of the Companies Act, 2013. These software have
already served its economic life.
7. The company declared dividend in FY2011-12, out of the declared amount partial
amount has been paid and the balance is still to be paid.
Due to the financial difficulties, the company could not pay the balance declared
dividend amount to its shareholders. Majority of the outstanding is only to the promoters,
friends and relatives. However, this amount will also be paid once the auctioning of the
properties get through, which we expect to happen in the current financial year.
Fixed deposits
Your company has not accepted any deposits during the year within the meaning of
Section 73 of the Companies Act, 2013 and Rules made thereunder.
Directors’ responsibility statement
Pursuant to the provisions under Section 134(5) of the Companies Act, 2013, with
respect to Directors’ Responsibility Statement, the Directors confirm:
i. That in the preparation of the Annual Accounts, theapplicable Accounting Standards
have been followed andno material departures have been made from the same;
ii. That they had selected such accounting policies andapplied them consistently, and
made judgements andestimates that are reasonable and prudent, so as to give atrue 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 that period;
iii. That they had taken proper and sufficient care forthe maintenance of adequate
accounting records inaccordance with the provisions of the Companies Act, 2013, for
safeguarding the assets of the Company and forpreventing and detecting fraud and other
irregularities;
iv. That they had prepared the annual accounts on a goingconcern basis;
v. That they had laid down internal financial controls to befollowed by the Company and
that such internal financial controls are adequate and were operating effectively; and
vi. That they had devised proper systems to ensurecompliance with the provisions of all
applicable lawsand that such systems were adequate and operatingeffectively.
Change in the nature of business
There is no change in the nature of business of the Company during the year.
Material changes and commitment if any affecting the financial position of the company
occurred between the end of the financial year to which these financial statements relate
and the date of the report
financial position of the Company occurred between the end of the financial year to
which these financial statements relate on the date of this report.
Secretarial auditor and secretarial audit report
The Board has appointed Mr. Naman G Joshi, Company Secretary in whole time practice, to
carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013
for the financial year 2014-15. The report of the Secretarial Auditor is annexed to this
report as Annexure-B.
The Secretarial Auditor has observed that the Company
1. The Company has not appointed a women director pursuant to section 149 of the
Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualification of
Directors) Rules, 2014.
The company has been undergoing lots of issues, in the present situation bringing any
director particularly the women director may not be possible. However, the company is
looking for a women director to comply the statutory requirement and hopefully will happen
in the coming year. It is not out of place to mention that the company had women director
in the past and we will have in future also.
2. The Company has not appointed Chief Financial Officer pursuant to section 203 of the
Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014.
The company is struggling on various fronts and bringing a CFO on board would be
difficult for twin reasons i) the company is not in a position to pay salary to existing
employees and for a high profile the cost would be more and obviously will not be able to
meet out until the existing issues are resolved and ii) no one would willing to join the
company as CFO considering the issues it presently has. Moreover, the company’s
business has drastically come down and even during the current year the business is on the
down stride. Once the company improves its business, we will hire CFO as per the statutory
requirement.
3. The Company has not filed certain forms and returns with the Registrar of Companies.
There has been rapid attrition of employees during the past few years due to the
financial crisis. There was not proper handing over of documents by the left employees
that has created some gaps in the continuity of the works even in the support functions.
Now the past dues are being handled by the external consultants who were subsequently
hired to address. The pending forms & returns with Registrar of Companies will be duly
complied in the coming months.
4. The Company has not paid Dividend pertaining to financial year 2011-12.
Due to the financial difficulties the company could not pay the balance declared
dividend amount to its shareholders. Majority of the outstanding is pertaining to the
promoters, friends and relatives. However, this amount will also be paid once the
auctioning of the properties get through, which we expect to happen in the current
financial year.
5. The Company has not submitted to the Reserve Bank through the designated Authorized
Dealer, Annual Performance Report in Part III of Form ODI in respect of Wholly Owned
Subsidiary outside India.
There has been rapid attrition of employees during the past few years due to the
financial crisis. There was not proper handing over of documents by the left employees
that has created some gaps in the continuity of the works even in the support functions.
Now the past dues are being handled by the external consultants who were subsequently
hired to address. The pending forms & returns with Registrar of Companies will be duly
complied in the coming months.
6. The Company has not submitted annual return on Foreign Liabilities and Assets (FLA)
as stipulated under A. P. (DIR Series) Circular No.45 dated March 15, 2011.
There has been rapid attrition of employees during the past few years due to the
financial crisis. There was not proper handing over of documents by the left employees
that has created some gaps in the continuity of the works even in the support functions.
Now the past dues are being handled by the external consultants who were subsequently
hired to address. The pending forms & returns with Registrar of Companies will be duly
complied in the coming months.
7. The Company is not regular in publication of financial results in newspapers as
stipulated under Clause 41 of the Listing Agreements.
The company is financial position is very weak at the moment and is not able pay the
amount for publication of financial results. However, these results are published in our
website.
8. The Company has not paid Annual Listing fees to Bombay Stock Exchange.
Due to the financial difficulties the company could not pay the Annual Listing fees to
Bombay Stock Exchange, we will pay this amount as soon as the cash flow position improves.
Extract of annual return
Pursuant to the Section 92(3) of the Companies Act, 2013 extract of the Annual Return
is annexed to this report as Annexure-C.
Green initiative in corporate governance
The ministry of corporate affairs has undertaken a green initiative in corporate
governance and allowed companies to send documents such as annual reports, notice,
quarterly results etc to the email ids of the shareholders. We have arranged to send the
soft copies of the notices of the 14th AGM and the Annual Report to the email ids of the
shareholders made available by Depositories. In case, any of the shareholder would like to
receive physical copies of these documents, the same shall be forwarded on request either
to the company or to the Registrar M/s. Sharex Dynamics (India) Private Limited.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report pursuant to the Corporate Governance
Clause of the Listing Agreement is annexed to this report as
Annexure- E.
Corporate Social Responsibility
A Corporate Social Responsibility Committee (CSR committee) is required to be
constituted under the provisions of the Section 135 of the Companies Act, 2013, if the
Company fulfil the criteria prescribed under the said section.
The Board of every company covered the criteria prescribed under section 135 of the
Companies Act, 2013 shall ensure that the company spends at least two percent of the
average net profits of the company made during the three immediately preceding financial
years and if the Board fails to spend such amount, it shall in its report to shareholders
specify the reasons for not spending the amount.
The Company has constituted a Corporate Social Responsibility Committee. The Company
has not incurred any expenditure on Corporate Social Responsibility during 2014-15 as
required under Section 135 of the Companies Act 2013. The average net profits of the
Company made during the three immediately preceding financial years is negative. Your
management is however committed to the CSR initiative and expects to incur CSR expenditure
as applicable. Your management wants to ensure that the fund so earmarked reaches out to
the needy and is in the process of outlining a program to benefit the needy local
populace.
Corporate Governance Report
The Report on corporate governance as stipulated under Clause 49 of the Listing
Agreement forms part of the Annual Report is annexed to this report as Annexure-F.
The requisite certificate from the Company Secretary in practice confirming compliance
with the conditions of corporate governance as stipulated under the aforesaid Clause 49 is
attached to the Report on corporate governance.
Particulars of remuneration to directors/KMP/employees
There were no employees during the year 2014-15 covered under the provisions of Section
197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014.
Disclosures pertaining to remuneration and other details as required under Section
197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are attached as ‘Annexure-A’ which
forms part of this report.
Number of meetings of the board and Audit Committee
The details of the number of Board and Audit committee meetings of your Company are
provided in the Corporate Governance Report which forms an integral part of this report.
The intervening gap between the Meetings was in compliance with the Companies Act, 2013.
Declaration by independent directors
All independent directors have given declarations that they meet the criteria of
independence as laid down under section 149(7) of the Companies Act, 2013 and clause 49 of
the Listing Agreement.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
i. Details of Conversation of Energy: Your Company’s operations consume very low
levels of energy. It is pleasure to announce that your Company’s technology center
has latest technology energy management system based on human occupancy. As the cost of
energy consumed by the Company forms a very small portion of the total costs, the impact
of changes in energy cost on total costs is insignificant.
ii. Technology absorption, adaption and innovation
The Company continues its endeavour for developing new technologies and for absorption
and adaptation of new technologies developed all over the world. The Company’s
strategic plans are to provide improved offerings to the fast changing market needs,
resulting in strong client relationship. Continuous efforts are made to improve service
delivery modules, thereby enabling better project execution, reduction in costs and at the
same time guaranteeing enhances business values both for the Company and for its clients.
This is through improving our own productivity and quality of services. For this it would
also be necessary for the Company to enter into partnerships, alliances and tie ups with
global leaders. However availability of required funds at a right time is a challenge,
which the Company continues to combat.
The Company as a result is able to provide improved solutions to its customers , which
would be relevant and appropriate to their Business needs and at the same time suits their
financial feasibility. This in turn will reduce costs to our customers and improve our
revenues and returns.
Research and development
The company is always open to innovations and has to make investments in R&D.
The R & D activities of the company have enabled it to innovate new ideas and
processes and make offerings at competitive prices, to achieve growth plans.
The company plans to focus its R&D in design thinking and problem solving and in
the emerging areas such as Mobility by investment in developing prototype. Cloud
Technologies, Big Data Analytics, Social Networking are also proposed to be covered.
However, the R&D in the existing lines of business of the company will also be
continued to be focused.
As explained above, the R&D is carried on by the company as part of ongoing
business activity and the expenditure thereof is considered as part of operating
expenditure and hence cannot be shown separately.
iii. Foreign exchange earnings and outgo
The company had a foreign exchange earnings of Rs.10,60,39,805 and outgo of Rs.Nil
during the year.
Listing
The shares of your Company are listed in the BSE & NSE.
Code of conduct
The Company has adopted a uniform Code of Conduct for Directors, Senior Management
Personnel and other Executive level officers to ensure proper ethical standards and
further ensure due compliance to such established standards.
Subsidiaries
| Particulars |
2015 |
2014 |
| Total revenue |
13.19 |
135.73 |
| Total expenses |
46.39 |
245.90 |
| Profit before tax |
(33.20) |
(105.96) |
| Provision for deferred tax |
(2.80) |
0.25 |
| Net loss carried to |
|
|
|
(30.40) |
(106.22) |
| Balance Sheet |
|
|
The subsidiaries of the company are in the same line of business as that of the holding
company.
Your company has resolved to utilise the general exemption granted by the Ministry of
Corporate Affairs, Government of India vide its General Circular No. 2/2011 dt. 8th
February 2011 from attaching the Balance Sheet, Profit and Loss Account, Directors’
Report and Auditors’ Report and other related documents of the subsidiary companies
and accordingly, the said documents of the subsidiary companies of your company are not
attached to the Balance Sheet of your company. However, requirements which your company is
required to meet under the said circular, will be complied with. Your company undertakes
that the annual accounts and the related detailed information of your company’s
subsidiary companies will be made available to the shareholders of the company and its
subsidiaries, who seek such information at any point of time. The annual accounts of
subsidiary companies will also be kept open for inspection by any shareholders at the
Registered Office of your company and of the subsidiary companies. The company shall
furnish a hard copy of accounts of the subsidiaries to any shareholders on demand. The
financial performance of subsidiaries is set out as Annexure G to this repoet.
Statement concerning development and implementation of risk management
The Company has comprehensive risk assessment and minimization procedure which are
reviewed by the Board.
The Company identifies risks and control systems to mitigate them are in place. In the
opinion of the Board, at present there are no risks which may threaten the existence of
the Company.
Related Party Transactions
During the financial year 2014-15, your Company has entered into transactions with
related parties as defined under Section 2(76) of the Companies Act, 2013 read with
Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary
course of business and on arms’ length basis and in accordance with the provisions of
the Companies Act, 2013,
Rules issued thereunder and Clause 49 of the Listing Agreement. During the financial
year 2014-15, there were no transactions with related parties which qualify as material
transactions under the Listing Agreement.
The details of the related party transactions as required under Accounting Standard -
18 are set out in Point 19 of the notes to the standalone financial statements forming
part of this Annual Report. The Form AOC-2 pursuant to Section 134 (3)(h) of the Companies
Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure
D to this Report.
Particulars of loans, guarantees or investments made under section 186 of the companies
act, 2013
Details of loan outstanding
The company has given trade advances to its associate companies M/s. Acropetal, Inc and
M/s. Binary Spectrum Softech Private Limited. The loan amount outstanding as of 31st March
2015 against these companies are Rs. 14.47 lakhs and Rs. 476.95 lakhs respectively.
Guarantees
The company has given corporate guarantee to UPS Capital Business Credit for the loan
(outstanding amount as of 31st March 2015 – Rs. 4155.39 lakhs) availed by its wholly
owned subsidiary M/s. Vision Info Inc.
The company has also provided a corporate guarantee to ICICI Bank for the loan
(outstanding amount as of 31st March 2015 is Rs. 267.50 lakhs) availed by its wholly owned
subsidiary M/s. Mindriver Information Technologies Private Limited.
Investments
| Subsidiaries: |
Rs in lakhs |
| Vision Info Inc |
1.36 |
| AcropetalInc |
5622.79 |
| Mindriver Information Technologies |
|
|
950.43 |
| Private Limited |
|
| Kinfotech Private Limited |
480.00 |
| Associate companies: |
|
| Binary Spectrum Softech Private Limited |
420.00 |
Total investments made by the company as of 31st March 2015 are as follows:
Particulars of contracts or arrangements made with related parties
All the related party transactions are entered on arm’s length basis and in the
ordinary course of business and are in compliance with the applicable provisions of the
Companies Act, 2013 and the listing agreement.
The details of the transactions with related parties are provided in the Notes to the
financial statements
Adequacy of internal financial controls with reference to financial statements
The Company has in place adequate internal financial controls with reference to
financial statements. During the year under review, such controls were tested and no
reportable material weakness in the design or operation were observed.
The details of directors or key managerial personnel who were appointed or have
resigned during the year
There are no appointments or resignations of directors or Key Managerial Personnel
during the year.
Mr. Vijayendra R, Company Secretary of the Company has resigned with effect from 26th
June, 2015.
Vigil Mechanism
Your Company is committed to highest standards of ethical, moral and legal business
conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which
is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and
Clause 49 of the Listing Agreement. The policy provides for a framework and process
whereby concerns can be raised by its employees against any kind of discrimination,
harassment, victimization or any other unfair practice being adopted against them. More
details on the vigil mechanism and the Whistle Blower Policy of your Company have been
outlined in the Corporate Governance Report which forms part of this report.
The names of companies which have become or ceased to be its subsidiaries, joint
ventures or associate companies during the year
During the year no company has become or ceased to be a subsidiary or joint venture or
associate company of Company.
Reporting Under Sexual Harrasement Of Women At Workplace (Prevention, Prohibition And
Redressal) Act, 2013
The Company has in place Sexual Harassment Policy in line with the requirements of the
Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act,
2013. Internal Complaints Committee (ICC) has been set up to redress complaints received
regarding sexual harassment. All employees (permanent, contractual, temporary, trainees)
are covered under this policy. Number of complaints of sexual harassment received in the
year is Nil.
Acknowledgements
Your Directors express their gratitude for the support and co-operation extended by
Government Authorities, Bankers, Shareholders, Investors, Customers and Vendors.
Your directors place on record their sincere appreciation for the continuous support
and sustained efforts put in by the employees of the company at all levels through their
hard work, sense of belonging and dedication.
For and on behalf of the Board of Directors,
Ravi Kumar D
Chairman and Managing Director
Date: 16th September, 2015
Place: Bangalore
+91-9892691696
