Danlaw Technologies India Ltd Directors Report.

To,

The Members,

The Directors submit annual report of Danlaw Technologies India Limited (DTIL) along with the audited financial statements for the financial year ended March 31, 2019. Consolidated performance of the Company and its subsidiary has been referred to wherever required.

Financial Results (Rs. in Lakhs)

Particulars

2018-19

2017-18

DTIL DTI DEAL Cons. DTIL DTI DEAL Cons.
Net Sales/Income from operations 2597.71 137.81 2750.69 5486.21 1820.83 137.24 1958.07
Other Income 61.23 6.58 1.83 69.64 71.51 1.33 - 72.84
Total Income 2658.94 144.39 2752.52 5555.85 1892.34 138.57 - 2030.91
Cost of materials 1362.01 - 1598.19 2960.20 693.54 - - 693.54
Employees Cost 899.34 109.35 751.39 1760.08 772.78 88.49 - 861.27
Finance Cost 2.07 - - 2.07 0.63 - - 0.63
Depreciation 28.18 - 84.06 112.24 18.75 - - 18.75
Other Expenses 325.03 9.75 500.59 835.37 245.64 10.52 - 256.16
Total Expenses 2616.63 119.10 2934.23 5669.96 1731.34 99.01 - 1830.35
Profit / (Loss) before tax 42.31 25.29 (181.71) (114.11) 161.00 39.56 - 200.56
Current Tax 8.11 5.63 0.71 14.45 35.95 7.70 - 43.65
Prior Period Tax (2.60) - 46.47 43.87 - - - -
Deferred Tax 6.22 - (87.53) (81.31) 13.33 - - 13.33
Profit / (Loss) after tax 30.58 19.66 (141.36) (91.12) 111.72 31.86 - 143.58
Profit / (Loss) attributable to - Owners of the Company 30.58 19.66 (98.95) (48.71) 111.72 31.86 143.58
- Non controlling interests - - (42.41) (42.41) - - - -
Paid up equity share capital 370.75 295.66 516.97 370.75 370.75 295.66 370.75
Reserves and Surplus (Excl. revaluation reserve) 2046.08 290.08 1164.09 2241.91 2015.59 222.81 2238.40
Earnings per share - basic 0.82 30.72 (2.73) (1.31) 3.01 49.78 3.87
Earnings per share - diluted 0.82 30.72 (2.73) (1.31) 3.01 49.78 3.86

DTIL: Danlaw Technologies India Limited

DTI : Danlaw Technologies Inc - 100% wholly owned subsidiary

DEAL: Danlaw Electronics Assembly Limited - subsidiary

Dividend

In view of requirement of funds for expansion/operations, the Board of Directors of your Company does not recommend any dividend for the financial year 2018-19.

Transfer to Reserve

Since there is no surplus in Profit and Loss account, there is no transfer to general reserve. Companys Performance (Stand Alone)

Revenue from operations has increased by about 43% to Rs.2597.71 lacs. The net Profit before Extraordinary items and Tax for the fiscal year is Rs.42.31 lacs as compared to a Profit of Rs.161 lacs in the previous year. During the FY 2018-19, your company has invested heavily in the creation of Intellectual Property. As the demand for engineering talent (especially Automotive Electronics) far exceeds the talent pool available, the success of adding significant talent has been slower than anticipated. During the current fiscal year (2019-20), we have taken steps to add resources in Hyderabad as well as Bangalore. This will help us rebuild the talent pool to offer Engineering solutions to our Global Automotive OEMs and Tier-1 Suppliers. Due to the concentration on products and creation of IP, the net profit for the current year has come down. Management is putting efforts to get the right mix of Products and Services in order to increase the profitability. Your management continued to control the costs without compromising the future delivery capacity.

The other income of Rs.61.23 lacs includes Rs.25.43 lacs of interest income. The management continues to put efforts to collect all the receivables from our customers.

Change in the nature of business, if any

There is no change in the nature of business.

Events subsequent to the date of financial statement

The Company has acquired Titan TimeProducts Limited, Goa having the electronics assembly lines for a consideration of Rs.18.50 crores through share purchase agreement on 18th June, 2018. Thus Titan Time products Ltd has become a 100% subsidiary and subsequently name changed to Danlaw Electronics Assembly Limited (DEAL). Subsequently 30% stake in the subsidiary was sold to Danlaw Inc for a consideration of Rs.5.55 crores to augment working capital needs. The acquisition is to facilitate the need of the company to manufacture its electronic products utilizing the assembly lines and expertise of Titan TimeProducts Limited.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future

No significant and material orders were passed by regulators or courts or tribunals impacting the going concern status and Companys operations in future.

Internal financial control systems and their adequacy

Danlaws internal financial control systems are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, executing transactions with proper authorization and ensuring compliance of corporate governance.

Subsidiary Companies

The Company has a wholly owned subsidiary in USA, Danlaw Technologies Inc and Danlaw Electronics Assembly Limited become subsidiary with effect from 18th June, 2018. Performance and financial position have been given above in the financial results.

Deposits from public

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the data of the balance sheet.

Auditors

In terms of the provisions of Section 139(1) of the Companies Act, 2013 and Companies (Audit and Auditors) Rules, 2014 the Company appointed the Statutory Auditors for a period of five years from the conclusion of the 24th Annual General Meeting upto the conclusion of 29th Annual General Meeting. Your Company has received confirmation from the said Auditor that their appointment is within the limits prescribed under Section 139(1) of the Companies Act, 2013 and Rule 4(1)(a) of Companies (Audit and Auditors) Rules, 2014. As per the provisions of Section 139(1) of the Act, their appointment for the above tenure is subject to ratification by the members at every AGM. Therefore, the Board of Directors recommend to the Members for ratification accordingly.

Auditors Report

The auditors report does not contain any qualifications, reservations or adverse remarks. Extract of the Annual Return

The extract of the annual return in Form No. MGT - 9 is annexed and shall form part of the Boards Report.

Conservation of energy and technology absorption

a) Conservation of energy

Your Company is engaged in the business of software and information technology and has no specific activities relating to conservation of energy and technology absorption as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) the Companies (Accounts) Rules, 2014. The Company has taken necessary measures wherever possible for the conservation of energy. However, your Company uses information technology extensively in its operations and also continues its endeavour to improve energy conservation and utilization, safety and environment.

b) Research & Development and Technology Absorption :

(i) R & D: Your Company has a team of people working on R & D. This year no revenue expenditure was deferred.

(ii) Technology Absorption: Your Company continues to use state of the art technology for improving the productivity and quality of its products and services. To create adequate infrastructure, your Company continues to invest in the latest hardware and software.

Foreign exchange earnings and outgo:

The particulars of foreign exchange earnings and outgo are given below.

Particulars 2018-2019 2017-2018
Earnings 8,80,92,130 8,91,12,870
Outgo 10,95,66,270 7,16,69,998

Corporate social responsibility policy

Not Applicable

Directors and Key Managerial Personnel

Directors
1. Mr. Raju S Dandu Chairman and Managing Director(KMP)
2. Mr. M. A. Ashok Kumar Independent Director
3. Mr. Naga Satyanarayana Sappata Independent Director
4. Mr. T. Ravi Kumar Independent Director
5. Mr. K. N. Praveen Kumar Independent Director
6. Mrs. P.Sundaramma Independent Director
7. Mr. Sirish Batchu Independent Director *

*During the year Mr Sirish Batchu was appointed as Additional Director, (Independent Director) by the board of director with effect from 11/02/2019 to hold office up to the ensuing Annual General Meeting.

The resolution seeking approval of the Members for regularization of the appointment of Mr. Sirish Batchu has been incorporated in the notice of the forthcoming annual general meeting of the Company along with brief details about him. The Company has received a notice under Section 160 of the Act along with requisite deposit proposing the appointment of Mr.Sirish Batchu as Director.

Mr. Naga Satyanaryanarya Sappata, Mr. T Ravi Kumar, Mr. K. N. Praveen Kumar and Mr. M. A. Ashok Kumar were appointed as Independent Directors of the Company in the 21st AGM held for a period of 5 years and their tenure ends at 26th AGM to be held in 2019.

The Board of Directors on the basis of the recommendation of the Nomination and Remuneration Committee, proposed to re-appoint Mr. Naga Satyanarayana Sappata, Mr. T Ravi Kumar and Mr. K N Praveen Kumar as the Independent Directors of the Company for a second term of five consecutive years subject to the approval of shareholders at the ensuing Annual General Meeting.

A resolution for proposing re-appointment of Independent Directors of the Company for the second term pursuant to Section 149(6) of the Companies Act, 2013 forms part of the Notice of Annual General Meeting. The said resolution shall also be treated as a Special Resolution under Regulations 17(1A) of SEBI LODR Regulations,

Mr. M A Ashok Kumar has opted not to be re-appointed. The Board places on record its sincere appreciation for the valuable advice during his tenure as Director of the Company.

Key Managerial Personnel

Mrs. V Padmaja was appointed as the Company Secretary of the Company with effect from 28.05.2014 and she has resigned from the services of the Company on 01.05.2019.

Mr. Gaurav Padmawar was appointed as the Company Secretary of the Company with effect from 01.05.2019.

Except for the above, Mr Raju S Dandu, Managing Director and Mr AVRK Varna, Chief Financial Officer were the Key Managerial Personnel of the Company during the year, pursuant to provisions of the Section 203 of the Companies Act, 2013.

Meeting of the Board of Directors

Five meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report.

Board Evaluation

The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and Regulation 19 read with Schedule II, Part D of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015,The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee (NRC) reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.

Audit Committee

Five meetings of the committee were held during the year. For details of the meetings of the committee, please refer to the corporate governance report, which forms part of this report.

Nominations and Remuneration Committee

Please refer to the corporate governance report, which forms part of this report.

Particulars of loans, guarantees or investments under section 186

In the Financial Year 2018-19, the Company has not given any loan, guarantees or made any investments exceeding sixty per cent of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and securities premium account, whichever is higher, as prescribed in Section 186 of the Companies Act, 2013.

Particulars of contracts or arrangement with related parties

None of the transactions with related parties falls under the scope of Section 188(1) of the Act. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form AOC- 2 and the same forms part ofthis report.

Managerial Remuneration

a. The ratio of remuneration of Managing Director to the median remuneration of the employees of the Company for the financial year: 6.06

b. No other directors are paid remuneration except sitting fees

c. The number of permanent employees on the rolls of the Company: 109

Particulars of employees

None of the employees of your Company is in receipt of remuneration requiring disclosure pursuant to the provisions of Section 134(3) (q) of the Companies Act, 2013 read with Rule 5(2) the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Hence, no such particulars in this regard are annexed.

Vigil Mechanism/ Whistle Blower Policy

The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the Section 177(9) of the Act and in terms ofregulation 22 of the SEBI Listing Regulation (URL: www.danlawtechnologies.com ).

Secretarial Audit Report :

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder, the Company has appointed M/s MNM & Associates, Company Secretaries in Practice (CP No 11694) to conduct the Secretarial Audit of the Companys secretarial and related records for the year ended 31st March 2019. The Secretarial Audit Report of the Company is annexed herewith as Annexure and forms an integral part of this report.

Disclosure about cost audit

Not applicable to the Company

Industry based disclosures as mandated by the respective laws governing the company

The Secretarial audit report for the financial year 2018-19 has briefed on compliance of industry-based disclosures and concerned laws governing the company.

Directors Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the directors had prepared the annual accounts on a going concern basis;

v. the directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2018-19.

Acknowledgement

Your Directors place on record their gratitude and appreciation for the continued cooperation and excellent support received from all the quarters.

Your Directors also wish to place on record their appreciation for the sincere contributions received from the employees of the Company in enabling it to achieve the performance during the year under review and the valuable co-operation and continuous support extended by the Bankers, Consultants, Stakeholders, Strategic Investor, various Government and Statutory authorities and other business associates.

Place: Hyderabad
Date: 10.08.2019 By Order of the Board
For Danlaw Technologies India Limited
Raju S. Dandu
Managing Director
DIN:00073484