GSS Infotech Ltd Directors Report.

Dear Members,

We are delighted to present the report on our business and operations for the financial year ended 31st March 2018

FINANCIAL RESULTS

The Companys Financial results (standalone & consolidated) for the year ended 31st March 2018 is provided in the Annual Report.

( Rs in Lakhs)
Particulars Consolidated Standalone
2017-18 2016-17 2017-18 2016-17
Net sales/income from operations 14,177.47 15,486.22 2,275.13 2,339.53
Less: Direct cost 1,713.41 3,091.81 319.40 279.15
Indirect Cost 11,742.60 12,235.03 1,609.99 2,085.75
Profit / (Loss) from operations before other income, finance costs and exceptional items

721.46

159.38

345.74

(25.37)

Other income 7.85 106.40 0.99 97.67
Profit / (Loss) from ordinary activities before finance costs and exceptional items

729.31

265.78

346.73

72.30

Finance costs 106.60 157.15 28.31 85.00
Profit / (Loss) from ordinary activities after finance costs but before exceptional items 622.71 108.63 318.42 (12.70)
Exceptional items* - 5,284.38 - 4,324.49
Profit / (Loss) from ordinary activities before tax

622.71

(5,175.75)

318.42

(4,337.19)

Tax expense (109.37) 637.97 (129.12) 631.14
Net Profit / (Loss) from ordinary activities after tax

732.08

(5,813.72)

447.54

(4,968.33)

Net Profit / (Loss) for the period

732.08

(5,813.72)

447.54

(4,968.33)

*In the Financial Year 2016-17, the Company had provided for Rs. 3,329.58 lakhs towards diminution in the value of Companys Investment in Wholly owned foreign subsidiaries, consequent upon sale of one of the step down WOS as per the audited financials of WOS. Further, exceptional items include old advances not recoverable amounting to Rs. 800 lakhs and reversal of lapsed advance tax of Rs. 194.90 lakhs.

There are no material changes and commitments affecting the financial position of your Company which have occurred between the end of the financial year ended 2017-18 and the date of this report.

I. STATE OF COMPANYS AFFAIRS

GSS primary focus is in the ADMS (Application Development and Maintenance Services), IMS (Infrastructure Management Services) and Healthcare services, while our major revenue contributor has been Professional Services. We continue to execute our business operations under the same units as last year. As we continue to meet customers, we remain convinced of the huge potential our company has given the services we offer today. We not only intend to leverage on our existing customer base to drive growth we will also be focusing on emerging technologies in the Business Intelligence and Analytics areas, which will be driving transformation and be within the demand circle.

II. CONSOLIDATED ACCOUNTS

The consolidated financial statements of your Company for the financial year 2017-18, are prepared in compliance with applicable provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as prescribed by the Securities and Exchange Board of India (SEBI). The consolidated financial statements have been prepared on the basis of audited financial statements of the Company, its subsidiary companies, as approved by their respective Board of Directors.

III. SUBSIDIARIES

A separate statement (Form No. AOC-1) containing the salient features of financial statements of all subsidiaries of your Company forms part of consolidated financial statements in compliance with Section 129 and other applicable provisions, if any, of the Companies Act, 2013. The financial statements of the subsidiary companies and related information are available for inspection by the members at the Registered Office of your Company during business hours on all days except Saturdays, Sundays and public holidays up to the date of the Annual General Meeting (AGM) as required under Section 136 of the Companies Act, 2013. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office of your Company. The financial statements including the consolidated financial statements of subsidiaries and all other documents required to be attached to this report have been uploaded on the website of your Company www.gssinfotech.com

IV. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis forms an integral part of this Report and gives detail of the overall industry structure, developments, performance and state of affairs of the Companys various businesses during the financial year ended 31st March, 2018, is enclosed as Annexure [F] to this report.

V. CORPORATE GOVERNANCE REPORT

In compliance with the Regulations 34 of Listing Regulations, a separate report on Corporate Governance along with a certificate from the Auditors on its compliance forms an integral part of this Report and is enclosed as Annexure [G] to this report.

VI. DIVIDEND

The Board of Directors did not recommend dividend for the financial year ended 31st March, 2018.

VII. PUBLIC DEPOSITS

During the financial year 2017-18, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

VIII. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Bhargav Marepally, Managing Director is liable to retire by rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and being eligible have offered himself for re-appointment. Appropriate resolution for his re-appointment is being placed for your approval at the ensuing AGM. Your Directors recommend the re-appointment of Mr. Bhargav Marepally (DIN 00505098), as Managing Director of your Company.

Mr. Mark Agnelo Silgardo has resigned as Non-Executive Director of the Company with effect from 17th January, 2018.

Mr. Madhukar Chimanal Sheth has resigned as Non-Executive Director of the Company with effect from 14th February, 2018.

Mr. Sanjay Heda has resigned as Chief Financial Officer of the Company with effect from 01st June, 2018.

Mr. Vishnubhatla Ravikumar Jatavallabha appointed as Chief Financial Officer of the Company with effect from 04th June, 2018.

Mrs. Esha Sinha has resigned as Company Secretary and Compliance Officer of the Company with effect from 13th November, 2017.

Mr. Mohammad Anwar ul Haq Abdul Mannan appointed as Company Secretary and Compliance Officer of the Company with effect from 15th November, 2018.

Key Managerial Personnel:

• Mr. Bhargav Marepally is the Chief Executive Officer and Managing Director of the Company.

• Mr. Vishnubhatla Ravikumar Jatavallabha is the Chief Financial Officer of the Company.

• Mr. Mohammad Anwar ul haq Abdul Mannan is the Company Secretary and Compliance Officer of the Company.

The Key Managerial Personnel have been appointed in accordance with the provisions of section 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Mr. Bhargav Marepally, CEO & Managing Director, Mr. Vishnubhatla Ravikumar Jatavallabha, CFO and Mr. Mohammad Anwar ul haq Abdul Mannan, Company Secretary & compliance officer, are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).

Annual Evaluation of Boards Performance:

In terms of the provisions of the Companies Act, 2013 read with Rules issued thereunder and the Listing Regulations, the Board of Directors on recommendation of the Nomination and Remuneration Committee, have annually evaluated the effectiveness of the Board/Director(s) for the financial year 2017-18.

IX. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES:

The remuneration paid to the Directors is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force). The salient aspects covered in the Nomination and Remuneration Policy has been outlined in the Corporate Governance Report which forms part of this report. None of the Directors draw remuneration from the Company other than sitting fees paid to the eligible directors.

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors of your Company is set out in Annexure [B] to this report and is also available on the website of your Company (www.gssinfotech.com).

X. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE

The details of the number of Board and Audit Committee meetings of your Company are set out in the Corporate Governance Report Annexure [G] which forms an integral part of this Report.

XI. DECLARATION OF INDEPENDENCE

Your Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the provisions of Companies Act, 2013, read with the Schedules and Rules issued thereunder as well as Listing Regulations.

XII. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3) (c) of the Companies Act, 2013, (including any statutory modification(s) or re-enactment(s) for the time being in force), the Directors of your Company confirm that:

(a) In the preparation of the annual accounts for the financial year ended 31st March, 2018, the applicable Indian Accounting Standards (Ind AS) and Schedule III of the Companies Act, 2013, (including any statutory modification(s) or re- enactment(s) for the time being in force) have been followed and there are no material departures from the same;

(b) The Directors 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 your Company as at 31st March, 2018 and of the profit and loss of the Company for the financial year ended 31st March, 2018;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the Provisions of the Companies Act, 2013, (including any statutory modification(s) or re-enactment(s) for the time being in force) for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts have been prepared on a ‘going concern basis;

(e) Proper Internal Financial Controls laid down by the Directors were followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

(f) Proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

XIII. AUDITORS AND AUDITORS REPORT

The Statutory Auditors of the Company, M/s. Sarath and Associates, Chartered Accountants (Firm Registration No. 005120S) were re-appointed by the members at the 13th AGM held on 30th September, 2016, for a term of three (3) years till the conclusion of the 16th Annual General Meeting of your company to be held in 2019, in accordance with section 139 of the Companies Act, 2013.

The Auditors Report issued by the Statutory Auditors for the financial year ended 31st March 2018 forms part of this Report and does not contain any Audit qualification, for which the reply of Directors is required.

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force).

XIV. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Sunil Kumar Kacham from M/s. SUNIL KACHAM AND ASSOCIATES, Practicing Company Secretaries (Membership No.: 46155, and CP No: 16820), Hyderabad, to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as Annexure [C] to this Report. The Secretarial Audit report issued by the Secretarial Auditor for the financial year ended 31st March, 2018 forms part of this report and does not contain any Audit Qualifications, for which the reply of the Directors is required.

XV. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure [D] to this Report.

XVI. RELATED PARTY TRANSACTIONS

During the financial year 2017-18, 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 Listing Regulations. During the financial year 2017-18, 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 Indian Accounting Standard - 24 are set out in point 30 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 [E] to this Report.

XVII. LOANS AND INVESTMENTS

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:

A. Details of investments made by the Company.

(i) Investments in Equity Instruments in wholly owned Subsidiaries as at 31st March, 2018:

(In Indian Rs )
Particulars 31st March 2018 31st March 2017
GSS Infotech Inc (Delaware)
GSS Infotech Inc (Delaware)
1,500 (31-March-2017: 1,500) equity shares of $ 1 each fully paid up in GSS Infotech Inc (Delaware) 736,185,789 540,522,338
GSS Healthcare IT Solutions Private Limited
9,990 (31- March-2017: 9,990) Equity Shares of Rs. 10/- Each fully paid up in GSS Healthcare IT Solutions Private Limited. 99,900 99,900
GSS IT Solutions Private Limited
9,990 (31- March-2017: 9,990) Equity Shares of Rs. 10/- Each fully paid up in GSS IT Solutions Private Limited. 99,900 99,900

(ii) Investments in Debt Instruments by the Company as at 31st March, 2018: Nil

B. Details of Amounts advanced to Subsidiary Companies by the Company pursuant to clause 32 of the Listing Agreement as at 31st March 2018:

(In Indian Rs )
Name of Subsidiary Balance as at 31.03.2018 Balance as at 31.03.2017
GSS Infotech Inc (Delaware) 14,42,21,972 14,37,78,485
GSS IT Solutions Pvt. Ltd 0.00 18,50,000
GSS Healthcare IT Solutions Pvt. Ltd 0.00 1,48,21,533

These amounts are advanced to fully owned subsidiaries towards carrying out the principal business activities of the subsidiaries. These funds are utilized in the regular course of business by the subsidiaries and shall be received back. Interest is not charged since these amounts are advanced to subsidiaries for the purpose of overall growth of the business of the GSS Group.

C. There are no guarantees issued by your Company in accordance with Section 186 of the Companies Act, 2013 read with the Rules issued thereunder.

XVIII. EMPLOYEE STOCK OPTION SCHEME:

The Stock exchanges accorded in-principal approval for listing of 20,00,000 shares under the GSS Infotech Limited Restricted Employee Stock Option Plan 2013. However, no shares were granted to the eligible employees during the financial year ended 31st March, 2018.

XIX. 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 Regulation 22 of the SEBI Listing Regulation. 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 Annexure [G] report which forms part of this report.

XX. INTERNAL FINANCIAL CONTROLS

Your Company has put in place adequate Internal Financial Controls with reference to the financial statements, some of which are outlined below:

Your Company has adopted accounting policies which are in line with the Indian Accounting Standards (Ind AS) prescribed in the Companies (Indian Accounting Standards) Rules, 2015 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with Generally Accepted Accounting Principles (GAAP) in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Auditors.

The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of your Company. The accounts of the subsidiary companies are audited and certified by their respective Auditors for consolidation.

Your Company, in preparing its financial statements makes judgments and estimates based on sound policies and uses external agencies to verify/validate them as and when appropriate. The basis of such judgements and estimates are also approved by the Auditors and Audit Committee.

The Management periodically reviews the financial performance of your Company against the approved plans across various parameters and takes necessary action, wherever necessary.

Your Company has a code of conduct applicable to all its employees along with a Whistle Blower Policy which requires employees to update accounting information accurately and in a timely manner. Any non-compliance noticed is to be reported and actioned upon in line with the Whistle Blower Policy. Your Company gets its standalone accounts audited every quarter by its Auditors.

XXI. RISK MANAGEMENT

The Board regularly discusses the significant business risks identified by the Management and the mitigation process to be adopted by the Company. At present, there exists no element of risk which threatens the existence of the Company.

XXII. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future.

XXIII. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR provisions under Section 135 of the Companies Act, 2013 are not applicable to your Company.

XXIV. 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.

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

i. Details of Conservation of Energy:

Your Companys operations consume very low levels of energy. It is pleasure to announce that your Companys 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, adaptation and innovation

Your Company is a technology driven organization and understands the importance of technical expertise from time to time. It has successfully built such expertise over a period of years and shall continue to with emerging technologies to be on a leading edge to offer its customers the state of art solutions.

Your Companys quality systems are ISO 9001:2008 and ISO 27001:2005 certified, which reflects a high degree of technology absorption, adoption and innovation across various operating layers within the Company. During the year technology absorption activities, have mainly created on:

• Network Operations Center

• Disaster Recovery Center

• IT Infrastructure Management

• Offshore Development Center using BOT delivery model

• Software Testing Service using SaaS Model

• Wholly owned subsidiary rendering BPO healthcare services in India.

iii. Foreign Exchange Earnings and Outgo

a. Activities relating to Exports:

The Company is in the business of software exports. All efforts of the Company are geared to increase the business of software exports in different products and markets.

b. Total Foreign Exchange Earnings used and earned:

Particulars 2017-18 ( Rs ) 2016-17 ( Rs )
Foreign Exchange expenditure (on Accrual basis) 45,739,897 7,23,72,133
Foreign Exchange earned (on Accrual basis) 13,67,94,306 14,98,96,782

XXVI. APPRECIATION

Your Directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year.

Your Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, business associates, regulatory and government authorities for their continued support.

Place: Hyderabad Bhargav Marepally Prabhakara Rao Alokam
Date: 01st August, 2018 CEO & Managing Director Director
DIN: 00505098 DIN: 02263908