Intrasoft Technologies Ltd Directors Report.

To

The Shareholders IntraSoft Technologies Limited

We are pleased to present the Twenty Fifth Annual Report of IntraSoft Technologies Limited ("the Company") together with the Audited Financial Statements of the Company for the financial year ended 31 March 2020.

Financial Statements & Results

a. Financial Results:

The consolidated and standalone performance during the financial year ended 31 March 2020 as compared to the previous financial year is summarized below:

Consolidated Financials

Particulars Amount (Rs. in Lacs)
2019-20 2018-19
Total Income 59,552.96 84,151.60
Profit before Interest and Depreciation 1,176.53 986.07
Less: Finance Cost 553.87 497.95
Less: Depreciation 409.43 176.19
Profit before Tax 213.23 311.93
Less : Provision for Income Tax 2.36 (254.52)
Profit after Tax 210.87 566.45

On Standalone basis, Total Income of the Company recorded at Rs.194.82 Lacs in FY 2019-20 against Rs. ,311.36 Lacs in FY 2018-19. EBITDA is recorded at Rs. 256.15 Lacs in FY 2019-20 against H272.89 Lacs in FY 2018-19. Profit before Tax for the financial year under review is recorded at Rs.138.38 Lacs against Rs.149.62 Lacs in FY 2018-19. The net profit for the financial year under review is Rs.118.88 Lacs as compared to Rs.142.95 Lacs of the previous financial year.

b. Business:

During the financial year under review, the Company reported a Consolidated Turnover of Rs.59,067.54 Lacs, as compared to Rs.83,655.42 Lacs in the previous financial year. The Consolidated Net Profit stood at Rs.210.87 Lacs, as compared to Rs.566.45 in the previous financial year.

The revenue reduction was the result of a conscious evaluation and optimization of the brand portfolio in our E-Commerce division. This was done to align the brands to our operational benchmarks. As a result, we saw an increase in Accounts Payable Days from 15.3 to 20.0, a trend which continues from the previous financial year.

With the brand optimization complete and the technological foundation and operational matrices in place, we believe we are ready to scale the to pline. The COVID-19 pandemic has increased the dependence on e-commerce and will have long-term implications on shopping behavior. Our role as an e-commerce retailer is crucial now more than ever.

There was no change in the nature of the business of the Company, during the year under review.

c. COVID 19 update:

While the COVID-19 pandemic has subdued commerce globally, the e-commerce industry has seen an acceleration in the online shift of purchase habits. With lockdown orders in many US states, we have seen strong acceleration in customer orders across all product categories. This in turn has highlighted the differentiated advantages that we have built as an e-commerce company in the last few years.

Our investments in technology during the last two financial years have allowed us to scale during these unprecedented times, despite facing supply-chain bottlenecks. Supporting our brand-partners in these times, with our technology and marketplace expertise, spells reliability for the brands and strengthens our long term relationship.

As we execute the plans that we have set in motion, we will be making significant strides towards increasing brand outreach, and gaining leverage on operating expenses. We remain confident in the success of our business as the shift of Home (one of our key categories) accelerates online and we continue to aggressively invest in our future.

In line with various advisories, directives and orders issued by Local authorities, Municipal Corporations, State Governments and the Central Government of India, as well as the local authorities and the Government of the United States, our employees have adapted quickly and seamlessly to new processes and protocols to work remotely and continue to serve strong demand, while keeping our customers and the community safe. With a focus on safety and well-being, our teams, both in India and the US, will continue to work remotely for the foreseeable future and are well equipped to do so as our technology scales on the cloud.

We believe that we have taken into account all possible impacts of known events arising from the COVID-19 pandemic. However, the impact assessment of this pandemic is a continuous process given the uncertainties associated with its duration. We will continue to monitor any material changes to future economic conditions and will revisit our strategy once life returns to normal and based on the impact this crisis leaves on shopping behaviour. We look ahead with a mix of caution and optimism.

d. Performance of Subsidiaries, Associates and Joint Venture Companies

The Company has, as on 31 March 2020, three wholly owned subsidiaries and two step down subsidiaries, viz. 123Greetings.com, Inc. (USA), IntraSoft Ventures Pte. Ltd (Singapore) & One Two Three Greetings (India) Private Limited (India) wholly owned subsidiaries, 123Stores, Inc. (USA), wholly owned subsidiary of IntraSoft Ventures Pte. Ltd (Singapore) and 123Stores E Commerce Private Limited (India), wholly owned subsidiary of 123 Stores, Inc. The entire group focuses on the E-Commerce business by consolidating all operations related to E-Commerce and online greeting activities to achieve financial and operational efficiencies.

Apart from the information provided in the foregoing paragraph, there was no Companies which have become or ceased to be subsidiaries, associates and joint venture company during the financial year under review.

In accordance with Section 129 of the Companies Act, 2013, consolidated financial statements of the Company along with its subsidiaries have been prepared which forms part of this Annual Report. Further, the performance and financial position of each of the subsidiaries for the year ended 31 March 2020 is attached and marked as Annexure I (Form AOC-1) and forms part of this Report.

Appropriations

a. Dividend

The Board of Directors of the Company has recommended a final dividend of Rs.1/- (10%) (Previous year Rs.2/- per equity share) per equity share of face value of Rs.10/- for the financial year 2019-20, which if approved would absorb Rs.147.32 Lacs (Previous year Rs.355.20 Lacs including dividend distribution tax of Rs.60.56 Lacs).

TDS will be deducted pursuant to the rates as per Income Tax Act, 1961 as amended by Finance Act, 2020 and further amendments thereto, while paying the dividend, as applicable to Resident and Non-Resident Shareholders. Please refer the notes to the Notice of the Annual General Meeting for a detailed explanation.

There was no Interim Dividend declared by the Company during the financial year.

Dividend Distribution policy is not applicable to the Company.

b. Amount and shares transferred to IEPF with details of Nodal officer

In terms of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017 the Company has transferred 895 shares to the designated account of the IEPF Authority during the financial year 2019-20 on which the dividend was unclaimed/ unpaid for a period of seven (7) consecutive years from the year of its declaration in financial year 2011-12. Company had already transferred 4961 shares of different shareholders to IEPF Authority up to financial year 2018-19, on whose shares the Dividend was unpaid/ unclaimed for a period of seven (7) consecutive years of the financial year 2010-11,2009-10 and also of the earlier years.

Details of the Nodal Officer:

Pranvesh Tripathi

Company Secretary and Compliance Officer

Email ID- pranvesh.tripathi@itlindia.com

Phone Nos. - 022 4004-0008.

During the Financial year 2019-20, Unpaid / Unclaimed Dividend of Rs.31,032 was transferred to IEPF Authority Account which was declared in the financial year 201112 and remained unpaid/unclaimed for 7 years.

c. Transfer to Reserves

The Board of Directors has not recommended transfer of any amount of profit to reserves during the year under review. Hence, the entire amount of profit for the year under review has been carried forward to Profit and Loss account.

Financial Statements as per IND-AS.

Financial Statements for the year ended 31 March 2020 are in accordance with the Indian Accounting Standards (IND-AS) notified by the Ministry of Corporate Affairs, Government of India, which have already become applicable to the Company from the accounting period beginning on 01 April 2017.

Standalone financial statements as at 31 March 2019 have been restated in accordance with the requirements of Ind AS 8, "Accounting Policies, Changes in Accounting Estimates and Errors" due to change in the assumptions with respect to accounting for fair valuation of corporate guarantee given on behalf of a subsidiary company. The details are provided in Note no. 25 of the standalone financial statements. The said restatement has no impact on the consolidated financial statements of the Company.

Deposits

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposits) Rules, 2014. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

Disclosures under Section 134(3)(l) of the Companies Act, 2013

Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Companys financial position have occurred between the end of the financial year of the Company and the date of this report.

Disclosure of Internal Financial Controls

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are found adequate. During the year under review, no material or serious observation has been received on inefficiency or inadequacy of such controls, from the Internal Auditors of the Company.

Disclosure of Orders passed by Regulators or Courts or Tribunal

Your Directors would like to inform that no orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and on the Companys operations in future.

Particular of Contracts or Arrangement with Related Parties

All contracts / arrangements / transactions entered into by the Company during the financial year with its wholly owned subsidiaries were in the ordinary course of business and at an arms length basis. During the year, the Company had not entered into any contract/arrangement/ transaction with related parties which could be considered as material related party transaction in accordance with the policy of the Company on related party transactions read with SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. The Policy on related party transactions as approved by the Board may be accessed on the Companys website www.itlindia.com.

Your Directors draw attention of the members to Note no. 27 of Standalone financial statements which sets out disclosures on related parties and transactions entered into with the said parties.

Particulars of Loans, Guarantees, Investments and Securities

Full particulars of loans given, investments made, guarantees given and securities provided along with the purposes for which the loans or guarantees or securities are proposed to be utilized by the recipient(s) thereof are provided in Note nos. 6, 7 and 26 of standalone financial statements.

Share Capital

During the year under review, the Company has not issued any shares with differential voting rights and sweat equity shares and hence, disclosures under Section 43(a)(ii) and Section 54(1)(d) of the Companies Act, 2013 read with relevant rules are not required to be furnished. The Company does not have a scheme of ESOP and hence disclosures pursuant to Section 67(3) of the Companies Act, 2013 are also not required to be furnished.

Matters Related to Directors and Key Managerial Personnel:

a. Board of Directors & Key Managerial Personnel

The tenure of Mr. Arvind Kajaria as Managing Director and Mr. Sharad Kajaria as Whole-time Director of the Company has come to an end on 31 March 2020. The Board of Directors of the Company at its Meeting held on 30 June 2020, upon recommendation of the Nomination and Remuneration Committee and subject to the approval of the shareholders, re-appointed Mr. Arvind Kajaria as Managing Director and Mr. Sharad Kajaria as Whole-time Director of the Company for a further term of 3 (three) years with effect from 01 April 2020.

The Board has recommended re-appointment of Mr. Arvind Kajaria as Managing Director and Mr. Sharad Kajaria as Whole-time Director for the approval of the Shareholders and necessary agenda for their reappointment have been included in the notice convening the Annual General Meeting of the Company.

Brief profile and the information as required under the relevant provisions of the Companies Act, 2013, Regulation 36 of the SEBI Listing Regulations and Secretarial Standards SS-2 are disclosed in the notice of the ensuing Annual General Meeting and forms part of the Annual Report.

In accordance with the provisions of the Act, none of the Independent Directors are liable to retire by rotation. Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Arvind Kajaria shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment for the approval of the Shareholders of the Company.

b. Declaration by Independent Directors

The Independent Directors of the Company have given a declaration confirming that they continue to meet with the criteria of the independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 as further amended by the Companies Amendment Act, 2017 and Regulation 16(1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and they have also confirmed that they are independent of the Management.

The Independent Directors also confirmed that they are not aware of any circumstances or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

In the opinion of the Board, each of the Independent Director possess requisite integrity, expertise, and experience for acting as an Independent Director of the Company.

The Independent Directors have confirmed that they have registered their details in terms of Sub-rule (1) and (2) of Rule 6 of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 in the Data Bank maintained by Indian Institute of Corporate Affairs (IICA).

There has been no change in the circumstances which may affect their status as Independent director during the year under review.

c. Companys Policy on Directors appointment and remuneration

The Board has as per the recommendation of the Nomination and Remuneration Committee, framed a policy on selection and appointment of Directors and Senior Managerial personnel and their remuneration which was further amended by the Board in their Meeting held on 30 March 2019 in terms of the Amendments in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2018. The details of said policy are given in the Corporate Governance Report which forms part of this Annual Report.

Disclosures Related to Board, Committees and Policies:

a. Board Meetings

The Board of Directors met 4(Four) times during the financial year 2019-20 in accordance with the provisions of the Companies Act, 2013 and rules made there under. Detailed information on the Board Meetings is provided in the Corporate Governance Report which forms part of this Annual Report.

b. Directors Responsibility Statement

In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31 March 2020, the Board of Directors hereby confirms that:

i. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

ii. such accounting policies have been selected and applied consistently and the Directors 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 as at 31 March 2020 and of the profit of the Company for that year;

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

iv. the annual accounts of the Company have been prepared on a going concern basis;

v. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

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

c. Committees of the Board

There are five Committees of the Board of Directors of the Company viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Business Advisory Committee. Detailed information on all the Committees is provided in the Corporate Governance Report along with the details of extract from Nomination and Remuneration Policy of the Company with respect to remuneration of Executive Directors, Key Managerial Personnel and other senior employees of the Company. Policies framed by the Committees / Board pursuant to the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are available on the Companys Website www.itlindia.com.

Disclosure in respect of composition of Committees, Committee Meetings held, attendance of members, Reference of the Committee and other related matters are made in the Corporate Governance Report attached and forms part of this Annual Report.

Policies

a. Vigil Mechanism Policy for the Directors and Employees

The Board of Directors of the Company have pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed a "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.

The employees of the Company have the right to report their concern/grievance to the Chairman of the Audit Committee.

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

b. Risk Management Policy

The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Companys businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/ strategic business plans and in periodic management reviews.

c. Policies and Procedures (Mechanism)

The Board of Directors of the Company has laid down policies and procedures in case of Leak of Unpublished price sensitive information or suspected leak of Unpublished price sensitive information in their Meeting held on 30 March 2019 in terms of the SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018.

Annual Evaluation of Directors, Committee and Board

The Board of Directors has carried out annual evaluation of its own performance, Committees of the Board and individual directors pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements as prescribed under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement), Regulation 2015.

A statement indicating the manner for evaluation of performance of the Board, its committees and individual Directors is stated in the Corporate Governance Report forming part of this Annual Report.

Internal Control Systems

Adequate internal control systems commensurate with the nature of the Companys business, size and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

Payment of Remuneration / Commission to Directors from Holding or Subsidiary Companies

None of the managerial personnel i.e. Managing Director and Whole-time Director of the Company are in receipt of remuneration/commission from the Subsidiary Companies of the Company.

Auditors and Reports

The matters related to Auditors and their Reports for the year ended 31 March 2020 are as under:-

a. Report of Statutory Auditors on Accounts for the Year ended 31 March 2020:

The auditors report does not contain any qualification, reservation or adverse remark or disclaimer or modified opinion.

b. Secretarial Audit Report:

Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates, the Company to obtain a Secretarial Audit Report in Form MR-3 from a Practicing Company Secretary. M/s. Rathi and Associates, Company Secretaries had been appointed as Secretarial Auditors to issue Secretarial Audit Report for the financial year 201920.

Secretarial Auditor Report includes an observation that the Company has not appointed an Independent Director on the Board of its Material Subsidiary, i.e. 123Stores, Inc. The Board of Directors hereby clarifies that as 123Stores, Inc. is a US subsidiary, the Board is looking for a suitable candidate to be appointed as an Independent Director of the Company and who shall be recommended to be appointed on the Board of 123Stores, Inc.

Secretarial Audit Report issued by M/s. Rathi and Associates, Company Secretaries in Form MR-3 for the financial year 2019-20 forms part of this report as Annexure V.

c. Statutory Auditors:

Walker Chandiok & Co. LLP Chartered Accountants (Firm Registration No. 001076N/N500013) were appointed as Statutory Auditors of the Company at the 21st Annual General Meeting held on 08 September 2016, for consecutive term of 5 (five) years to hold office up to the conclusion of the 26th Annual General Meeting of the Company. Companies Amendment Act, 2017, omitted the provisions relating to ratification of the appointment of Auditors and accordingly no ratification of appointment of Statutory Auditors by members would be necessary.

Auditors have given their consent/ eligibility certificate for their appointment as Statutory Auditors for financial year 2020-21.

d. Cost Audit:

The Cost Audit in terms of the provisions of the Companies Act, 2013 and The Companies (Cost Records and Audit Rules), 2014 are not applicable to the Company.

e. Fraud Reporting:

During the year under review, no instances of fraud were reported by the Statutory Auditors of the Company.

Copy of Annual Return 2019 and Extract of Annual Return 2020

Pursuant to the provisions of Section 134(3) (a) of the Companies Act, 2013, Extract of Annual Return in the prescribed format for the financial year ended 31 March 2020 is uploaded on the website of the Company and the link for the same is http://www.itlindia.com/statutory.html. The Annual Return for the year ended 31 March 2019 in Schedule-V which was filed with the Registrar of the Companies is also uploaded on the Website of the Company and the link for the same is http://www.itlindia.com/statutory.html.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure II which forms part of this Report.

Annual Report on Corporate Social Responsibility

Pursuant to Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014, during the financial year under review, the Company was not required to spend any amount towards Corporate Social Responsibility activities.

Further, Annual Report on CSR as required to be disclosed under the above mentioned rules for the Financial Year 201920 is attached to this report as Annexure III.

Particulars of Employees as per Section 197 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014

The information required pursuant to Section 197 read with Rule 5 (1) and 5 (2) of the Companies (Appointment& Remuneration of Managerial Personnel) Rules, 2014 is attached to this report as Annexure IV.

The Managing Directors and Whole-time Director of the Company had not received any commission from the Company and also not received any remuneration or commission from its subsidiary company.

Compliance with Secretarial Standards

During the Financial year under review, in terms of Section 118 (1) of the Companies Act, 2013, the Company has observed and complied with the Secretarial Standards SS-1 and SS-2 on Board Meetings and Annual General Meeting specified by the Institute of Company Secretaries of India (ICSI).

Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has taken sufficient measures and adopted a policy in terms of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules thereunder. During the year under review, no complaints in relation to sexual harassment at workplace have been reported.

Managements Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Managements Discussion and Analysis is attached and forms part of this Report.

Corporate Governance Report

The Company is committed to uphold the values of transparency, integrity, accountability and ethical corporate citizenship across all its business activities. This commitment lays down the foundation of its governance practices which focus on creating sustainable value for the stakeholders.

The Company has laid down Code of Conduct to which the board and senior management have affirmed compliance. The Code is displayed on the official website of the Company at www.itlindia.com.

The Company has complied with the provisions of Corporate Governance requirements, as stipulated under Regulation 27 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section on Corporate Governance forming part of the Directors Report and the certificate from a Practicing Company Secretary pursuant to the said Regulation is attached with the Corporate Governance Report.

Business Responsibility Reporting

Business Responsibility Reporting is not applicable to the Company, hence the disclosure is not made.

Acknowledgements and Appreciation

Your Directors take this opportunity to place on its gratitude to customers, shareholders, suppliers, bankers, business partners/associates and financial institutions for their consistent support and encouragement to the Company.