Kapston Services Ltd Directors Report.

Dear Members,

The Board of Directors ("Board") of Kapston Services Limited (Formerly known as Kapston Facilities Management Limited) ("Kapston" or "Company") with immense pleasure present the Fourteenth Annual report on the business and operations of your company together with the Audited Financial Statements for the financial year ended 31st March 2022.

1. FINANCIAL HIGHLIGHTS

The Companys performance during the financial year ended March 31, 2022 is summarized in the following table:

(INR in Lakhs)

Particulars 2021-22 2020-21
Revenue from Operations 27,224.96 21303.86
EBITDA 1309.83 1691.4
Less: Finance Costs 665.38 519.66
Less: Depreciation and amortization expenses 545.68 357.02
Profit before prior period items 98.77 814.72
Prior period items -- --
Profit before tax 98.77 814.72
Less: Current Tax -- 157.94
Deferred Tax (148.57) 14.99
Profit Available for appropriations/Loss 247.34 641.78
Basic Earnings per Share (INR) 2.44 6.33
Diluted Earnings per Share (INR) 2.44 6.33
Paid up share capital (face value of INR 10 each) 1014.40 1014.40

A detailed performance analysis on various segments, business and operations are provided in the Management Discussion and Analysis Report which is annexed to this report.

2. STATE OF AFFAIRS / COMPANYS PERFORMANCE

The Company is primarily engaged in providing manpower for staffing solutions, IT staffing, private security services and Integrated Facilities Management Services in various parts of the country. As part of empowering the unemployed sector, the Company has, in partnership with various Central & State level government bodies, undertaken training and development programs for the Unemployed Youth.

During the Financial period ended March 31, 2022, the revenue from operations stood at INR 27,224.96 Lakhs as against INR 21303.86 Lakhs as on March 31, 2021. The Company has achieved EBITDA (including other income) of INR 1309.83 Lakhs during the financial year 2022 as against that of EBITDA of INR 1691.4 Lakhs for the previous financial year 2021. The profit before tax for the financial year under review is INR 98.77 Lakhs as against INR 814.72 Lakhs for the previous financial year 2021.

3. DIVIDEND

The Board of Directors of the Company has not recommended Dividend for the financial year ended March 31, 2022.

4. CHANGE IN THE NAME OF THE COMPANY

During the period under review, the name of the Company was changed from "Kapston Facilities Management Limited" to "Kapston Services Limited". The new name Kapston Services Limited - reflects and indicates the true objectives with wider range of services being provided by the Company.

Consequent to the postal ballot exercise and Companys application for name change, the Registrar of Companies, Telangana, Ministry of Corporate Affairs issued the fresh certificate of incorporation dated February 4, 2022 confirming change in the name of the Company from "Kapston Facilities Management Limited" to "Kapston Services Limited" effective from February 4, 2022. This change in name also involved consequent amendment of Memorandum of Association and Articles of Association of the Company.

The security name of the Company on National Stock Exchange of India Limited is Kapston Services Limited and NSE scrip symbol is KAPSTON.

5. TRANSFER TO RESERVES

For the financial period under review, your Company has proposed not to transfer any amount to the General Reserves.

6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The provisions of Section 124 of Companies Act, 2013 are not applicable as the Company has not completed Seven years from the date of declaration of dividend.

7. SHARE CAPITAL

During the period under review, there was no change in the Authorised Share Capital of the Company. The Authorized Share Capital of the Company is INR 11,50,00,000 /- (Rupees Eleven Crores and Fifty Lakhs only) divided into 1,15,00,000 (One Crore Fifteen Lakhs only) equity shares of INR 10/- (Rupees Ten only) each.

During the period under review, there has been no change in the Paid up share capital structure of the Company. The Paid Up Capital is INR 10,14,40,610/- (Rupees Ten Crore Fourteen Lakhs Forty Thousand Six Hundred and Ten Only) divided into 1,01,44,061 (One Crore One Lakh Forty Four Thousand Sixty One) equity shares of INR 10/- (Rupees Ten only) each.

The Company has not issued any shares with differential rights and hence no information as per the provisions of Section 43(a)(ii) of the Companies Act, 2013 (hereinafter referred as "the Act") read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished and the Company has not issued any stock options to its employees.

LISTING OF EQUITY SHARES

The Company migrated from SME Platform of NSE i.e., NSE Emerge to Main Board of NSE. The Equity shares of the Company are listed on the Main Board of "National Stock Exchange of India Limited" (NSE) with effect from May 27, 2020.

It may be noted that there are no payments outstanding to the Stock Exchange by way of Listing Fees. The company has paid the listing fee for the financial year 2021-22.

8. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Your Company has not given any Loans / Guarantees and not made any Investments during the financial year 2021-22, as specified under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

9. DEPOSITS

During the year under review, the Company has neither invited nor accepted deposits from the public / members under Section 73 of the Act, read with the Companies (Acceptance of Deposits) Rules, 2014.

10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

During the financial year under review all transactions with the related parties are in compliance with the provisions of section 188 of the Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

Further there are no transactions as per Section 188(1) of the Companies Act, 2013. Therefore, disclosure as per the provision of Section 134 (Form AOC-2) is not applicable.

11. RISK MANAGEMENT

Risk management is the process of identification, assessment and prioritization of risks followed by coordinated efforts to minimize, monitor and mitigate / control the probability and / or impact of unfortunate events to maximize the realization of opportunities. The company has initiated a process of preparing a comprehensive risk assessment and minimization procedure. These procedures are meant to ensure that executive management controls risk by way of a defined framework. The major risks are being identified by the company and its mitigation process/measures being formulated in areas of operations, recruitment, financial processes and reporting, human resources and statutory compliance.

12. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY FROM THE END OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT

Other than those mentioned in this Report, there has been no material changes and commitments, affecting the financial position of your Company having occurred between the end of the financial year to which the financial statements relate and the date of this Report. Further, it is hereby confirmed that there has been no change in the nature of business of the Company.

13. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION, AND REDRESSAL) ACT, 2013

The Company is committed to provide a safe and conducive work environment to its employees and has zero tolerance towards any actions which may fall under the ambit of sexual harassment at the workplace. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Policy aims to promote a healthy work environment and to provide protection to employees at the workplace and redress complaints of sexual harassment and related matters thereto.

The policy on prevention of sexual harassment is available on the website of the company at https://www.kapstonfm.com/imaaes/PDF/Policy-for-prevention-of-Sexual-Harassment.pdf.

An Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, has been constituted to enquire into complaints, and to recommend appropriate action, wherever required in compliance with the provisions of the Act. All employees (Permanent, Contractual, temporary, trainees) are covered under this policy.

a. number of complaints filed during the financial year - NIL.

b. number of complaints disposed of during the financial year - NOT APPLICABLE.

c. number of complaints pending as on end of the financial year - NIL.

14. MEETINGS OF THE BOARD

Seven meetings of the Board were held during the year. The details of composition of the Board, particulars of meetings held and attended by each Director are detailed in the Corporate Governance Report, which forms part of this Report.

15. COMMITTEES OF THE BOARD

Detailed composition of the Board committees, number of meetings held during the year under review and other related details are set out in the Corporate Governance Report, which forms a part of this Report.

16. CORPORATE GOVERNANCE

A detailed report on Corporate Governance, pursuant to the requirements of Regulation 34 of the Listing Regulations, forms part of the Annual Report. A certificate from Mr. D S Rao, Practicing Company Secretary, Hyderabad, confirming compliance to conditions of Corporate Governance, as stipulated under the Listing Regulations, is annexed to the Corporate Governance Report Annexure I, which forms part of this Annual Report.

17. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Nomination and Remuneration Committee has adopted a policy as per Section 178(3) of the Companies Act, 2013 for determination of remuneration and the manner of selection of the Board of Directors, CS and CFO & Managing Director.

Criteria for selection of Non-Executive Directors

• The Non-Executive Directors shall be of high integrity with relevant expertise and experience in the fields of Service Industry, Marketing, Finance and Taxation, Law, governance and general management.

• In case of appointment of Independent Directors, the committee shall satisfy itself with regard to the criteria of independence of the directors vis-a-vis the company so as to enable the board to discharge its functions and duties effectively.

• The committee shall ensure that the candidate identified for appointment as a director is not disqualified for appointment under Section 164 of the Companies Act, 2013.

• The committee shall consider the following attributes, whilst recommending to the board the candidature for appointment as a director:

- Qualification, expertise and experience of the directors in their respective fields;

- Personal, professional or business standing;

- Diversity of the Board.

- In case of re-appointment of Non-Executive Directors, the Board shall take into consideration the performance evaluation of the Directors and his engagement level.

Remuneration

The Non-Executive Directors shall not be entitled to receive remuneration except by way of sitting fees, reimbursement of expenses for participation in the board / committee meetings and commission. The Independent Director of the company shall not be entitled to participate in the Stock Option Scheme of the company. The aggregate commission paid to the Non-Executive Directors if any. Is within the statutory limit of the company.

Criteria for selection / appointment of Managing Director, Executive Director, CS and CFO

For the purpose of selection of the Managing Director, Executive Director, Company Secretary and Chief Financial Officer, the Committee shall identify persons of integrity who possess relevant expertise, experience and leadership qualities required for the position.

The Committee will also ensure that the incumbent fulfils such other criteria with regard to age and other qualifications as laid down under Companies Act, 2013, or other applicable laws.

Remuneration to Managing Director and Executive Director

• At the time of appointment or re-appointment, the Executive Director and Managing Director shall be paid such remuneration as may be mutually agreed between the Company (which includes the Committee and the Board of Directors) and the Executive Director / Managing Director, within the overall limits prescribed under the Companies Act, 2013.

• The remuneration shall be subject to the approval of the members of the Company in General Meeting in compliance with the provisions of the Companies Act, 2013.

Remuneration Policy for the Senior Management Employees including CFO & CS

In determining the remuneration of Senior Management Employees, the committee shall ensure/consider the following:

• The relationship between remuneration and performance benchmark;

• The balance between fixed and variable pay reflecting short and long-term performance appropriate to the working of the company and its goals, as mutually agreed.

The policy relating to remuneration of Directors, Key Managerial Personnel, Senior Management and other employees is available on the website of the Company

https://www. kapstonfm.com/imaaes/PDF/Nomination%20and%20Remuneration%20Policv.pclf.

18. BOARD EVALUATION AND ASSESSMENT

The Board of Directors have carried out an annual evaluation of its own performance, Board committees and individual Directors pursuant to the provisions of the Sections 134, 178 and Schedule IV of the Companies Act, 2013. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, execution and performance of specific duties by the Board of Directors, independence, ethics and values, attendance and contribution at meetings etc.

The performances of the Independent Directors were evaluated by the Board after seeking inputs from all the Directors on the effectiveness and contribution of the Independent Directors.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members based on the criteria such as the composition of Committees, effectiveness of Committee meetings, etc.

The Board reviewed the performance of the individual Directors on the basis of the contribution of the individual Director.

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 Independent Directors also assessed the quality, frequency and timeliness of flow of information between the Board and the management that is necessary for effective performance.

19. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Retirement by Rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Associations of the Company, Ms. Kanti Kiran Doddapaneni, Director (DIN: 07420023), retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers herself for reappointment. The Board has recommended her re-appointment.

Appointment of Directors

During the year under review,

• Dr. Ramachandra Naidu Cherredi (DIN: 02096757) has been re-appointed as Chairman for a term of 3 years with effect from August 29, 2021.

Appointment and Resignation of KMP

During the year under review,

• The Board considered and approved the resignation of Ms. Amreen Gulnaaz from the post of Company Secretary and Compliance Officer of the Company w.e.f. June 15, 2021. The Board on the recommendation of Nomination and Remuneration Committee approved the appointment of Ms. Kinkeri Vyshali as Company Secretary and Compliance Officer of the Company with effect from August 9, 2021.

• The Board considered and approved the resignation of Mr. Brendon Thomas Pereira from the post of Chief Financial Officer of the Company w.e.f. October 31, 2021. The Board on the recommendation of Nomination and Remuneration Committee approved the appointment of Mr. Kapil Sood as Chief Financial Officer of the Company with effect from November 8, 2021.

• The Board considered and approved the resignation of Ms. Kinkeri Vyshali from the post of Company Secretary and Compliance Officer of the Company w.e.f. December 10, 2021.

• The Board on the recommendation of Nomination and Remuneration Committee approved the appointment of Ms. Kalluru Manaswini as Company Secretary and Compliance Officer of the Company with effect from February 14, 2022.

20. DECLARATION BY THE INDEPENDENT DIRECTORS

The Company has received declarations from the Independent Directors that they meet the criteria of independence as prescribed under Section 149(6) of the Act along with rules framed thereunder and Regulation 16(1)(b) and 25 of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission, if any, and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/ Committees of the Company.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Act and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

21. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Act, the Board of Directors, to the best of their knowledge and information and explanations received from the Company, confirm that:

a) in the preparation of the accounts for the year ended March 31, 2022, the applicable accounting standards have been followed and there are no material departures from the same;

b) they have selected such accounting policies and applied them consistently, and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the loss of the Company for the year under review;

c) they have 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;

d) they have prepared annual accounts of the Company on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) they have devised proper systems to ensure compliance with the provision of all applicable laws and that such systems were adequate and operating effectively.

22. EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company for the financial year ended March 31, 2022 can be accessed at https://www.kapstonfm.com/investors.html.

23. CORPORATE SOCIAL RESPONSIBILITY

The Company believes in building and maintaining a sustainable societal value, inspired by a noteworthy vision to actively participate, contribute and impact not just individual lives but create a difference on a social level as well.

In compliance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established the CSR Committee.

The Board has adopted the CSR Policy, as formulated and recommended by the CSR Committee, and is available on the Companys website at https://www.kapstonfm.com/images/PDF/CSR%20Policy.pdf

The disclosure of contents of CSR policy pursuant to provisions of Section 134(3)(o) of Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is annexed herewith as Annexure II to the Boards Report.

24. PARTICULARS OF EMPLOYEES

The information relating to remuneration and other details as required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is provided as an Annexure III to this report.

There are no employees who draw remuneration in excess of the limits prescribed in Rule 5(2)(i), (ii) and (iii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Pursuant to the provisions of the first proviso to Section 136(1) of the Act, the annual report excluding the remuneration details of top ten employees is being sent to the Members of the Company. The said information is available for inspection on all working days, during business hours, at the Registered Office of the Company. Any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request

25. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report for the year under review, is presented in a separate section, forming a part of the Annual Report.

26. STATUTORY AUDITORS

M/s NSVR and Associates LLP, Chartered Accountants, (Firm Registration No.0008801S/S200060), who are the Statutory Auditor of your Company, hold office until the conclusion of the 14th AGM.

Pursuant to the provisions of Sections 139, 142 and other applicable provisions, if any, of the Act (including any statutory modification or re-enactment thereof for the time being in force) and the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, M/S NSVR and Associates LLP, Chartered Accountants, are proposed to be re-appointed as Statutory Auditors of the Company for a second term of five years to hold office from the conclusion of the 14th AGM till the conclusion of the 19th AGM in 2027, subject to approval of Members in the ensuing AGM. The necessary resolutions for re-appointment of M/s NSVR and Associates LLP,Chartered Accountants, form part of the Notice convening the ensuing AGM.

The Board has duly examined the Statutory Auditors Report on the financial statements, which is selfexplanatory. The Auditors report for Financial Year 2022 does not contain any qualification, reservation or adverse remark for the year under review. The Auditors Report is enclosed with the financial statements in this Annual Report. During the year under review, the Auditors have not reported to the Audit Committee any instances of fraud committed against the Company by its officers or employees under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134(3) (ca) of the Act.

27. SECRETARIAL AUDITOR

Mr. D.S Rao, Practicing Company Secretary (CP No.- 14487), was appointed as Secretarial Auditors of your Company to conduct a Secretarial Audit of records and documents of the Company for Financial Year 2022. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or non-compliances. The Secretarial Audit Report is provided in Annexure-IV to this Report.

The Secretarial Audit Report does not contain any qualifications, reservations, adverse remarks or disclaimers.

The Board based on the recommendation of the Audit Committee has re-appointed Mr. D.S Rao, Practicing Company Secretary, Hyderabad as Secretarial Auditor of the Company for the financial year 2022-23 pursuant to the Board resolution dated May 20, 2022.

28. COST AUDIT

Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Act, is not required by the Company and accordingly such accounts and records are not made and maintained.

29. INTERNAL AUDITOR

The Board, on the recommendation of the Audit Committee, in its meeting had approved the appointment of M/s. Ms. Sravanthi Karuturi, Chartered Accountant (M No - 239567) as the Internal Auditors of the Company for Financial year 2021-22 to conduct the internal audit, which is reviewed each year in consultation with the Audit Committee. On a quarterly basis also, Internal Auditors give presentations and provide a report to the Audit Committee of the Company.

The Board based on the recommendation of the Audit Committee, has re-appointed Ms. Sravanthi Karuturi, Chartered Accountant (M No - 239567) as the Internal Auditors for the financial year 2022-23.

30. INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. Based on the audit reports your company undertakes corrective action in their respective areas and strengthen the controls.

The Board of Directors of the Company have adopted various policies like Related Party Transactions policy, Whistle Blower Policy, code of conduct for regulating, monitoring and reporting insider trading and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 2015, the Board has approved the code of conduct for prohibition of insider trading and the same is being implemented by the Company.

31. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE

During the financial year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in the future.

32. VIGIL MECHANISM

In compliance with Section 177(9) of the Act and Regulation 22 of the Listing Regulations, the Company has a Whistle Blower Policy and has established the necessary vigil mechanism for Directors and employees in confirmation with the above laws, to report concerns about unethical behaviour.

The details of the Policy is also available on the website of the Company https://www.kapstonfm.com/imaaes/PDF/Whistle%20Blower%20policvw.pdf

The policy provides for a framework and process, for the employees and directors to report genuine concerns or grievances about leakage of unpublished price sensitive information (UPSI), illegal and unethical behaviour to the Chairman of the Audit Committee.

33. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION

Considering the nature of activities of the Company, the provisions of Section 134(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 relating to conservation of energy, Research and Development, Technology Absorption are not applicable to the Company.

34. FOREIGN EXCHANGE EARNINGS AND OUTGO

During the financial year under review there is no foreign exchange earnings and outgo.

35. COMPLIANCE WITH THE ICSI SECRETARIAL STANDARDS

Pursuant to the provisions of Section 118 of the Act, the Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India ("ICSI") and notified by the Ministry of Corporate Affairs ("MCA").

36. OTHER DISCLOSURES

• The Company does not have any subsidiary or group or associate company, therefore standalone financial statement is presented.

• There are no applications made or any proceeding pending against the Company under Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the financial year.

• There are no instances of one-time settlement during the financial year.

• Various policies as approved by the Board of Directors in accordance with the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is hosted on the companys website at https://kapstonfm.com/investors.html

37. ACKNOWLEDGEMENT

Your Directors place on record their gratitude to the Central Government, various State Governments and Companys Bankers and advisors for the valuable advice, guidance, assistance, co-operation, and encouragement they have extended to the Company from time to time. The Directors also take this opportunity to thank the Companys customers, suppliers, partners, investors and all other Stakeholders, Regulators and Stock Exchange(s) for their consistent support to the Company.

Last but not the least, the Directors also sincerely acknowledge the significant contributions made by all the employees for their continued & dedicated services to the Company.

For and on behalf of the Board of Directors
Kapston Services Limited
(Formerly known as Kapston Facilities Management Limited)
Sd/-
Dr. Chereddi Ramachandra Naidu
Executive Chairman
Date : August 10, 2022 DIN:02096757
Place : Hyderabad