scintilla software technology ltd Directors report

SCINTILLA SOFTWARE TECHNOLOGY LIMITED ANNUAL REPORT 2004-2005 DIRECTORS REPORT Dear Shareholders Your Directors have pleasure in presenting the 20th Annual Report and the Audited Statement of Accounts of the company for the financial year ended 30th April, 2005. 1. FINANCIAL HIGHLIGHTS: (Rs. 000) FINANCIAL RESULTS 2004-2005 2003-2004 Turnover 2666 2326 Gross Profit before interest and depreciation 170 68 Less: Interest NIL NIL Depreciation 47 49 Profit Before Tax 123 19 Less: Provision for Taxation NIL NIL Profit After Tax 123 19 Balance brought forward 149,472 149,453 Amount available for appropriation TOTAL 149,555 149,472 Appropriations: Proposed dividend on equity shares -- -- Corporate tax on dividend -- -- Debenture Redemption Reserve -- -- Balance carried to Balance Sheet 149,555 149,472 TOTAL 149,555 149,472 2. MANAGEMENT ANALYSIS AND DISCUSSION: COMPANY PERFORMANCE: The sales of the Company for the year ended 30th April, 2005 touched Rs.26.66 lakhs and Net Profit were Rs.1.23 lakhs. Your Company has improved its position in the domestic market and software industry. The year under review was one of them most challenging years for IT industry all over the world. Constant efforts are put to redesign the planning and implementation process to aim for leadership on the theme of rapid growth and differentiation. We are confident that the steps taken will help achieve the size, scalability, brand and ambition necessary to create the next generation IT Solutions and Services Company. REVIEW OF OPERATIONS: The Indian IT industry is one of the top 10 industries in India. The IT Industry has shown signs of recovery and IT/Technology expenditure is expected to rise this year as against a stagnant trend in the past two years. The domestic growth has been driven by rapid expansion of IT Infrastructure by Government, Education, Telecom, BPO and Corporate segments. The Indian IT Industry is interspersed with several large, medium and small players offering their services. The competition and challenges to medium size niche players like SSTL is emerging primarily from large system integration companies. Your Company is strong in providing IT Infrastructure set-up, support and management as well as in the system integration business. The wide range of products and solutions, domain expertise and competency pools created by the Company over the year has helped in customer retention and addition of new customer accounts. Clients are looking for a company that is a trusted advisor and a strategic partner. In response to clients needs, we have been working on several new service initiatives. Your company seeks long term partnerships with clients while addressing their various IT requirements. Your Companys customer centric approach has resulted in high levels of client satisfaction. Your Company has reorganized to face new challenges of greater client expectations, rapidly changing business scenario and heightened competition. As a part of it business process engineering the Company is constantly analyzing the business areas to focus on the most profitable and productive ones. This has helped in maintaining the profitability levels despite the reduction in the sales turnover. Your Company has also helped many of its clients improve their processes and systems by providing consulting services and high-end products and solutions. OUTLOOK: The domestic IT spends is likely to continue its current upward trend. Organizations have been increasing their IT spends for process improvements and efficiency enhancements to face competition and increased productivity. Organizations are widely outsourcing the various activities of managing their IT infrastructure to increase operational efficiency. Your Company has clearly drawn its roadmap as a dominant provided of end-to-end IT solutions and services encompassing comprehensive services of IT infrastructure design, implementation and lifecycle support. Continuous research and development of new services, products, processes and solutions allows your Company to enhance quality, productivity and customer satisfaction through innovation. Initiatives are being taken for development of solutions on Storage systems, Disaster Management Systems, Security, Converged Communications etc. Your Company has established a national service network and this will help in providing support to a large base of customers. Your company is continuously evolving new business processes, modifying its existing line of activities and expanding its business capabilities to gain higher growth and market share. DIVIDEND: Your directors do not recommend any dividend for the year ended 30th April, 2005. FIXED DEPOSITS: The company has not accepted any deposit within the meaning of Section 53A of the Companies Act, 1956 and the rules made there under. DIRECTORS: Mr. S.R. Poojari retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. During the year Mr. Sham Mishra have resigned from the Board due to pre-occupation. The Board placed on record his appreciation of the valuable services rendered by them during his tenure. Mr. S.R. Poojari was appointed as Additional Director and requires confirmation of the Shareholders as Director. He is entitled for re appointment and retired by rotation. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirement Under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed: * That in the preparation of the annual accounts for the financial year ended 30th April, 2005 and the Application Accounting Standards had been followed along with proper explanation relating to material departures. * That the Directors had 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 at the end of the financial year and of the profit or loss of the company for the year under review. * That the Director had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. * That the Directors had prepared the accounts for the financial year ended 30th April, 2005 on a going concern basis. AUDITORS: M/s S.S. Trimbakkar & Co., Chartered Accountants, Auditors of the company hold office till the conclusion of the ensuing Annual General Meeting and are eligible for appointment by the Company. PERSONNEL: As there are no employees, drawing remuneration as per provisions of Section 217(2A) of the Companies Act, 1956, and due to that, there is no requirement to submit particulars of employees as per the provisions of section 217(2A) of the Companies Act, 1956, read with the provisions of Companies) Particulars of Employees Rules, 1975. Conservation of Energy, Technology Absorption, Research & Development and Foreign Exchange Earnings and Outgo: Conservation of Energy: The Companys operations involve low energy consumption. However efforts to conserve and optimize the use of energy through improved operational methods and other means will continue: Technology Absorption: The Technology available and utilized is continuously being upgraded to improve overall performance and productivity. Foreign Exchange Earnings : Nil Foreign Exchange Outgo : Nil CORPORATE GOVERNANCE: Your Company continues to be committed to the systems of good corporate governance by increased transparency and accountability to its shareholders. Pursuant to clause 49 of the Listing Agreement with Stock exchanges, a report On Corporate Governance and Auditors certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report. ACKNOWLEDGEMENT: Your Directors place on record their appreciation of the assistance and support extended by all Government authorities, financial institutions, banks, consultants, solicitors, shareholders and debenture holders of the company. Yours directors also wish to thank management and staff of, the promoter company, for the continuous guidance and support received from them. Your directors express their appreciation for the dedicated and sincere services rendered by employees of the company. For and on behalf of the Board S. PAWASKAR S.R. POOJARI Director Director Place: Kanpur Dated: 1st September, 2005