Tanla Solutions Ltd Directors Report.

Dear Members,

Your Directors are pleased to submit their 23rd (twenty third) report of Tanla Solutions Limited (hereinafter referred as "Tanla" or the "Company") on the Companys business and operations, together with the audited financial statements of the Company for the year ended March 31, 2019.

Summary of Financial Results:

The summary of Consolidated & Standalone Financial Results for the year is as follows;

(Rs. in Lakh)

Particulars

Consolidated

Standalone

FY 2018-19 FY 2017-18 FY 2018-19 FY 2017-18
Revenue from Operations 1,00,396.5 79,161.3 80,940.9 69,193.5
Other Income 1,061.1 476.0 956.0 467.2
Total Income 1,01,457.6 79,637.3 81,896.9 69,660.7
Expenses
Operating expenses 90,756.4 72,642.4 73,124.8 64,131.8
Depreciation 7,322.8 5,733.0 6,808.3 4,891.5
Total Expenses 98,079.2 78,375.5 79,933.1 69,023.2
Profit before Tax 3,347.4 1,261.8 1,963.8 637.5
Less: Provision for Tax incl. deferred Tax 365.3 (649.0) 256.2 (671.7)
Profit after Tax 2,982.1 1,910.8 1,707.6 1,309.2
Other Comprehensive Income 119.6 227.8 433.9 34.7
Total Comprehensive Income 3,101.7 2,138.6 2,141.4 1,343.9
Attributable to:
Shareholders of the Company 3,101.7 2,138.6 2,141.4 1,343.9
Non-controlling interests - - - -
Retained earnings - opening balance 8,570.1 6,993.1 16,484.6 15,509.2
Add: Profit/(Loss) for the period 2,982.1 1,910.8 1,707.6 1,309.2
Less: Dividend and dividend tax (405.9) (333.8) (405.9) (333.8)
Retained earnings - closing balance 11,146.3 8,570.1 17,786.3 16,484.6
Earnings per Share (EPS)
Basic & Diluted 2.6 1.7 1.5 1.2

Consolidated Performance

The Consolidated Revenue from operations for FY 2019 stood at Rs. 1003.96 Crore and grew by 26.83% Y-o-Y.

Standalone Performance

The Standalone Revenue from operations for FY 2019 stood at Rs. 809.41 Crore and grew by 16.98% Y-o-Y.

Dividend:

During the year under review, the Board has recommended a final dividend for FY 2018-19 @ 35% of the paid-up equity share capital i.e. Rs. 0.35 per fully paid-up equity share of Rs. 1/- each, for your consideration and approval at the ensuing 23rd Annual General Meeting of the Company.

With the proposed final dividend, the dividend for FY 2018-19 would be Rs. 0.35 per fully paid-up equity share of Rs. 1/- each (35% of the paid-up value) as against the total dividend of Rs. 0.30 per equity share (30% of the paid-up value) declared in the previous year 2017-18.

The total dividend outgo would amount to Rs. 6.06 Crore (including Corporate Dividend Tax), a payout of 35.52% of Net profit of the Company for the financial year 2018-19.

Transfer to Reserves:

The Company has not proposed to transfer any amount to the general reserve for the Financial Year ended March 31, 2019.

State of Companys affairs:

During FY 2019 the Company:

• has achieved a consolidated revenue of Rs. 1,004 Crore registering a growth of 27% Year-on-Year

• to strengthen and retain its leadership position, the Company successfully launched Trubloq, the first blockchain-enabled customer commercial communication stack

• completed the acquisition of Karix Mobile Private Limited and its wholly owned subsidiary Unicel Technologies Ltd

Listing with Stock Exchanges:

Tanla is a public limited Company listed on leading Indian stock exchanges The BSE Limited (BSE: 532790 and National Stock Exchange of India Limited. (NSE: TANLA). The annual listing fee for the financial year 2018-19 is paid to both these exchanges.

Particulars of Loans, Guarantees or Investments:

Details of loans and guarantees given and investments made under Section 186 of the Act are given in the Notes to the Financial Statements.

Disclosure under Section 197(14) of Act

The managing director of the Company is not receiving any remuneration or commission from any subsidiary companies of the Company.

Material Changes and Commitments:

Tanla has completed acquisition of Karix Mobile Private Limited (hereinafter referred as "Karix") on April 10, 2019, making Karix a 100% wholly-owned subsidiary (WOS) of Tanla. Karix has a WOS Unicel Technologies Private Limited (hereinafter referred as "Unicel"), making Unicel step down subsidiary of Tanla. Post-acquisition, Registered Office of Karix and Unicel has been shifted to the State of Telangana from the states of Tamilnadu and Karnataka respectively.

RBI has vide Order No. DNBS (H) CMS No. 131/00.01.692/2019-20, dated August 2, 2019 confirmed cancellation of the Registration of CapitalSiri Investments Private Limited as NBFC.

Apart from above acquisitions, there are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the FY 2018-19 to which the financial statements relate and to the date of this report.

Management Discussion & Analysis:

The Management Discussion and Analysis Report highlighting the industry structure and developments, opportunities and threats, outlook, risks and concerns etc. is furnished separately and forms part of this Annual Report, as per the requirements of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Directors Responsibility Statement as required under Section 134 of the Companies Act, 2013:

The Directors Responsibility Statement pursuant to the requirement of Section 134(3)(c) and 134(5) of the Companies Act, 2013 ("the Act") is appended as Annexure-1 to this Report.

Consolidated Financial Results:

Pursuant to Regulation 33 of SEBI (Listing Obligations & Disclosures Requirements) Regulations 2015, and the Companies Act, 2013, the Consolidated Financial Statements prepared as per Companies Act, 2013 and Indian Accounting Standards, duly audited from part of the Annual Report.

Consolidated Financial Statements incorporating the operations of the Company, its Subsidiaries, Joint Venture Company and Associate Company is appended. Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial statements of the Subsidiaries, Joint Venture and Associate is enclosed in Form AOC-1 as Annexure-2 to this Report.

Change in the nature of business, if any:

There is no change in the nature of business of the Company or any of its subsidiaries or joint venture, during the year under review.

Subsidiary, Associate & Joint Venture (JV) Companies

Tanla Corporation Private Limited, India ("TCPL")

A wholly-owned subsidiary of Tanla Solutions Limited based at Hyderabad, India is engaged in development of products and services.

Tanla Mobile Asia Pacific Pte Limited, Singapore ("Tanla Singapore" or "TMAP"), a wholly-owned subsidiary of Tanla based at Singapore, provides aggregator and offshore development services to clients in telecommunications and offshore service sectors.

Capitalsiri Investments Private Limited ("Capitalsiri") a wholly-owned subsidiary of Tanla Solutions Limited based at Hyderabad, India is engaged in NBFC activity and the Company is yet to commence its operations. RBI has vide Order No. DNBS (H) CMS No. 131/00.01.692/2019-20, dated August 2, 2019 confirmed cancellation of the Registration of CapitalSiri Investments Private Limited as NBFC.

Karix Mobile Private Limited ("Karix") a wholly-owned subsidiary of Tanla Solutions Limited, is engaged in the business of Cloud Communications. It has received a Certificate of Registration from the Registrar of Companies on August 8, 2000 and the Company was acquired by Tanla on April 10, 2019.

Unicel Technologies Private Limited ("Unicel") a wholly-owned subsidiary of Karix, and Step-Down Subsidiary of Tanla is engaged in the business of providing wireless applications hosting services designed to help businesses deliver Internet and other content and web applications to users. It has received a Certificate of Registration from the Registrar of Companies on May 29, 2003 and Unicel became Step-Down Subsidiary of Tanla as a result of acquisition of Karix by Tanla on April 10, 2019.

TZ Mobile Private Limited ("TZ Mobile") a joint venture of Tanla with Zed Worldwide (ZWW), Spain, is under liquidation w.e.f. June 18, 2019 Jengatron Gaming Private Limited ("Jengatron") an associate Company of Tanla, provides a skill based mobile gaming platform.

The audited financial statements of each of its subsidiary, associate and joint venture companies are available for inspection at the Companys registered office and also at registered offices of the respective companies and pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of each of its subsidiary companies are also available on the Companys website www.tanla . com. Copies of the annual financial statements of the subsidiary, associate and joint venture companies will also be made available to the investors of the Company and those of the respective companies upon request.

Deposits:

The Company has not accepted any deposit from the public under Chapter V of the Act or under the corresponding provisions of Section 73 and 74 of the Companies Act, 2013, and no amount of principal or interest was outstanding as on the Balance Sheet date.

Share Capital:

The paid-up equity share capital of the Company as on March 31, 2019 was Rs. 1,156.27 Lakh.

Particulars

As at March 31, 2019

As at March 31, 2018

Number of shares Rs. Number of shares Rs.
SHARE CAPITAL
(a) Authorised Equity shares of Rs. 1/- each 20,00,00,000 20,00,00,000 12,00,00,000 12,00,00,000
(b) Issued, Subscribed and fully paid-up:
Equity Shares of Rs. 1/- each fully paid-up 11,56,26,827 11,56,26,827 11,24,21,952 11,24,21,952
11,56,26,827 11,56,26,827 11,24,21,952 11,24,21,952

During the year the Company had issued shares as detailed below:

(i) Reconciliation of the shares outstanding at the beginning and at the end of the reporting period:

Particulars

As at March 31, 2019

As at March 31, 2018

Equity Shares No. of Shares Rs. No. of Shares Rs.
Shares outstanding at the beginning of the year 11,24,21,952 11,24,21,952 10,74,85,785 10,74,85,785
Add: Issued and allotted during the year 32,04,875 32,04,875 49,36,167 49,36,167
Less: Shares bought back during the year - - - -
Shares outstanding at the end of the year 11,56,26,827 11,56,26,827 11,24,21,952 11,24,21,952

The Company has one class of equity shares of Rs. 1/- each fully paid-up. As on April 01, 2018 the paid-up share capital of the Company was Rs. 11,24,21,952. For the year under review, the Company has issued & allotted 3,00,000 equity shares under ESPS 2018 on December 27, 2018, 63,750 equity shares under ESOP 2015 on March 7,

2019, 11,76,125 equity shares under ESPS 2018 on March 15, 2019 and 16,65,000 equity shares to Promoters upon conversion of warrants into equity on Preferential basis on March 29, 2019.

During the year under review, the Promoters Mr. D. Uday Kumar Reddy & Ms. D. Tanuja Reddy have subscribed to 79,50,858 warrants at Rs. 40/- each by paying 25% upfront amount. Out of the above, 16,65,000 warrants were converted into Equity Shares on March 29, 2019 by paying remaining 75% amount. The balance 62,85,858 warrants are to be converted into Equity Shares.

As on March 31, 2019 the paid-up share capital of the Company was Rs. 11,56,26,827.

(ii) Terms/Rights and restrictions attached to the equity shares:

The Company has only one class of equity shares having a face value of Rs. 1/-. Each shareholder is eligible for one vote per every equity share held.

(iii) The details of shareholders holding more than 5% shares in the Company:

D. Uday Kumar Reddy

Shareholding at the beginning of the year

Cumulative shareholding during the year

No. of shares % of total shares of the Company No. of shares % of total shares of the Company
1 At the beginning of the year 1,94,96,493 17.34 - -
26/10/2018 (Purchase) 7 0.00 1,94,96,500 17.34
28/01/2019 (Purchase) 1,90,000 0.17 1,96,86,500 17.46
29/01/2019 (Purchase) 4,46,947 0.40 2,01,33,447 17.86
29/03/2019 (Preferential Allot.) 8,32,500 0.72 2,09,65,947 18.13
At the end of the year 2,09,65,947 18.13

Shareholding at the beginning of the year

Cumulative shareholding during the year

D. Tanuja Reddy No. of shares % of total shares of the Company No. of shares % of total shares of the Company
2 At the beginning of the year 1,43,19,270 12.74 - -
29/03/2019 (Preferential Allot.) 8,32,500 0.72 1,51,51,770 13.10
At the end of the year 1,51,51,770 13.10

Particulars of Employees:

Disclosure pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is provided as Annexure-3 of this Report.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 including the amendments thereto, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in Annexure-4 to this report.

Extract of the Annual Return:

Pursuant to the provisions of Section 134(3) (a) of the Companies Act, 2013 and rules framed thereunder, an extract of the Annual Return in form MGT-9 in the prescribed format is appended as Annexure-5 to this Report. The Weblink for accessing the extract of annual return is www.tanla.com .

Corporate Governance:

Your Company is committed to good Corporate Governance coupled with good corporate practices.

The report on corporate governance for the year ended March 31, 2019 pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 forms part of this annual report. A Compliance Report on Corporate Governance for the year 2018-19 from a Practicing Company Secretary confirming compliance with the conditions of Corporate Governance is attached to the Report on Corporate Governance.

The Corporate Governance Report, inter alia, contains the following disclosure:

i. Number of Board Meetings

ii. Composition of Audit Committee

iii. Composition of Nomination & Remuneration Committee

iv. Composition of Stakeholders Relationship Committee

v. Composition of Corporate Social Responsibility Committee

vi. Appointment & Remuneration Policy (for

Directors, Key Managerial Personnel & Senior Management Personnel of the Company)

vii. Performance Evaluation criteria of the Board, its Committees & individual Directors

viii. Details as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Directors and Key Managerial Personnel:

Pursuant to the provisions of Sections 149 & 184 of the Companies Act, 2013 and under Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, all the Independent Directors of the Company have submitted a declaration that each of them meets the criteria of Independence as prescribed in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as an Independent Director during the year.

Pursuant to provisions of Section 203 of the Act, Mr. Dasari Uday Kumar Reddy, Chairman & Managing Director, Mr. Srinivas Gunupudi Kamoji, Chief Financial Officer and Ms. Seshanuradha Chava, Company Secretary, are the Key Managerial Personnel (KMP) of the Company.

No Director or KMP was appointed or had retired or resigned during FY 2018-19.

Mr. D. Uday Kumar Reddy, Chairman & Managing Director of the Company is recommended by the Board and by Nomination & Remuneration Committee to be reappointed as the Chairman & Managing Director of the Company for next 5 (Five) years subject to approval of the Shareholders.

Ms. Amrita Gangotra, who was appointed by the board on July 31, 2019 and Mr. Rohit Bhasin, Mr. Sanjay Baweja & Mr. Sanjay Kapoor who were appointed by the board on August 30, 2019 as Additional Directors up to the date of Annual General Meeting are proposed by the Board and Nomination & Remuneration Committee to be appointed as a regular Directors on the Board of the Company subject to the approval of Shareholders.

Mr. R. N. Agarwal & Ms. Kalpana Kunda are retiring from the Board as their term as Independent Directors is expiring in this Annual General Meeting, the Board thanks them for their contribution on the Board during their association with the Company.

Dr. A. G. Ravindranath Reddy is retiring as Independent Director as his term is expiring in this Annual General Meeting. The Board and Nomination & Remuneration Committee propose to appoint and redesignate him as Non-Executive Director on the Board of the Company subject to the approval of Shareholders.

Brief particulars and expertise of each director seeking appointment/re-appointment together with their other directorships and committee memberships has been given in the annexure to the Notice of the Annual General Meeting and Report on Corporate Governance, which forms part of this Annual Report, in accordance with the requirements of the Listing Regulations and applicable Secretarial Standards.

Declaration from Independent Directors:

The independent directors have submitted the declaration of independence stating that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 and Regulations 16 & 25 of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the Companys code of conduct

Familiarisation Programme for Independent Directors:

In terms of Clause 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, details of the familiarisation programme of the independent directors are available on the website of the Company (www.tanla.com)

A meeting of Independent Directors was held on January 24, 2019.

Committees of Board, Number of Meetings of the Board and Board Committees:

During the year ended March 31, 2019, Seven (7) Board Meetings were held. And the dates on which they were held are - May 4, 2018, May 18, 2018, August 14, 2018, August 24, 2018, November 1, 2018, January 23, 2019 & March 7, 2019.

As on March 31, 2019, the Board has Four committees, namely, the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility (CSR) Committee, the Stakeholders Relationship Committee.

All the recommendations made by committees of the Board including the Audit Committee were accepted by the Board. A detailed update on the Board, its composition, detailed charter including terms and reference of various Board Committees, number of Board and Committee meetings held during FY 2018-19 and attendance of the Directors at each meeting is provided in the Report on Corporate Governance, which forms part of this Annual Report.

Secretarial Standards:

Pursuant to the provisions of Section 118 of the Companies Act, 2013, the Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India and notified by Ministry of Corporate Affairs.

Internal Financial Controls and their adequacy:

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detention of fraud, error reporting mechanisms, accuracy and completeness of accounting records, and timely preparation of reliable financial disclosures. Refer to "Internal control systems and adequacy" in the Management Discussion and Analysis report.

Whistle-Blower Policy/Vigil Mechanism:

Pursuant to the requirement of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has a Whistle-Blower Policy and has established the necessary vigil mechanism for directors and employees to report concerns about unethical behaviour. The said Policy provides for adequate safeguard against victimisation of directors/employees who avail of such mechanism and provides access to the Chairman of Audit Committee in exceptional cases. No person has been denied access to the Chairman of the Audit Committee. The Whistle-Blower Policy has been placed on website of the Company and web link thereto is www.tanla.com.

During the year, no whistle blower complaints were received.

Board Evaluation:

The Company believes that formal evaluation of the board and of the individual directors, on an annual basis, is a potentially effective way to respond to the demand for greater board accountability and effectiveness. Evaluations provide an ongoing means for directors to assess their individual and collective performance and effectiveness on the Board of the Company.

In line with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015, the Board has carried out evaluation of its own performance, the Directors individually and the Committees of the Board.

The board evaluation was performed after seeking inputs from all the directors and included criteria such as the board composition and structure, effectiveness of board processes, information and functioning as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017 and the amendments brought in SEBI (LODR) Regulations in 2018.

Nomination and Remuneration Policy:

Pursuant to the provisions of Section 178(3) of the Companies Act, 2013, and Regulation 19 of the Listing Regulations, the NRC has formulated a policy relating to the nomination and remuneration for the Directors and Key Managerial Personnel (KMP). The current policy is to have an appropriate mix of executive, non-executive and Independent Directors to maintain the independence of the Board and separate its functions of governance and management.

The policy of the Company on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters are adopted as per the provisions of the Companies Act, 2013. The remuneration paid to the Directors is as per the terms laid out in the Nomination & Remuneration policy of the Company. The Nomination & Remuneration policy adopted by the Board is placed on the Companys website www.tanla.com.

Risk Management:

The Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimisation of probable risks. It ensures that all the risks are defined and mitigated in accordance with the well-structured risk management process.

During the year, the Risk management team reviewed the elements of risk and the steps taken to mitigate the risks and in the opinion of the Board there are no major element of risk, which has the potential of threatening the existence of the Company. A report on risk management is prepared by the management and forms part of this annual report.

Material Subsidiary Policy:

The Company has adopted a policy for determining material subsidiary, in line with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy on Material Subsidiaries is available on the website of the Company and weblink thereto is www.tanla.com

Related Party Transactions:

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

None of the Directors had any pecuniary relationship or transactions with the Company, other than to the extent of their shareholding and except the payments made to them in the form of remuneration/sitting fee.

In accordance with Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contract or arrangement entered into, if any, by the Company with related parties referred to in Section 188(1) in Form AOC-2 is attached as Annexure-6.

Corporate Social Responsibility Committee (CSR):

The Company has formed its Corporate Social Responsibility Committee and the details of the composition of the Corporate Social Responsibility Committee as required under the provisions of Section 135 of the Companies Act, 2013 are given in the Corporate Governance Report which forms part of this annual report.

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Rules made thereunder, the brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on the CSR activities during the year are provided elsewhere in this report in the format prescribed in the Companies (Corporate Social Responsibility) Rules, 2014. The said policy is available on the Companys website www.tanla.com .

The prescribed minimum CSR spend i.e. 2% of the average net profits of the Company for the immediately preceding three financial years calculated as per Section 198 of the Companies Act, 2013 works out to Rs. 11.03 Lakh and the Company has spent Rs. 14.46 Lakh on CSR activities in the areas of Education. Detailed disclosure of CSR are provided in Management Discussion & Analysis annexed to this Annual Report.

Auditors and Auditors Report:

Statutory Auditors:

In terms of the provisions of Section 139 of the Companies Act, 2013, M/s. M. N. Rao & Associates, Chartered Accountants were appointed as the Companys Statutory Auditors in the 22nd AGM, for a period of one year i.e. till the conclusion of 23rd AGM. The Board has duly examined the Statutory Auditors Report to the financial statements, which is self-explanatory and required no further clarifications.

The Auditors have not reported any frauds to the Audit Committee and/or to the Central Government as prescribed under Section 143 (12) of the Companies Act, 2013.

Auditors of the Company have completed their term as they have been appointed for a period of 1 year from the date of 22nd AGM until the conclusion of 23rd AGM to be held in 2019 and therefore, the Board of Directors of your Company, on the recommendation of the Audit Committee, have recommended to the members for appointment of M/s. MSKA & Associates, Chartered Accountants, Firm Registration number 105047W as Statutory Auditors of the Company for a period of 5 years from the conclusion of 23rd Annual General Meeting of the Company till the conclusion of 28th Annual General Meeting to be held in 2024.

Internal Auditors:

The Company has appointed KPMG as the Internal Auditors for FY 2018-19 to audit specific locations and processes. It reports to the Audit Committee about the adequacy and effectiveness of the internal control system of your Company. The recommendations of the internal audit team on improvements in the operating procedures and control systems are also presented to the Audit Committee and the business to use these as tools for strengthening the operating procedures.

Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act,2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board had appointed M/s. BS & Company Company Secretaries LLP as Secretarial Auditors to conduct Secretarial audit of the Company for the financial year 2018-19. The Secretarial Auditors have submitted their report, confirming compliance by the Company of all the provisions of applicable corporate laws. The Secretarial Audit Report issued by M/s. BS & Company Company Secretaries LLP in form MR-3 is enclosed as Annexure-7 to this Annual Report.

The Report does not contain any qualification, reservation, disclaimer or adverse remark.

Cost Audit:

Pursuant to Section 148(1) of the Companies Act, 2013, Cost Audit is not required for the Company for the financial year ended March 31, 2019.

Significant and material orders passed by the Courts/Regulators:

There are no significant and material orders passed by the Courts or Regulators against the Company.

Rating:

The rating was not changed during the year and the Company has maintained rating of CARE A2+ by CARE and 5a3 by Dun & Bradstreet.

Insurance:

All the properties and insurable interests of the Company including buildings have been fully insured.

Human Capital:

Employees are our most valuable assets and they play a vital role in the growth of your Company. The Company places the engagement, development and retention of talent as its highest priority, to enable achievement of organisational vision. Structure, Process and Culture are the cornerstones of our Human Resource strategy and we have made strides in these areas during the last year.

With an unswerving focus on nurturing, training and retaining talent, your Company provides avenues for learning and development through functional, behavioural and leadership training programmes, communication channels for information sharing, to name a few.

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

The particulars as prescribed under sub-section (3)(m) of Section 134 of the Act, read with the Companies (Accounts) Rules, 2014, are enclosed as Annexure-8 to this Report.

Employee Stock Option Scheme (ESOP):

Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees Stock Option Plan of the Company in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("SEBI Regulations"). There was no change in the ESOP scheme of the Company during the year.

The Company has an operative Employees Stock Option Scheme Plan 2015 (ESOP 2015-16) which provides for grant of Stock Options to eligible employees of the Company.

The details of Employee Stock Options pursuant to Section 62 of the Companies Act, 2013 read with Rules made thereunder and SEBI (Share Based Employee Benefits) Regulations, 2014 and erstwhile SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are provided in Annexure-9 to this Report. 63,750 shares were granted under ESOP 2015, during FY 2018-19.

Employee Stock Purchase Scheme (ESPS)

Company believes in rewarding its employees, for their hard work, dedication and support, which has led the Company on growth path. Equity based compensation is considered to be an integral part of employee compensation across sectors.

The Company implemented employee stock purchase scheme i.e. Tanla Employee Stock Purchase Scheme 2018" ("ESPS 2018"/"Scheme") pursuant to the approval of shareholders on September 17, 2018, on the recommendation of Nomination and Remuneration Committee of the Board.

The details of ESPS 2018 pursuant to Section 62 of the Companies Act, 2013 read with Rules made thereunder and SEBI (Share Based Employee Benefits) Regulations, 2014 are provided in Annexure-10 to this Report.

Sexual Harassment of Women at Workplace

Pursuant to the provisions of "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013" ("POSH Act") the Company has framed a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto. 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.

The Company has always provided a safe and harassment free workplace for every woman working in its premises through various policies and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has been actively involved in ensuring that the associates are aware of the provisions of the POSH Act and rights thereunder. In the year under review, the Company has not received any complaint from any woman employee.

Acknowledgement:

The Board of Directors takes this opportunity to place on record their appreciation to all the Stakeholders of the Company, viz. customers, investors, banks, regulators, suppliers and other business associates for the support received from them during the year under review. The Directors also wish to place on record their deep sense of gratitude and appreciation to all the employees for their commitment and contribution towards achieving the goals of the Company. The relation between the management and the employees has been cordial throughout the year.

On behalf of The Board of Directors
For Tanla Solutions Limited
Sd/-
Hyderabad D. Uday Kumar Reddy
August 30, 2019 Chairman & Managing
Director
(DIN: 00003382)

Annexures to Boards Report

Annexure-1

Directors Responsibility Statement

Pursuant to the provisions of Sections 134(3)(c) and 134(5) of the Companies Act, 2013, and on the basis of compliance certificate received from the executives of the Company and subject to disclosures in the Annual

Accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, and to the best of our knowledge and information furnished, we state that:

i) In preparation of the Annual Accounts for the year ended March 31, 2019, all the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India have been followed along with proper explanation relating to material departures, if any.

ii) We have adopted such accounting policies, as selected in consultation with Statutory Auditors, 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 the Company at the end of the financial year and of the profit of the Company for the financial year ended March 31, 2019.

iii) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The Annual Accounts for the year ended March 31, 2019 has been prepared on a going concern basis.

v) Proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi) The systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

On behalf of The Board of Directors
For Tanla Solutions Limited
Sd/-
Hyderabad D. Uday Kumar Reddy
August 30, 2019 Chairman & Managing Director
(DIN: 00003382)

Annexure-2

Form AOC-1

(Pursuant to first proviso to sub-section (3) of Section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries or associate companies or joint ventures

Part A: Subsidiaries

Name of the Subsidiary The date since when subsidiary was acquired /date of incorporation Reporting period for the subsidiary concerned, if different from the holding companys reporting period. Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries. Share capital Reserves and surplus Total assets Total Liabilities Investments Turnover Profit before taxation Tax expense Profit after taxation Proposed Dividend Extent of shareholding (in percentage)
1 Tania Corporation Private Limited 16-11-1998 31.03.2019 INR 13,286,470 540,486,416 735,961,219 182,188,332 347,099,388 34,166,499 10,910,919 23,255,580 100
2 Tania Mobile Asia Pacific Pte Ltd 24-04-2007 31.03.2019 USD 555,063 4,342,620 14,468,685 9,571,002 26,094,602 1,589,779 1,589,779 100
3 Capitalsiri Investments Private Limited 17-11-2017 31.03.2019 INR 20,500,000 -4,141,101 21,686,497 5,327,598 -3,689,606 -3,689,606 100

Names of subsidiaries which are yet to commence operations- Capitalsiri Investments Private Limited Names of subsidiaries which have been liquidated or sold during the year- Not applicable

Part B: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

Particulars TZ Mobile Private Limited Jengatron Gaming Private Limited
1 Latest audited Balance Sheet Date 31.03.2019 31.03.2019
2 Date on which the Associate or Joint Venture was associated or acquired 27.07.2009 27-11-2018
3 Shares of Associate or Joint Ventures held by the company on the year end
No. 103,490 60,000
Amount of Investment in Associates or Joint Venture 10349000 20000000
Extent of Holding (in percentage) 50% 30%
4 Description of how there is significant influence Company holds 50% of shares in TZ Mobile Private Limited. Company holds 30% of shares in Jengatron Gaming Private Limited.
5 Reason why the associate/joint venture is not consolidated Not applicable Not applicable
6 Networth attributable to shareholding as per latest audited Balance Sheet 3,465,834 12,347,826
7 Profit or Loss for the year -22,000 -13,475,869
(i) Considered in Consolidation -11,000 -3,096,200
(ii) Not Considered in Consolidation - -946,560

Names of associates or joint ventures which are yet to commence operations- Not applicable

Names of associates or joint ventures which have been liquidated or sold during the year- Not applicable

For M N Rao & Associates For and on behalf of the Board
Chartered Accountants Tanla Solutions Limited
Firm Regn. No. 005386S Sd/- Sd/-
M. V. Ratnam D. Uday Kumar Reddy Srinivas Kamoji Gunupudi
Partner Chairman & Managing Director Chief Financial Officer
Membership No. 008314 Din: 00003382 Sd/-
Hyderabad Seshanuradha Chava
May 02, 2019 VP - Legal & Secretarial & Company Secretary

Annexure-3

The details of remuneration during the year 2018-19 as per Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are as follows:

Sr. No. Disclosure Requirement Disclosure Details
1. Ratio of Remuneration of each Director to the median remuneration of the employees of the Company for the financial year: Executive Directors Ratio to median remuneration (In %)
Mr. D. Uday Kumar Reddy 56.3
Non-Executive Directors
Mr. Ram Narain Agarwal 0.11
Dr. A. G. Ravindranath Reddy 0.52
Ms. Kalpana Reddy 0.52
2. Percentage increase in the remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the Financial year Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
Mr. D. Uday Kumar Reddy, -
Chairman & Managing Director
Mr. Ram Narain Agarwal -
Dr. A. G. Ravindranath Reddy -
Ms. Kalpana Reddy -
Mr. Srinivas Gunupudi Kamoji, Chief Financial Officer 8.2%
Mrs. Seshanuradha Chava, Company Secretary 6%

3. Percentage increase in the median remuneration of the employees in the financial year - 48%

4. Number of permanent employees on the rolls of the Company as on March 31, 2019 is 130.

5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase in salaries of employees was around 10%.

Increase in the managerial remuneration for the year was 10%.

6. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company is in compliance with its remuneration policy.

On behalf of The Board of Directors
For Tanla Solutions Limited
Sd/-
Hyderabad D. Uday Kumar Reddy
August 30, 2019 Chairman & Managing Director
(DIN:00003382)

Annexure-4

Statement under Section 134 of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014

a) Employed throughout the Financial Year and in receipt of remuneration aggregating Rs. 1,02,00,000 per year or more:

Name, Age and Qualification Designation and nature of duties Date of commencement of employment Experience in years Remuneration (in Rs.) Last Employment
D. Uday Kumar Reddy 52 Years MBA Chairman & Managing Director 27/11/1999 23 Years Rs. 2,20,00,000 (excluding contributions to provident and other funds

List of Top 10 employees in terms of Remuneration drawn as set out in Rule 5(2) Companies (Appointment and Remuneration 0f Managerial Personnel) Rules, 2014

Sr. No. Name of the Employee Designation Remuneration* received (Rs.) p.a. Nature of employment, whether contractual or otherwise Qualification and experience of the employee Date of Commencement of employment Age The last employment held before joining the Company The percentage of equity shares held by the employee in the Company within the meaning of Clause (iii) of subrule (2) of Rule 5 Whether the employee is a relative of any director or manager of the Company
1 Sriram Srinivasa Vinjamuri COO 15,128,560 Permanent MBA and 25.3 years 22/10/2018 49 Tata Teleservices No Employee was in receipt of No
2 Venkata Papi Reddy Konda AVP - Delivery Product Engineering 7,180,762 Permanent MCA and 25 Years 08/11/2006 49 Virtu mobile Pvt. Ltd. remuneration above the remuneration No
3 Srinivas Gunupudi Kamoji CFO 8,289,882 Permanent CA and 27 Years 08/08/2008 57 Omeir travel agency of Managing No
4 Ravichandra Reddy Kanuparthi Manager - Delivery 7,337,840 Permanent MBA and 20 Years 01/06/2001 43 Poojitha Infotech Director/ Whole-time No
5 Chandra Sekhar Konetisetti VP - Product Planning 6,738,115 Permanent MBA and 23.9 Years 01/11/2007 40 Tecsys Pvt Ltd Director No
6 Badrinath Krishnarao Agnihotri AVP - India Sales 5,862,715 Permanent MBA and 21.6 Years 12/02/2014 50 Loop Mobile Pvt. Ltd. No
7 Kiran Kumar Sikhakolli GM - Operations 6,596,001 Permanent MBA and 18.6 Years 11/02/2008 40 People infocom Pvt. Ltd. No
8 Amar Reddy Chilukuri Manager - Delivery 6,374,642 Permanent B.Tech and 16.8 Years 11/12/2002 39 - No
9 Seshanuradha Chava VP - Legal & Secretarial 6,764,010 Permanent M.COM, LLb, ACS-22.9 Years 06/11/2005 47 Virtusa No
10 Praveen Kumar Reddy Narra DGM - Pre-sales 6,084,698 Permanent MBA and 14.1 Years 16/07/2008 39 XiUS-BCGI Pvt Ltd. No

* Remuneration paid includes perquisite value of shares allotted under ESPS / ESOP.

b) Employed for part of the Financial Year and in receipt of remuneration aggregating Rs. 8,50,000 per month or more:

Mr. Sriram Srinivasa Vinjamuri- COO of the Company- details in the table above-mentioned

1. Remuneration includes salary and allowances, commission where applicable, Companys contribution to Provident Fund, Superannuation Fund and Group Gratuity Scheme, reimbursement of medical expenses at actuals, and monetary value of perquisites calculated in accordance with the Income Tax Act/Rules.

2. There are no employees in the service of the Company within the category covered by Rule 5 (2) (iii) of The Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014.

3. None of the above employees is a relative of any Director of the Company.