Maars Software International Ltd Directors Report

MAARS SOFTWARE INTERNATIONAL LIMITED ANNUAL REPORT 2010-2011 DIRECTORS REPORT Dear Members, Your Directors are pleased to present the Fifteenth Annual Report together with the Audited Accounts for the period ended 31st March, 2011 (July the March) and also in highlighting the performance of the Company in th previous year along with the scope of the profit generating capacity of th Company in the years to come. FINANCIAL HIGHLIGHTS: 2010-2011 2009-2010 (1st July, 10 to (1st April, 09 to 31st March 11) 30th june 10) Profit Before Interest, (11,17,84,296) (11,75,35,225) Depreciation and Tax Less: Interest & other - - finance costs Depreciation and Amortization 30,59,499 2,54,93,542 Profit/(Loss) Before Tax (11,48,43,797) (14,30,28,767) Less: Provision for Taxes 1,12,213 (54,62,140) (Current, Deferred & FBT) Profit/(Loss) After Tax (11,49,56,010) (13,75,66,627) Less: Previous Period - - Adjustments Less: Appropriations - - Proposed final dividend- - - Equity Shares Preference share - - Tax on Dividend - - Balance Carried Forward (11,49,56,010) (13,75,66,627) * TURNOVER AND PROFITS: During the year under review, due to the increase in competition in the IT Sector and the effects of the global meltdown in the previous year, the company has incurred a loss before tax of Rs. 11,48,43,797/- and the loss before providing depreciation and amortization was Rs. 11,17,84,296/- but Net Loss after Tax amounted to Rs. 11,49,56010/-. * OVERALL PERFORMANCE: The company in the year under consideration has survived the competition and managed to maintain and perform its business activities. The Company has consolidated its business activities in order to remove those which were having a negative impact on the Turnover of the Company. The companys portfolio of activities includes those activities wherein Company has emerged as a competitive organization and wherein Company can integrate its Business. During the Financial Year under consideration i.e. 2010-2011, the Company has incurred a loss before tax of Rs. 11,48,43,797/- * DIVIDEND: In view of the loss suffered by your Company during the year, Directors show their inability to recommend any dividend during the year. * FUTURE OUTLOOK: The future for Indian information technology sectors is growing due to the advancement in the technology and growing demand of from the service sectors for the provision of the better IT services. The IT sectors have had a history of outperforming the growth target perceived by various authorities. During the year under review the IT Sector has just been coming out of the economic crisis and the deficit suffered by the Financial Markets in the previous year. The financial markets influence the business cycle indirectly impacting the non-financial sectors, domestic and commercial consumptions of the goods and services. However even though there was a financial deficit your Company maintained its activities and has on the basis of the current experience planned its future activities. sectors for the provision of the better IT services. The IT sectors have had a history of outperforming the growth target perceived by various authorities. During the year under review the IT Sector has just been coming out of the economic crisis and the deficit suffered by the Financial Markets in the previous year. The financial markets influence the business cycle indirectly impacting the non-financial sectors, domestic and commercial consumptions of the goods and services. However even though there was a financial deficit your Company maintained its activities and has on the basis of the current experience planned its future activities. * SUBSIDIARIES: The Company has three wholly owned subsidiaries namely M/s Maars Infratech Private Limited, Maars Software International Limited FZLLC-Dubai and Hi- tech Software Services INC- USA to manage the business of The details on these subsidiaries are outlined in the Management Discussion and Analysis Section appended to this Report. * CONSOLIDATED FINANCIALS: The Audited Consolidated Financial Statements for the year ended 31st March 2011 are annexed to this report. Further, the reports and standalone audited financial statements of subsidiary company viz. M/s Maars Infratech Private Limited , Maars Software International Limited FZLLC- Dubai and Hi- tech Software Services INC- USA is annexed to this report along with statement pursuant to Section 212 (1) (e) also forms part of this Annual Report. * CORPORATE GOVERNANCE: Pursuant to Clause 49 of the listing agreement with the Stock Exchange, the Corporate Governance Report along with Certificate by the Practicing Company Secretary on its compliance, Management Discussion and Analysis Report forms a part of this Annual Report. * DIRECTORS: 3/4 Retiring Directors by Rotation: In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. Harshavardhan Singh Rathore, Director of the Company retires by rotation, and being eligible offers himself for reappointment. Appropriate resolutions for re-appointment of aforesaid director are being moved at the ensuing Annual General Meeting. Brief resume of retiring directors are given in the notice of Annual General Meeting. 3/4 Additional Directors: In accordance with Section 260 of the Companies Act 1956 and Articles of Association of the Company, Mr. Prem Kumar Mysore was appointed as Additional Director w.e.f. 02nd June 2011. Mr. Prem Kumar Mysore holds office up to the date of the ensuing Annual General Meeting. The Company has received a notice from one of the Member signifying his/her intention to propose the appointment of Mr. Prem Kumar Mysore as Director of the Company and appropriate resolutions for his appointment are being moved at the ensuing Annual General Meeting. In accordance with Section 260 of the Companies Act 1956 and Articles of Association of the Company, Mr. Sunil Soni was appointed as Additional Director w.e.f. 01st August 2011. Mr. Sunil Soni Mysore holds office up to the date of the ensuing Annual General Meeting. The Company has received a notice from one of the Member signifying his / her intention to propose the appointment of Mr. Sunil Soni as Director of the Company and appropriate resolutions for his appointment are being moved at the ensuing Annual General Meeting. 3/4 Independent Directors: In accordance with Section 260 of the Companies Act 1956 and Articles of Association of the Company, Mr. Prem Kumar Mysore and Mr. Sunil Soni were appointed as Additional Director on 2nd June 2011 and 1st August 2011 respectively. Both of the Directors holds office up to the date of the ensuing Annual General Meeting. The Company has received a notice from one of the Member signifying his/her intention to propose the appointment of both the directors as Director of the Company and appropriate resolutions for his appointment are being moved at the ensuing Annual General Meeting. Both the directors were designated as the Independent Director of the Company w.e.f 2nd June 2011 and 1st August 2011 respectively. The said Terms and conditions are subject to Members approval and the same is sought to be ratified from the members of the Company in this said Annual General Meeting. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibilities Statement, the Directors of the company hereby state and confirm that: (1) In the preparation of the annual accounts, the applicable accounting standards have been followed: (2) They have selected such accounting policies and applied them consistently and 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 31st March 2011 and of the profits of the Company for the year ended on that date; (3) They have taken proper and sufficient care 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; (4) They have prepared the annual accounts on a going concern basis. PUBLIC DEPOSITS: The Company has not accepted any deposits from public in accordance with Section 58A of the Companies Act, 1956. PARTICULARS OF EMPLOYEES: Information of the employees of the category specified in Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is contained in Annexure-A appended to this report. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION: Considering nature of activities carried on by the Company and the list of industries included in the Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988, the consumption of the Energy by the company has been to the minimal level and your company has taken all the steps necessary to conserve the energy as and where required. FOREIGN EXCHANGE EARNINGS AND OUTGO: (Amount in Rupees) Foreign Exchange Earnings NIL Foreign Exchange Outgo NIL * AUDITORS: It is proposed to re-appoint the retiring auditors M/s. Daiya, Tiwari & Soni, Chartered Accountants, as the Statutory Auditors of the Company. The Company has received letters from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and they are not disqualified for such appointment within the meaning of Section 226 of the said Act. The notes on Accounts referred to in the Auditors Report are self explanatory and therefore does not call for any further comments. * INTERNAL CONTROL SYSTEM: The Company has in place appropriate internal control systems, commensurate with its size and nature of operations. * ACKNOWLEDGEMENTS: Your Directors wish to place on record their appreciation and sincere gratitude to the various Departments of the Central and State Government, Companys Bankers, clients, media and business constituents for their valuable assistance and support. The Directors also acknowledge the continued support received from investors and shareholders and the confidence reposed by them. The Directors place on record their appreciation for the sincere and dedicated services rendered by all the employees of the Company. For and on behalf of the Board of Directors Director Director Ms. Sanhita Dey (Company Secretary) Date : 8th September, 2011 Place: Chennai MANAGEMENT DISCUSSION AND ANALYSIS: Economic Scenario: The country which was termed underdeveloped till a few decades back has shown the world its great potential. Moving along slowly with accurately measured footsteps India is surely trading on. The recent all round growth and development has made people across the globe realize the importance of India as a powerful economy. The economic scenario in India has been pretty stable over the last 3 years. Despite the economic downturn three years back the Indian economy has managed to remain stable. Indias GDP growth in 2010-2011 has not been phenomenal but is certainly encouraging and forced other powerful economies to take notice of it. The country today, despite all odds is showing signs of health, wealth and vigor. * Overview: The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by Securities and Exchange Board of India (SEBI) and Generally Accepted Accounting Principles (GAAP) in India. Our Management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present our state of affairs, profits and cash flows for the year. * Industry Structure and Developments: Changing economic and business conditions and rapid technological innovation are creating an increasingly competitive market environment that is driving corporations to transform their operations. Consumers of products and services are increasingly demanding accelerated delivery times and lower prices. Companies are focusing on their core competencies and are using outsourced technology service providers to adequately address these needs. The role of technology has evolved from supporting corporations to transforming them. There is an increasing need for highly skilled technology professionals in the markets in which we operate. At the same time, corporations are reluctant to expand their internal IT departments and increase costs. These factors have increased corporations reliance on their outsourced technology service providers and are expected to continue to drive future growth for outsourced technology services. Technology, especially information technology has transformed business by creating productivity gains and new business models in the last decades. This has resulted in the increased importance of IT to the success of companies worldwide. Changing economic and business conditions, rapid technological innovation, proliferation of the internet and globalization are creating an increasingly competitive market environment that is driving corporations to transform the manner in which they operate. Customers are increasingly demanding improved products and services with accelerated delivery times and at lower prices. To adequately address these needs, corporations are focusing on their core competencies and are using outsourced technology service providers to help improve productivity develop new products, conduct research and development activities, reduce business risk, and manage operations more effectively. The role of technology has evolved from supporting corporations to transforming them. The ability to design, develop, implement, and maintain advanced technology platforms and solutions to address business and customer needs has become a competitive advantage and a priority for corporations worldwide. Concurrently, the prevalence of multiple technology platforms and a greater emphasis on network security and redundancy have increased the complexity and cost of IT systems, and have resulted in greater technology related risks. The need for more dynamic technology solutions and the increased complexity, cost and risk associated with these platforms have created a growing need for specialists with experience in leveraging technology to help drive business strategy. * Opportunities and Threats: Opportunities: India, in the recent years, is witnessing higher investments in infrastructure activities, so the atmosphere for the IT Industry is expected to be more conducive in the time to come. There is an increasing need for highly skilled technology professionals in the market in which we operate. At the same time, corporations are reluctant to expand their internal IT department and increase costs. These factors have increased Corporations reliance on their outsourced technology service providers and are expected to continue driving future growth for outsourced technology services. India is fast developing as a IT Hub and the premier destination for offshore technology services. According to NASSCOMs strategic review 2007, the Indian IT-BPO sector would achieve USD 60billion in export revenue by FY 2010 we believe that our robust quality process and our access to skilled talent base at lower cost of providing services places us in a unique position to take advantage of the trend towards outsourcing IT Services. There is a significant amount of competitions from Indian and Foreign Companies operating in the similar segment. Intense competition for the limited quality talent and skilled professional required to perform the services we offer is a significant threat, looking ahead. These risks are broadly country risks. At an organizational level we have well-defined contingency plans to address the unforeseen events and minimize their impact on the services delivered. * Outlook: The Global IT Industry is expected to grow at a rapid rate for next coming years. The offshore spending of the IT Industry itself is expected to grow at a rapid rate for example In the Countries Like Middle East, where IT investments hitherto were in the nascent stage, have increasingly stepped up their spend on harnessing higher automation and digitization. Not only this ITES/ BPO is expected to grow at a much higher rate. The ITES/ BPO is expected to give rise to maximum off shoring opportunities in the near future. Risk and Concerns: Besides increasing the client base, the Company needs to retain its current clients by providing timely quality services. The Company must look for emerging business opportunity in the growing demand for IT professionals across industries. Internal Control Systems and their adequacy: The Company has in place the internal control systems and procedures commensurate with the size and nature of its business. These procedures are designed to ensure that: All assets and resources are used efficiently and are adequately protected. All internal policies and statutory guidelines are complied with. There is accuracy of financial reports and management information. Audit Committee has been entrusted with detailed terms of reference to review and look into proper recording of transactions and preparations of financial statement. One of the important functions of the Audit Committee is to review the adequacy of internal control systems and compliance thereof. * Human Resource Development: The Companys progress is largely attributed to the wholehearted support from its manpower. The technical team were constantly challenged for quality performance and expected to work with an entrepreneurial spirit on the project. For and on behalf of the Board Chairman & Managing Director Ms. Sanhita Dey (Company Secretary) Date : 8th September 2011 Place: Chennai