Ranklin Solutions Ltd Directors Report

RANKLIN SOLUTIONS LIMITED ANNUAL REPORT 2010-2011 DIRECTORS REPORT Dear Members, I am delighted to present on behalf of the Board of Directors the 16th Directors Report on our business and operations of the company together with the Audited Balance Sheet, Profit and Loss Account of the company for the financial year ended 31st March, 2011. FINANCIAL HIGHLIGHTS: Financial results for the year under review and as well as previous year are as follows. (Rs. In Lacs) Particulars Year ended Year ended 31.03.2011 31.03.2010 Income from Operations 4775.60 4129.60 Other Income 0.00 4.61 PBIDT 1029.94 934.38 Depreciation 199.10 101.46 Profit Before Tax (PBT) 830.81 832.92 Provision for Tax 220.82 143.61 Profit After Tax (PAT) 609.99 689.31 FINANCIALS: The turnover of the company during the year is Rs.4775 Lakhs as compared to Rs.4129 Lakhs in the previous year. The company recorded the net profit of Rs. 571.05 Lakhs during the year in comparison with net profit of Rs 689.31 Lakhs of Previous year. The company is continuously endeavoring to achieve its objectives and implementing new plans to grab new opportunities in the IT sector. OPERATIONS: During the year under review the Company posted a better performance due to various on-going and existing contracts. Considering the recession and pressure on the margins of software industry the Company as part of its diversification plan to mitigate the impact of foregoing, has amended its objects facilitating to venture into trading of gold and jewellery and other ornaments by utilizing the experience of the promoters in this field as well as to set-up small hydro power generation units. DIVIDEND: Based on the Companys performance, the Directors are pleased to recommend for approval of the Members a Final Dividend of 5% i.e., Rs. 0.50 per equity share for the financial year ending 31st March, 2011. The final Dividend on the Equity shares, if declared as above, would involve an outflow of Rs. 25.2 Lakhs towards dividend and Rs.4.19 Lakhs towards dividend tax, resulting in total outflow of Rs.29.39 Lakhs. FIXED DEPOSITS: Your Company has not accepted any deposits falling under Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules 1975 during the year. DIRECTORS: During the year under review Mr. K.S.Chakravarthi and P.Venkateswara Rao were resigned on 03.12.2010 and 10.02.2011 respectively from the Board of Directors. Further Mr. A. Vijaya Ramaraju was appointed as Additional Director W.e.f.10.02.2011. DIRECTORS RESPONSIBILITIES STATEMENT: In pursuance of Section 217(2AA) of the Companies Act, 1956 the Directors of your Company hereby confirm that: (i) That in the preparation of Annual Accounts for the year ended 31st March, 2011, the applicable accounting standards have been followed along with the proper explanation relating to material departures, if any, there from; (ii) That the directors 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 at the end of the financial year ended 31st March, 2011 and of the profit and loss of the company for that period; (iii) That the directors 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; (iv) That the directors have prepared the annual accounts on a going concern basis for the financial year 2010-11. EMPLOYEE STOCK OPTION SCHEME: Pursuant to the Special Resolution passed by the Members at the Extra- ordinary General Meeting held on December 1st, 2010, Ranklin Solutions Limited has introduced Employees Stock Option Scheme-2010 (Ranklin ESOS - 2010) to enable the employees of the Company to participate in the future growth and financial successes of the Company. Out of 20,00,000 stock options under Ranklin ESOS - 2010 with each option convertible into one equity share of Rs. 10/- each, the Board of Directors of your Company, based on the recommendations of the Remuneration Committee, granted 20,00,000 stock options to its eligible employees, on December 3rd 2010. MANAGEMENTS DISCUSSION ANALYSIS: Managements Discussion and Analysis report is enclosed to this report as Annexure - A CORPORATE GOVERNANCE: Report on Corporate Governance along with Company Secretaries Certificate on Compliance with the code of Corporate Governance under Clause 49 of the Listing Agreement is enclosed as Annexure-B to this report AUDITORS: M/s P.S.Nagaraju & Co, Chartered Accountants, retire at the conclusion of the ensuing AGM and being eligible offer themselves for reappointment for the financial year 2011-2012. Your Company has received a certificate from the said Auditors to the effect that their reappointment if made would be in accordance with the provisions of Sections 224(1B) of the Companies Act, 1956. PARTICULARS OF EMPLOYEES: There are no employees whose particulars are required to be furnished under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975, and as amended from time to time as remuneration of none of the employees is in excess of Rs. 5,00,000/- per month, if employed for the part of year or Rs.60,00,000/- per annum during the financial year 2010-11 . AUDIT COMMITTEE: Pursuant to Section 292A of the Companies Act, 1956, the Board has constituted the Audit Committee consisting three directors of the Company. The functions as envisaged in the said section have already been delegated to the Committee. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: a) Conservation of Energy: The operations of the Company are not energy extensive. However, company has taken necessary steps to minimize the Energy consumption as far as possible. b) Technology absorption: Not Applicable c) Foreign exchange earnings and outgo: (Rs. In lacs) 2010-11 2009-10 Foreign Exchange earnings 39.38 142.00 Foreign Exchange outgo Nil Nil HUMAN RESOURCES Your Company is powered by a group of talented IT & consulting professionals. An effective retention strategy and pride of being associated with the resurrection has helped to bring a marked improvement in the retention of key Associates. Acquiring top talent continues to be one of our primary objectives. The Performance and Potential Management System was revamped to offset the limitations of a traditional career management program. Associates now have the distinct opportunity to choose either a specialist or managerial career path at key inflection points in the organization. This enables the right cross matching of opportunities with individual aspirations and helps to provide a well rounded industry exposure to Associates. Leadership development and capability enhancement continues to be the focus areas for the organization. Our investments in enhancing the skill levels and successfully deploying talent have helped enhance utilization levels across the company. To continually strengthen our Associates skills - from entry level programmers to lateral hires, a variety of classroom and action learning interventions have been rolled out. Great emphasis is being placed on building young leaders and programs such as Global Leadership Cadre (GLC) and Shadow Board help unearth young, aspiring talent and provide them with high-octane, growth accelerating roles. ACKNOWLEDGEMENTS: Your Directors also place on record their heart felt gratitude for the support extended and confidence reposed by the customers, shareholders, employees, Central and State Government agencies and suppliers and look forward for the same in future. For and on behalf of the Board Sd/- (M.J.V.V.D.PRAKASH) Chairman & Managing Director Place: Hyderabad Date : 03-09-2011 Annexure - A MANAGEMENT DISCUSSION AND ANALYSIS REPORT Overview The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by the Securities and Exchange Board of India (SEBI) and the Generally Accepted Accounting Principles (GAAP) in India. Our Management accepts responsibility for the integrity and objectivity of these financial statements, as well as for the 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 using outsourced technology service providers to adequately address these needs. The role of technology has evolved from supporting corporations to transforming their business. 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 the reliance of corporations on their outsourced technology service providers and are expected to continue to drive future growth for outsourced technology services Growth in Domestic Market:- India is widely recognized as the premier destination for offshore technology services. According to the NASSCOM Strategic Review 2011, IT services exports (excluding exports relating to business process outsourcing (BPO), hardware, engineering design and product development) from India are estimated to grow by 22.7% in fiscal 2011, to record revenues of US$ 33.5 billion. The same review also forecasts that BPO exports from India are estimated to grow by 14% in fiscal 2011 to record revenues of US$ 14.1 billion. There are several key factors contributing to the growth of IT and IT-enabled services (ITES) in India and by Indian companies. Some of these factors are high-quality delivery, significant cost benefits and abundant skilled resources. Opportunities and Threats Opportunities * Higher economic growth in developing markets Developing markets are growing faster than the developed nations. Sustaining such high growth would require increase in competitiveness of local players. IT would play an important role in increasing competitiveness. Markets such as India, Asia Pacific, Latin America are increasingly becoming important from the point of view of consumption of IT services. * Increased adoption of off-shoring The global economy which was on a recovery mode post the recession continued to face challenges like those stemming from the European debt crisis, Japan calamity and other such events. Simultaneously, the continued thrust of global organizations towards costs and improving efficiencies, reflected in the uptick in discretionary spending, offers sufficient opportunity for growth. The Company views this as a good opportunity to improve and strengthen its customer base. * Environment sustainability issues and emergence of new technologies Increased environmental consciousness coupled with the search for more cost effective IT solutions have brought in a greater emphasis on Green Technologies. Additionally, there is an increasing acceptance of cloud- based solutions that offer both flexibility and scalability. There is likely to be increasing interest in technology areas such as Cloud and Software as a Service (SaaS) which will offer new opportunities for growth. The Company views these as a focus area and is taking active interest in developing and providing services in partnership with established product vendors. Threats During the last financial year, the global economy was subject to great turmoil. The crisis in the financial sector led to a lower confidence in financial markets leading to a global credit crunch. The past year has been some of the fastest and sharpest falls in both the financial marketplace as well as the industrial economy. According to International Monetary Fund (IMF) World Economic Outlook 2011, the advanced economies declined by 6.5 percent in real Gross Domestic Product during the third quarter of the last financial year. Although the U.S. economy was among the hardest hit, the crisis also had its cascading effect on economies in both Western Europe and Asia. The cascading effect on the emerging economies was partially driven by low confidence on these economies resulting in capital flight from these economies to developed economies and contraction of global trade. This uncertainty in the markets led to significant volatility in exchange rates. Segment wise performance The company operates in a single segment business i.e. Information Technology Enabled Services, performance is explained elsewhere in this Annual Report. Internal Control systems and their adequacy Your Company has adequate internal control procedures commensurate with its size and nature of the business. The controls ensure optimum use and protection of data, resources and compliances with the policies, procedures and statutes. The Management periodically reviews the adequacy of the internal control systems. Financial Performance Financial performance of the Company is reviewed in Directors Report. The financial statements of the company have been prepared in compliance with the requirements of the Companies Act, 1956. There are no material departures from the adoption of the prescribed accounting standards. The Board of Directors of the Company accepts the responsibility for the integrity and objectivity of the financial statements as well as for various estimates and judgments used thereon. Material Developments in Human Resources/Industrial Relations Our Professionals are our most important assets. We believe that the quality and level of service that our professionals deliver are among the highest in the global technology services industry. Your Company has a team of qualified and dedicated personnel who have contributed to the growth and progress of the Company. Necessary training is being imparted to the employees and various seminars and workshops are being conducted to continuously hone their skills. To increase the deduction of Employee and to retain talanted man power in long term the Company as the attrition rate is very high in software industry Introduced Employee stock option scheme and granted 20,00,000 options. Outlook In view of the increasing opportunities, Management is expecting the sustained growth in the current year both in terms of volume and performance and ensuring the long term financial stability and simultaneously achieving its other objectives by improving its working and reducing un- necessary expenditures and paving the way for new opportunities. For and on behalf of the Board Sd/- (M.J.V.V.D.PRAKASH) Chairman & Managing Director Place: Hyderabad Date : 03-09-2011