Aftek

The Directors are pleased to present their 21st Annual Report together
 with the Audited Statement of Accounts for the year ended 31st March,
 2008.
 
 Members may please note that the Government of India, Ministry of
 Company Affairs, the Office of the Registrar of Companies, Maharashtra
 vide letter dated 29th August, 2008 has granted extension of time of
 one month for holding the 21st Annual General Meeting (“AGM”) of your
 Company under the provisions of section 166 of the Companies Act, 1956.
 The forthcoming AGM is being held accordingly.
 
 FINANCIAL PERFORMANCE
 
 PARTICULARS                                      Amount (Rs. in lacs)
                                              31/03/2008   31/03/2007
 
 Turnover                                         39,254       33,252
 
 Profit Before Depreciation                       11,533       10,768
 
 Less: Depreciation                                3,170        1,486
 
 Profit Before Tax                                 8,363        9,282
 
 Less: Provision for Taxation                        269          230
 
 Profit After Tax                                  8,094        9,050
 
 Transfer to General Reserve                       1,000        1,200
 
 
 DIVIDEND
 
 Your Directors have recommended a dividend of Re 0.50 (25%) per Equity
 Share of Rs.02/- each [Re. 01/- (50%) for the previous year], for the
 year ended 31st March 2008.
 
 BUSINESS REVIEW & FUTURE PROSPECTS
 
 Your Company experienced a steady performance in the backdrop of a
 global slowdown. In spite of early signs of recovery, it was noticed
 that the global meltdown had much larger dimensions than earlier
 anticipated. Your Company is now technologically as well as
 geographically fairly diversified and as a consequence, is able to meet
 the goals set for itself.  However, herculean efforts are needed to
 keep the Company’s funnel of customers full. US, which accounts for 55%
 of your Company’s revenue, is the biggest casualty of the global
 financial mess. Your Directors believe that matters will get better in
 the next year, post the US elections.  However, experts say that there
 would be further catastrophes in the financial world before a recovery
 can take place. Europe too gets affected by what happens in US. In
 fact, the whole world gets affected when US economy gets destabilized.
 This is hard times and one needs to hang in there till the crises are
 through. Here, the dictum ‘cash is king’ is extremely relevant and your
 Directors are very prudent in any expense which otherwise could be
 avoided.
 
 After having executed our long intended strategy your Directors feel
 that your Company can and will cross this stormy waters. Growth targets
 set during the good times may not be relevant during the downturns.
 Your Company will shortly give revised outlook and growth targets
 which, your Directors believe, will be modest but will reflect a
 positive growth.
 
 Your Company is keeping a close watch on all reorganized SBUs and is
 carefully monitoring them . Your Directors feel that the Company can
 certainly latch on any opportunities in its specialization domain. The
 Company was reorganized to precisely address the customers’ needs under
 one roof by offering solutions from application layer to the physical
 layer (chip designing). This is a rare offering by mid-sized companies
 like yours. The global melt-down was in this backdrop but its
 significance was not analyzed or realized by the business community and
 your Company is no exception.  However, the inherent strength coupled
 with your Company’s resilience to survive through crises will hold good
 during these bad times.
 
 FINANCE
 
 Out of 3,450 numbers of FCCBs of USD 10,000/- each, issued in 2005, a
 total number of 2570 FCCBs stand converted into GDRs/equity shares
 resulting in the issuance of 12029471 equity shares and 880 numbers of
 FCCBs remained outstanding as on 31st March, 2008. No conversion of
 FCCBs has taken place during the year as well as during the period from
 1st April, 2008 to 29th September, 2008.
 
 61,50,000 equity shares of Rs 02/- each were allotted pursuant to the
 Scheme of Amalgamation of Elven Micro Circuits Pvt Ltd and C2Silicon
 Software Solutions Pvt Ltd with your Company during the year.
 Further,70263 numbers of equity shares of Rs 02/- each were allotted
 during the year against exercise of an equivalent number of stock
 options.  In view of this, the paid-up equity share capital has
 increased from Rs 17.45 crores to Rs 18.70 crores as on 31st March,
 2008.
 
 DIRECTORATE
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr. Nitin Shukla, Mr. Sunil
 Desai and Dr S S S P Rao are liable to retire by rotation and are
 eligible for reappointment.
 
 Attention of the members is invited to the relevant items in the Notice
 of the Annual General Meeting.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements of Section 217(2AA) of the Companies Act,
 1956, with respect to Directors’ Responsibility Statement, it is hereby
 confirmed:
 
 i. that in the preparation of the annual accounts for the year ended
 31st March, 2008, the applicable accounting standards had been followed
 along with proper explanation relating to material departures;
 
 ii. that the directors had 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, 2008 and of the profit of the Company for that period;
 
 iii. that the directors 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;
 
 iv. that the directors had prepared the annual accounts for the year
 ended 31st March, 2008, on a ‘going concern’ basis.
 
 FIXED DEPOSITS
 
 The Company has not accepted any Fixed Deposits from the Public.
 
 SUBSIDIARY COMPANIES
 
 Mihir Properties Pvt Ltd. and Aftek Sales & Services Pvt Ltd have not
 carried out any business during the year under review. Aftek
 (Mauritius) Ltd which was formed in October 2007 has not carried on any
 business activity. Digihome Solutions Pvt Ltd (“DSPL”) became your
 Company’s subsidiary company in January 2008 by virtue of increase in
 the stake of your Company in DSPL from 25% to 51%. Opdex Inc. continues
 to explore business prospects in Energy sector in the USA. As a part of
 business restructuring with a view to avail of reduced taxation and
 increased profitability and avoiding unfavourable labour laws and legal
 frame-work, Arexera Information Techonologies GmbH (“Arexera GmbH”),
 Germany is in the process of being closed down. The critical IPs had
 already being transferred from Arexera GmbH to Arexera Information
 Techonologies AG, Switzerland, a wholly-owned subsidiary of your
 Company, which will continue its business in Europe.
 
 The statement pursuant to Section 212 of the Companies Act, 1956
 containing details of subsidiaries of the Company , forms part of the
 Annual Report.
 
 AUDITORS
 
 At the ensuing Annual General Meeting, members will be required to
 appoint Auditors for the current year and fix their remuneration. M/s
 Walker, Chandiok & Co., Chartered Accountants, retire at the ensuing
 Annual General Meeting and being eligible, offer themselves for
 re-appointment.
 
 AUDITORS’ REPORT
 
 The Auditors’ observations in paragraph 4 of their report have been
 explained under the Notes to accounts. With regard to observations made
 by the Auditors in the paras(i)(a), (iii)(c), (iv), (v), (vii), (ix)(a)
 of the Annexure to their report, we have to state as follows.
 
 Fixed assets located at Bangalore earlier belonged to M/s Elven Micro
 Circuits Pvt Ltd that was merged with the Company vide Hon’ble Orders
 of High Courts at Bombay and Karnataka, Bangalore in August/September
 2007. This is now being regularized ; Interest is payable alongwith
 principal which is not yet demanded; Internal control system for sales
 of services is being strengthened ; para B.16 of Notes to Accounts is
 self-explanatory ; Company is in the process of restructuring its
 internal audit system ; The provident fund and income-tax payments
 related to employees of the earstwhile Elven Micro Circuits Pvt Ltd and
 C2Silicon Software Solutions Pvt Ltd which were merged with the Company
 vide Court Orders in September 2007 with April 01, 2006 as the
 appointed date. The outsourced records needed to be reconciled leading
 to delay in payment of these dues.
 
 PARTICULARS OF EMPLOYEES
 
 Details of remuneration paid to employees, as required under Section
 217(2A) of the Companies Act, 1956, are set out in a separate statement
 attached hereto as Annexure “A” and the same forms part of this Report
 
 CONSERVATION OF ENERGY ETC.
 
 Your Company endeavors to ensure conversation of energy.  However, as a
 software company, energy costs constitute a small portion of the total
 cost and there is not much scope for energy conservation. Form A as
 prescribed under the Companies (Disclosure of Particulars in the Report
 of Board of Directors) Rules, 1988 is not applicable for software
 industry. The particulars of Technology Absorption are also not
 applicable. The Foreign Exchange Earnings and Outgo are as per Para Nos
 3(iv) and (iii) of the Notes on Accounts.
 
 OTHER DISCLOSURES
 
 The disclosures required to be made under the Securities and Exchange
 Board of India (Employee Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999, together with a certificate obtained
 from the Statutory Auditors confirming compliance, is given in Annexure
 “B”.
 
 Pursuant to Clause 49 of the listing agreement entered into with the
 Stock Exchanges, the Management Discussion and Analysis, Corporate
 Governance Report and Practicing Company Secretary’s Certificate
 confirming compliance form part of the Annual Report.
 
 ACKNOWLEDGEMENT
 
 Your Directors would like to place on record their sincere appreciation
 of the continued co-operation, support and assistance given by
 shareholders, customers, vendors, bankers, service providers, suppliers
 and employees at all levels.
 
                                      FOR AND ON BEHALF OF THE BOARD
 
                                                        RANJIT DHURU
                                             CHAIRMAN & MG. DIRECTOR
 PLACE : MUMBAI
 DATED : 30th SEPTEMBER, 2008