The Directors are pleased to present the 18th Annual Report together
with the statement of audited accounts of the Company for the financial
year ended on December 31, 2011.
The following table summarizes the financial highlights of your
Company, on a standalone basis, for the financial year under review:
(Amount in Rs.)
Particulars Year ended Year ended
2011 31st December,
(12 months) (18 months)
Total Income 53,65,07,714 119,29,85,522
Profit Before Interest, Depreciation
and Taxes 7,26,35,079 39,83,74,913
Less: (a) Interest 1,87,82,500 4,30,58,343
(b) Depreciation 17,71,48,232 37,01,00,290
Profit/(Loss) Before Tax (12,32,95,653) (1,47,83,720)
Less: Provision for - (a) Provision
for Current Tax 10,72,000 1,21,90,000
(b) Deferred Tax (1,03,70,322) (1,68,84,584)
Profit/(Loss) After Tax (11,39,97,331) (1,00,89,136)
Note: The figures for the current year are for a period of 12 months as
against 18 months in the previous period and hence, are not comparable.
The turnover of the Company for the financial year ended 31st December,
2011, reported a decrease of 55.03% from Rs. 11929.85 lakhs in the
previous year to Rs. 5365.08 lakhs in the year under review.
The Company has reported a Profit before interest, depreciation and tax
of Rs. 726.35 lakhs and after providing Rs. 187.83 lakhs towards
interest, Rs. 1771.48 lakhs towards depreciation and adjusting Rs.
92.98 lakhs towards tax, the net loss amounts to Rs. 1139.97 lakhs.
During the current financial year ended December 31, 2011, the
businesses across all verticals met with a substantial setback on
account of factors both external and beyond the control of the
management and internal relating to issues such as marketing structure
and reach, product pricing etc. Dhanus has, over the past two years,
been trying to make efforts to reverse the downslide in business by
attempting to restructure its businesses and salvage the Company''s
business clientele and marketing reach.
With the Company facing a recession throughout the year under review,
and on account of growing financial instability and economic downturn
across various parts of the globe, more significantly in Europe, and
making an impact in India, the tourism industry suffered substantially
thus adversely influencing the overseas travels of Indians. The
Company''s telecom services were thus impacted as Indians traveling
abroad happen to be the exclusive target customer segment in this
vertical. V-tel continues to contribute a major share to the Company''s
top line. The Company continues to make efforts to arrest this negative
trend by reviewing and drawing new plans both on the product and
The Company''s telematics vertical brand ''Fleetrac'' showed a significant
negative growth on account of recession in the transportation and
automobile sector. The Company is having a relook at the Company''s
marketing strategies, client reach, pricing policies and strategies.
Your Company plans to revisit its business model in this segment and
review its financial viability and thereafter decide on its renewed
The marginal reversal in the recessionary conditions in the US did not
do much in terms of reviving the fortunes of the outsourcing business
of your Company. Morover, the anti-sourcing sentiments prevailing in
the US also added to lack of fresh business from the US. This has
affected the Company''s main customer segment, and the anti-outsourcing
sentiments prevailing in the US on account of large scale unemployment
continued to impact this segment of Company''s business this year too.
The BPO business had sustained a negative growth in its business and
the Company succumbed to pricing and margin pressures.
The Company had forayed into a new business segment viz., Trading
Activity in November 2010. The Company primarily was engaged in the
trading of computer products, accessories and peripheral items. The
Company started this business in the first week of November, 2010 and
did robust business in this segment initially, although with nominal
margin levels. However, the Company continued this business till June
2011 anticipating increased volume of business and also upward
scalability in the profit margins. The Company however realized that it
was not to happen and it was essentially a low-margin with not much of
perceptible scalability and therefore decided to suspend this activity
in the second quarter of the financial year under review till a
comprehensive review of this segment of business and its viability is
The Company''s primary aim is to be a global communications company,
utilizing emerging technologies to provide convergent communication
services. The business model of the Company revolves around its core
competence i.e., Telecom & Networking.
The Company proposes to review its entire gamut of existing businesses,
marketing structure and strategy and adopt a pragmatic approach in
analyzing its ability to achieve a dedicated revival plan in each of
The Company''s business opportunities are undoubtedly high in various
parts of the world wherever there is a perceptible presence of Indian
Management Discussion and Analysis
A detailed report on Management Discussion & Analysis for the financial
year ended December 31, 2011 as stipulated under Clause 49 of the
listing agreement with the Stock Exchanges in India is provided as a
separate chapter in this Annual Report.
Issue of Convertible Warrants
As mentioned in our earlier Report for the financial year 2009-10, your
Company made firm financial arrangements to take advantage of business
opportunities that may arise in future, as the Company believes that it
needs to have an inorganic- growth approach till a self-sustaining
financial strength is reached.
The Company therefore issued 15,00,00,000 Convertible Equity Warrants
to select group of investors/allottees on February 21, 2011.
Thereafter, on receipt of full consideration, your Company converted
8,32,68,333 Warrants into Equity Shares of equivalent amount on March
31, 2011 and the balance 6,67,31,667 Warrants into Equity Shares of
equivalent amount on July 9, 2011.
Your Company decided to capitalize its existing reserves by issuing
Bonus Shares to its Equity Shareholders in the ratio of 12:5 (i.e., 12
equity shares for every 5 equity shares held as on the Record Date).
Your Company, after receiving the requisite approvals from the Stock
Exchanges, successfully made the allotment of 40,30,62,312 Bonus
Your Company has not accepted any public deposits.
In compliance with the provisions of the Companies Act, 1956 and in
accordance with the Company''s Articles of Association, Shri. G. Rathan
Kumar and Shri. A.D. Sudhindra, Directors, retire by rotation at this
Annual General Meeting scheduled on September 25, 2012 and, being
eligible, offer themselves for re-appointment.
It needs to be mentioned here that the Company had seven Directors at
the end of financial year 2009-10. However, one of the independent
Directors expired consequent to which the strength of the Board reduced
to six at the end of the financial year ended 31st December, 2011.
Amongst the remaining six, the resignation of two independent Directors
was accepted by the Board in its meeting on 18th March, 2012. In the
same meeting, three Additional Directors were appointed bringing the
strength of the Board to seven. The Additional Directors would come up
for confirmation as Directors in the ensuing Annual General Meeting.
During the year and the intervening period post the closure of the
financial year and the date of this Report, the following developments
in the Board took place:
Shri. Darshan Suryakant Shah, Non-Executive and Independent Director of
the Company resigned on February 24, 2012 and ceased to be a Director.
His resignation was accepted by the Board in its meeting held on March
Shri. R. Radhakrishna, Non-Executive and Independent Director of the
Company resigned on August 9, 2011 and ceased to be a Director. His
resignation was accepted by the Board in its meeting held on March 18,
Consequent to the untimely demise of Shri. S. Manoharan, Non-Executive
& Independent Director, his name was removed from the Board in its
meeting on May 14, 2011.
During the period between the end of the financial year 2011 and the
date of this Report, Shri. Kumar Raichand Madan, Shri. U. Parthasarathy
and Shri. S. Sriram were appointed as Additional Directors w.e.f March
18, 2012. They will hold office till the conclusion of the ensuing
Annual General Meeting of the Company. The Board welcomes Shri. Kumar
Raichand Madan, Shri. U. Parthsarathy and Shri. S. Sriram on board and
looks forward to their active participation on various deliberations.
The Board appreciates the contributions made by Shri. Darshan Suryakant
Shah, Shri. R. Radhakrishna and Shri. S. Manoharan during their tenure
as Directors of the Company.
The Board of Directors inform the members that all the directors of
your Company have confirmed that, in terms of Section 274(1)(g) of the
Companies Act, 1956, they are not disqualified to act as directors of
Directors Responsibility Statement
Pursuant to the requirements of sub-section 2AA of Section 217 of the
Companies (Amendment) Act 2001, the Directors confirm that:
(i) In preparation of the annual accounts, the applicable accounting
standards have been followed and proper explanations have been provided
for material departures, wherever applicable.
(ii) 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 as at 31st December, 2011 and the loss of the Company
for the financial year ended 31st December, 2011.
(iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Company''s Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
(iv) The Directors have prepared the annual accounts on a going concern
M/s. P.C. Acharya & Co., Chartered Accountants, the Statutory Auditors,
will retire at the conclusion of the forthcoming Annual General Meeting
and are eligible for re-appointment. The Audit Committee and your Board
recommend their reappointment as Auditors of the Company for a further
period of one year and to fix their remuneration. They have furnished
to the Company a certificate of their eligibility for appointment as
auditors, pursuant to section 224 (1B) of the Companies Act, 1956.
The Board of Directors shall subsequent to their appointment determine
the terms and conditions of their appointment, scope of work, and
allocation of responsibilities such as statutory audit, internal audit,
taxation, tax audit etc and to accordingly fix their remuneration.
With regard to the qualifications and emphasis of matter contained in
the Auditor''s Report of Dhanus Technologies Limited, our explanations
are given below:
i. Note (b) and (c) of the 4th para of the Auditor''s Report - Note 1.2
(a) and (b) of Schedule 1 & 2 - Notes to Accounts to the financial
The Company has four business verticals and has a large number of
debtors and creditors as its business across various service verticals
is of retail nature. Also, the Company''s services and products have a
wide geographical reach as well. Consequently, the reconciliation and
control accounts of receivables and payables are not fully complete,
although substantially covered. The Company however believes that
non-reconciliation in such accounts will not have any serious and
perceptible impact on the revenues and expenses recognized.
ii. Note (d) of the 4th para of the Auditor''s Report
The Company has maintained a proper system of accounts. The Company
confirms that the purported deviation from Accounting Standards
prescribed under AS-6, AS-9, AS-10, AS-22 and AS-28 will in no way have
any material adverse impact on the Profit & Loss Account and also the
Asset Liability position of the Company. The Company shall however
make extra efforts to bring the systems in line with the accounting
Standards expected of the Company.
iii. Note (e) & (f) of the 4th para of the Auditor''s Report
The Company agrees that reconciliation of Trade Receivables and
Payables is yet to be fully completed. However, the Company firmly
believes that non-reconciliation and control accounts of receivables
and payables will not have any serious and perceptible impact on the
revenues and expenses recognized as substantial and critical
reconciliations have not provided any adverse indication or cause for
iv. Note (g) of the 4th para of the Auditor''s Report
The inability to quantify the value of current assets including
debtors, loans and advances from a mark to market perspective will not
have any material impact on the asset liability position of the
Company. The Company''s fixed assets being very large in number as it
primarily comprises of high-value routers, switches, servers, computing
systems, integrators etc., the Company is in the process of completing
the physical verification of its fixed assets. The Company certifies
that it fully owns the title to the assets and the cost of purchase and
depreciation levied on them is accurate and in terms of generally
accepted accounting principles. Kindly refer to Note 1.1 on Fixed
Assets and corresponding write up on depreciation on assets.
v Note (h) of the 4th para of the Auditor''s Report
The Board agrees with the statement that the investment in M/s Borusan
Telekom, Turkey is possibly irrecoverable. The Company however proposes
to attempt recovering the initial advance given towards share purchase,
although the Company agrees that the attempt may be an exercise in
futility and accordingly appropriate steps in this regard would be
followed to write off the investment after all possible efforts towards
recovery are completely exhausted.
The Company disagrees with the view that the amount advanced to M/s
Sreeven Infocom Limited is irrecoverable. Sreeven Infocom is a healthy
company and the Company is in talks with the management of Sreeven
Infocom to recover the amount advanced earlier.
Since the qualifications made by the Auditor''s in the Report on the
Consolidated financial statements is similar to the ones made in the
Standalone financial statements, the above explanations apply equally
to those as well.
The Audit Committee consists of three members namely Shri. G. Rathan
Kumar, Justice (Retd.) Shri. S. Kalyanam and Shri. U. Parthasarathy,
all of whom are independent. Shri. G. Rathan Kumar is the Chairman of
the Audit Committee. All members of the Audit Committee possess
sufficient knowledge and experience in the field of Finance and
Dhanus Global Medicare Limited, India and Dhanus Technologies Inc., USA
continues to be wholly owned subsidiaries of your company. The
statement under section 212 of the Companies Act, 1956 along with a
statement of additional information of subsidiaries is attached
The Equity Shares continue to be listed on Bombay Stock Exchange
Limited (BSE) and National Stock Exchange of India Limited (NSE). Both
these exchanges have nation-wide terminals and therefore,
shareholders/investors are not facing any difficulty in trading the
shares of the Company from any part of the country. The Company has
paid the annual listing fee for the year 2012-13 to the BSE and NSE and
the annual custodial fee to National Securities Depository Limited
(NSDL) and Central Depository Services (India) Limited (CDSL).
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo.
Information as required under section 217(1)(e) of the Companies Act,
1956 read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, is annexed as an Annexure to this
Particulars of Employees
In terms of the provisions of Section 217 (2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules 1975 as
amended, there was no employee during the year drawing remuneration
more than the stipulated amount in the said rules.
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, a detailed compliance report on Corporate Governance systems
and practices together with a certificate from the statutory auditors
confirming compliance with the conditions of corporate governance
stipulated in the said clause is annexed to this report.
The Board laid down a Code of Conduct for all Board members and
senior management of the Company and the Code of Conduct has been
posted on the website of the Company, www.dhanus.net.
Your Directors take this opportunity to place on record their sincere
appreciation for the continued support and confidence reposed by the
clients, business associates and the shareholders. The Directors also
convey their appreciation to the employees at all levels for their
enormous personal efforts as well as collective contribution.
For and on behalf of the Board of Directors
Place: Chennai Capt. D.S. Srinivasan A.D. Sudhindra
Dated: August 18, 2012 Managing Director Director