The Directors are pleased to present the Company''s Twenty- Sixth
Annual Report on the Business and Operations of HOV Services Limited
(the Company or HOVS) together with the Audited Statement of
Accounts for the fifteen months period ended March 31, 2014.
The financial year was changed from calendar year to fiscal year i.e.
April to March from April 1, 2014. Accordingly, the current financial
statements are prepared for 15 (Fifteen) months period from January 1,
2013 up to March 31, 2014 and therefore, are not comparable to the
financial statements of previous year which comprises of the 12
(Twelve) months year ended on December 31, 2012.
FINANCIAL RESULTS AND OPERATIONS: Rs. In Million
Fifteen Twelve Fifteen Twelve
Particulars months months months months
period year period year
ended on ended on ended ended on
March 31, December on March December
2014 31, 2012 31, 2014 31, 2012
Income from Operations 173.26 140.20 159.24 113.60
Other Income 10.14 15.58 12.74 14.73
183.40 155.78 171.98 128.33
Purchase for resale - 21.20 - -
Staff Cost 128.50 96.59 122.17 87.61
General and Administrative
Expenses 69.92 36.59 31.72 15.43
198.42 154.38 153.89 103.04
Profit/ (Loss) before
and Tax (15.02) (1.40) 18.09 25.29
Less: Interest 1.60 - -
Less: Depreciation 9.74 4.99 4.03 3.42
Profit / (Loss) before Tax (26.36) (3.59) 14.06 21.87
Tax pertaining to earlier
years 0.04 0.70 0.04 0.70
Less: Provisions for taxes
Current Tax 6.23 7.77 6.23 7.77
Deferred Tax (1.94) (0.83) (0.74) (0.83)
Profit / (Loss) after Tax (30.69) (11.23) 8.53 14.23
Less: Minority Interest (6.41) (8.80) - -
minority interest (24.28) (2.43) - -
Add: Share of Profit/(Loss)
from an Associate (464.50) 51.23 -
Profit / (Loss) after Tax &
Share of Profit/(Loss)
from an Associate (488.78) 48.80 8.53 14.23
1. RESULTS OF OPERATIONS:
Consolidated Financial Performance
* Consolidated total Income for the current fifteen months period was
Rs. 183.40 million.
* EBIDT for the current fifteen months period was Rs. (15.02) million.
* Net Profit / (Loss) was Rs. (488.78) million.
* The basic and diluted Earnings per share (EPS) for the fifteen months
period is Rs. (39.13). Standalone Financial Performance
* Total Income for the current fifteen months period was Rs. 171.98
* EBIDT for the current fifteen months period was Rs. 18.09 million.
* Net Profit was Rs. 8.53 million.
* The basic and diluted Earnings per share (EPS) is Rs. 0.68 for the
period under reporting.
Your Company intends to conserve available resources to invest in the
growth of the business and pursue strategic growth opportunities.
Accordingly your Directors do not recommend any dividend for the
For the fifteen months period ended March 31, 2014 the Company does not
have any unpaid dividend meant to be transferred to the Investor
Education Protection Fund under Section 205C of the Companies Act,
(ii) Transfer to Reserve:
No amount was transferred to Reserve during the financial period ended
on March 31, 2014.
3. Subsidiary companies
The Company has the following subsidiary companies:
i) HOVS LLC incorporated in Delaware under the laws of Unites States of
ii) HOV Environment LLC incorporated in Nevada State under the laws of
United States of America;
iii) HOVS Holdings Limited incorporated under the Companies Ordinance
of Hong Kong; and
iv) HOV Environment Solutions Private Limited incorporated in
Maharashtra under Indian Company Laws.
4. Significant developments
i) On March 19, 2013, Citi Venture Capital International (CVCI Private
Equity) invested in the SourceHOV as a new equity partner wherein CVCI
Private Equity purchased all of the ownership interests of affiliates
of Apollo Global Management, LLC (Apollo) and certain minority
holders'' in SourceHOV. This new partnership positioned SourceHOV for
accelerated growth through industry leading advisory formed by a
tenured investment team with specialized technology and service
industry experience. The HOVS owns an equity interest in SourceHOV.
ii) On September 6, 2013 HOV Environment Solutions Private Limited
(HOV ESPL) was made subsidiary of HOV Environment LLC, a subsidiary
company of HOVS LLC. HOV ESPL earlier was indirect subsidiary of HOV
Services Limited through HOVS Holdings Limited a wholly owned
subsidiary (WOS) of HOV Services Limited. The change was made in order
to streamline & strengthen execution of operations and work related to
environmental projects. Post the change HOV ESPL will continue to be an
indirect subsidiary of the Company through HOVS LLC.
The shareholder''s in their Annual General meeting dated July 21, 2007
granted approval for proposed 15,000,000 of ADR/GDR issue. However, so
far none of the underlying equity shares were issued by the Company.
6. Share Capital of the Company
During the quarter ended March 31, 2014 pursuant to the options
exercised, 8,500 equity shares were allotted. Consequently after the
allotment, the paid up share capital of the Company has gone up from
12,491,022 equity shares of Rs. 10/- each aggregating to Rs.
124,910,220/- to 12,499,522 equity shares of Rs. 10/- each aggregating
to Rs.124,995,220/- Consequently the fully diluted outstanding share
capital of the Company as at period ended March 31, 2014, on
consolidated basis comprise of 12,499,522 equity shares of Rs. 10/-
(Ten only) each.
7. Employee Stock Option Plan (ESOP)
Your Company instituted HOVS Stock Option Plan 2007 and HOVS Stock
Option Plan 2008 for its employees and for employees of its subsidiary
companies as detailed below:
Plan Shareholder''s No. of Options No. of Options Total
Approval for employees for employees
Date of the Company of subsidiary
Option July 21, 2007 400,000 700,000 1,100,000
Option September 30, 0 750,000 750,000
Plan 2008 2008
The information to be disclosed as per SEBI (Employees Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed
to this report.
8. Conservation of Energy, Technology Absorption, and Foreign
Particulars furnished pursuant to Companies (Disclosures of Particulars
in the Report of Board of Directors) Rules, 1998:
Conservation of Energy: Your Company''s operations involve low energy
consumption. The Company strives to conserve energy on continuous
Research and Development: The Company has not undertaken any R&D
activity in any specific area during the period under review, and hence
no cost has been incurred towards the same.
Technology Absorption, Adaptation and Innovation: The Company is
constantly developing and adopting modern technologies and standards to
grow its competitive advantage, to better serve its clients, retain
employees and improve productivity and performance, however during the
period no such activities been carried out.
Foreign Exchange Earnings and Outgo: Almost the entire earnings of the
Company are from the export of services since the Company has no
domestic business. The foreign exchange earnings and outgo is contained
in the Note number 20.10 of Notes to the Financial Statements of the
9. Particulars of Employees:
The Company has no employees drawing remuneration in excess of limits
specified under Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules, 1975, as amended.
10. Human Resources:
During the period the Company had maintained cordial relations with all
its employees and has taken utmost care of its employees deployed. All
employees are aligned under our value system which propagates and
practices being open, transparent and honest, collaborative, honoring
commitments and demanding excellence among them.
11. Directors Responsibility Statement:
Information as per Section 217(2AA) of the Companies Act, 1956 is
annexed and forms part of the report.
12. Fixed Deposit
The Company has not accepted any deposits from the public within the
meaning of Section 58A of the Companies Act, 1956, during the period
13. Corporate Governance Report
The Company adheres to Corporate Governance guidelines to fulfill its
responsibilities to all its stakeholders i.e. investors, customers,
vendors, government, employees. Company believes that good corporate
governance enhances accountability and increases shareholder value.
The Company complies with the corporate governance norms as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges and a
report thereto is included in annexure to the Directors'' report.
14. Management Discussion and Analysis
Management Discussion and Analysis Report for the period under review,
as stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges is presented as a separate section forming a part of this
15. Statutory Auditors
The Statutory Auditors M/s Lodha & Co, Chartered Accountants, Mumbai,
hold office till the conclusion of ensuing Annual General Meeting and
have expressed their willingness and being eligible to continue, if
re-appointed. Your directors recommend their re-appointment. A
resolution proposing their appointment at remuneration to be fixed by
the Board of Directors is submitted at the Annual General Meeting.
The Company had, pursuant to the provisions of clause 49 of the Listing
Agreements entered into with Stock Exchanges, appointed Mr. B R Gupta,
Mr. Harish Bhasin and Mr. Prakash Shukla as Independent Directors of
As per section 149(4) of the Companies Act, 2013 (Act), which came into
effect from April 1, 2014, every listed public company is required to
have at least one-third of the total number of directors as Independent
Directors. In accordance with the provisions of section 149 of the Act,
Mr. B R Gupta and Mr. Harish Bhasin, are being appointed as Independent
Directors to hold office as per their tenure of appointment mentioned
in the Notice of 26th Annual General Meeting (AGM) of the Company. Mr.
Prakash Shukla intends not to seek for his appointment.
Mr. Surinder Rametra, Director, retires by rotation and being eligible
has offered himself for re-appointment.
None of the Director was materially interested in any contracts or
arrangements existing during or at the end of the financial period that
was significant in relation to the business of the Company.
17. Subsidiary companies and consolidation of Accounts
As per Section 212 of the Companies Act, 1956, the Company is required
to attach the directors'' report, auditors'' report, balance sheet, and
statement of profit and loss, schedules to account and notes to the
account of subsidiaries of your Company along with the balance sheet of
your Company. However general exemption is granted in terms of General
Circular No. 2/ 2011 and No. 5/12/2007-C1-III dated February 8, 2011,
issued by the Ministry of Corporate Affairs under section 212(8) of the
Companies Act, 1956 granting general exemption. Your Company is in
compliance of the section read with the provisions of the circular and
will not be attaching the accounts of the subsidiaries.
The audited annual accounts and related information of subsidiary
companies, where applicable, will be kept in the registered office and
will be available for inspection, upon request by any of shareholders
of the holding and subsidiary companies. A statement showing details on
the subsidiary companies as prescribed vide general circular is
attached in separate section of this Annual Report.
Your Directors'' place on record their appreciation for co-operation and
support received from the Software Technology Parks of India, the
Government of India, Government of Maharashtra, Reserve Bank of India,
other governmental agencies and NASSCOM and the National Stock Exchange
and the Bombay Stock Exchange and, bankers and shareholders during the
Your Directors express their sincere appreciation for the efforts made
by employees at all levels for their hard work, co-operation and
support extended to your Company during the year.
For and on behalf of the Board of Directors
Place: Mumbai Sunil Rajadhyaksha
Date: May 21, 2014 Chairman & Executive Director