The Directors are pleased to present the Company''s Twenty- Fifth
Annual Report on the Business and Operations of HOV Services Limited
(the Company or HOVS) together with the Audited Statement of
Accounts for the year end December 31, 2012.
The financial statements are prepared for the year comprising of the 12
(Twelve) months period ended on December 31, 2012 and are not
comparable to the financial statements of previous year comprising of 9
(Nine) months ended December 31, 2011, as the financial year was
changed to the calendar year ended December 31 in 2011.
FINANICAL RESULTS AND OPERATIONS:
Rs. In Million
Particulars ended on ended on ended on ended on
December December December December
31, 2012 31, 2011 31, 2012 31, 2011
Income from Operation 140.20 105.42 113.60 94.10
Other Income 15.58 9.88 14.73 10.01
155.78 115.30 128.33 104.11
Purchase for resale 21.20 - - -
Staff Cost 96.59 57.58 87.61 57.65
Expenses 36.59 35.05 15.43 19.75
154.34 92.63 103.04 77.40
Profit / (Loss)
Depreciation and Tax (8.59) 22.67 25.29 26.71
Less: Interest - - - -
Less: Depreciation 4.99 2.76 3.42 2.76
Profit / (Loss) before
Tax (3.60) 19.91 21.87 23.95
Tax pertaining to
earlier years 0.70 0.21 0.70 0.21
Current Tax 7.77 8.38 7.77 8.38
Deferred Tax (0.83) (0.64) (0.83) (0.64)
Profit / (Loss)
after Tax (11.24) 11.96 14.23 16.00
Less: Minority Interest (8.80) - - -
minority interest (2.43) - - -
Add: Share of Profit/
(Loss) from an Associate 51.23 (104.33) - -
Profit/ (Loss) after
Tax & Share of Profit/
(Loss) from an Associate 48.80 (92.37) 14.23 16.00
1. RESULTS OF OPERATIONS:
Consolidated Financial Performance for the Year ended December 31, 2012
- Consolidated total Income for the current twelve month period was Rs.
- EBIDT for the current twelve month period was Rs. 1.38 million.
- Net Profit was Rs. 48.80 million.
- The basic and diluted Earnings per share (EPS) for the twelve months
period is 3.91. Standalone Financial Performance:
- Total Income for the current twelve month period was Rs. 113.60
- EBIDT for the current twelve month period was Rs. 25.29 million.
- Net Profit was Rs. 14.23 million.
- The basic and diluted Earnings per share (EPS) is Rs 1.14 for the
Year under reporting.
2. SIGNIFICANT DEVELOPMENTS:
During the year following developments took place;
i) In April 2012, HOVS LLC (the WOS of the Company) invested in a new
company named HOV Environment LLC, having equity interest of 61.10%;
ii) In October 2012, the Company had acquired building property
admeasuring 13,243 Square feet area situated at Vashi InfoTech Park,
Vashi, Navi Mumbai.
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 year.
For the financial year 2012 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, 1956.
(ii) Transfer to Reserve: No amount was transferred to Reserve during
the financial year ended December 31, 2012.
4. Subsidiary companies
The Company has the following subsidiary companies:
i) HOVS LLC incorporated in Delaware under the laws of United States of
ii) HOVS Holdings Limited incorporated under the Companies Ordinance of
iii) HOV Environment LLC incorporated in Nevada under the laws of
United States of America; and
iv) HOV Environment Solutions Private Limited incorporated in
Maharashtra under Indian Company Laws.
In the earlier proposed 15,000,000 of ADR/GDR issue by the Company none
of the underlying equity shares were issued.
6. Share Capital of the Company
The fully diluted outstanding share capital of the Company on
consolidated basis comprise of 12,491,022 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
Approval Date for
employees of for employees Total
Company of subsidiary
Option July 21, 2007 400,000 700,000 1,100,000
Option September 0 750,000 750,000
Plan 2008 30, 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 year 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
year 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 20.4 of Notes to the Accounts of the Annual Report.
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 year 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 year
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 Director''s report.
14. Management Discussion and Analysis
Management Discussion and Analysis Report for the year 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.
There is no change in the Board of Directors during the year under
review. Mr. Prakash Shukla, Director is to retire by rotation at
ensuing 25th Annual General Meeting. Mr. Prakash Shukla confirmed his
eligibility and willingness to continue the directorship of the
Company, if appointed. It is considered prudent that Company should
continue to avail the services of Mr. Prakash Shukla and therefore the
Board recommends approving the proposed resolution relating to his
None of the Director was materially interested in any contracts or
arrangements existing during or at the end of the financial year 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
profit and loss account, 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-Cl-III dated February 8, 2011,
issued bt 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 head office and will
be available for inspection, upon request by any of shareholders. These
documents will also be available for inspection during business hours
at our registered office. 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, Governments 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: February 27, 2013 Chairman & Executive Director