Virinchi Directors Report, Virinchi Reports by Directors


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Directors Report Year End : Mar '15    « Mar 14
 Dear Members,
 The Directors have pleasure in presenting you the 26th Directors''
 Report on the business and operations of your company, for the
 financial year ended 31st March, 2015.
 Financial Highlights:
                                                          (Rs. in Lakhs)
 Particulars                                     2014-15        2013-14
 Total Income                                   14120.26       11445.62
 Profit before interest, Depreciation and Tax    2456.80        1637.68
 Interest                                         214.44         192.66
 Depreciation                                    1138.00         850.29
 Provision for Taxation                           331.23         228.01
 Profit after interest, Tax and depreciation      775.37         401.25
 Deferred Tax provision                          (53.44)          13.62
 Balance brought forward                         4705.44       4,317.80
 Balance Carried to Balance Sheet                5132.97        4705.44
                                                         (Rs. in Lakhs)
 Particulars                                      2014-15       2013-14
 Total Income                                     8070.59       6533.14
 Profit before interest, Depreciation and Tax     1493.33       1105.19
 Interest                                          127.41        152.43
 Depreciation                                      964.51        731.82
 Provision for Taxation                             89.11         76.26
 Profit after interest, Tax and depreciation       312.30        144.68
 Deferred Tax provision                           (49.05)          4.54
 Balance brought forward                          4457.95       4317.80
 Balance Carried to Balance Sheet                 4427.43       4457.95
 Following are the results of operations for the financial year 2014-15
 Consolidated Revenues: The total Consolidated income of the Company for
 the FY 2014-15 Rs. 14120.26Lacs as against Rs. 11445.62 Lacs in FY
 Standalone Revenues: The total income of the Company for the FY 2014-15
 Rs. 8070.59 Lacs as against Rs.  6533.14 Lacs in FY 2013-14
 Consolidated Profits: Profit before Tax (PBT) stood at Rs. 1106.60 Lacs
 as against Rs. 629.26 Lacs for the previous year. Profit after Tax
 (PAT) stood at Rs.828.81 lacs as against Rs. 387.63 Lacs for the
 previous year.
 Standalone Profits: Profit before Tax (PBT) stood at Rs. 401.41 Lacs as
 against Rs. 220.94 Lacs for the previous year. Profit after Tax (PAT)
 stood at Rs. 361.35 Lacs as against Rs. 140.14 Lacs for the previous
 Your Company is primarily engaged in the business of providing IT
 Products & Services to its customers in US.  The financial results of
 the Company on consolidated basis have been encouraging despite the
 challenges faced in terms of unfavorable business conditions in our
 primary market of US.
 During the year the Company has transferred an amount of Rs.361.35
 Lakhs to Reserves and Surplus.
 Your directors did not recommend any dividend on shares for this year.
 Particulars of contracts or arrangements with related parties referred
 to in Section 188(1) of the Companies Act, 2013, in the prescribed Form
 AOC-2, is appended as Annexure 2 to the Board''s report
 Material changes and commitments;
 There are no material changes and commitments occurred between the end
 of the financial year of the company and the date of the report
 affecting the financial position of the company
 None of the directors of the company is disqualified under the
 provisions of the act or under the Listing agreement with the stock
 In accordance with the provisions of the Companies Act, 2013 K Sri
 Kalyan retire by rotation at the Annual General Meeting and being
 eligible offer themselves for reappointment at the ensuing Annual
 General Meeting.
 Brief resume of the Directors proposed to be reappointed, nature of
 their expertise in specific functional areas, directorships in other
 companies as stipulated under clause 49 of the listing agreement with
 the stock exchanges in India are provided in the report on corporate
 None of the Directors ceased to Director of the company during period
 under review.
 Allotment of Shares:
 The Company has not allotted any shares during the period under review.
 Internal control systems and their adequacy:
 The Company has an Internal Control System, commensurate with the size,
 scale and complexity of its operations.  The scope and authority of the
 Internal Audit function is defined in the Internal Audit Manual. To
 maintain its objectivity and independence, the Internal Audit function
 reports to the Chairman of the Audit Committee of the Board & to the
 The Internal Audit Department monitors and evaluates the efficacy and
 adequacy of internal control system in the Company, its compliance with
 operating systems, accounting procedures and policies at all locations
 of the Company. Based on the report of internal audit function, process
 owners undertake corrective action in their respective areas and
 thereby strengthen the controls. Significant audit observations and
 recommendations along with corrective actions thereon are presented to
 the Audit Committee of the Board.
 The Board of Directors has approved a Code of Conduct which is
 applicable to the Members of the Board and all employees in the course
 of day to day business operations of the company. The Company believes
 in Zero Tolerance against bribery, corruption and unethical dealings
 / behaviours of any form and the Board has laid down the directives to
 counter such acts. The code laid down by the Board is known as code of
 business conduct which forms an Appendix to the Code. The Code has
 been posted on the Company''s website
 The Code lays down the standard procedure of business conduct which is
 expected to be followed by the Directors and the designated employees
 in their business dealings and in particular on matters relating to
 integrity in the work place, in business practices and in dealing with
 stakeholders. The Code gives guidance through examples on the expected
 behaviour from an employee in a given situation and the reporting
 All the Board Members and the Senior Management personnel have
 confirmed compliance with the Code. All Management Staff were given
 appropriate training in this regard.
 The Company has a vigil mechanism named Fraud and Risk Management
 Policy to deal with instance of fraud and mismanagement, if any.
 In staying true to our values of Strength, Performance and Passion and
 in line with our vision of being one of the most respected companies in
 India, the Company is committed to the high standards of Corporate
 Governance and stakeholder responsibility.
 The Company has a Fraud Risk and Management Policy to deal with
 instances of fraud and mismanagement, if any. The FRM Policy ensures
 that strict confidentiality is maintained whilst dealing with concerns
 and also that no discrimination will be meted out to any person for a
 genuinely raised concern.
 A high level Committee has been constituted which looks into the
 complaints raised. The Committee reports to the Audit Committee and the
 The Company has adopted a Code of Conduct for Prevention of Insider
 Trading with a view to regulate trading in securities by the Directors
 and designated employees of the Company. The Code requires
 pre-clearance for dealing in the Company''s shares and prohibits the
 purchase or sale of Company shares by the Directors and the designated
 employees while in possession of unpublished price sensitive
 information in relation to the Company and during the period when the
 Trading Window is closed. The Board is responsible for implementation
 of the Code.
 All Board Directors and the designated employees have confirmed
 compliance with the Code.
 The financial statements are prepared in accordance with the Generally
 Accepted Accounting Principles (GAAP) under the historical cost
 convention on accrual basis except for certain financial instruments,
 which are measured at fair values. GAAP comprises mandatory accounting
 standards as prescribed under Section 133 of theCompanies Act, 2013
 (''the Act''), read with Rule 7 of the Companies (Accounts) Rules, 2014,
 the provisions of the Act (to the extent notified) and guidelines
 issued by the Securities and Exchange Board of India (SEBI). There are
 no material departures from prescribed accounting standards in the
 adoption of these standards
 The Directors Confirm that:
 i) In the preparation of the annual accounts for the year ended 31st
 March, 2015, the applicable accounting standards had been followed and
 there are no material departures.
 ii) The directors have selected appropriate accounting policies and
 applied them consistently and have 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 financial year and of the
 profit of the company for that period.
 iii) The directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of Companies Act, 2013 for safeguarding the assets of the
 Company and for preventing and detecting fraud and other irregularities
 iv) We have prepared the annual accounts for the financial year ended
 31st March, 2015 on a going concern basis.
 v) The Directors have laid down internal financial controls, which are
 adequate and are operating effectively.
 vi) The directors have devised proper systems to ensure compliance with
 the provisions of the applicable laws and such other systems are
 adequate and are operating effectively.
 As required by clause 49of Listing Agreement, Auditor''s certificate on
 corporate governance is enclosed as Annexure to Board''s Report.
 The observation made in the Auditors'' Report read together with
 relevant notes thereon are self explanatory and hence, do not call for
 any further comments under Section 134 of the Companies Act, 2013.
 As required under section 204 (1) of the Companies Act, 2013 the
 Company has obtained a secretarial audit report. Certain observations
 made in the report with regard to non filing of some forms were mainly
 due to ambiguity and uncertainty of the applicability of the same for
 the relevant period. However, the company would ensure in future that
 all the provisions are complied to the fullest extent.
 M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the
 Company retire at the conclusion of the ensuing Annual General Meeting
 and being eligible, offer themselves for reappointment.
 The company has received consent letter from the Statutory auditors and
 certificate indicating satisfaction of criteria sated in Section 141 of
 Companies Act, 2013 .
 N V S S Suryanarayana Rao, Practicing Company Secretary was appointed
 to conduct Secretarial Audit of the company for the financial year
 2014-15, as required under section 204 of the Companies Act, 2013 and
 rules framed there under.The Secretarial Audit report for Financial
 year 2014-15 forms part of board''s report as Annexure
 The Board has appointed Mr. N V S S Suryanarayana Rao, Practicing
 Company Secretary as Sectretarial Auditor of the Company for financial
 year 2015-16.
 There are no significant and material orders passed by the regulators
 or courts or tribunals impacting the going concern status and Company''s
 operation in future.
 The details forming part of the extract of the Annual Return in form
 MGT-9 is annexed herewith as Annexure
 The Particulars as required under Sub- section (3)(m)of Section 134 of
 the Companies Act,2013, read with the Companies(Accounts) Rules 2014
 are enclosed in Annexure
 Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49
 of the listing agreement , the company has constituted a business risk
 management committee. The details of the committee and its terms of
 reference are set out in the corporate governance report forming part
 of the Boards report.
 Your Company has not accepted any deposits within the meaning of
 Section 73 of the Companies Act, 2013 and the Companies (Acceptance of
 Deposits) Rules, 2014
 Performing Subsidiaries
 Virinchi Learning Private Ltd
 Virinchi Learning Private Ltd incorporated in the year 2010 as wholly
 owned subsidiary of Virinchi Technologies Ltd. The primary objective of
 incorporating Virinchi Learning is to promote technology based, for
 profit, quality education services to the different student categories
 in India, both by creation of new content & infrastructure and also by
 partnering with existing content providers by leveraging the strength
 of Information technology
 The company has been granted a loan of Rs.5.5 crores by NSDC towards
 training of youth in the specified skills as notified by the NSDC in
 healthcare and bio tech sectors. The company has tied up with some
 training institutes and has developed the training content and the
 Company has trained 370 students in various courses viz., healthcare,
 Bio Technology, IT as per the NSDC Programme.
 KSoft Systems Inc
 M/s. KSoft Systems Inc is in the business of software development and
 consulting. M/s. KSoft Systems Inc provides consulting services to
 various clients in the US in the domains of SAP, Oracle and other
 M/s. KSoft Systems Inc., has taken 5000 Sft office premises on lease in
 Edison, NJ and had set up state of art infrastructure facility for
 serving the existing and new customers.
 During the year around 100 people travelled and joined in various
 projects of the company and total head count is around 120 employees in
 KSoft as on 31st March, 2015
 Virinchi Health Care Private Ltd
 Virinchi Helath Care private Ltd is incorporated in the year 2013 with
 the main objective of delivering quality health care to end users on an
 asset-heavy model connecting the whole eco-system including Hospitals,
 Doctors, Para-medics , Medical & Imaging Equipment, pharmacists and
 patients on a robust IT back bone. To achieve this objective, The
 company has leased a building at Banjara hills, in the city of
 Hyderabad, by way of long term lease agreement.
 Tyohar Foods Pvt. Ltd.
 The company had planned to take up a project under Tyohar Foods Pvt Ltd
 and had purchased a 50,000 square feet of building in 4047 Square
 meters of land by participating in an open auction conducted by Canara
 Bank on 16thAugust 2012 and registered the said property located at
 Survey No 15, Suraram Village. However, post purchase, a petition was
 filed against the company and the bank, in Debts Recovery Tribunal vide
 S.A.No.370/2012 and I.A.No.1437/2012 and the DRT directed to maintain
 Status Quo orders pending detailed hearing. As the Sale was done
 through Auction which was conducted under the SARFESI act, the company
 and the Bank are hopeful of clearing the litigation favourably. However
 due to the delay in settlement, the proposed project at the scheduled
 property has been suspended by the company.
 Consolidated Financial Statements
 In accordance with the Accounting Standards AS-21 and AS-27 on
 Consolidated financial Statements read with the Accounting Standard
 AS-23 on Accounting for investments in Associates, the Audited
 consolidated financial statements are provided in the annual report.
 Particulars of Employees
 The information required pursuant to Section 197 read with rule 5 of
 the Companies (Appointment and Remuneration of Managerial Personnel)
 Rules, 2014 in respect of employees of the Company, will be provided
 upon request. In terms of Section 136 of the Act, the reports and
 accounts are being sent to the members and others entitled thereto,
 excluding the information on employees'' particulars which is available
 for inspection by the members at the Registered office of the company
 during business hours on working days of the company up to the date of
 ensuing Annual General Meeting. If any member is interested in
 inspecting the same, such member may write to the company secretary in
 Details about Virinchi Employees Stock Option Scheme, 2004 (VESOS,
 Pursuant to the provisions of Guideline 12 of the Securities and
 Exchange Board of India (Employee Stock Option Scheme and Employee
 stock purchase Scheme), Guidelines, 1999, the details of stock options
 as on 31st March, 2015 under the Virinchi Employee Stock Options
 Scheme, 2004 are as under:
 Sl. No Description Details
 1.   Options Granted during 2014-15                          NIL
 2.   Pricing formula                                         N.A.
 3.   Options Vested                                          N.A.
 4.   Options exercised                                       N.A.
 5.   The total number of shares arising as a
      result of exercise of option                            N.A.
 6.   Options lapsed                                          N.A.
 7.   Variation of terms of options                           N.A.
 8.   Money realized by exercise of options                   N.A.
 9.   Total number of options in force             Total options reserved
                                                   under the scheme:
                                                   11,67,000 and Total
                                                   options granted:
 10. Employee wise details of options
 granted to i) Senior                             n.A.
 Management personnel ii) Any other
 employee who receives a grant in any
 one year of option amounting
 to 5% of or more of option granted
 during that year iii) Identified
 employees who were granted option,
 during any one year, equal to or
 exceeding 1% of the issued capital
 (excluding outstanding warrants and
 conversions) of the company at the
 time of grant.
 11.  Diluted Earning Per share (EPS)
 pursuant to issue of                                 N.A.
 shares on exercise of option calculated
 in accordance with Accounting Standard
 (AS)20 Earning Per share
 12.  The difference between the employee
 compensation costs computed under intrinsic           N.A.
  value method and the employee
 compensation cost that shall have been
 recognized if the Company had
 used the Fair Value methods and its impact
 on profits and EPS of the
 13.  Weighted Average exercise prices
 and weighted average                                   NIL
 fair values of options for options whose
 exercise price either equals
 or exceeds or is less than the market price
 of the stock
 14.  Description of the method and            The Company
 signigicant assumptions                       has opted intrinsic Value
 used during the year to estimate the          method for
 fair value of options.                        accounting of Compensation
                                               Cost arising out
                                               of ESOP. The Company has
                                               not  made any assumptions.
  i.  Risk-free interest rate
  ii.  Expected   life
  iii. Expected   Volatility
  iv.  Expected   dividends
  v.   The price of the underlying share in
       market at the time of option grant
 a) Conservation of Energy:
 Company''s operations require electrical energy for its use in air
 conditioning the premises, for power supply to computer systems and
 lighting which are not energy intensive. However, adequate measures
 have been taken to reduce energy consumption, wherever possible.
 To decrease the carbon footprint, company transportation is extended to
 associates from different parts of the city; the occupation is 100% in
 all the buses on all the working days. Also, to conserve the natural
 resources, STP plan is installed and the waste water and solid material
 emitted out, after processing is being used for landscaping.  The
 company has adopted laudable practices like reducing the carbon foot
 prints, maximizing the utilization of natural light and reducing the
 electric light fitments, reduction of size of work station partitions.
 use of recycled material for the work stations'' wood boards, provision
 of task lights for every work station to minimize the power
 consumption, central control switch for entire work station and
 automated water control taps in the rest rooms. As part of energy
 conservation, LED lighting is being use for the new areas, which are
 undergoing interior renovation works.
 b) Research and Development
 Your company will continue to focus and invest in its R & D activities
 in software engineering, technologies and products. Your company
 leverages its excellence in technology for producing World Class
 Products and solutions. The continual exposure to new technologies has
 helped maintain high motivation levels in employees and to generate
 higher levels of productivity, efficiency and quality. Your company
 continues to give due importance to research and development to
 maintain its leadership in the field of leading edge technologies.
 c) Foreign Exchange Earnings and Outgo:
 Most of your Company''s earnings are from the export of Computer
 Software and Services. In order to promote product sales and services,
 your Company participated in various exhibitions and carried product
 promotion activities.  Details of foreign exchange earnings and outgo
 during the year as follows :
                                                         (Rs. in Lacs)
 Particulars                           FY 2014-15             FY 2013-14
 Foreign Exchange Earnings                 7838               6187.64
 Foreign Exchange Outgo                    7743               1547.78
 d) Technology Absorption, Adaptation and Innovation
 Your company continues to use state-of-the-art technology for improving
 the productivity and quality of its products and services. To create
 adequate infrastructure, your Company continues to invest in the latest
 hardware and software.
 To support its growth plans, the company continues to invest in global
 solutions that are configured consistently for its core business
 Report on Corporate Governance
 Corporate Governance Report is set out as separate Annexure to this
 Management Discussion and Analysis Report
 Management''s Discussion and Analysis report for the year under review
 as stipulated under Clause 49 of the Listing Agreement with the stock
 exchanges is presented in a separate section forming part of the Annual
 Your directors would like to place on record their appreciation of
 support, co-operation and assistance received from the company''s
 clients, Central Government authorities, bankers, shareholders and
 suppliers. The board wishes to convey its appreciation for hard work,
 solidarity, cooperation and support put in by the company''s employees
 at all levels in enabling such growth.
                                                BY ORDER OF THE BOARD
                                    For VIRINCHI TECHNOLOGIES LIMITED
 PLACE : HYDERABAD                                     M. Santi Priya
 DATE : 31-08-2015                  Chairperson & Whole Time Director
Source : Dion Global Solutions Limited
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