Dear Members,
The Directors are pleased to present the Twenty First Annual Report
for the financial year ended March 31, 2015. Summarized Financial
Highlights:
(Rs. in Lakh)
PARTICULARS Year Ende Year Ended
31.03.2015 31.03.2014
Gross Income 9,325.99 10,278.83
Expenditure 7,434.66 7950.56
Profit before Finance Cost, depreciation 1,891.33 2328.27
& tax
Less:Finance Cost 719.69 899.36
Depreciation 630.74 1,002.47
Profit before tax 540.90 426.44
Less:Provision for Current tax 127.96 369.02
Tax Expense relating to earlier years 0.51 0
Deferred tax 49.99 (144.91)
Profit for the year 362.44 202.33
Company Performance
Your Company posted a turnover of Rs. 9,325.99 lakh for the year ended
31st March, 2015 as against Rs. 10,278.83 Lakh in 2013-14. Your Company
has registered a net profit of Rs.362.44 Lakh, as compared to previous
year''s net profit of Rs. 202.33 Lakh representing an increase of 179%
over the previous year.
No Material changes and commitments have occurred after the close of
the year till the date of this Report, which affect the financial
position of the Company.
Dividend:
Your Directors have recommended a dividend of Re.0.80/- per equity
share i.e. 8% on each equity share having face value of Rs.10/- each,
subject to the approval by the shareholders at the ensuing Annual
General Meeting. The total dividend payout will be Rs. Rs.120.11 Lakh
(including dividend tax).
Share Capital
The paid up Equity Share Capital as on 31st March, 2015 was 12.51
crores. During the year under review, the Company has not issued any
shares. The Company has not issued shares with differential voting
rights. It has neither issued employee stock options nor sweat equity
shares and does not have any scheme to fund its employees to purchase
the shares of the Company.
Economic Scenario and Outlook
India is set to become the world''s fastest-growing major economy by
2016 ahead of China, the International Monetary Fund (IMF) said in its
recent latest forecast. India is expected to grow at 6.3 per cent in
2015, and 6.5 per cent in 2016 when it is likely to cross China''s
projected growth rate, the IMF said in the latest update of its World
Economic Outlook.
With the introduction of the concept of e-governance, both the Central
and State Governments are keen in implementing different projects to
keep the activities of the Governments transparent, timely and cost
effective.
E-governance in India is steadily evolving from basic digitization of
government data and processes to actually facilitating delivery of
various citizen services on-line. A common vision and strategy is being
deliberated and firmed up across all levels of government Central,
State and local bodies. This approach has huge potential in garnering
cost savings, increasing transparency, and presenting a seamless view
of government to citizens. Digital Technologies which include Cloud
Computing and Mobile Applications have emerged as catalysts for rapid
economic growth and citizen empowerment across the globe. Digital
technologies are being increasingly used by us in everyday lives from
retail stores to government offices. They help us to connect with each
other and also to share information on issues and concerns faced by us.
In some cases they also enable resolution of those issues in near real
time.
Hon''ble Prime Minister vision of a digital India is transforming our
nation and creating opportunities for all citizens by harnessing
digital technologies. His vision is to empower every citizen with
access to digital services, knowledge and information.
Vision of Digital India Centered on 3 Key Areas
* Digital Infrastructure as a Utility to Every Citizen
* Governance & Services on Demand
* Digital Empowerment of Citizens
A well connected citizen to government eco system has huge potential
for both the partners. Citizens will continue to enjoy speedy,
transparent and convenient services, whilst the government gets
increasingly integrated into the community welfare and more importantly
is in a position to focus real time on reallocation of resources where
they are needed the most. A social transformation happens when citizens
are empowered to help themselves in dealing with various government
segments, saving time and money for all concerned and elevating overall
levels of satisfaction for common man.
Tera Software is positioned to entrench into the following schemes
announced by the Government under Digital India initiatives.
* Infrastructure as a Utility to Every Citizen
* High speed internet as a core utility
* Mobile phone & Bank account enabling participation in digital &
financial space
* Easy access to a Common Service Centre
* Services available in real time from online &mobile platform
* All citizen entitlements to be available on the cloud
* Making financial transactions electronic & cashless
* Universal Digital Literacy - Universally accessible digital resources
- All documents/ certificates to be available on cloud
* Collaborative digital platforms for participative
* Process Re-engineering using IT to improve transactions
* Use of online repositories e.g. school certificates, voter ID cards,
etc.
* Integration of services and platforms - UIDAI, Payment Gateway,
Mobile Platform, EDI Workflow automation inside government
* Technology for Education - e-Education
* Technology for Health - e-Healthcare - Online medical consultation-
Online medical -Pan-India exchange for patient information
* Common Service centers
* Aadhaar based Direct Cash (e-Cash) Transfers
* Aadhaar based Pension schemes.
* Aadhaar based Social Security Benefit Schemes towards Scholarships
for Students and Teachers.
* Aadhaar based Public Distribution Systems ( PDS)
* Permanent enrollment centres for AADHAAR
* Automation of VAT and subsequently GST
* Power sector Field Management services including Pre-Paid Meters
* Online tax/Utility Bill Collection
* Healthcare and Education
* Smart Cities, Wi-Fi enabled services.
The Company has a positive outlook for the coming years and endeavors
to achieve a steady business performance in the coming years. Your
company anticipates higher percentage of gross profits from the new
projects that will be undertaken during the coming years.
Corporate Social Responsibility
The Company has constituted a Corporate Social Responsibility (CSR)
Committee as required under Section 135 of the Companies Act, 2013 at
its Board meeting held on 30.05.2014. The Company''s average Net profits
of last 3 years works out to Rs.804.07 lakhs, and 2% thereof to be
spent on CSR works out to Rs.16.08 lakhs. The Company could not spend
any amount on CSR activity in view of substantial outstanding
receivables from the Government Departments.
Human Resources
''Human Resources'' are recognized as a key pillar of any successful
organization and so is for Tera Software. The company puts constant
efforts in recruiting and training the employees and ensures to bring
out the best of them. The company adopts a HR policy and ensures that
all the employees are aware of personnel policies. The needs of the
employees are addressed with high importance and efforts are made to
provide a highly challenging and healthy environment. Besides all
these, the company places high emphasis on professional etiquette
required of every employee.
Business Risk Management
The Company has adopted a Risk Management Policy in accordance with the
provisions of the Companies Act, 2013 and Clause 49 of the Listing
Agreement. It establishes various levels of accountability and overview
within the Company, while vesting identified managers with
responsibility for each significant risk.
The main objective of this policy is to ensure sustainable business
growth with stability and to promote a pro-active approach in
reporting, evaluating and resolving risks associated with the business.
In order to achieve the key objective, the policy establishes a
structured and disciplined approach to Risk Management, in order to
guide decisions on risk related issues.
In today''s challenging and competitive environment, strategies for
mitigating inherent risks in accomplishing the growth plans of the
Company are imperative. The common risks inter alia are: Regulations,
competition, Business risk, Technology obsolescence, Investments,
retention of talent and expansion of facilities.
Business risk, inter-alia, further includes financial risk, political
risk, fidelity risk, legal risk.
As a matter of policy, these risks are assessed and steps as
appropriate are taken to mitigate the same.
Internal Controls Systems and Adequacy
Tera Software has an adequate system of internal control to ensure that
the resources of the Company are used efficiently and effectively, all
assets are safeguarded and protected against loss from unauthorized use
or disposition and the transactions are authorised, recorded and
reported correctly, financial and other data are reliable for preparing
financial information and other data and for maintaining accountability
of assets. The internal control is supplemented by extensive programme
of internal audits, review by management, documented policies,
guidelines and procedures.
Vigil Mechanism/ Whistle Blower Policy
The Company has adopted a Whistle Blower Policy, to provide a formal
mechanism to the Directors and employees to report their concerns about
unethical behaviour, actual or suspected fraud or violation of the
Company''s Code of Conduct or ethics policy. The Policy provides for
adequate safeguards against victimization of employees who avail of the
mechanism and also provides for direct access to the Chairman of the
Audit Committee. It is affirmed that no personnel of the Company has
been denied access to the Audit Committee.
Particulars of Loans, Guarantees or Investments
The Company has not made any investment or given any loans or
guarantees or provided any security during the year.
Fixed Deposits:
The Company has not accepted any fixed deposits during the financial
year 2014-2015. The Company has repaid the public fixed deposits of
Rs.11 Lakh accepted during the year 2013-14. There are no outstanding
deposits as on 31.03.2015.
Related Party Transactions
The Company has not entered into any new Related Party Transactions
during the financial year. There were no materially significant Related
Party Transactions made by the Company during the year that would have
required Shareholder approval under Clause 49 of the Listing Agreement.
All the Related Party Transactions of the Company were entered before
the commencement of Companies Act, 2013 at arm''s length price and
requisite approvals were also obtained. Details of the transactions
with Related Parties are provided in the accompanying financial
statements.
The Company has adopted a Policy for Related Party Transactions. The
Policy, as approved by the Board, is uploaded on the Company''s website.
Directors
In pursuance of Section 152 of the Companies Act, 2013 and the rules
framed there under, Sri K. Rama Rao, Wholetime Director is liable to
retire by rotation, at the ensuing Annual General Meeting and being
eligible has offered himself for reappointment.
During the year under review Sri Koteswara Rao SSR was appointed as the
Additional Director (Independent) w.e.f. 07th August, 2014 by the
Board and Sri D. Seetharamaiah, an independent Director and Chairman
ceased to be the Director of the Company from 30.09.2014. The Board of
Directors records its sincere appreciation and recognition of the
valuable contribution and services rendered by Sri D. Seetharamaiah
during his association with the Company.
At the 20th Annual General Meeting of the company held on 30th
September, 2014 the Company had appointed Sri Koteswara Rao SSR and the
other independent directors, Dr. T .Hanuman Chowdary, Sri R. S.
Bakkannavar and Dr.T. V. Lakshmi as independent directors under the
Companies Act, 2013 for 5 years term which ends at conclusion of the
25th Annual General Meeting.
All the Independent Directors have given declarations that they meet
the criteria of independence as laid down under Section 149 (6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement entered into
with the Stock Exchanges. In the opinion of the Board, they fulfill the
conditions of independence as specified in the Act and the Rules made
there under and are independent of the management.
No Key Managerial Person has been appointed or has retired or resigned
during the year.
Performance Evaluation
Pursuant to the provisions of Section 134 (3) (p), 149(8) and Schedule
IV of the Companies Act, 2013 and Clause 49 of the Listing Agreement,
annual Performance Evaluation of the Directors as well as of the Audit
Committee, Nomination and Remuneration has been carried out.
The Performance Evaluation of the Independent Directors was carried out
by the entire Board and the Performance Evaluation of the Chairman and
Non-Independent Directors was carried out by the Independent Directors.
The manner in which the evaluation has been carried out has been
explained in Corporate Governance Report.
Nomination and Remuneration Policy
The Company has adopted the Nomination and Remuneration Policy for the
Directors, Key Managerial Personnel and other employees, pursuant to
the provisions of the Companies Act, 2013 and Clause 49 of the Listing
Agreement.
The Nomination and Remuneration Committee has considered the following
factors while formulating the Policy:
(i) The level and composition of remuneration is reasonable and
sufficient to attract, retain and motivate Directors of the quality
required to run the Company successfully;
(ii) Relationship of remuneration to performance is clear and meets
appropriate performance benchmarks; and
(iii) Remuneration to Directors, Key Managerial Personnel and Senior
Management involves a balance between fixed and incentive pay
reflecting short and long-term performance objectives appropriate to
the working of the Company and its goals.
It is affirmed that the remuneration paid to Directors, Key Managerial
Personnel and all other employees is as per the Remuneration Policy of
the Company. Details of the Remuneration Policy are given in the
Corporate Governance Report.
Board and Committee Meetings
A calendar of Board and Committee Meetings to be held during the year
was circulated in advance to the Directors. Five Board Meetings were
convened and held during the year.
The Board has constituted an Audit Committee with all Independent
Directors namely Sri R.S.Bakkannavar (Chairman), Dr.T.Hanuman Chowdary
and Sri Koteswara Rao SSR as Members. There have not been any instances
during the year when recommendations of the Audit Committee were not
accepted by the Board.
Details of the composition of the Board and its Committees and of the
Meetings held and attendance of the Directors at such Meetings, are
provided in the Corporate Governance Report. The intervening gap
between the Meetings was within the period prescribed under the Act and
the Listing Agreement.
Directors'' Responsibility Statement:
Pursuant to the provisions of Section 134(5) of the Companies Act,
2013, your Directors to the best of their knowledge and ability confirm
as under::
a) In the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) We 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 at the end of the financial year and of the profit of the
Company for that period;
c) We have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
d) The annual accounts have been prepared on a going concern basis; and
e) The Company had laid down internal financial controls to be followed
by the Company and that such internal financial controls are adequate
and were operating effectively.
f) We have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
Significant and Material orders passed by the Regulators or Courts
No significant material orders have been passed by the Regulators or
Courts or Tribunals which would impact the going concern status of the
Company and its future operations.
Auditors
Statutory Auditors
M/s. Narven Associates, Chartered Accountants have been appointed as
statutory auditors of the company at the last Annual General Meeting
held on 30.09.2014 for a period of three years subject to ratification
by members at every consequent Annual General Meeting. Members are
requested to consider the ratification of appointment of Statutory
Auditors of the Company at the ensuing AGM and authorize the Board of
Directors to fix their remuneration.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed M/s C.V Reddy K &
Associates, Practicing Company Secretaries, to undertake the
secretarial audit of the company. The Secretarial Audit Report is
annexed herewith as Annexure I''.
The Auditors'' Report and the Secretarial Audit Report for the financial
year ended 31st March, 2015 do not contain any qualification,
reservation, adverse remark or disclaimer.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The details of conservation of energy, technology absorption, foreign
exchange earnings and outgo are as follows: A) Conservation of energy:
The operations of the Company are not energy intensive and every effort
has been made to ensure the optimal use of energy, avoid waste and
conserve energy by using energy efficient computers and equipment with
latest technologies.
(B) Technology absorption:
Your Company is constantly upgrading its technological excellence with
emerging technologies. The has not incurred any expenditure on Research
and Development.
(C) Foreign exchange earnings and Outgo:
Foreign Exchange Earnings during the year: Nil Foreign Exchange outgo:
* Value of Imports on CIF Basis In Respect of
(Rs. in Lakh)
Particulars Current Year Previous Year
Trading goods 15.76 Nil
Capital Contracts 3.56 Nil
Total 19.32 Nil
* Expenditure in Foreign Currency (CIF):
(Rs. in Lakh)
Particulars Current Year 3Previous Year
Trading Goods 13.40 Nil
Capital Contracts 2.52 Nil
TOTAL 15.92 Nil
Particulars of Employees and related disclosures:
The information required pursuant to Section 197 of the Companies Act,
2013 read with Rule, 5 of The Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 in respect of employees of the
Company is as follows:
(i) & (ii) the ratio of the remuneration of each director to the median
remuneration of the employees of the company for the financial year,
the percentage increase in remuneration of each director, Chief
Financial Officer, Chief Executive Officer, Company Secretary or
Manager, if any, in the financial year;
Ratio of remuneration
Name Designation of each Director to the
Median remuneration
of Employees
*Mr. T. Gopichand Vice Chairman & Managing 77.62
Director
Mr. K. Rama Rao Wholetime Director 16.77
Mr. B. D. Naidu Chief Financial Officer N.A
Mrs. V. Sri Lakshmi Company Secretary N.A
Name % Increase in
remuneration
during
F.Y. 2014-15
*Mr. T. Gopichand 300%
Mr. K. Rama Rao 11%
Mr. B. D. Naidu 3.50%
Mrs. V. Sri Lakshmi 5.75%
*Due to inadequate profits previous year Sri T. Gopichand, Vice
Chairman & Managing Director was paid minimum remuneration of Rs.21
lakhs only as per the applicable provisions of Companies Act, 1956 read
with Schedule XIII of the said Act.
Due to inadequate profits during the year review Sri T. Gopichand, Vice
Chairman & Managing Director was paid minimum remuneration of Rs.84
lakhs only as per the applicable provisions of Companies Act, 2013 read
with Schedule V of the said Act as approved by the Members of the
Company at the AGM held on 30.09.2014 by special resolution for
doubling limits of remuneration payable to managerial personnel
specified in Para-A, Section II, Part-II of Schedule V of the Companies
Act, 2013 in case of Company having no profit or inadequate profit in
any financial year to Sri T. Gopichand, Vice Chairman and Managing
Director during the tenure of his appointment with effect from 1st
April, 2014, for the remainder of his term up to 31.08.2016.
(iii) the percentage increase in the median remuneration of employees
in the financial year- 3% to 6%.
(iv) the number of permanent employees on the rolls of company as on
31.03.2015 - 864.
(v) the explanation on the relationship between average increase in
remuneration and company performance;
There was no increase in remuneration during the previous year 2013-14
due to average company performance. The average increase of 3% to 6%
in remuneration given in the Company was to prevent any significant
employee attrition at lower levels.
(vi) Comparison of the remuneration of the Key Managerial Personnel
against the performance of the company;
The increase in remuneration of the Chief Financial Officer and Company
Secretary are below the increase in employees'' median remuneration. The
increase in the remuneration of Mr. T. Gopichand and Mr. K. Rama Rao is
as approved by the Board of Directors and the Members.
(vii) Variations in the market capitalisation of the company, price
earnings ratio as at the closing date of the current financial year and
previous financial year and percentage increase over decrease in the
market quotations of the shares of the company in comparison to the
rate at which the company came out with the last public offer in case
of listed companies.
The market capitalization of the Company as at 31st March, 2015 is
Rs.40.038 crores, as against Rs.19.581 crores as at 31st March, 2014,
an increase of 104% during the year under review. The price earnings
ratio of the Company as at 31st March, 2015 is 11.03, as against 9.66
as at 31st March, 2014.
Price at the time of initial public offer in the year 2000 was Rs. 10.
The market quotation of the Equity Shares of the Company as on 31st
March, 2015 was Rs.32 for shares of face value of Rs. 10/- each,
representing an increase of 220% over the period.
(viii) Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration;
The percentage increase in the salaries of employees other than the
managerial personnel in the last financial year is 3% to 6%. The
increment given to each individual employee is based on the employees''
potential, experience as also their performance and contribution to the
Company''s progress over a period of time.
The Percentage increase in the salaries of employees its comparison
with the percentile increase in the managerial remuneration - for
justification please refer point no. (ii) (v) & (vi) above.
There are no exceptional circumstances of increase in KMP remuneration.
(ix) Comparison of the each remuneration of the Key Managerial
Personnel against the performance of the company Same response as in
point (v) & (vi) above.
(x) The key parameters for any variable component of remuneration
availed by the directors;
No Director has received any variable component of remuneration.
(xi) The ratio of the remuneration of the highest paid director to that
of the employees who are not directors but receive remuneration in
excess of the highest paid director during the year;
None of the employees (who are not directors) receive remuneration in
excess of the highest paid director.
(xii) Affirmation that the remuneration is as per the Remuneration
Policy of the Company:
It is affirmed that the remuneration paid to all the Key management
Personnel was in accordance with remuneration policy adopted by the
Company.
The particulars of the employees who are covered by the provisions
contained in Rule 5(2) and rule 5(3) of Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 are:
a) Employed throughout the year Nil
b) Employed for part of the year Nil
Extract of Annual Return
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as Annexure - II.
Sexual Harassment
During the year under review, there were no cases filed pursuant to the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and the Rules there under.
Corporate Governance
The Report on Corporate Governance, as required under Clause 49 of the
Listing Agreement, forms part of the Annual Report.
Acknowledgment:
Your Directors place on record their sincere appreciation and thanks
for the valuable cooperation and support received from the employees of
the Company at all levels, Company''s Bankers, Financial Institutions,
Central and State Government Authorities, Electronic Corporation of
India Limited and Other Government Agencies, clients, consultants,
suppliers, and Members of the Company and look forward for the same in
greater measure in the coming years.
For and on behalf of the Board of Directors
Sd/- Sd/-
Place : Hyderabad (T. Gopichand) (K. Rama Rao)
Date : 30.05.2015 Vice Chairman and Managing Wholetime Director
Director
