DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting the 31st Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2015. Review of Operations The financial year 2014-15 ended with a sharp rise in profitability due to better realization and capacity utilization. Growing demand for structural engineering services and improved economic conditions in USA led to higher demand for these niche services. Company has established the Salesforce.com practice and received orders from a chain of hospitals and a reputed pharma company for implementing salesforce. On standalone basis for the year 2014-15, revenues at Rs.4077.96 Lakhs were higher by 17.79% over the previous year's revenues of Rs.3462.15 Lakhs. Profit after tax shot up to Rs. 588.16 Lakhs from Rs. 196.89 Lakhs resulting into a growth of 198.72%.On consolidated basis for the year 2014-15, revenues at Rs. 4699.04 Lakhs were higher by 16.76% over the previous year's revenues of Rs. 4024.28 Lakhs. Profit after tax substantiallyincreased to Rs. 598.74 Lakhs from Rs. 207.96 Lakhs resulting into a growth of 187.91%. Future Outlook Positive trends in US economic activity enhances demand for structural engineering services and new opportunities in IT division propel growth in Company revenues in the financial year 2015-16. A major breakthrough has been achieved by our IT Division through an agreement to establish an ODC for a German based platinum partner of Salesforce. com. Through this contract and growing demand for cloud computing and mobile applications there will be a considerable growth in revenues from our newly formed IT division. The ODC is for product development on Salesforce cloud platform using mobile apps with latest "Agile" project management techniques. This not only generate considerable revenues for the Company but also open newer avenues for opportunities in the latest emerging "SMAC" technologies. The fruits of this initiative are expected to be visible from 3rd quarter onwards. Review Material changes and commitments, if any, affecting the financial position of the Company No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which the financial statements relate and the date of this Directors' Report. Dividend Your Directors have recommended a final dividend of Rs1.50 per equity share @15 % of equity share capital in addition to interim dividend of Rs.2.00/- (20%) hitherto declared making a total of Rs 3.50/- (35%) per equity share (previous year Rs. 1.80 per equity share @18%) for the financial year ended 31st March 2015. The final dividend if approved, will be paid to those members whose names appear in Register of Members as on 21st September 2015. In respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) limited as beneficial owners as on that date. This will entail an outflow of Rs 208.56 Lakhs (Inclusive of dividend tax). The dividend payout for the years under review has been formulated keeping in view your Company's need for capital for its growth plans and the intent to finance such plans through internal accruals to the optimum. Equity shares that may be allotted on or before the Book Closure will rank pari passu with the existing shares and will be entitled to receive the dividend. Transfer to reserve The Directors propose to transfer a sum of Rs 51.20 lakhs to General Reserve out of the profits earned by the Company. Authorised Share Capital The Authorised Share Capital of the Company stands at Rs 13,00,00,000 (Rupees Thirteen Crores only) divided into 1,30,00,000 (One Lac Thirty Thousand) Equity Shares of Rs 10/- (Rupees Ten Only) each. During the year, there has been no change in the Authorised Share Capital of the Company. Paid-up Share Capital The Board of Directors at its meeting held on 19th April 2014 allotted 10,900 Equity Shares of Rs 10- each at a price of Rs 28/- [comprising nominal value of Rs.10/- and premium of Rs.18/- each] to its employees who have exercised the option vested on them under the Mold-Tek Technologies Employees Stock Option Scheme 2009. The Board of Directors at its meeting held on 02nd March 2015 allotted 9,850 Equity Shares of Rs 10- each at a price of Rs 28/- [comprising nominal value of Rs.10/- and premium of Rs.18/- each] to its employees who have exercised the option vested on them under the Mold-Tek Technologies Employees Stock Option Scheme 2009. Post allotment of shares by way of exercise of Employee Stock option, the paid up equity share capital of the company has increased to Rs 4,70,90,560/- ( Rupees Four Crores Seventy Lacs Ninety Thousand Five Hundred and Sixty Only) divided in to 47,09,056 (Forty Seven Lacs Nine Thousand and Fifty Six Only ) Equity Shares of Rs 10/- ( Rupees Ten Only) each, as on 31st March 2015. Particulars of Loans, Guarantees or Investments The Board of Directors at its meeting held on 19th August 2015 (after balance Sheet date) allotted 6,00,000 Equity Shares of Rs 10- each at a price of Rs 31.20/- [comprising nominal value of Rs.10/- and premium of Rs.21.20/- each] pursuant to conversion of 6,00,000 fully convertible warrants issued on 26th February 2014 on receipt of balance 75% of purchase price. Post allotment of shares by way of conversion of warrants, the paid up equity share capital of the company has increased to Rs. 5,30,90,560/- ( Rupees Five Crores Thirty Lacs Ninety Thousand Five Hundred and Sixty Only) divided in to 53,09,056 (Fifty Three Lacs Nine Thousand and Fifty Six Only ) Equity Shares of Rs 10/- ( Rupees Ten Only) each, as on 19th August 2015. Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. Internal Controls Systems and Adequacy The Company's internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company's policies, identifying areas of improvement, evaluating the reliability of Financial Statements, ensuring compliances with applicable laws and regulations and safeguarding of assets from unauthorized use. Details of the internal controls system are given in the Management Discussion and Analysis Report, which forms part of the Directors' Report. Directors/Key Managerial Personnels (KMP) At the Annual General Meeting of the Company held on 30th September, 2014, the Members had approved the appointment of Mr. Shyam Sunder Rao Pillarisetty, Mr Srinivas Madireddy, Dr Venkata Appa Rao Kotagiri , Dr Surya Prakash Gulla and Mr Vasant Kumar Roy Chintamaneni as Independent Directors for a term of five years. 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. Mr. Subramanyam Adivishnu and Mr Venkateswara Rao Pattabhi have resigned as Wholetime Director of the Company w.e.f 31st August 2014. However they are associated with the Company as non-executive promoter directors of the Company. They resigned in order to comply with the provisions of Section 203 of the Companies Act 2013 which provides that a Wholetime Director shall not hold the office as Wholetime Director in more than one Company. Since Mr. Subramanyam Adivishnu and Mr Venkateswara Rao Pattabhi were also Deputy Managing Directors in Mold-Tek Packaging Limited, in order to comply with the provision of the aforesaid section, they resigned from the office of Wholetime Director of the Company. The Board approved their resignations and placed on record its appreciation for the services rendered by them during their tenure as Wholetime Directors. Based on the confirmations received, none of the Directors are disqualified for being appointed/ reappointed as directors in terms of Section 164 of the Companies Act 2013. During the year, Mr Durgaprasad Sigatapu has been appointed as Chief Financial Officer w.e.f 02nd March 2015 and Ms. J Sudharani resigned as Chief Financial Officer w.e.f 02nd March 2015. Ms. Pooja Jain, has been appointed as Company Secretary & Compliance Officer w.e.f 15th April 2015. Mr. Durgaprasad Sigatapu, has resigned from the position of Chief Financial Officer ("CFO") and Key Managerial Personnel of the Company with effect from July 25, 2015 and the same has been approved and taken on record by the Board of Directors at its meeting held on 03rd August 2015. The Company is in the process of identifying or hiring new person for the vacant position. (after the balance Sheet date) In accordance with the provisions of Section 152 of the Act, Mr Venkateswara Rao Pattabhi, Director of the Company is liable to retire by rotation and is eligible for re-appointment. Apart from above there has been no change in Directors and Key Managerial Personnels. Scheme of Arrangement In terms of Scheme of Arrangement, your Company has created trust and transferred its shares to the trust so formed. Employee Stock Option Scheme The Company has in operation Mold-Tek Technologies Employees Stock Option Scheme 2009 for granting stock options to the employees of its company, in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Board of Directors at its meeting held on 15th April, 2015 has approved "MTTL ESOS - 2015" scheme for which the approval has been obtained from members by way of postal ballot on 13th April, 2015 to issue 3,00,000 equity shares to eligible employees under the Scheme. At the Board Meeting dated 3rd August, 2015, the Company has granted 2,00,000 shares to its employees under "MTTL ESOS - 2015" scheme at a price of Rs.73/- per option. There have been no Changes in the Scheme. Disclosures pursuant to Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are enclosed as Annexure - A to this report. The said disclosures are also uploaded on the Company's website at the web link: <http://www>. moldtekindia.com/Samples/Annexure%20A%20-%20 ESOP%20Disclsoures.pdf Consolidated Financial Statements: In accordance with the Accounting Standards AS-21 on Consolidated Financial Statements, your directors are pleased to provide the audited consolidated financial statement in this annual report. A Summary of key financials of the Company's subsidiaries is also annexed. Subsidiaries: Your Company has two wholly owned subsidiaries viz, Crossroads Detailing Inc., Farmersburg, Indiana, USA and RMM Global Inc., Indiana. The financial position of the said Companies is given in the Notes to Consolidated financial statements. The audited accounts of the subsidiary companies are placed on the Company's website and the same are open for inspection by any member at the Registered Office of the Company on any working day between 2.00 p.m. and 4.00 p.m. and the Company will make available a copy thereof to any member of the Company who may be interested in obtaining the same. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of subsidiaries, associates and joint venture companies in Form AOC 1 is attached to the Accounts. Deposits The Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 during the year under review. Governance Guidelines: The Company has adopted Governance Guidelines on Board, Independent Director, Key Managerial Personnel or senior managerial personnel. The Governance Guidelines cover aspects related to role of the Board diversity, definition of independence, Code of Conduct, Moral, ethics and principles to be followed. Nomination, Remuneration and Performance Evaluation Policy The requisite details as required by Section 134(3) (e), Section 178(3) & (4) and Clause 49 of the Listing Agreement is provided in the Corporate Governance Report Statement on Related Party Transaction All Related Party Transactions that were entered into during the financial year were on an arm's length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 ('the Act') and the Listing Agreement. 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 Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The Company has adopted a Related Party Transactions Policy. The Policy, as approved by the Board, is uploaded on the Company's website at the web link: <http://www.moldtekindia.com/Samples/Related%20> Party%20Policy%20-%20MTTL-%20New.pdf Details of the transactions with Related Parties are provided in the accompanying financial statements. Board and Committee Meetings 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 Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory and Secretarial Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2014-15. Accordingly, pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that: (i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures; (ii) they 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; (iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) they have prepared the annual accounts on a going concern basis; (v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; (vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. Corporate Social Responsibility (CSR): The Provisions of Section 135 of the Companies Act 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014 are not applicable to the Company for the Financial Year ended 31st March 2015. The provisions becomes applicable w.e.f 01st April 2015, accordingly the Company at its Board Meeting held on 03rd August 2015 (after the balance Sheet date) has constituted a CSR Committee. The Corporate Social Responsibility Committee comprises of 1 Executive Director, 2 Non Executive Promoter Directors and 1 independent Director, chaired by Mr. J. Lakshmana Rao. The composition of the Corporate Social Responsibility Committee meets the requirements of section 135 of the Companies Act, 2013. Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to inquire into complaints of sexual harassment and recommend appropriate action. 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 behavior, 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. The policy of Vigil Mechanism is uploaded on website of the Company at a web link <http://www.moldtekindia.com/> Samples/MTTL%20Policy%20of%20SH.pdf 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 (1) Statutory Auditors: At the 30th Annual General Meeting held on 30th September, 2014, the Members had appointed M/s Praturi & Sriram. [Firm Registration No. 002739S] Chartered Accountants as Statutory Auditors of the Company, by way of ordinary resolution under section 139 of the Companies Act, 2013, to hold office from the conclusion of 30th Annual General Meeting until the conclusion of the 33rd Annual General Meeting of the Company, subject to ratification of the appointment by the members of the Company at every Annual General Meeting as per the provisions of the Companies Act, 2013. Based on the recommendation of the Audit Committee, the Board of Directors at their meeting held on 19th May, 2015, recommended the ratification of appointment of M/s Praturi & Sriram., Chartered Accountants, as Statutory Auditors of the Company, and that, the necessary resolution in this respect is being included in the notice of the 31st Annual General Meeting for the approval of the Members of the Company. The Company has received consent from the Statutory Auditors and confirmation to the effect that they are not disqualified to be appointed as Statutory Auditors of the Company in terms of the provisions of Companies Act, 2013 and Rules framed thereunder. The notes to the accounts referred to in Auditors Report are self-explanatory and do not call for any further comments. The Statutory Auditors Report does not contain any qualification, reservation or adverse remark. (2) Secretarial Auditors: Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. P Vijaya Bhaskar & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the year ended 31st March, 2015. The Secretarial Audit Report is annexed as Annexure B The Secretarial Audit Report for the financial year ended 31st March, 2015 does not contain any qualification, reservation, adverse remark or disclaimer. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as Annexure C. Particulars of Remuneration The information required under Section 197 (12) of the Act read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure D The information required under Rule 5 (2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. Extract of Annual Return Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in form MGT.9 is annexed as Annexure E. Management Discussion and Analysis and Corporate Governance The Management Discussion and Analysis Report and the Report on Corporate Governance, as required under Clause 49 of the Listing Agreement, forms part of the Annual Report. Corporate Governance Your Company is committed to the tenets of good Corporate Governance and has taken adequate steps to ensure that the requirements of Corporate Governance as laid down in Clause 49 of the Listing Agreement are complied with. A separate report on Corporate Governance and a Management Discussion and Analysis Report is being presented as part of the Annual Report. A Company Secretary in Practice has certified that conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement have been complied by your Company and his certificate is annexed to the Report on Corporate Governance. A declaration of Code of Conduct from J. Lakshmana Rao, Chairman and Managing Director forms part of the Corporate Governance Report. Risk Management: All assets of the Company and other potential risks have been adequately insured. Employee Relations The relationship with the workmen and staff remained cordial and harmonious during the year and the management received full co-operation from the employees. Acknowledgements Your Directors wish to place on record their appreciation and gratitude for all the assistance and support received from Citibank and ICICI Bank Limited and officials of concerned government departments for their co-operation and continued support extended to the Company. They also thank the Members for the confidence they have reposed in the Company and its management. For and on behalf of the Board of Directors (J.LAKSHMANA RAO) Chairman & Managing Director Hyderabad 31st August, 2015 |