Directors Report 1.Your Directors are pleased to present the Twentieth Annual Report on the business and operations of the Company for the year ended March 31, 2015. 2. Management Analysis and Discussions Company performance: During the year, your Company earned total revenues of Rs. 10535.31 lacs compared with Rs. 7764.54 lacs during the previous year, reflecting a growth of 35% over the previous year. The profit before tax stood at Rs.103.17 lacs as compared to Rs. 83.87 lacs in the previous year reflecting a growth of 24%. The Company has made a provision of tax totaling to Rs. 34.40 lacs and the profit after tax stood at Rs.68.76 lacs for the current year. The Operating Profit (earnings before depreciation and interest and tax) grew from Rs. 358.77 lacs to Rs. 418.24 lacs. Your Company has continued to delivery strong performance and further strengthened its position in the market. The performance was achieved in the background of a fast changing industry landscape and a challenging economic scenario. Your Company's growth has been a result of its customer centric approach and a balanced portfolio of integrated solutions and services. Core focus areas during the year have been customer acquisition and engagement of strategic customers to ensure products aligned with customer expectation and market requirements for sustained growth. Industry structure and developments: The year under review was one of the most challenging ones in recent years. The year saw continued volatility even in the midst of positive factors like declining oil prices and US economy showing signs of revival. The market for IT services is growing in the midst of continued volatility in large global economies in spite of oil prices showing a declining trend. In India although the sentiment continues to be positive, demand on the ground has not picked across product categories. There is an increasing trend seen in customers both in India and in the Global context, embracing Social media, Mobility, Analytics and Cloud (SMAC) to drive growth and derive competitive advantage especially with analytics and mobility becoming integral to IT strategy. This has led to a dynamic value ecosystem digitally connecting products and services that combine to meet customer needs and deliver more business value. Review of operations: Dynacons' Enterprise Services offerings include a wide spectrum of Enterprise IT and Office Automation Services including Infrastructure Managed Services, Breakfix Services, Managed Print Services, Cloud Computing, Systems Integration Services, and Applications Development and Maintenance. The Company provides end-to-end technology and technology related services to corporations across industry verticals. The Company has deep domain knowledge across industry sectors and technology expertise across traditional and new age technologies. Dynacons undertakes all activities related to IT infrastructure including infrastructure design and consulting services, turnkey systems integration of large network and data centre infrastructures including supply of associated equipment and software; on-site and remote facilities management of multi- location infrastructure of domestic clients. The Companys' domain knowledge and technology expertise combined with its delivery capability offers unique advantage to its customers. The Company has built a strong customer base, variety of talent and a competent service delivery infrastructure. The systems integration business focuses on creating solutions and providing services for the IT infrastructure requirements covering infrastructure architecture, design and consulting services; turnkey system integration of large network and data centre infrastructures. The scope of services includes supply of associated equipment and software; On-Site and Remote Support Services for multi-locations for the IT infrastructures. The Company has undertaken several solution deployments such as National Payments Corporation of India, IDBI Bank, Reserve Bank of India, State Bank of India, Central Bank, Bank of India, etc. Your Company undertakes large scale network setups and rollouts. We have successfully completed the networking setup of the 2 new lounges at the new Terminal 2, International Airport at Mumbai. This included setup of a wired and Wi-Fi infrastructure alongwith deployment of the server infrastructure. Your Company made several wins in the state of Madhya Pradesh. Notable wins are the MP Advocate General Case Management System, Public Examination Board, IGRS and Water Resource Department. Services offered include Application Development, Data Centre build, System Integration, Digitization, Project Management, Networking and support over multiple years. Your Company continues to develop deeper, more strategic relationships with global customers like H & M, British Airways, Sita, Zoetis, Levi's, Schindler etc. Your Company is also working on several projects with the Tier I System Integrators like TCS, Tech Mahindra, Atos, UST Global, L&T Infotech etc. Infrastructure Management Services: This is a key growth engine of our Enterprise Services business. The business significantly increased its annuity contract bank backed by multiple deals in BFSI, Manufacturing, Hospitality, & Government verticals in India. In FY14, we launched many productivity and customer service improvement initiatives including field force automation, spares cycle time reduction, traveltime reduction through optimalroute planning, remote resolution improvement, etc. We recognise that for most organisations the management of their ICT infrastructure must balance the need for availability, flexibility and security against the need for keeping the cost of ownership as effective as possible. All of our services and operations are fully aligned with the world's most respected standards and frameworks. Our processes are based on the IT Infrastructure Library (ITIL®) service management framework with a focus on continuous service improvement and customer satisfaction. Your Company has developed and refined its Service Delivery Model to ensure a consistent and controlled service process. Your Companys' Service Delivery Model is an integrated Service Management process delivery model, with the objective of enabling delivery of high quality, standardised, repeatable and consistent services for our customers. Our teams provide first class onsite and remote support services including logistics management and full equipment lifecycle management. Fully integrated into our service management solutions, our engineering capability enhances workspace delivery across the nation. The Company's relentless focus on delivery excellence and customer satisfaction has won the Company multiple awards and recognitions in the marketplace. Your Company has won awards for work undertaken in the Managed Services, Data Centre, Storage and Security domain. These awards are testimony to the commitment of our team for the hard work and dedication which ensures that we deliver an extraordinary experience to our customer. Our key differentiators include an end-to-end services and solutions driven model with a strong focus on quality in every aspect of service and product delivery. Dynacons has an established nationwide support network to provide multi location multi platform support for organisations. Our ability to align our teams to the customers business goals, together with our extensive domain and technology expertise, has helped us to remain relevant to our customers. Strengths The Companys' market strategy is to offer the full range of IT services, have presence in all industry segments through a diverse range of products and service offerings, and continue expanding geography presence. The product and service portfolio is based on providing end-to-end solutions in the Systems Integration and Managed Services space. The Company maintains a competitive edge through a wide spectrum of technology skills, including niche areas. Your company has unique end to end servicing and solution capabilities that differentiate it from the traditional vendors in the market place. Dynacons has a team of specialists with experience in leveraging technology to help improve efficiency. The Company provides dynamic technology solutions and has the capability to address the increased complexity, cost and risk associated with these technology platforms. Your Company's offerings span across areas relevant to each organization. Quality Sustained commitment to highest levels of quality, best-in-class service management, robust information security practices and mature business continuity processes helped the Company attain significant milestones during the year. Your Company continues to strive towards maintaining sustainable growth through the philosophy of business excellence Recognizing that workforce competency is a powerful growth engine, competency mapping and development was completed for the workforce with appropriate interventions through a learning and development plan. Your Company continues to strive towards process improvement for ensuring high quality delivery and high levels of customer satisfaction. A strong emphasis is based on quality in every aspect of the company's activities. In line with this philosophy we have designed our quality management program and have defined several key parameters for measurement of quality levels to ensure improvement in the quality of the deliverables. Customer satisfaction and excellence in quality are key elements for succeeding in the competitive global market. Review of key business processes like business planning, reporting and communication has been done to make them more effective in meeting business objectives. The Company's ERP system enables the business to yield higher employee productivity, save time and our employees can focus their energy and time in providing enhanced services and capturing new clients. Moving forward your company shall continue to further strengthen its processes by adopting best in class standards. Outlook We are at the beginning of a new era - the Digital Revolution - which is resulting in the Consumerisation of IT fuelled by a set of technologies referred to as Social, Mobile, big Data and Cloud. This began as a technological change but is rapidlity transforming and impacting every facet of our lives and work. Such transformations are drivings businesses to change and adapt. Going forward, new concepts like service as a software, agile platforms and artificial intelligence will play a bigger role in enterprise IT and your Company is well positioned to play a significant role in this journey. There is a rising intensity of technology adoption across industry verticals which are fuelling adoption of newer platforms. The technologies themselves have a shorter shelf life now than ever before. This leads businesses to move from committing and investing on a technology platform to making use of technology on an Opex model. Therefore, there is a greater propensity to outsource which is showing no sign of tapering off. Overall the objective is to minimise the overall transaction costs by appropriate and customised use of Technology. IT companies like ours are already well positioned and ahead of the curve intaking advantage of the emerging opportunities. Indian IT industry would continue its growth path and will weather any volatility in the global economy on the back of strong domestic market which is still largely unserved and has unmet needs. The IT skills supply is marked by some very high levels of skills and cutting edge web technologies. In addition there is a strong trend towards digital and e commerce based start-ups indicating a healthy innovative culture building up which would foster IP led as an add-on to services led growth so far witnessed. The Company's strategy for long term growth continues to be to (a) expand its addressable market by investing in newer geographies and newer businesses and (b) strengthen and deepen existing client relationships through a customer-centric approach, superior execution that gives clients an experience of certainty, a full services capability and a scalable global network delivery model. Your Company will continue to invest in the three horizon portfolio of derivative innovation (improvements on current offerings), platform innovations (near term advancements) and disruptive innovations (long term or new market focused investments). With the maturity of technologies around the 'Internet of Things', your Company has scaled up its efforts to build competencies in that area. As an organization, your Company continues to be driven by a strong performance ethich and a strong set of values and behaviours and is committed to delivering excellence. Our investments in our people, capabilities, technology and infrastructure continue to ensure that your Company remains the partner of choice for customers. Opportunities and threats Opportunities (1) Domestic market to get boosted due to Government focus on "Digital India" and "Make in India" and "Smart Cities". (2) Increasing penetration of Internet in India with the rapid expansion of broadband spectrum availability is enabling businesses to look at Tier II/Tier III cities not only for addressing newer markets but also for IT companies to look for delivery centres in these places. As a result, IT and network Infrastructures services and associated value added services would therefore be a growth area. (3) The adoption of SMAC technologies is expected to drive growth in all the segments. Cloud and client maturity are the major drivers for across the industry verticals. (4) E Commerce is driving rapid growth with unprecedented levels of funding. This will bring in opportunities for IT services and associated opportunities for provision of skilling services. Threats Competition is the main threat to most tech outfits, considering the relentless product cycles, the typically rapid move towards commoditization in the sector and also changes in technology and markets, changes in government policy or regulations / legislation etc. also brings challenges and treats to the smooth functioning of the Company. Since the IT sector is exposed to high attrition rate due to more opportunities available in market for the employee, retaining existing talent pool and attracting new talented manpower is a major risk to the Company. The Company has initiated various measures to enhance the retention of employees during the year. Risks and Concerns The Company's objectives and expectations may be forward looking within the meaning of applicable laws and regulations. The competition from large international and Indian IT companies is increasing in the domestic market space. Actual results may differ materially from those expressed. Important factors that could influence the Company's operations include change in government regulations, tax laws, increased competition, economic and political developments. The growth in the economy and IT industry is expected to lead to higher job opportunities and increased demand. This is leading to higher attrition across the IT industry. The speed of technology obsolescence has increased as a natural reaction to fast changing technologies. The productive life of IT resources and competencies is shrinking, thereby increasing the level of investment needed to meet the market requirements. Internal control systems and their adequacy Your Company has an effective internal control and risk mitigation system, which are constantly assessed and strengthened with new/revised standards operating procedures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. Dynacons Systems & Solutions Limited have a well-defined delegation of power with authority limits for approving revenue as well as expenditure and processing payments. Dynacons Systems & Solutions Limited has an audit committee, the details of which have been provided in the corporate governance report.The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggest improvements to strengthen the same. The Company has the robust Management Information System, which is an integral part of the control mechanism. 3. Dividend With a view to plough back the profits of the Company and keeping in mind the expansion of business activities, the Board of Directors consider it prudent and recommend not declaring any dividend for the year ended March 31, 2015. 4. Directors and Key Managerial Personnel Pursuant to Section 149 of the Companies Act, 2013, the Board recommended the appointment of Ms. Archana Phadke for a period of 5 Years as an Independent Director of the Company, not liable to retire by rotation from the date of its 20th Annual General Meeting subject to approval of the Members of the Company. Ms. Archana Phadke (holding Din 07138774), was appointed as an Additional Director designated as an Independent Director w.e.f. March 27, 2015. The Director has given the declaration to the Board that she met the criteria of independence as provided under Section 149(6) of the said Act and also confirmed that she will abide by the provisions as mentioned in Schedule IV of the Companies Act, 2013. Mr. Parag Dalal, Whole Time Director, retires by rotation and being eligible, has offered himself for re-appointment. The Board recommends the same for your approval. The terms of appointment made for Mr. Parag Dalal as Whole Time Director dated 1st February, 2012, shall stand altered and be read as "rotational director" instead of "non- rotational director" due to applicability of Companies Act, 2013 since Independent Directors are not liable for retire by rotation. The Board recommends the resolutions for your approval for the above appointments. Also during the year, Mr. Ravi Singh, Company Secretary & Compliance officer was appointed as Key Managerial Personnel w.e.f. August 14, 2014 as per Section 203 of Companies Act, 2013. 5. Auditors Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s. Palan & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company from the conclusion of the 19th Annual General Meeting (AGM) of the Company held on 30th September, 2014 till the conclusion of the 22nd AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. AUDITORS' REPORT The Auditors' Report does not contain any qualification. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments. 6. Corporate Governance As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Statutory Auditors' Certificate regarding compliance of conditions of Corporate Governance forms part of the Annual Report. Your Company has always practiced sound corporate governance and takes necessary actions at appropriate time for meeting stakeholders' expectations while continuing to comply with the mandatory provisions of corporate governance. 7. Code of Conduct for Directors and Senior Management The Directors and members of Senior Management have affirmed compliance with the Code of Conduct for Directors and Senior Management of the Company. The copies of Code of Conduct as applicable to the Executive Directors (including Senior Management of the Company) and Non-Executive Directors are uploaded on the website of the Company - www.dynacons.com . 8. Familiarization Program for Independent Directors The Company has practice of conducting familiarization program of the independent directors as detailed in the Corporate Governance Report which forms part of the Annual Report. 9. Relationship Between Directors Inter-Se The Directors, Mr. Shirish M. Anjaria & Mr. Dharmesh S. Anjaria having father and son relationship are related to each other within the meaning of the term "relative" as per Section 2(77) of the Act and clause 49(VIII)(E)(2) of the revised listing agreements. Other than these, none of the Directors are related. 10. Particulars of the Employees The information as required under Section 197 of the Act and rules made there-under is not applicable as none of the employees are in receipt of remuneration which exceeds the limits specified under the said rules. 11. Documents placed on the Website of the Company: The following documents have been placed on the website in compliance with the Act: • Financial statements of the Company along with relevant documents. • Details of Vigil mechanism for directors and employees to report genuine concerns as per proviso to Section 177(10). • The terms and conditions of appointment of Independent Directors as per Schedule IV to the act. 12. Human Resource Management (Material developments in Human Resources / Industrial Relations front, including number of people employed) The Company continues its focus on retention through employee engagement initiatives and provides a holistic environment where employees get opportunities to realize their potential. The human resource (HR) strategy is focused on creating a performance-driven environment in the Company, where innovation is encouraged, performance is recognised and employees are motivated to realise their potential. HR is the core of the Company, influencing change, building culture and capabilities. The HR processes are continuously evolving and aligning with the changing business requirements. The effort is towards developing competencies in technology, domain and processes to meet customer requirements and help our employees to stay relevant and realise their potential. Your Company maintained the momentum during the year implementing Human Resource practices for effective staffng, retention, training and staff development facilitating delivery excellence for our customers. The company's people centric focus providing an open work environment fostering continuous improvement and development helped several employees realize their career aspirations during the year. Your company has continually adopted structures that help attract best external talent and promote internal talent to higher roles and responsibilities. Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes, which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement. In the current global work environment, our company focuses on lowering employee turnover and on retaining the talent and knowledge held by the workforce. New hiring not only entails a high cost but also increases the risk of a newcomer not being able to replace the person who was working in that position before. Human Resource departments also strive to offer benefits that will appeal to workers, thus reducing the risk of losing corporate knowledge. 13. Credit Rating Your Directors have pleasure to inform that CARE Ratings has assigned CARE BB+ rating to your Company for long term bank facilities for a total amount of Rs. 13 Crores. CARE has also assigned A4+ rating for the short term bank facilities of the Company up to Rs. 3.50 Crores. CARE had carried out a credit rating assessment of the Company both for short term and long term bank facilities in compliance with BASEL II norms implemented by Reserve Bank of India for all banking facilities. This enables the Company to access banking services at low costs. 14. Fixed Deposits Your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as on the date of the Balance Sheet. 15. Directors Responsibility Statement Pursuant to the provisions of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, the Directors based on the information and representations received from the operating management confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with no material departures; (b) The directors had 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 and loss of the Company for that period; (c) The directors had taken proper and sufficient care, to the best of their knowledge and ability, 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 directors had prepared the annual accounts on a going concern basis; and (e) The directors, 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) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 16. Conservation of Energy, Technology Absorption, Research & Development and Foreign Exchange Earnings and Outgo Information pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) the Companies (Accounts) Rules, 2014 forming part of Directors' Report for the year ended 31st March, 2015 is as under : Conservation of Energy: The Company's operations involve low energy consumption. However efforts to conserve and optimize the use of energy through improved operational methods and other means will continue. Technology Absorption: The Technology available and utilized is continuously being upgraded to improve overall performance and productivity. Research & Development: Your Company believes that research & development is a continuous process for sustained corporate excellence. Our research & development activities help us in product and service improvement, effective time management and are focused to provide unique benefits to our customers. Such methods do not involve any specific cost burden to the Company. Foreign Exchange Earnings : Rs. Nil (previous year Nil) Foreign Exchange Outgo : Rs. 25.55 Lacs (previous year 24.57 lacs) 17. Board Evaluation Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committee. 18. Declaration by an Independent Director(s) A declaration has been received by an Independent Director(s) that they meet the criteria of independence as provided in subsection (6) of Section 149 of the Companies Act, 2013 and revised Clause 49 of the Listing Agreements. Further, there has been no change in the circumstances which may affect their status as independent director during the year. 19. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. 20. Secretarial Audit Report Pursuant to Section 204 of the Companies Act, 2013, the Company had appointed, Ms. Shruti Shah, Practicing Company Secretary as its Secretarial Auditor to conduct the Secretarial Audit of the Company for the F.Y 2014-15. The Company provides all the assistance and facilities to the secretarial auditor for conducting their audit. Report of Secretarial Auditors for the F.Y 2014-15 in Form MR-3 is annexed to this report as Annexure-II. 21. Internal Audit & Controls The Company has in place proper and adequate internal control systems commensurate with the nature of its business and size and complexity of its operations. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. 22. Vigil Mechanism (Whistle Blower Policy) Your Company has established a mechanism called 'Vigil Mechanism' for directors and employees to report the unethical behavior, actual or suspected, fraud or violation of the Company's code of conduct or ethics policy and provides safeguards against victimization of employees who avail the mechanism. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.dynacons.com . 23. Risk Management Risks are events, situations or circumstances which may lead to negative consequences on the Company's businesses. Risk management is a structured approach to manage uncertainty. As a formal roll-out, all business divisions and corporate functions will embrace Risk Management Policy and Guidelines, and make use of these in their decision making. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The risk management process in our multi-business, multi-site operations, over the period of time will become embedded into the Company's business systems and processes, such that our responses to risks remain current and dynamic. The Risk Management is overseen by the Audit Committee of the Company on a continuous basis. The Committee oversees Company's process and policies for determining risk tolerance and review management's measurement and comparison of overall risk tolerance to established levels. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. For details, please refer to the Management Discussion and Analysis report which form part of the Board Report. 24. Extract of Annual Return As required pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT-9 as a part of this Annual Report annexed as Annexure-I. 25. Particulars of Loans, Guarantees or investments Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 26. Particulars of contracts or arrangements with related parties The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto have been disclosed in Form No. AOC-2 as Annexure-III. 27. Obligation of company under the sexual harassment of women at workplace (prevention, prohibition and redressal) act, 2013 In order to prevent sexual harassment of women at work place, a new Act The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified. Under the said Act, every Company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee. Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year, Company has not received any complaint of harassment. 28. Acknowledgements Your Directors thank the Company's Investors, Clients, Vendors, Bankers, Business and various governmental as well as regulatory agencies for their continued support and confidence in the management. Your Directors wish to place on record their deep sense of appreciation of the dedicated and sincere services rendered by employees at all levels during the year. Your Company's consistent growth was made possible by their hard work, solidarity, cooperation and support. For and on behalf of the Board of Directors Shirish Anjaria Chairman cum Managing Director Din no.: 00444104 Parag Dalal Executive Director Din no.: 00409894 Date : August 31, 2015 Place : Mumbai |