DIRECTORS REPORT Dear Shareholders, 1. Your Directors presenting their Report on the Business & Operations of your Company and its working results for the year 2014-15. 2. DIVIDEND The Company and the Group incurred a loss for the year and have accumulated negative reserves as at the year end. The Directors therefore recommend that no dividend be paid in respect of the Financial Year 2014-2015. 3. BUSINESS UPDATE AND OUTLOOK After the buyer for RVC Towers that was reported last year, failed to complete the transaction the company has been unable to secure an alternative buyer even at a reduced price. Demand for office space in Chennai continues to be weak due mainly to over-supply; whilst Rupee interest rates have continued to be held high both by the RBI and by the RVC mortgagee, who is concerned about the company's continuing ability to settle the interest and capital payments as they fall due, in the absence of sufficient income from rentals. As a result the company's only remaining business, that of letting out the floors of RVC Towers that it owns, has been loss making throughout the year and is totally dependent on continuing financial support from its major shareholder. The company continues to look for tenants to fill the vacant floors of RVC Towers, and for a buyer of the building. Until it finds a buyer for RVC the shares of the company are not an attractive option for a partner seeking a reverse takeover due to the high loan interest and low rentals on RVC. At the date of this report we have a number of prospective buyers for the building with whom we are in preliminary talks. RESULTS OF OPERATIONS I - Consolidated Results During the year, your Company on a consolidated basis with all its subsidiaries earned total revenue of $ 3.69 Crores as against $ 7.22 Crores earned during the previous year. The profit before tax during the year is $ (15.10) Crores as against $ (14.43) Crores for the previous year. After taking into account the tax provisions and adjustments for minority interest, prior period adjustments and extraordinary items if any, the loss for the year is $ (15.10) Crores as against a loss of $ (14.48) Crores of the previous year. II - Standalone Results During the year, your Company on a standalone basis earned total revenue of $ 3.63 Crores as against $ 7.20 Crores earned during the previous year. The profit before tax during the year is $ (12.12) Crores as against $ (18.56) Crores of the previous year. After taking into account the tax provisions and adjustments, the loss for the year was $(12.12) Crores as against a loss of $(18.56) Crores for the previous year. 4. REVIEW OF SUBSIDIARIES I - CSWL, Inc. USA and its Subsidiaries CSWL Inc and its subsidiaries has not earned any revenue of during the year, compared to US$ 938,571 achieved during the previous year. The subsidiary reported a loss of US$ (43926) as compared to a profit of of US$ 833,275 last year. The results of existing subsidiaries International Innovations, Waldron Ltd and AspireSoft Corporation are included for the full year under review. The Company and its subsidiaries are in the process of liquidation. II - Aspire Communications Private Ltd The Consolidated results of Aspire including its wholly owned Subsidiary Aspire Peripherals Limited have been taken into Company's Consolidated results for the full year. Aspire on a consolidated basis has reported revenues of $ 0.002 Crores with loss of $ (2.71) Crores against the consolidated reported revenues of $ 0.016 Crores with a loss of $ (0.94) Crore of the previous year. The Company and its subsidiaries are in the process of liquidation. 5. CONSOLIDATED RESULTS PUBLICATION As per Section 129 of the Companies Act, 2013, a copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors of the above subsidiary companies have not been attached with the Balance Sheet of the Company. The Company will make available these documents upon request in writing to the Company Secretary at the Registered Office of the Company by any member of the Company interested in obtaining the same. However, as required under the Listing Agreements with the Stock Exchanges, the Consolidated Financial Statements of the Company and all its Subsidiaries as prepared in accordance with Indian GAAP is enclosed and form part of the Annual Report and Accounts. 6. DIRECTORS Mr. Frederick Ivor Bendle has been appointed as additional director with effect from 23rd September 2014. His appointment was confirmed at the Annual General Meeting held on 27th November 2014. He is retiring at this Annual General Meeting and being eligible offer himself for re-appointment. Ms.Vijayapriya was appointed as Additional Director with effect from 30th April 2015 and hold office until the conclusion of this Annual General Meeting. The Company has received notice under Section 160 of the Companies Act, 1956 from a member proposing Ms.Vijayapriya as Director and a resolution for her appointment forms part of the Notice. 7. AUDIT RELATED MATTERS 7.1. Audit Committee In terms of clause 49 of the listing agreement and the provision of Section 177(8) read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules 2014 the company has duly constituted a qualified and independent Audit Committee. During the period under review, the suggestions put forth by the Audit Committee were duly considered and accepted by the Board of Directors. There were no instances of non-acceptance of such recommendations. 7.2. Statutory Auditors At the Annual General Meeting of the Company held on 27th November 2014, M/s.Tomy & Francis, Chartered Accountants (Firm Registration Number 010922S) were reappointed as the Statutory Auditors of the Company to hold office until the conclusion of this Annual General Meeting. Since the Company has time up to the year 2017 to comply with the provisions relating to rotation of auditors as stipulated in Section 139 (2) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, it has decided to re-appoint the auditors for the financial year 2015-2016. Accordingly, the appointment of M/s.Tomy and Francis, Chartered Accountants, as statutory auditors of the Company, is placed for approval by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. The Audit committee and the Board of Directors recommend the appointment of M/s. Tomy and Francis Chartered Accountant as Auditors to hold office up to the conclusion of next Annual General Meeting. 7.3. Qualifications in Auditors Report With reference to auditor's remark in audit report, we state as follows:- 1. Note 26 and 27 in the stand alone financial statements which indicate that the Standalone Company has accumulated losses and its net worth has been fully eroded, the Standalone Company has incurred a net loss during the current and previous year(s) and, the Stand alone Company's current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters set forth in Note 26, indicate the existence of a material uncertainty that may cast significant doubt about the Stand alone Company's ability to continue as a going concern. On sale of RVC Towers we are unlikely to realize any more than is required to settle amounts due to Canara Bank, and so after a sale the company would be left with no rental incomes and therefore no income at all to meet its ongoing staff and administration costs. Unless we can find a buyer for the Company who can attribute some value to the company's listed status and who would be willing to make an offer for the entire share capital, a sale of RVC Towers would most likely trigger the winding up of the Company. 2. Note No. 29 to the standalone financial statements and Notes to Fixed Asset schedule regarding Change in Depreciation Policy of Fixed Assets and resultant loss amounting to $ 58,64,486/- including prior period Depreciation of $ 50,21,028.00/-. As per estimation of management no impairment of Fixed Assets was considered during the year 2014-15, since impairment losses on Fixed Assets were provided and recognized in the previous years. However, depreciation rates have been changed to amortise the depreciable value over the useful life as set out in Schedule II of Companies Act, 2013, equally, as the holding company is expected to use the same for letting out, which will be in tune with Schedule II of Companies Act 2013. Depreciation is charged on building based on the estimated remaining life period of 25 years from the date of valuation on 17-01-2013 by the approved valuer. Useful life of various assets is as given below estimating a residual value of 1% on original cost at the end of useful life. Item Useful life Furniture & Fitiings 10 years Office Equipment 5 Years Total additional depreciation charged to the profit and loss Account is Rs. 58,64,486/-. 3. Note No. 30 to the stand alone financial statement regarding write back of Account Payables to Aspire Communications P Ltd and Aspire Peripherals P Ltd, two wholly owned subsidiaries of the Standalone Company amounting to Rs. 253,45,879.00/-. Since the company has fully stopped its principle business being Software Development and its sales and service and company have no trade receivables during the year. Payables to Aspire Communications P Ltd and Aspire Peripherals P Ltd, wholly owned subsidiary of the company amounting to Rs. 253,45,879/- has been written back to Profit and loss account as Exceptional item as these companies have stopped all it activities. 4. Note no. 31 to the standalone financial statement regarding unsecured loans from Associate companies amounting to Rs. 246,936,135.00/-. Auditors notes are self explanatory. 5. Company's Overseas subsidiary CSWL Inc and Indian subsidiary Aspire Communications P Ltd and it subsidiary Aspire peripherals P Ltd have stopped their operations fully. CSWL Inc has initiated Liquidation proceedings. Those companies ceased to carry on any business operation and are in the process of liquidation. 7.4. Secretarial Audit M/s.V.S.Sowrirajan & Associates, Company Secretaries-in-Practice were appointed as Secretarial Auditor for the financial year 2014-15. The Secretarial Audit Report in Form No.MR.3 issued by the Secretarial Auditor forms part of the Annual Report as Annexure 1 to the Board's report. The Secretarial Audit Report contain qualifications/adverse remarks with respect to which, we state the following: 1) In respect of delayed filing of forms, we have paid applicable additional fee and the same is considered as compliance 2) In respect of non-filing of forms, the company has noted the same and file these documents with applicable additional filing fee and ensure its due compliance 3) The women director was appointed with effect from 30th April 2015 and thus the requirement stipulated under Section 152 of the Companies Act,2013 is duly fulfilled. The delay was due to technical reasons since the concerned Director was allotted Director Identification Number only from that date. 4) Since the earnings of the company was only through Rental Income, the unaudited/audited financial results for various quarters were only submitted to Stock Exchanges and placed on the website of the company and not advertised in newspapers. 7.5. Cost Audit The Company is not required to conduct cost audit. 7.6. Internal Financial Controls There are adequate internal financial controls in place with reference to the financial statements. During the year under review, these controls were evaluated and no significant weakness was identified either in the design or operation of the controls. POLICY MATTERS 8.1. Nomination and Remuneration Policy The Company has constituted a Nomination, Remuneration and Governance Committee of the Board of Directors and formulated a Nomination and Remuneration Policy containing the criteria for determining qualifications, positive attributes and independence of a director and policy relating to the remuneration for the directors, key managerial personnel and senior management personnel of the Company. The Nomination and Remuneration Policy is available on the website of the Company www.calsoftgroup.com and relevant extracts from the Policy are reproduced in Annexure 2 to this report. The Board affirms that the remuneration paid during financial year 2014-15 to the Employees and Key Managerial Personnel was as per the Remuneration policy of the Company. 8.2. Risk Management Framework Pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the Board of Directors of the Company have constituted a Risk Management Committee which is entrusted with the task of monitoring and reviewing the risk management plan and procedures of the Company. The Company has developed and implemented a risk management framework detailing the various risks faced by the Company and methods and procedures for identification, monitoring and mitigation of such risks. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report. The risk management function is complimentary to the internal control mechanism of the Company and supplements the audit function. 8.3. Corporate Social Responsibility Policy The provisions of Section 135 of the Companies Act, 2013 and the rules made there under reltingt to Corporate Social Responsibility are not applicable to the Company. 8.4. Vigil Mechanism In terms of Clause 49 of the listing agreement and the provision of Section 177(9) read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules 2014 the company has duly established a vigil mechanism for stakeholders, directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy. The Audit Committee of the Company oversee the vigil mechanism. The Company affirm that no personnel has been denied direct access to the Chairman of the Audit Committee. The Policy also provides for adequate protection to the whistle blower against victimization or discriminatory practices. The Policy is available on the website of the Company at http:// www.calsoftgroup.com. OTHER MATTERS 9.1. Debentures During the year under review, the Company has not issued any debentures. As on date, the Company does not have any outstanding debentures 9.2. Bonus Shares The Company has not issued any bonus shares during the financial year. 9.3. Deposits The Company has not accepted any deposits in terms of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014, during the year under review and as such, no amount on account of principal or interest on public deposits was outstanding as of the balance sheet date. 9.4. Transfer to Investor Education and Protection Fund In compliance of Section 205C of the Companies Act, 1956, the dividends pertaining to the financial year 2006-07 which were lying unclaimed with the Company was transferred to the Investor Education and Protection Fund during the financial year 2014- 15. 9.5. Human Resources The Company has only one Employee. Disclosure containing the names and other particulars of employees in accordance with the Provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given below: (i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year: Not Applicable since no remuneration is paid to directors. (ii) the percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year: No Increase. (iii) the percentage increase in the median remuneration of employees in the financial year - No Increase. (iv) the number of permanent employees on the rolls of company - One (1). (v) the explanation on the relationship between average increase in remuneration and company performance- Not applicable. (vi) comparison of the remuneration of the Key Managerial Personnel against the performance of the company- Not Applicable. (vii) 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 - Not Applicable. (viii) comparison of the each remuneration of the Key Managerial Personnel against the performance of the company - Not Applicable. (ix) the key parameters for any variable component of remuneration availed by the directors - Not Applicable. (x) 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 - Not Applicable since no remuneration was paid to any director. The directors affirms that the remuneration paid by the company is as per the remuneration policy of the company. 9.6. Corporate Governance A detailed report on Corporate Governance and a certificate from the Statutory Auditors affirming compliance with the various conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. 9.7. Code of Conduct In compliance with Clause 49 of the listing agreement and Companies Act,2013 the Company has laid down a Code of Conduct (Code) for all the Board Members and Senior Management Personnel of the Company. The Code is also posted on the Website of the Company www.calsoftgroup.com. All Board Members and Senior Management Personnel have affirmed their compliance with the Code for the financial year ended 31st March, 2015. A declaration to this effect signed by Mr. Bhavesh Rameshlal Chauhan, Managing Director forms part of the Corporate Governance Report. 9.8. Management Discussion and Analysis Report In accordance with the requirements of the Listing Agreement, the Management Discussion and Analysis Report titled as Management Report forms part of this Report. 9.9. Extract of Annual Return In terms of Section 134 of the Companies Act, 2013 read with Rules 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return of the Company for the financial year 2014-15 is provided in Annexure 3 to this report. 9.10. Number of Board Meetings During the year, Eight (8) Board Meetings were held and details are available in the Corporate Governance Report. The intervening gap between two board meetings was within the period prescribed by the Companies Act, 2013. 9.11. Particulars of Loans, Guarantees and Investments In terms of Section 134 of the Companies Act, 2013, the particulars of loans, guarantees and investments given by the Company under Section 186 of the Companies Act, 2013 is detailed in Notes to Accounts of the Financial Statements. 9.12. Related Party Transactions During the year, the Company has not entered into any contract / arrangement / transaction with a related party which can be considered as material in terms of the policy on related party transactions laid down by the Board of Directors. The related party transactions undertaken during the financial year 2014-15 are detailed in Notes to Accounts of the Financial Statements. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in form AOC-2 is appended as Annexure 4 to the Board's Report. 9.13. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo Since the company is in the Information Technology Enabled Services (ITES), the provisions relating to conservation of energy and technology absorption are not applicable. Details of earnings and expenditure in foreign currency are given below: 9.14. Declaration by Independent Directors The Company has received necessary declaration from each independent director under Section 149 (7) of the Companies Act, 2013 that he/she holds the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement 9.15. Board Evaluation As required by the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the nonexecutive directors and executive directors. On the basis of Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. 9.16. Financial Position and Performance of Subsidiaries, Joint Ventures and Associates In terms of Section 134 of the Companies Act, 2013 and Rule 8(1) of the Companies (Accounts) Rules, 2014, the financial position and performance of subsidiaries are given as an Annexure 5 to the Consolidated Financial Statements. As on 31st March 2015, the Company has two subsidiaries viz., CSWL INC and Aspire Communication Private Limited. There has been no material change in the nature of the business of the subsidiaries. The consolidated financial statement has been prepared in accordance with the relevant accounting standards and a separate statement containing the salient features of the financial statement of its subsidiaries and associate in form AOC-1 is attached along with the financial statement of the Company. 9.17. Material Changes and Commitments, if any, affecting the Financial Position between the end of the Financial Year and the date of Report: There are no material changes and commitments affecting the financial position of the company between the end of financial year and the date of report. 9.18. Green initiatives Electronic copies of the Annual Report 2014-15 and Notice of the Twenty Third Annual General Meeting are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2015 and the Notice of the Twenty Third Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company. 9.19. Additional Information to Shareholders All important and pertinent investor information such as financial results, investor presentations, press releases, new launches and project updates are made available on the Company's website (www.calsoftgroup.com) on a regular basis. 10 DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(3)(c) read with 134(5) of the Act 2013, with respect to Directors' Responsibility Statement,it is hereby stated - i. that in the preparation of annual accounts for the financial year ended 31st March 2015, the applicable Accounting Standards had been followed and that there were no material departures; ii. that the directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review; iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. that the directors had prepared the accounts for the financial year ended 31st March 2015 on a "going concern basis." v. that 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; and vi. 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. ACKNOWLEDGEMENT Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/ associates and Government and regulatory authorities in India and other countries of operation for their consistent support and encouragement to the Company and look forward to their continued support during the coming years. Your Directors place on record their appreciation for the valuable contribution made by the employees at all levels. For and on behalf of the Board of Directors Bhavesh Rameshlal Chauhan Managing Director & CEO Dr. P J George Director Chennai 24th July, 2015 |