DIRECTOR'S REPORT To, The Members, Your Directors have pleasure in presenting their 25th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015. Brief description of the Company's working during the year/State of Company's affair The company has suffered a loss of -3,556,680/- During the year 2014-15 which was -1,458,521/- during the last financial year 2013-14. Companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year: Adroit InfoTech Private Limited became subsidiary of the company on 07.11.2014 Consolidated Financial Results Consolidated Financial Statements incorporating the operations of the Company, its subsidiaries is appended. As required under the provisions of the Act, a statement showing the salient features of the financial statements of the subsidiaries, associates and joint ventures is forming part of this Annual Report. The financial statements of the subsidiary companies will be made available to the members of the Company and its subsidiary companies on request and will also be kept for inspection in the Registered Office of the Company. Material Changes and Commitments, if any, affecting the financial position of the company The Company has made acquisition of a Pune based IT Company namely ADROIT InfoTech Private Limited. There are no other Material Changes and Commitments affecting the financial position of the Company which occurred between the end of the financial year to which the financial statements relate and the date of this Report. Further the company has now entered into IT and ITES business. Consolidated Financial Statements (CFS) In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS -23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report. The CFS should therefore be read in conjunction with the directors' reports, financial notes, cash flow statements and the individual auditor reports of the subsidiaries. Share Capital The Authorised Share Capital of the company is Rs. 39,31,50,000/- divided into 39315000 equity shares of Rs.10/- (Rupees Ten) each. The Issued, Subscribed and Paid up Capital of the Company is Rs. 174,688,720./- divided into 1,74,68,872 equity shares of Rs.10/- (Rupees Ten) each. The Company has made preferential issue of 10,00,000 warrants pursuant to the special resolution passed at the Extraordinary general meeting held on 15.06.2015. Company has received in-principle approval from the Bombay stock exchange in respect of 10,00,000 warrants. However, the Bombay stock exchange required calculation of minimum price of warrants as per ICDR Regulations and the same to be disclosed at the general meeting of the company. Members to take note of same. Directors and Key Managerial Personnel Board of directors is duly constituted. Mr. Ramakrishna Bhaskar Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for reappointment. Ms. Suneeta Vishnupanthulu was appointed as additional director w.e.f 24.03.2015 Mr. S. Sudha Kiran Reddy to be appointed as Managing director of the company for a period of 3 years w.e.f. 30.09.2015 Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, Directors of your Company hereby state and confirm that: i. in the preparation of the annual accounts for the financial year ended 31st March 2015, the applicable accounting standards had been followed along with proper explanation relating to 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 or loss 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 Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. That the Directors have prepared the accounts for the financial year ended 31st March 2015 on a 'going concern' basis. v. That the Directors laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and Vi. That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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 and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Meetings Of The Board The Board of Directors duly met 10times on 30.05.2014, 26.07.2014, 07.08.2014, 14.08.2014, 24.09.2015 , 30.09.2014, 14.10.2014, 07.11.2014 , 09.02.2015, 24.03.2015 in respect of which meetings, proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose. Constitution and Composition of Audit Committee In Compliance with the provisions of Companies Act, 2013, Audit Committee has been constituted. The Composition of the Audit committee is as follows: Sunder Raj - Non Executive Independent Director -Chairman S Sudha Kiran Reddy - Managing Director - Member SRS Srivastav - Non-Executive Independent Director - Member Particulars of Employees Details in respect of remuneration paid to employees as required under Section 197 (12) of the Companies Act, 2013 , read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary at the Registered Office of the Company The ratio of the remuneration of each Director to the median employee's remuneration and other details in terms 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, are enclosed in Annexure A and forms part of this Report 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. The Remuneration Policy is stated in the Corporate Governance Report. Risk management policy A statement indicating development and implementation of a risk management policy for the Company including identification therein of elements of risk, if any, this in the opinion of the Board may threaten the existence of the company. Statutory Auditors: M/s. Niranjan and Narayan, Chartered Accountants (Firm Registration No. 005899S ) to be appointed for a period of 3 years subject to ratification by members at every consequent Annual General Meeting. Therefore, ratification of appointment of Statutory Auditors for financial year 2015-2016 is being sought from the members of the Company at the ensuing AGM . Secretarial Audit Report In terms of Section 204 of the Act and Rules made there under, Mr. Manoj Kumar Koyalkar M/s. AGR Reddy & Co, Practicing Company Secretary has been appointed Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure B to this report. Reply to Secretarial Audit Report The Secretarial Auditors' Report does not contain any qualification. The report is self-explanatory and do not call for any further comments. Internal Audit & Controls The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company. The Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business. 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 as Annexure C Particulars of loans, guarantees or investments under section 186 Details of loans, guarantees or investments are provided in notes to accounts of Auditor's Report. Corporate Governance The Company is committed to maintain the high standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditor confirming compliance forms an integral part of this Annual Report in Annexure E. Management Discussion and Analysis Management Discussion and Analysis Report, pursuant to Clause 49 of the Listing Agreement, forms part of this report and the same is forming part of this report. Conservation of Energy &Technology absorption Information on conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are as follows: We firmly believe that technology is the genesis of innovative business practices, which in turn enable the organization to carry out business effectively and efficiently. Even though the Information Technology industry is technology intensive, we believe that there is an increasing need to mechanize the processes involved in order to minimize costs and increase efficiency. We intend to make investments in innovative techniques for this regard. Energy: The Company is in the business of development of Information Technology and does not require large quantities of energy. However, wherever possible energy saving efforts are made. Listing With Stock Exchanges: 1. The Company is listed on BSE and NSE (NSE Revocation is under process) 2. The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to BSE and NSE where the Company's Shares General listed. Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Issue of equity shares with differential rights as to dividend, voting or otherwise. 2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 3. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 4. 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. 5. There were no material changes commitments affecting the financial position of the Company between the end of financial year (March 31, 2015) and the date of the report (August 05, 2015), save and except provided in the report. 6. During the year under review, your Company did not accept any public deposits. 7. During the year under review, your company has not declared any dividend neither has transferred any amount to reserves. 8. Non-applicability of Corporate Social Responsibility under Section 135 of the Companies Act, 2013. 9. There were no Related Party Transactions entered during the financial year under review Annexure-D 10. There were no qualifications mentioned by the Auditors in their report. 11. The policies, as framed by the company is available on the web link as provided hereunder: <http://www.sphereglobal.in/policies-our-company.html> 12. There were no Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows. Acknowledgements Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels, to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation of business constituents, banks and other financial institutions and shareholders, of the Company for their continued support. By Order of the Board For SPHERE GLOBAL SERVICES LIMITED (Formerly known as Color Chips (India) Limited) S. Sudhakiran Reddy Managing Director DIN:01436242 Ramakrishna Bhaskar Director & CFO DIN:01620392 Place : Hyderabad Date : 05.08.2015 |