DIRECTORS’ REPORT

Dear Shareholders,

I. Your Directors are happy to present Thirty Second Annual Report and the Financial Results for the year ended on 31st March, 2015.

II. Management Discussion & Analysis (M D &A):

Industry Structure and developments:

India’s IT industry can be divided into five main components, viz. Software Products, IT services, Engineering and R&D services, ITES/BPO (IT-enabled services/Business Process Outsourcing) and Hardware. Export revenues, primarily on project based IT Services continue to drive growth with IT Services. This accounts for 54.2% of total revenues followed by BPO and Engineering services at 19.5%, Software Products at 15.3% and hardware at 11%. Multi-year annuity based outsourcing agreements continue to increase at a steady rate.

On an overview the companies’ had a good year in terms of financial performance, driven by factors like such as the improvement in the quality of service offerings, stable pricing environment and the depreciation of the Indian rupee. Indian IT firms continue to move up the value chain by providing more end-to-end solutions and engaging more closely with clients. They are also increasingly relying on internal cost optimization measures to improve profitability.

Opportunities and Threats:

Retention of labour has always been the most important factor in all IT companies and being in niche markets increases the risk.

Increasing competition, pressure on billing rates of traditional services and increasing commoditization of lower-end services are among the key reasons forcing the Indian software industry to make a fast move up in the software value chain. The companies are now providing higher value-added services like consulting, product development, R&D as well as new digital technologies like social media, mobility, analytics, and cloud computing (SMAC).

The new Indian government is emphasizing on better technology enabled delivery mechanisms for a multitude of government projects. Further, with the new digital India initiative being launched, the domestic market for software services looks forward to a bright future.

Outlook:

With the evolution of our new products, we expect the market to accept our products more readily and with online advertising, which we have introduced, the response has been up to the mark. Furthermore, the strategic alliances entered last year with Computer Age Management (CAMS), Chennai for providing software services that are required for KYC services for their client and UID Authority of India are working as per the expectations of the Company. We continue to develop new products and increasing our marketing strength.

Risk and Concerns:

· The first major problem developed in recent times subject to added different legal laws and norms.

· Another major problem the need to develop the optimum mix of employees. A big dilemma is to get the balance correct in terms of recruitment.

Internal Control systems and Adequacy:

The Company has a proper and adequate system of internal controls. This ensures that all transactions are authorized, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls. The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

Discussion on financial performance with respect to operational performance:

During the year under review, your Company made a Turnover of Rs. 246.47 Lakhs as against Rs. 85.23 Lakhs and incurred a profit of Rs. 32.07 Lakhs as against a profit of Rs. 13.82 Lakhs for the previous year, the Company anticipates more profits in the coming years.

Material development in Human Resource & Industrial Relations:

There are no significant developments in human resources and number of people employed.

However, all our efforts were made to retain the talent and improve the productivity.

III. Change in the nature of business - Nil

IV. Deposits: The Company has not accepted any deposits from the public during the year in pursuant to Section 73 of the Companies Act, 2013.

V. Material Changes and Commitments - Nil

VI. Number of meetings of the Board:

The Board of Directors met 6 (six) times during this financial year on 30th May, 2014, 31st July, 2014, 15th October, 2014, 30th October, 2014, 6th February, 2015 and 30th March, 2015.

VII. 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 (ANNEXURE-I).

VIII. Policy on directors’ appointment and remuneration

The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board and they demark their functions of governance and management. As on March 31, 2015, the Board consists of 5(five) members, two of whom are executive, one is non-executive and two are independent directors. The Board periodically evaluates the need for change in its composition and size. The policy of the Company on directors’ appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Sub-Section (3) of Section 178(4) of the Companies Act, 2013, adopted by the Board, is appended as Annexure-II to the Board’s report. We affirm that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company.

IX.Changes in the composition of Board of Directors:

· Ms. Geeta Feroz Bhote (DIN: 06976756) appointed as a non-executive Director with effect from 6th February, 2015 and who is liable to retire by rotation.

· Mr. K.S Hanumaiah (DIN: 07158916) appointed as an executive Director of the Company with effect from 30th March, 2015 and as a Whole-time Director with effect from 29th May, 2015.

· Mr. F. R. Bhote (DIN: 00156590) re-appointed as Managing Director of the Company with effect from 18th February, 2015 to hold office upto 17th February, 2020.

X. Declaration given by Independent Directors:

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

XI. Contracts and arrangements with Related Parties under Section 188

The Company has not entered into any contracts or arrangements with related parties during the financial year. Therefore, AOC-2 is not required to be enclosed to this report.

XII. Particulars of loans, guarantees or investments under Section 186

The Company has not made any investments and has not given any loan or guarantee under section 186 of the companies Act, 2013.

XIII. Risk Management

The Company has developed and implemented a risk management framework that includes identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company.

The following broad categories of risks to the business objectives have been considered in our risk management framework:

• Strategy: Risks to the successful execution of the Company’s articulated strategies.

These originate from the choices we make on markets, business mix, resources and delivery models that can potentially impact our competitive advantage in the medium and long term. Risks related to scalability and sustainability of our business might also have an impact on our business.

• Industry: Risks relating to the inherent characteristics of our industry such as competitive structure, emergence of new business models, technological landscape, extent of linkage to economic environment and regulatory structure.

• Counterparty: Risks arising from our association with entities for conducting business.

The counterparties include clients, vendors, alliance partners and their respective industries.

Counterparty risks include those relating to litigation and loss of reputation.

• Resources: Risks arising from inappropriate sourcing or sub-optimal utilization of key organizational resources such as financial capital, talent and infrastructure.

• Operations: Risks inherent to business operations including those relating to client acquisition, service delivery to clients, business support activities, information security, intellectual property physical security, and business activity disruptions. Operational risks are assessed primarily on three dimensions — business process effectiveness, compliance to policies and procedures, and strength of underlying controls.

• Regulatory environment: Risks due to adverse developments in the regulatory environment that could potentially impact our business objectives and lead to loss of reputation.

• Societal: Risks and opportunities relating to our focus on the environment and society at large. Environmental focus includes conservation of essential resources such as water and energy, disposal of waste, minimizing emissions, etc. Social focus includes projects to impact the communities in the regions where we operate.

XIV. Subsidiaries, Associate Companies and Joint Ventures

The Company does not have any subsidiaries, Associate Companies or Joint Ventures.

XV. Annual Evaluation of Board’s Performance

The Nomination and Remuneration Committee of the Company approved an Evaluation Policy during the year, which was adopted by the Board of Directors. The policy provides for evaluation of the Board, the Committees of the Board and individual Directors, including the Chairman of the Board. The Policy provides that evaluation of the performance of the Board as a whole, Board Committees and Directors shall be carried out on an annual basis.

The Evaluation process focused on various aspects of the Board and Committees functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues etc. A separate exercise was carried out to evaluate the performance of individual Directors on parameters such as attendance, contribution and independent judgment.

The results of the Evaluation were shared with the Board, Chairman of respective Committees and individual Directors. Based on the outcome of the Evaluation, the Board and Committees have agreed on the action plan to improve on the identified parameters.

XVI. Transfers to reserves

The Company has not transferred any amount to the reserves in the financial year.

XVII. Dividend

In view of the accumulated losses, the Directors express their inability to recommend dividend during the year.

XVIII. Auditors

M/s. Ramanatham & Rao, Chartered Accountants bearing Firm Registration Number 002934S, Statutory Auditors of the Company who retire at the conclusion of the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if reappointed. The Company has also received a confirmation from them under Section 139(1) of the Companies Act, 2013.

Secretarial Auditor:

R & A Associates, Practicing Company Secretaries, was appointed to conduct the secretarial audit of the Company for the financial year 2014-15, as required under Section 204 of the Companies Act, 2013 and Rules thereunder.

The secretarial audit report for financial year 2014-15 forms part of the Annual Report as Annexure-III to the Board’s report.

XIX. Corporate Governance:

A report on the Corporate Governance, which inter alia, includes the composition and construction of Audit Committee, is featuring as a part of Annual Report. Your Company will continue to adhere in letter and spirit to the good corporate governance policies. Pursuant to the provision of Clause 49(VII)(1) of the Listing Agreement, a certificate from the auditors of the Company on the compliance of the Clause is enclosed.

XX. CEO’s Declaration:

Pursuant to the provisions of Clause 49(I)(D)(ii) of the Listing Agreement, a declaration by the Managing Director of the Company declaring that all the members of the Board and the Senior Personnel of the Company have affirmed compliance with the Code of Conduct of the Company is enclosed. The same can be viewed on the website of the Company at www.hypersoftindia.net.

XXI. Directors’ Responsibility Statement:

In accordance with the provisions of the section 134(c) of the Companies Act, 2013 and based on the information provided by the management your directors state that:

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to 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 of the Company for that period;

c. 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;

d. The directors had prepared the annual accounts on a going concern basis.

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.

XXII. Corporate Social Responsibility – N.A

XXIII. Significant and material orders - Nil

XXIV. Secretarial Standards - Not applicable during the financial year.

XXV. Internal Financial Controls

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

XXVI. Whistle Blower Policy/ Vigil Mechanism

To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behaviour in all its operations, the company has formulated a Vigil Mechanism/Whistle Blower Policy that governs the actions of its employees. This Whistleblower Policy aspires to encourage all employees to report suspected or actual occurrence(s) of illegal, unethical or inappropriate events (behaviors or practices) that affect Company’s interest / image.

A copy of the Policy is available on the website of the Company.

XXVII. Disclosures Under Sexual Harassment Of Women At Workplace (Prevention, Prohibition & Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. During the financial year 2014-15, the Company has not received any complaints on sexual harassment.

XXVIII. Conservation of Energy & Technology Absorption, Foreign Exchange Earnings and Outgo:

A. Conservation of Energy:

(a) Energy Conservation measures taken: Your Company’s operations are software oriented and not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy-efficient computers and equipment.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Exchanging legacy CRT monitors with LCD power saving monitors.

(c) Impact of the measures (a) and (b) above for energy consumption and consequent impact on the cost of production of goods: As energy conservation is very meager and energy cost forms a small part of total costs, the impact of costs is not material.

B. Technology Absorption: Research and Development (R & D):

1. Specific areas in which R & D carried out by the Company:

The Company continues to focus and invest in R & D activities for developing and improving the quality and enhancing the benefits of its software products. The Company is a product oriented Company and the continuous development of new products and the existing products is an ongoing exercise.

2. Benefits derived as a result of the R & D:

Research and development of new products & processes will continue to be of importance to your Company. Products although have a longer gestation, are of higher benefit to the Company and its profitability in the long run.

3. Future plan of Action:

The Company continues to strive for development and innovation of new products and improving the existing ones in order to meet the changing requirements and to cater to customer needs.

4. Expenditure on R & D: -NIL

Technology Absorption: Adaptation and Innovation:

As a result of new partnerships the Company now has absorbed new technologies and will result in better adaptation to Indian customer needs.

XXIX. Appreciation:

Your Directors place on record their appreciation of the continued assistance and co-operation extended by the shareholders, customers, bankers and the dedicated employees and the business associates.

For and on behalf of Board of Directors

(F.R. Bhote)

Managing Director

DIN: 00156590

Place: Secunderabad

Date : 25-08-2015