27th ANNUAL REPORT · 2012-10-25 · 27th Annual Report 2011-2012 Capricorn Systems Global Solutions Limited 5 EXPLANA TORY STATEMENT AS REQUIRED UNDER THE PROVISIONS OF SECTION 173

27th Annual Report 2011-2012

Capricorn Systems Global Solutions Limited

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27thANNUAL REPORT

2011-2012

Capricorn SystemsGlobal Solutions Limited

People and Solutions



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BOARD OF DIRECTORS

1. Mr. S. Murali Krishna Chairman2. Mr. S. Man Mohan Rao Managing Director3. Mr. G. Surender Reddy Director4. Mr. Jagadeswar Reddy Director (Upto 30th September 2011)5. Mr. Anand Deshmukh Director6. Mr. K.V. Srinivasa Rao Director7. Mr. G. Ramesh Babu Director (w.e.f. 13th August 2012)

Registered Office & Development Centre:

# 8-2-293/82A/408A,Plot No: 408A, Road No: 22A,Jubilee Hills,Hyderabad – 500 033.

Auditors:

M/s. Satyanarayana & Co.,Chartered Accountants,Amar Mansion,Rani Gunj,Secunderabad – 500 003.

Bankers:

ICICI Bank Limited,S.R. Nagar Branch,Hyderabad – 500 038.



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NOTICE

Notice is hereby given that the Twenty Seventh Annual General Meeting of the Members of CAPRICORNSYSTEMS GLOBAL SOLUTIONS LIMITED will be held on Saturday the 29th of September, 2012 at theRegistered Office of the Company situated at # 8-2-293/82A/408A, Plot No. 408A, Road No: 22A, JubileeHills, Hyderabad – 500033 at 11.00 a. m to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider, approve and adopt the audited Balance Sheet of the Company as at 31st March,2012 and the Profit and Loss Account and Cash Flow Statement for the year ended as on that datetogether with the schedules and notes thereon and the Directors and Auditors Report thereof.

2. To appoint a Director in place of Sri Anand Deshmukh, Director who retires by rotation and beingeligible offers himself for re-appointment.

3. To appoint a Director in place of Sri G. Surender Reddy, Director who retires by rotation and beingeligible offers himself for re-appointment.

4. To consider and appoint M/s. Satyanarayana & Co., Chartered Accountants as the Statutory Auditorsof the Company to hold office until the conclusion of next Annual General Meeting at such remunerationas may be decided by the Board of Directors.

SPECIAL BUSINESS:

5. To consider and if thought fit, to pass with or without modification(s), the following resolution as anOrdinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 255 and other applicable provisions, if any of theCompanies Act, 1956 Sri G. Ramesh Babu be and is hereby appointed as Director of the Company liable toretire by rotation.”

6. To consider and if thought fit, to pass the following resolution with or without modification (s) as aSpecial Resolution:

“RESOLVED THAT pursuant to the provisions of Section 269 read with Schedule XIII and subject to theprovisions of Section 198, 309, 310 and 311 and other applicable provisions, if any, of the Companies Act,1956 and subject to such approvals as may be required from time to time consent of the members be andis hereby accorded for payment of remuneration of Rs.6,00,000/- per annum to Sri S. Man Mohan RaoManaging Director of the Company.

“FURTHER RESOLVED THAT the Board be and is hereby authorised to vary, alter or modify the differentcomponents of the above remuneration as may be agreed to by the Board of Directors and Sri S. ManMohan Rao, Managing Director.”

“FURTHER RESOLVED THAT in case of absence or inadequacy of profits for any financial year Sri S. ManMohan Rao, Managing Director shall be paid a remuneration as per the limits prescribed in Section II of PartII of Schedule XIII to the Companies Act, 1956 (including any statutory modifications or re enactmentsthereof) as may be applicable from time to time.”

By order of the BoardFor Capricorn Systems Global Solutions Limited

Place: HyderabadDate: 03 September 2012

Sd/-S. Man Mohan RaoManaging Director



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NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT APROXY TO ATTEND AND VOTE INSTEAD OF HIM/HERSELF AND SUCH PROXY NEED NOT BE AMEMBER. PROXIES IN ORDER TO BE VALID AND EFFECTIVE MUST BE RECEIVED BY THECOMPANY AT ITS REGISTERED OFFICE NOT LESS THAN 48 HOURS BEFORE THE TIME FIXEDFOR THE MEETING.

2. Pursuant to the provisions of Section 154 of the Companies Act, 1956 read with Clause 16 of theListing Agreement entered into with Bombay Stock Exchange Limited the Register of Members andShare Transfer Books of the Company will remain closed from 23.09.2012 to 29.09.2012 (both daysinclusive).

3. Explanatory Statement as required under the provisions of Section 173 (2) of the Companies Act, 1956is enclosed herewith.

4. Members holding shares in physical form are requested to intimate the change, if any, in their RegisteredAddress to the Company quoting their Registered Folio. If the shares are held in Demat form, intimationregarding the change of address, if any, has to be notified to the concerned Depository Participantwhere the Shareholder is maintaining the Demat Account.

5. Green Initiatives in the Corporate Governance – Electronic Mode of Service of Documents:

Keeping in view the theme underlying the Circular issued by Ministry of Corporate Affairs (Circular No. 17/2011 dated 21.04.2011 read with Circular No. 18/2011 dated 29.04.2011), the Company proposes to sendcommunications (including the Notice calling for the Annual General Meeting, Audited Financial Statements,Directors Report, Auditors Report etc., for the year ending 31st March, 2013) to the shareholders in electronicform to email addresses of those members which are available in the records of the Registrar. Memberswho have not registered their email ids are requested to register the same.

Registration of email id of the members holding shares in electronic form should be done with the concernedDepository Participant (DP) and Registration of email id of the members holding shares in Physical Formshould be done with the Registrar.

REQUEST TO THE MEMBERS:1. Members / Proxies should bring the Attendance slips duly filled in for identification for attending the

meeting.2. Members desiring any information on the Accounts are requested to write to the Company at least one

week before the Meeting so as to enable the Management to keep the information ready. Replies willbe provided only at the Meeting.

3. Members are requested to bring their copy of the Annual Report while attending the Annual GeneralMeeting.

4. Members are requested to avoid being accompanied by non-members and or children.

PROFILE OF DIRECTORS RETIRING BY ROTATION AS REQUIRED UNDER CLAUSE 49 OF THELISTING AGREEMENT:

PROFILE OF SRI ANAND DESHMUKH: Sri Anand Deshmukh, is aged 43 years is a Graduate in Commerceand he has 15 years of experience in Business Process, Re-Engineering, Management Consulting, AdvisoryServices in Scaling up of small and medium enterprises.

PROFILE OF SRI G. SURENDER REDDY: Mr. SURENDER REDDY GARLAPATI, is a graduate has richexperience in the areas of operations management and marketing related to manufacturing industries.

PROFILE OF DIRECTORS BEING APPOINTED AS REQUIRED UNDER CLAUSE 49 OF THE LISTINGAGREEMENT:

PROFILE OF SRI G. RAMESH BABU: Sri G. Ramesh Babu, is aged 42 years is a Post Graduate inCommerce and he has 19 years of Managerial experience in the areas of Business Process out sourcing.The industry exposure includes Software Services and Hospitality and Manufacturing.



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EXPLANATORY STATEMENT AS REQUIRED UNDER THE PROVISIONS OF SECTION 173 (2) OFTHE COMPANIES ACT, 1956

Item No. 5:

Sri G. Ramesh Babu was appointed as Additional Director of the Company in the Board Meeting held on13th August 2012 and holds office till the date of the ensuing Annual General Meeting. Considering theexperience of Sri G. Ramesh Babu, the management is of the strong opinion that continuation of him asDirector would benefit the Company. The Company has received a notice from the member of the Companyalong with a deposit of Rs.500/- for appointment of Sri G. Ramesh Babu as Director of the Company liableto retire by rotation.

Appointment of Sri G. Ramesh Babu as Director liable to retire by rotation requires the approval of membersby way of Ordinary Resolution. Hence this resolution is placed before you for approval

None of the Directors except Sri G. Ramesh Babu is concerned or interested in the resolution.

Item No. 6:

Sri S. Man Mohan Rao was appointed as the Managing Director of the Company with effect from1st December, 2010 for a period of five years without any remuneration. However considering the servicesrendered by Sri S. Man Mohan Rao, the Board of Directors of the Company thought it fit to pay himremuneration as specified in the Resolution with effect from 1st April, 2012.

Payment of remuneration was approved by the Remuneration Committee in their meeting held on05-04-2012 as required under the provisions of Section 198, 309 read with Schedule XIII of the CompaniesAct, 1956.

Payment of remuneration requires the approval of members by way of Ordinary Resolution. Hence thisresolution is placed before you for approval

None of the Directors other than Sri S. Man Mohan Rao and Sri S. Murali Krishna is concerned or interestedin the resolution.

By order of the BoardFor Capricorn Systems Global Solutions Limited

Place: HyderabadDate: 03 September 2012

Sd/-S. Man Mohan RaoManaging Director



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DIRECTORS’ REPORTTo,

The Members,CAPRICORN SYSTEMS GLOBAL SOLUTIONS LIMITED

Your Directors have pleasure in presenting the Twenty Seventh Annual Report of your Company togetherwith the Audited Accounts for the financial year ended 31st March, 2012 and the report of the Auditorsthereon.

(Rs. Lakhs)

Particulars 2011-12 2010-11

Total Income 241.99 151.87Expenditure 229.85 140.83Profit before Tax, Interest and Depreciation 12.14 11.04Less : Depreciation 7.56 6.47Less : Interest 0.21 0.24Profit before Tax 4.37 4.33Provision for Income Tax 2.18 2.35Provision for Deferred Tax Liability 0.71 0.00Net Profit after Tax 1.48 1.98Profit brought forward 58.99 57.01Balance available for appropriation 60.47 58.99Transferred to General Reserve 0.00 0.00Provision for Dividend 0.00 0.00Provision for Tax on Dividend 0.00 0.00Profit carried to Balance Sheet 60.47 58.99

OPERATIONS & FUTURE PROPSECTS:The operations of the company have shown a healthy growth of about 60% on account of execution of newworks during the year. The company has set in place a dedicated business development team for exploringthe new and profitable business opportunities. The company expects to benefit from this initiative in theensuring period.

CORPORATE GOVERNANCE:The Corporate Governance Report regarding compliance of the conditions of corporate governance by yourCompany as stipulated in clause 49 of the Listing Agreement entered into with The Bombay Stock ExchangeLimited is annexed to this Report.

MATERIAL CHANGES:There are no material changes affecting the business of the Company after the date of the Balance Sheet.

DEPOSITS:During the year under review the Company has not accepted any deposits from public as defined under theprovisions of Section 58 A of the Companies Act, 1956

DIVIDEND:No dividend is recommended by the Board of Directors for the year 2011 – 2012

DIRECTORS:Sri G. Surender Reddy and Sri Anand Deshmukh, Directors retire by rotation and being eligible offer themselffor re appointment. The Board recommends their re appointment.



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Sri G. Ramesh Babu was appointed as an Additional Director of the Company in the Board Meeting held on13th August, 2012 and holds office till the date of the ensuing Annual General Meeting. The Company hasreceived notice along with the required deposit for appointment of the aforesaid Director as Director of theCompany liable to retire by rotation. The Board recommends his appointment.

Sri S. Jagadiswar Reddy has resigned from the Board of the Company during the year. The board placed onrecords its appreciation for the valuable services rendered by him to the company.

AUDITORS:

M/s Satyanarayana & Co., Chartered Accountants, the Statutory Auditors of the Company retire at theconclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company hasreceived a notice stating that they would be within the limits as prescribed under the provisions of Section224 (1B) of the Companies Act, 1956. The Board recommends their re-appointment

PERSONNEL:

During the year under review, there were no employees drawing remuneration in excess of the limits laiddown in Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employee's)Rules, 1975.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to provisions of Section 217 (2AA) of the Companies Act, 1956 we, the Board of Directors of theCompany hereby state:

(i) that in the preparation of the annual accounts for the year ended 31st March, 2012, the applicableaccounting standards had been followed along with proper explanation relating to material departures;

(ii) that we had selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit of the Company for that period;

(iii) that we had taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;

(iv) that we had prepared the annual accounts for the year ended 31st March, 2012 on a going concernbasis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO:

The disclosures required under Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosureof particulars in the Report of the Board of Directors) Rules, 1988, for the year ended March 31, 2012 are asfollows:

A. CONSERVATION OF ENERGY:a. Adequate measures have been taken to conserve energy wherever possible.b. Additional investments and proposals, if any, being implemented for reduction of consumption of

energy: NILc. Impact of measures for reduction of energy consumption / energy conservation: NIL

B. RESEARCH AND DEVELOPMENT & TECHNOLOGY ABSORPTION :1. The company has an Inhouse team for upgradation / development of technologies and products.2. Benefits Derived : Faster turn around time in delivery of the projects.3. Future plan of action : Enhancing the capacity & capability of the team as per growth needs of

the company.



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C. In case of imported technology, imported during the last 5 years reckoned from the beginningof the financial year, following information may be furnished:a. Technology Imported: N. A.b. Year of Import: N. A.c. Has technology fully absorbed areas where this has not been taken place, reasons thereof and

plan of action: N. A.

D. FOREIGN EXCHANGE EARNINGS AND OUTGO:1. Activities relating to exports, initiatives taken to increase exports, development of new export

markets for products and services, and export plans:The entire software developed is exported to the Company belonging to the promoters. The managementdoes not have any immediate plans to export its services to other countries.

2. Total Foreign Exchange used and earned:

COMPLIANCE CERTIFICATE:

The Company has complied with the provisions of Corporate Governance under listing agreement.A Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governanceas stipulated under clause 49 of the listing agreement is attached to this report.

ACKNOWLEDGEMENTS:

The Board places a record of appreciation to the Bankers, Government and Non Government authorities,Members and Employees of the Company for their continued support and confidence in the Company.

For and on behalf of the BoardFor Capricorn Systems Global Solutions Limited

Place: HYDERABADDate : 03 September 2012 Sd/-

S. Man Mohan RaoManaging Director

S.No. Particulars of the transaction 2011 - 2012(in Rs.)

2010 - 2011(in Rs.)

1. Total Foreign Exchange earnings 23,812,269 14,964,656

2. Foreign Exchange outgo Nil Nil

a. on account of import of Equipment Nil Nil

b. on account of Travel Nil Nil

Total Foreign Exchange outgo Nil Nil



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MANAGEMENT DISCUSSION AND ANALYSIS:

INDUSTRY STRUCTURE AND DEVELOPMENTS:The company is engaged in the business of software development, providing consultancy services in thefields of software and allied services.

REVIEW OF OPERATIONS:The Company has ramped up its head count during the year in line with the expected business. Thecompany continues to invest in enabling its workforce to be future ready by imparting them training in newtechnologies.

FINANCIAL REVIEW:The Company has achieved a total turnover or Rs.238.12 Lakhs. The Gross Profit (earnings before interest,depreciation and taxes) was Rs.12.13Lakhs. The paid-up share capital as at 31st March 2012 amounts toRs.399.6 Lakhs.

OPPORTUNITIES:The outlook for the services rendered by the company is encouraging. The company with its strengths andbusiness alliances is exploring the new markets. With long standing relations with the customers and alsothe with the proven track record of the company delivering as per the expectations of the customers, thecompany is confident of identifying the new areas of business with the existing customers and in newmarkets.

CHALLENGES:Capricorn Systems Global Solutions Limited (CSGSL) encounters normal market competition from othersimilar companies One of the major challenges would be to ensure the retention of the skilled work force inthe face of the increased demand for the trained personnel in the software market in general. Further oneof the main challenges would be to optimize the cost of operations in the face of the pressure on the marginin the highly matured markets the company operates.

OUTLOOK:With improved spend of the companies on the software services and with the industry expected growth rateof around 15% CSGSL is targeting a growth rate of around 25% for the current year.

RISKS AND CONCERNS:The domestic and international economic environment directly influences the spending patterns of theindustry on the Information Technology. And also the margins of the companies are affected by any changesin the government regulations like taxation and also the increased competition from other countries.

ADEQUACY OF INTERNAL CONTROLS:CSGSL has a proper and adequate system of internal control to ensure that all the assets are safeguardedand protected against loss or misuse or disposition and the transactions are authorized, recorded andreported correctly.The internal control systems are supplemented by management review. The internal control system isdesigned to ensure that the financial and other records are reliable and also maintaining accountability ofassets.

QUALITY:The software development activity of the company is ISO 9001:2000 certified.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS:CSGSL has 52 employees. CSGSL recognizes the contributions of its people in creating a company, whichranks as one of the best facilities with highly skilled people.CGSGL provides continuous learning and personal development programs by conducting training andevaluation of its personnel. Industrial relations have been very cordial in the organization during the year.



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COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE

ToThe Board of Directors ofM/s. Capricorn Systems Global Solutions Ltd

We have reviewed implementation of Corporate Governance procedures set by Capricorn SystemsGlobal Solutions Limited for the period ended 31st March 2012 with relevant records and documentsmaintained by the Company and furnished to us for our review and the report on Corporate Governanceas approved by the Board of Directors.

The compliance of conditions of corporate governance is the responsibility of the management. Ourexamination was limited to a review of procedures and implementation thereof, adopted by the companyfor ensuing the compliance of the conditions of Corporate Governance. It is neither an audit nor anexpression of opinion on the financial statements of the company.

We further state that such compliance is neither an assurance as to the future viability of the companynor the efficiency or effectiveness with which the management has conducted the affairs of thecompany.

On the basis of our review and according to the information and explanations given to us, the conditionsof Corporate Governance as stipulated in Clause 49 of the Listing agreements with the stock exchangeshave been compiled with in all material respects.

for Satyanarayana & CoChartered AccountantsFRN No. 003680S

Sd/-Place: Hyderabad. J. Jagannadha RaoDate: 30 May 2012 Partner

Membership No. 006239



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CORPORATE GOVERNANCE

1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE:

The basic philosophy of corporate governance in the company is to attain excellence in the operationkeeping in view the interests of all the stake holders

Company is committed to achieving the high standards of corporate governance.

Company believes that all its operations and acts should serve the underlying goal of enhancingoverall stakeholders' value, over a sustained period of time.

2. BOARD OF DIRECTORS:

Composition and Functions:

The Board consists of 5 Directors with considerable professional experience and expertise in variousfields. The Board of Directors has the ideal composition with more than half the directors being non-executive directors. Since the Company has an Promoter Chairman, the Board's composition meetsthe stipulated requirement of at least one – half of the Board comprising independent directors.

None of the non-executive directors have any pecuniary relationship or transactions with the Company,except receiving sitting for attending each Board Meeting.

The number and dates of the Board Meetings held during the year under review:

Board Meetings were held during the financial year 2011 – 2012 on the following dates: 30-05-2011 ,11-08-2011, 14-09-2011, 01-10-2011, 14-11-2011 and 14-02-2012.

During the year under review the time gap between any two consecutive meetings did not exceed fourmonths.

The details of the attendance of directors at meetings of the Board and annual general meeting, heldduring the year (April 2011 to March 2012), along with the details of Committee memberships and theirother directorships are furnished below:

Name of the Director andcategory of Directorship

AttendanceParticulars

BoardMeetings

LastAGM

No. of other Directorshipsand Committee Memberships

OtherDirectorships

CommitteeMembership

Sri S. Murali Krishna 1 NO 1 -(Promoter and Non Executive Chairman)

Sri S. Man Mohan Rao 6 YES - 1(Promoter and Managing Director)

Sri G. Surender Reddy 6 YES 1 1(Promoter and Non Executive Director)

Sri Jagadeeshwar Reddy 2 YES - 1(Non Promoter and Independent Director)

Sri K.V. Srinivasa Rao 6 YES 1 1(Non Promoter and Independent Director)

Sri Anand Deshmukh 6 YES - 1(Non Promoter and Independent Director)



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CODE OF BUSINESS CONDUCT AND ETHICS

The Company has adopted a Code of Business Conduct and Ethics (the 'Code'), which applies to all seniormanagement personnel, and Directors of the Company. It is the responsibility of all senior managementpersonnel and Directors to familiarize themselves with this Code and comply with its standards.

The Code of Business Conduct and Ethics have been posted on the Company's website – www.capricornsys-global.com.

1. AUDIT COMMITTEE:

Composition, Names of Members & Chairperson and terms of reference

The Audit Committee of the Board comprises of 2 Non-Executive Independent Directors and 1 NonIndependent Director. Sri Anand Deshmukh is the Chairman of the Audit Committee. Consequent tothe resignation of Sri S. Jagadeshwar Reddy the Audit Committee was re constituted in the BoardMeeting held on 1st October, 2011 to include Sri K. Srinivasa Rao in the place of Sri S. JagadeeshwarReddy.

Shares held by Non-Executive Directors in the Company

S.No. Name of the Director No. of shares held

1. Sri S. Murali Krishna 16,50,000

2. Sri G. Surender Reddy 3,00,000

3. Sri K.V. Srinivasa Rao Nil

4. Sri Anand Deshmukh Nil

Name of the Director andcategory of Directorship

Sri S. Murali Krishna 1(Promoter and Non Executive Chairman)

Sri S. Man Mohan Rao Nil(Promoter and Managing Director)

Sri G. Surender Reddy 2(Promoter and Non Executive Director)

Sri Jagadeeshwar Reddy (upto 30th Sep 2011) Nil(Non Promoter and Independent Director)

Sri K.V. Srinivasa Rao 1(Non Promoter and Independent Director)

Sri Anand Deshmukh Nil(Non Promoter and Independent Director)

Sri G. Ramesh Babu 2(Non Promoter and Independent Director)

Other Directorship



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S.No. Name of the Member Designation

1. Sri S. Jagadeeshwar Reddy – upto 30th September, 2011 Chairman

2. Sri G. Surender Reddy Member

3. Sri Anand Deshmukh Member

4. Sri K. V. Srinivasa Rao Member

Powers of the Audit Committee:

a. To invite such of the executives, as it considers appropriate (and particularly the head of financefunction) to be present at the meetings of the Committee,

b. To investigate any activity within its terms of reference,c. To seek information from any employeed. To obtain outside legal or other professional advice, ande. To secure attendance of outsiders with relevant expertise if considered necessary.

Terms of Reference of the Audit Committee:1. Overseeing the Company's financial reporting process and the disclosure of its financial information to

ensure that the financial statement is correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement orremoval of the statutory auditor and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by them.

4. Appointment, removal and terms of remuneration of internal auditors

5. Reviewing, with the management, the annual financial statements before submission to the Board forapproval, with particular reference to:a. Matters required to be included in the Director's Responsibility Statement to be included in the

Board's report in terms of clause (2AA) of Section 217 of the Companies Act 1956;b. Changes, if any, in accounting policies and practices and reasons for the same;c. Major accounting entries involving estimates based on the exercise of judgment by management;d. Significant adjustments made in the financial statements arising out of audit findings;e. Compliance with listing and other legal requirements relating to the financial statements;f. Disclosure of any related party transactions;g. Qualifications in the draft audit report.

6. Reviewing, with the Management, the quarterly financial statements before submission to the Boardfor approval.

7. Monitoring the use of the proceeds of the proposed initial public offering of the Company. Reviewingwith the management the statement of uses/application of funds raised through initial public offeringby major category, as well as statement of funds utilised for purpose other than those stated in theProspectus and making appropriate recommendations to the Board to take up steps in this matter.

8. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of theinternal control systems.

9. Reviewing the adequacy of internal audit function, if any, including the structure of the internal auditdepartment, staffing and seniority of the official heading the department, reporting structure, coverageand frequency of internal audit.

As on date the members of the Audit Committee are:



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10. Discussions with internal auditors on any significant findings and follow up thereon.

11. Reviewing internal audit reports and adequacy of the internal control systems.

12. Reviewing the adequacy of internal audit function, if any, including the structure of the internal auditdepartment, staffing and seniority of the official heading the department, reporting structure coverageand frequency of internal audit.

13. Reviewing management letters / letters of internal control weaknesses issued by the statutory auditors.Discussion with internal auditors any significant findings and follow up there on.

14. Reviewing the findings of any internal investigations by the internal auditors into matters where there issuspected fraud or irregularity or a failure of internal control systems of a material nature and reportingthe matter to the Board.

15. Discussion with statutory auditors before the audit commences, about the nature and scope of auditas well as post-audit discussion to ascertain any area of concern.

16. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,shareholders (in case of nonpayment of declared dividends) and creditors.

17. To review the functioning of the whistle blower mechanism, when the same is adopted by the Companyand is existing.

18. Carrying out any other function as may be statutorily required to be carried out by the Audit Committee.4 meetings were held during the year.

The attendance of each member of the Committee is given below:

2. REMUNERATION COMMITTEE:

The Remuneration Committee was constituted in the Board Meeting held on 05-04-2012 withSri G. Surender Reddy, Sri Anand Deshmukh and Sri K. V. Srinivasa Rao as the Members.Sri G. Surender Reddy is the Chairman of the Remuneration Committee. The powers and duties of theremuneration committee are:

i. To review, assess and recommend the appointment of Executive and Non Executive Directorsfrom time to time;

ii. To periodically review the remuneration package of the Executive Directors and recommendsuitable revision to the Board;

iii. To recommend compensation to the non executive directors in accordance with the CompaniesAct, 1956

iv. To consider and recommend Employee Stock Option Scheme, if any, from time to time and toadminister and superintend the same.

S.No. Name of the Member No. of Meetingsattended

1. Sri S. Jagadeeshwar Reddy – upto 30th September, 2011 2

2. Sri G. Surender Reddy 4

3. Sri Anand Deshmukh 4

4. Sri K. V. Srinivasa Rao 4



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The remuneration committee did not meet during the year.

None of the Directors receive any remuneration except for getting sitting fee for attending each BoardMeeting..

3. SHAREHOLDERS AND INVESTORS GRIVEANCE COMMITTEE:

The committee comprises 2 directors, Mr. S. Man Mohan Rao is Chairman and Mr. G. SurenderReddy is member. The Committee, interalia, approves issue of duplicate share certificates and overseesand reviews all matters connected with the securities transfer. The Committee also looks into redressingof shareholders/investor's complaints like transfer of shares, non-receipt of balance sheet, etc. Thecommittee oversees the performance of the Registrar and Transfer Agents and recommends measuresfor overall improvement of the quality of investors' services.

The Company has not received any complaints from the shareholders during the year.

Name and designation of the compliance officer : D. Madhav Rao, Compliance Officer

CEO CERTIFICATION:

As required by Clause 49 of the Listing Agreement, the CEO certification is provided elsewhere in theAnnual Report.

4. AUDITORS' CERTIFICATION ON CORPORATE GOVERNANCE:

As required by Clause 49 of the Listing Agreement, the Auditors' certification is provided elsewhere inthe Annual Report.

5. COMPLIANCE WITH NON-MANDATORY REQUIREMENTS OF CLAUSE 49 OF THE LISTINGAGREEMENT:

The Company is presently complying only one non mandatory requirement enumerated in the provisionsof Clause 49 of the listing agreement i.e., constitution of remuneration committee.

Number of shareholders complaints received:

Number not solved to the satisfaction of shareholders: NIL

Number of pending share transfers: No Pending share transfers as on 31st March, 2012

6. GENERAL BODY MEETINGS:

Location and date/time of last three Annual General Meetings :

No special resolution requiring a postal ballot was placed before the last AGM. Similarly, no specialresolutions requiring postal ballot is being proposed at the ensuing AGM.

Year Location Date Time

2010-2011 # 8-2-293/82A/408A, Plot No. 408A, Road No. 22A,Jubilee Hills, Hyderabad – 500 033 28-09-2011 11.00 A.M.

2009-2010 # 8-2-293/82A/408A, Plot No. 408A, Road No. 22A,Jubilee Hills, Hyderabad – 500 033 30-09-2010 4.00 P.M.

2008-2009 # 8-2-293/82A/408A, Plot No. 408A, Road No. 22A,Jubilee Hills, Hyderabad – 500 033 30-09-2009 4.00 P.M.



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7. DISCLOSURES:

Disclosures on materially significant related party transactions i.e. transactions of the company ofmaterial nature, with its promoters, the directors or the management, their subsidiaries or relativesetc. that may have potential conflict with the interests of company at large.

Details of related party transactions have been disclosed under Note 12 on Schedule 21 on thefinancial statements. There are no transactions, which may have potential conflict with the interests ofthe Company at large.

Details of non-compliance by the Company, penalties, and strictures imposed on the Company byStock exchanges or SEBI or any statutory authority, on any matter related to capital markets, duringthe last three years

No penalties have been imposed on the Company by Stock Exchanges or SEBI or any StatutoryAuthority on any matter related to capital markets, during the last three years.

8. MEANS OF COMMUNICATION:

No half-yearly reports were sent to the shareholders. Quarterly results are published in FinancialExpress / Business Line (in English) and Andhra Prabha (in Vernacular Language)

The results of the Company are displayed on www.capricornsys-global.com

Management Discussion and Analysis forms part of the Annual Report and is provided elsewhere inthis report.

9. GENERAL SHAREHOLDER INFORMATION:

A. Details of the ensuing Annual General Meeting

B. Financial Calendar: 1st April, 2012 to 31st March, 2013

C. Date of Book Closure:

23rd September, 2012 to 29th September, 2012 (both days inclusive).

D. Dividend Payment Date:

No Dividend is recommended for the financial year 2011 – 2012

E. Listing on Stock Exchanges and Stock code:

The shares of the Company are listed on The Bombay Stock Exchange Limited, Mumbai and theStock Code is 512169. The BSE has revoked the suspension on listing of the share of thecompany during the year.

Date Day Time Venue

29-09-2012 Saturday 11.00 AM # 8-2-293/82A/408A, Plot No. 408A,Road No. 22A, Jubilee Hills, Hyderabad – 500 033

1st Quarterly

August 2012

Half Yearly 3rd Quarter 4th Quarter

November 2012 February 2013 May 2013



17

Period The Bombay Stock Exchange Limited (Mumbai)

F. Market Price Date: High/Low during each month in last financial year (2011 – 2012)

In Rupees

G. Performance in comparison to broad-based indices such as BSE Sensex:

COMPARITIVE GRAPH

High Low

April 2011 0 0

May 2011 0 0

June 2011 0 0

July 2011 0 0

August 2011 0 0

September 2011 0 0

October 2011 0 0

November 2011 63.60 47.55

December 2011 66.10 41.00

January 2012 69.35 56.60

February 2012 58.00 49.00

March 2012 49.00 44.75



18

H. Registrar and Transfer Agents:

Venture Capital and Corporate Investments Limited is the Registrar and Share Transfer agents ofthe Company. For any queries regarding transfer of shares and demat of share, shareholdersmay contact:

Venture Capital and Corporate Investments Pvt. Limited12-10-167Bharat Nagar ColonyHyderabad – 500018Tel: 040-23818475 / 76Fax: 91-40-23868024email: [email protected]

I. Share Transfer System:

Pursuant to the appointment of Venture Capital and Corporate Investments Private Limited asCommon Agency for undertaking Company's electronic and physical share registry work, all therequests for share transfers received by the Company are sent to the Registrar. Similarly someof the shareholders send the requests for share transfers directly to the Registrar.

Normally the shares, without any technical objections, are transferred and the certificates aresent to the shareholders within 30 days from the date of receipt of the request. The requests,which contain technical objections are rejected and rejection letters along with the requests aresent to the shareholders within 15 days from the date of receipt of the request.

J. Distribution of shareholding:

Distribution Schedule as on 31.03.2012 is furnished below:

Category

From ToNo. of Holders No. of Shares % of shares

to Total Equity

0 1000 151 39,235 0.98

1001 5000 12 34,859 0.88

5001 10000 8 72,200 1.81

10001 20000 5 69,600 1.74

20001 30000 - - 0.00

30001 40000 3 1,04,006 2.60

40001 50000 - - 0.00

50001 100000 5 3,09,300 7.74

100001 & ABOVE 8 33,66,800 84.25

TOTAL 192 39,96,000 100.00



19

Shareholding pattern as on 31st March 2012

K. Dematerialization of shares and liquidity:

Name of Demat Registrars:

Venture Capital and Corporate Investments Pvt. Limited12-10-167Bharat Nagar ColonyHyderabad – 500018Tel: 040-23818475 / 76Fax: 91-40-23868024email: [email protected]

International Securities Identification Number (ISIN): INE968E01012

The Company has entered into Agreements with NSDL and CDSL, and as on 31.03.2012,6,33,700 Equity Shares have been dematerialized, constituting 15.86% of the total equity. As perthe directives of Securities and Exchange Board of India (SEBI), the Company's shares arecovered under the compulsory dematerialization list and are transferable through the depositorysystem.

Registered Office and Address for correspondence:

Compliance OfficerCapricorn Systems Global Solutions Limited# 8-2-293/82A/408A, Plot No. 408A, Road No: 22A, Jubilee Hills, Hyderabad – 500033Tel & Fax : 040-23547889email : [email protected] Centre:# 8-2-293/82A/408A, Plot No. 408A, Road No: 22A, Jubilee Hills, Hyderabad – 500033

L. Outstanding GDRs / ADRs / Warrants or any Convertible instruments, conversion dateand likely impact on equity:

The Company has not issued any GDRs, ADRs/ warrants or any convertible instruments.

Shareholders holding shares in electronic mode should address all their correspondence to theirrespective Depository Participant (DP)

Category% to the

Total CapitalNo. of

Shares held

1. Promoter & Promoter Group 29,97,000 75.002. FII’s 0 0.003. Bodies Corporate 57,643 1.444. Individuals 7,10,161 17.625. Directors and their relatives 0 0.006. Employees 2,30,006 5.907. NRI’s 11 0.018. Clearing Members 1179 0.03

TOTAL 39,96,000 100.00

Sl.No.



20

CHIEF EXECUTIVE OFFICER (CEO) CERTIFICATION

I, S. Man Mohan Rao, Managing Director of CAPRICORN SYSTEMS GLOBAL SOLUTIONS LIMITED, tothe best of our knowledge and belief, certify that:

1. I had reviewed the balance sheet and profit and loss account and all its schedules and notes onaccounts, as well as the cash flow statements and the directors' report;

2. Based on my knowledge and information, these statements do not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respect to the statementsmade;

3. Based on my knowledge and information, the financial statements and other financial informationincluded in this report, present in all material respects, a true and fair view of, the company's affairs,the financial condition, results of operations and cash flows of the company as of, and for, the periodspresented in this report, and are in compliance with the existing accounting standards and / or applicablelaws and regulations;

4. To the best of my knowledge and belief, no transactions entered into by the company during the yearare fraudulent, illegal or violative of the company's code of conduct.

5. I am responsible for establishing and maintaining internal controls over financial reporting for thecompany, and I have:

a) designed such disclosure controls and procedures to ensure that material information relating tothe company, including its consolidated subsidiary, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared.

b) designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparing of financial statements for external purposes inaccordance with generally accepted accounting principles;

c) evaluated the effectiveness of the company's disclosure, controls and procedures and

d) disclosed in this report any change in the company's internal control over financial reporting thatoccurred during the company's most recent financial year that has materially affected, or isreasonably likely to materially affect, the company's internal control over financial reporting.

6. I had disclosed based on our most recent evaluation, wherever applicable, to the company's auditorsand the audit committee of the company's Board of Directors.

a) significant changes in internal controls during the year covered by this report;

b) significant changes in accounting policies during the year and that the same have been disclosedin the notes to the financial statements;

c) instances of significant fraud of which they have become aware and the involvement therein, ifany, of the management or an employee having a significant role in the company's internalcontrol system.

For CAPRICORN SYSTEMS GLOBAL SOLUTIONS LIMITED

S. MAN MOHAN RAOManaging Director

Place: HyderabadDate: 30 May 2012



21

AUDITOR’S REPORT

To,The Members ofCapricorn Systems Global Solutions Limited,Hyderabad.

We have audited the attached Balance Sheet of Capricorn Systems Global Solutions Limited, Hyderabadas on 31st March ‘ 2012 and also the Profit and Loss Account for the Year Ended on that date annexedthereto and Cash Flow Statement for the period ended on that date. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by the management, as well as evaluating the over allfinancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government ofIndia in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and on the basis of suchchecks of the books and records of the Company as we consider appropriate and according to theinformation and explanations given to us, We give in the annexure a statement on the matters specifiedin paragraph 4 and 5 of the said Order.

2. Our comments on the accounts are as under:

a) Balances appearing under Sundry Debtors, Loans and Advances are subject to confirmation and/ or reconciliation.

b) According to the information and the explanations given to us, the Company does not have anyover – dues to SSI units and hence no provision for interest is made in accounts.

3. Subject to our observations in the annexure referred to in paragraph (1) and our comments in paragraph(2) above, We report that:

a) We have obtained all the information and explanations, which to the best of our knowledge andbelief were necessary for the purpose of our audit.

b) In our opinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of such books.

c) The Balance Sheet and Profit and Loss Account referred to in this report are in agreement withthe Books of Account.



22

d) In our opinion the Balance sheet and Profit and Loss Account are in compliance with the AccountingStandards referred to in Sec. 211 (3C) of the companies Act, 1956, excepting in relation toAccounting Standard 22 on Accounting for Taxes on Income.

e) In our opinion, and based on the information and explanations given to us, none of theDirectors of the Company are disqualified as on 31st March ‘2012 from being appointed as aDirector under clause (g) of sub – section (1) of Section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, thesaid Balance Sheet and Profit and Loss Account read together with the significant accountingpolices and notes thereon, give the information required by the Companies Act, 1956, in themanner so required and give a true and fair view:

i) In so far as it relates to the Balance sheet, of the state of affairs of the Company as on 31st ofMarch ‘ 2012 and

ii) In so far as it related to the Profit and Loss Account, of the Profit of the Company for the Yearended on that date.

iii) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date.

for SATYANARAYANA & CoCHARTERED ACCOUNTANTSFRN No. 003680S

Sd/-Place: Hyderabad. J. JAGANNADHA RAODate: 30 May 2012 Partner




23

ANNEXURE REFERRED TO IN PARAGRAPH (1) OF THE REPORT OF EVEN DATE:

(i) (a) The Company has maintained proper records showing full particulars including quantitative detailsand situation of fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management during theyear which, in our opinion, is reasonable having regard to the size of the Company and the natureof its assets. No material discrepancies were notice on such verification.

(c) In our opinion, the Company has not disposed off substantial part of fixed assets during the yearand the going concern status of the Company is not affected

(ii) The Clauses relating to the physical verification of inventories, maintenance of records of inventory isnot applicable to the Company as the company is engaged in the development of software and thereare no inventories in the operations of the Company.

(iii) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firmsor other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has not taken any loans from parties mentioned in the register maintained undersection 301 of the Companies Act’1956.

b) There are no loans which are given during the year.

(iv) In our opinion and according to the information and explanations given to us, there are adequateinternal control procedures commensurate with the size of the Company and the nature of its businesswith regard to purchases of fixed assets, and with regard to the sale of services. During the course ofour audit, we have not observed any major weaknesses in internal controls.

(v) (a) According to the information and explanations given to us, we are of the opinion that thetransactions that need to be entered into the register maintained under section 301 of theCompanies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactionmade in pursuance of contract or arrangements entered in the register maintained under section301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of anyparty during the year have been made at prices which are reasonable having regard to prevailingmarket prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has compliedwith the provision of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptanceof Deposits) Rules, 1975with regard to the deposits accepted form the public.

(vii) The Company has an internal audit system, the scope of the same need to be increase so as to becommensurate with the size and nature of the business.

(viii) In our opinion and according to the information and explanations given to us, the Central Governmenthas not specified maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956to the company for the year under audit.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutorydues including provident fund, investor education protection fund, employees’ state insurance,sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicableto it.



24

(b) According to the information and explanations given to us no undisputed amounts payable inrespect of wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st

March ‘ 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, there are no dues of sale tax, incometax, customs duty, wealth tax, excise duty and cess which have not been deposited on accountof any dispute.

(x) The company does not have any accumulated losses. The company has not suffered any cash lossesduring the financial year covered by the audit and also in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company is regularin payment of dues to the NBFCs from which it has availed Hire Purchase Loan.

(xii) In our opinion and according to the information and explanation given to us, no loans and advanceshave been granted by the Company on the basis of security by way of pledge of shares, debenturesand other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore clause4(xiii) of the Companies (Auditor’s Report) Order’2003 is not applicable to the Company.

(xiv) In our opinion and according to the information and explanation given to us the Company is not dealingin shares and securities.

(xv) In our opinion and according to the information and explanations given to us the Company has notgiven guarantees for the loans taken by others from Banks or Financial Institutions.

(xvi) The Company has not raised any new term loans during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balancesheet of the Company, we report that no funds raised on short term basis have been used for long terminvestment, No long term loan funds have been used to finance short terms assets expect permanentworking capital.

(xviii)The Company has not made any preferential allotment of shares to parties and the Companies coveredin the Register maintained under Section 301 of the Companies Act’1956 during the year.

(xix) The Clause 4(xix) of the Companies (Audit Report) Order 2003 relating to the creation of security forthe Debentures is not applicable to the Company as no debentures are raised by the Company.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has beennoticed or reported during the year that caused the financial statements to be materially misstated.

for SATYANARAYANA & CoCHARTERED ACCOUNTANTSFRN No. 003680S

Sd/-Place: Hyderabad. J. JAGANNADHA RAODate: 30 May 2012 Partner




25

BALANCE SHEET AS AT MARCH 31, 2012

31-Mar-2012 31-Mar-2011

EQUITY AND LIABILITIESA. SHAREHOLDERS’ FUND

a) Share Capital 3 39,960,000 39,960,000b) Reserves & Surplus 4 12,681,681 12,533,600

52,641,681 52,493,600B. NON-CURRENT LIABILITIES

a) Long-term Borrowings 5 - -b) Deferred Tax Liability (Net) 70,756c) Trade Payables - -d) Other Long-term Liabilities - -e) Long-term Provisions 6 - -

70,756 -C. CURRENT LIABILITIES

a) Short-term Borrowings - -b) Trade Payables 7 341,277 331,719c) Other Short-term Liabilities 8 2,443,905 1,737,617d) Short-term Provisions 9 218,000 418,000

3,003,182 2,487,336

TOTAL 55,715,619 54,980,936

ASSETSA. NON-CURRENT ASSETS

a) FIXED ASSETSi) Tangible Assets 10 8,024,743 6,355,996ii) Intangible Assets 11 20,000,000 20,000,000iii) Capital Work In Progress 950,000 950,000iv) Intangible Assets under Development - -v) Fixed Assets pertaining to Discontinuing Operations - -

and held for Sale 28,974,743 27,305,996

b) Non Current Investments - -c) Deferred Tax Assets (Net) 12 - -d) Long-term Loans & Advances 13 24,903,119 24,292,166e) Trade Receivables - -f ) Other Non-current Assets - -

24,903,119 24,292,166B. CURRENT ASSETS

a) Current Investments - -b) Inventories - -c) Trade Receivables - -d) Cash and Bank Balances 14 1,610,446 2,463,075e) Short-term Loans & Advances 15 227,311 919,699f ) Other Current Assets 16 - -

1,837,757 3,382,774

TOTAL 55,715,619 54,980,936

Significant accounting Policies 2

Notes

The accompanying notes are an integral part of the financial statementsAs per our report of even date

For SATYANARAYANA & COFirm’s Reg. No.: 003680S For and on behalf of the BoardChartered Accountants

Sd/- Sd/- Sd/-JAGANNADHA RAO J S MAN MOHAN RAO G SURENDER REDDYPartner Managing Director DirectorMembership No.: 006239

Place : HyderabadDate : 30 May 2012



26

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31 MARCH 2012

Notes 31-Mar-2012

I) INCOMEa) Revenue from Operations 17 23,812,269 14,830,215b) Other Income 18 386,999 357,102

Total Revenue (i) 24,199,268 15,187,317

II) EXPENSESa) Employee benefits expense 19 17,200,696 10,092,280b) Finance Costs 20 20,560 24,046c) Other expenses 21 5,284,407 3,990,520d) Depreciation and amortization expense 22 756,227 646,932e) Taxes of Previous Years 500,541 -

Total (II) 23,762,431 14,753,778

III) Profit / (Loss) before and tax (I-II) 436,837 433,539

IV) Tax expensesa) Current Tax 218,000 235,000b) Deffered Tax 70,756 -

Total Tax Expenses 288,756 235,000

V) Profit / (Loss) for the year from 148,081 198,539continuing operations

Significant accounting Policies 2

31-Mar-2011

The accompanying notes are an integral part of the financial statementsAs per our report of even date

For SATYANARAYANA & COFirm’s Reg. No.: 003680SChartered Accountants For and on behalf of the Board





27

CASH FLOW STATEMENT FOR THE PERIOD ENDED ON 31 MARCH 2012

I CASH INFLOW1 Cash Inflow from Operating activities(a) Profit from operating activities 148,081 198,539Adjustments:Depreciation and amortization 756,227 646,932Amortization of stock compensation -(Gain)/Loss on sale of fixed assets - 415,859Provision/ (Reversal) for doubtful debts, advances -(b) Working capital changes:- Decrease in inventories -- Decrease in trade receivables - 134,256- Decrease in short-term loans and advances 692,388- Decrease in other current assets -- Increase in Non Current liabilities 70,756- Increase in trade payables 9,558- Increase in other current liabilities 706,288 956,432- Increase in provisions (200,000) 235,000

Total of 1 2,183,298 2,587,018

2 Cash Inflow from Investing Activities(a) Proceeds from sale of fixed assets 600,000(b) Proceeds from sale of investments(c) Realisation of long-term loans and advances (610,953) (2,409,605)

from subsidiaries/associates/business ventures

Total of 2 (610,953) (1,809,605)

3 Cash Inflow from Financing activities(a) Proceeds from issue of share capital -(b) Share application money pending allotment -(c) Proceeds from long-term borrowings -(d) Proceeds from short-term borrowings -

Total of 3 -

TOTAL CASH INFLOWS (1+2+3) (I) 1,572,345 777,413

II CASH OUTFLOW1 Cash outflow from Operating activities(a) Loss from operating activities -

Adjustments:Depreciation and amortization -Amortization of stock compensation -(Gain)/Loss on sale of fixed assets -Provision/ (Reversal) for doubtful debts, advances -

Sl.No. PARTICULARS

31-Mar-2012 31-Mar-2011

Amount Amount Amount Amount



28

Notes:(i) The Cash Flow Statement reflects the combined cash flows pertaining to continuing and discounting

operations.

See accompanying notes forming part of the financial statements

In terms of our report attached.As per our report of even dateFor SATYANARAYANA & COFirm’s Reg. No.: 003680SChartered Accountants For and on behalf of the Board



(b) Working capital changes:- Increase in inventories -- Increase in trade receivables -- Increase in short-term loans and advances - 8,693- Increase in other current assets -- Decrease in trade payables - 18,781- Decrease in other current liabilities -- Decrease in provisions -

Total of 1 - 27,4742 Cash Outflow from Investing Activities

(a) Purchase of fixed assets 2,424,974 730,289- Plant & Machinery -- Building Work In progress -- Car -(b) Purchase of Investments -(c) Investment in subsidiaries/associates/business ventures -(d) Payment of long-term loans and advances to subsidries -(f) Increase in other long-term loans and advances -(g) Increase in other non-current assets -

Total of 2 2,424,974 730,2893 Cash Outlow from Financing activities

(a) Repayment of long-term borrowings -(b) Repayment of short-term borrowings -(c) Dividends paid (including distribution tax) -(d) Interest and other finance costs -(e) Share issue expenses -

Total of 3 -

TOTAL CASH OUTFLOWS (1+2+3) (II) 2,424,974 757,763

III Net (decrease)/increase in cash and cash equivalents (I-II) (852,629) 19,650

Add: Cash and cash equivalents at the beginning of the period 2,463,075 2,443,425

IV Cash and cash equivalents at the end of the period 1,610,446 2,463,075



29

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MAR 2012

31-Mar-2012 31-Mar-2011

NOTE : 3 - SHARE CAPITALAuthorised Capital

Authorised (50,00,000 equity shares of Rs.10 each) 50,000,000 50,000,000

50,000,000 50,000,000Issued, Subscribed & Paid-upIssued, Subscribed and Paid-up Capital(39,96,000 equity shares of Rs.10/- each)(Out of which 30,00,000 Equity Shares of Rs.10/- eachalloted for consideration other than cash 39,960,000 39,960,000

39,960,000 39,960,000a. Terms/rights attached to equity shares

The company has only one class of equity shares havinga par value of Rs.10/- each holder of equity shares is

entitled one vote per share.In the event of liquidation of the Company, the holdersof equity shares will be entitled to receive remaining assetsof the Company after distribution of all preferential amounts.The distribution will be in proportion to the number of equityshares held by the shareholders.

b. Details of Shareholders holding more than5 % shares in the company

Particulars Nos. %

Equity shares of Rs.10 each fully paid

1 MURALI K SUDDALA 1,650,000 41.29

2 SURENDER REDDY.G 300,000 7.51

3 MANMOHAN RAO.S 300,000 7.51

4 RAJESHWAR.V 300,000 7.51

5 L N POLYESTERS LIMITED 269,100 6.73

6 LAXMI TWISTERS LIMITED 268,600 6.72

NOTE : 4 - RESERVES & SURPLUSGeneral Reserve 6,634,006 6,634,006P&L Opening Balance 5,899,594 5,701,055Profit & Loss Account for the year 148,081 198,539

Total 12,681,681 12,533,600

NOTE : 5 - LONG-TERM BORROWINGSSecured Borrowings from Financial Institutions - -

- -



30


31-Mar-2012 31-Mar-2011

NOTE : 6 - LONG-TERM PROVISIONS- -- -

NOTE : 7 - TRADE PAYABLESCreditors for Expenses & Services 341,277 331,719

341,277 331,719

NOTE : 8 - OTHER SHORT-TERM LIABILITIESTDS Payable 160,188 573,183Other Liabilities 2,283,717 1,164,434

2,443,905 1,737,617

NOTE : 9 - SHORT-TERM PROVISIONS

Provisions for Taxation 218,000 418,000

218,000 418,000

NOTE : 12 - DEFFERED TAX ASSETS- -

- -

NOTE : 13 - LONG-TERM LOANS AND ADVANCES(Secured, Considered good)Security Deposits 1,210,917 957,527Share Application Money - Pending Allotment 6,900,000 6,100,000Advances recoverable in cash or kind 16,792,202 17,234,639

24,903,119 24,292,166

NOTE : 14 - CASH AND BANK BALANCESCash in Hand 35,367 72,971Cash at Bank 575,079 890,967Balances in Deposits 1,000,000 1,499,137

1,610,446 2,463,075NOTE : 15 - SHORT-TERM LOANS & ADVANCES

Balances with Statutory / Government authorities 150,798 112,281Prepaid Expenses - 53,364Staff Advances 76,513 293,513Advance Income Tax - 460,541

227,311 919,699NOTE : 16 - OTHER CURRENT ASSETS

Advances recoverable in cash or kind - -

- -



31


31-Mar-2012 31-Mar-2011

NOTE: 17 REVENUE FROM OPERATIONSSale of Services-Software Development exports 23,812,269 14,830,215

23,812,269 14,830,215NOTE: 18 Other Income

Interest Incomefrom Bank Deposits 97,369 92,211from Others 271,800 264,706Foreign Currency Exchange Account 17,830 185

Total 386,999 357,102

NOTE: 19 Employee benefits ExpensesEmployee Benefits Expense 16,257,877 9,387,117Contribution to provident and other funds 544,679 309,633Staff welfare Expenses 398,140 395,530

17,200,696 10,092,280NOTE: 20 Other Expenses

Other ExpensesInternet And Support Services 677,985 489,926Printing & Stationery 64,245 31,857Postage & Telephones 139,493 176,460Rent, Rates & Taxes 2,374,828 1,426,074Electrcity Charges 423,623 377,792Travelling & Conveyance 362,475 335,338Repairs & Maintenance 515,992 479,201Advertisement 43,836 23,824Professional & Consultancy Charges 483,285 101,508Audit Fee 44,120 19,303Web Domain Charges 2,758 8,033General Expenses 46,776 30,932Office Maintenance & Security 104,991 74,413Loss on sale of Asset 415,859

Total 5,284,407 3,990,520

NOTE: 22 Depreciationa) Depreciation of Tangible Assets 756,227 646,932b) Amortization of Intangible assets - -c) Depreciation of Investment Property - -

Total - -Less: Recoupment from revaluation reserve - -

Total 756,227 646,932NOTE: 23 Finance Costs

Finance Charges 20,560 24,046

20,560 24,046

27th Annual R

eport 2011-2012

Capricorn System

s Global Solutions Lim

ited

32

Notes to Financial Statements for the Year Ended March 31, 2012Note 8. Fixed Assets

Fixed Assets

Gross Block Depreciation Net Block

as on01-04-11

Additions/Disposals Disposals

as on31-03-12

as on01-04-11

for theperiod

onDisposals

as on31-03-12

as on31-03-11

A. Tangible Assets

1 Land 1,642,500 - - 1,642,500 - - - - 1,642,500 1,642,500

2 Buildings (Civil Works) - - - - - - - - - -

3 Plant and Equipment 2,429,594 737,882 - 3,167,476 1,202,868 132,733 - 1,335,601 1,831,875 1,226,726

4 Furniture and Fixtures 4,221,609 315,500 - 4,537,109 2,476,605 273,791 - 2,750,396 1,786,713 1,745,004

5 Vehicles 806,572 595,361 - 1,401,933 431,824 96,305 - 528,129 873,804 374,748

6 Computers 3,731,454 776,231 - 4,507,685 2,364,437 253,398 - 2,617,835 1,889,850 1,367,017

Total 12,831,729 2,424,974 - 15,256,703 6,475,733 756,227 - 7,231,960 8,024,743 6,355,996

B Intangible Assets

1 Goodwill 20,000,000 - - 20,000,000 - - - - 20,000,000 20,000,000

Total 20,000,000 - - 20,000,000 - - - - 20,000,000 20,000,000

Capital Work in Progress 950,000 - - 950,000 - - - - 950,000 -

Total 950,000 - - 950,000 - - - - 950,000 -

Grand Total as at 31-03-2012 33,781,729 2,424,974 - 36,206,703 6,475,733 756,227 - 7,231,960 28,974,743 26,355,996

Grand Total as at 31-03-2011 34,651,440 730,289 1,600,000 33,781,729 6,412,942 646,932 584,141 6,475,733 27,305,996 28,238,498

as on31-03-12S

l.No.



33

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012

1 Corporate Information:CAPRICORN SYSTEMS GLOBAL SOLUTIONS LIMITED is a limited company domiciled in India and incorporatedunder the provisions of the Companies Act, 1956, the company engages in the business of Information Technologyenabled services other related activities.2 Summary of significant accounting policies:

a. Basis of preparationThe financial statements of the company have been prepared in accordance with generally acceptedaccounting principles in India (Indian GAAP). The company has prepared theses financial statementsto comply in all material respects with the accounting standards notified under the Companies(Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act,1956. The financial statements have been prepared on an accrual basis and under the historical costconvention.The accounting policies adopted in the preparation of financial statements are consistent with those ofprevious year. , except for the change in accounting policy explained below.

b. Change in Presentation and disclosure of financial statementsDuring the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956,has become applicable to the company, for preparation and presentation of its financial statements.The adoption of revised Schedule VI does not impact recognition and measurement principles followedfor preparation of financial statements. However, it has significant impact on presentation anddisclosures made in the financial statements. The company has also reclassified the previous yearfigures in accordance with the requirements applicable in the current year.

c. Use of estimateThe preparation of financial statements in conformity with Indian GAAP requires the management tomake judgments, estimates and assumptions that affect the reported amounts of revenues, expenses,assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period.Although these estimates are based on the management's best knowledge of current events andactions, uncertainty about these assumptions and estimates could result in the outcomes requiring amaterial adjustment to the carrying amounts of assets or liabilities in future periods.

d. Revenue RecognitionRevenue from Software Development is recognized based on Software Developed and billed as perthe terms of specific contracts. Revenue from the training activity is accounted basing on the proportionof the completion of the course as at the end of the year. Income from dividend is accounted on cashbasis.

e. InterestInterest income is recognized on a time proportion basis taking into account the amount outstandingand the applicable interest rate. Interest income is included under the head "other income" in thestatement of profit and loss.

f. Earnings Per ShareBasic earnings per share are calculated by dividing the net profit or loss for the period attributable toequity shareholders by the weighted average number of equity shares outstanding during the period.For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributableto equity shareholders and the weighted average number of shares outstanding during the period areadjusted for the effects of all dilutive potential equity shares.

g. InventoriesMedical supplies, stores and spares are valued at cost. Cost of pharmacy items is computed on thebasis of Specific identification Method.

h. Contingent liabilitiesA contingent liability is a possible obligation that arises from past events whose existence will beconfirmed by the occurrence or non-occurrence of one or more uncertain future events beyond thecontrol of the company or a present obligation that is not recognized because it is not probable that anoutflow of resources will be required to settle the obligation. A contingent liability also arises in extremelyrare cases where there is a liability that cannot be recognized because it cannot be measured reliably.



34

The company does not recognize a contingent.i. Tangible Fixed Assets

Fixed assets are accounted at cost and inclusive of inward freight, duties and taxes and incidentalexpenses related to acquisition.Capital Work-in-Progress includes advances for capital items, capital items under erection and pre-operative expenses pending allocation on the assets to be commissioned.

j. DepreciationDepreciation on Fixed Assets based on the rates specified in Schedule XIV to the Companies Act, 1956,under Straight Line method.

k. Tax Expensesi) Current Tax Expense

The Current charge for income tax is calculated in accordance with the tax regulations.ii) Deferred Tax Expense

Deferred Income tax reflects the impact of timing difference between accounting income and taxincome for the year/period. Deferred tax is measured based on the tax rates and the tax lawsenacted at the Balance Sheet date. Deferred tax asset is recognized only to the extent of certaintyof realization of such asset.

3. There is no information from any of the suppliers regarding their status as small scale industrial undertakings.Hence information regarding dues to such undertakings could not be furnished.

4. The Previous year figures have been regrouped or reclassified wherever necessary to be in conformity withthe current year figures. All amounts in the financial statements are presented in Rupees except where everspecifically mentioned.

5. Contingent Liabilities :On Account of Bank Guarantee given by Bankers Rs.1,60,000 (previous Year Rs.1,60,000).

6. Directors' Remuneration: 2011 -12 2010-2011Salary and allowances Nil Nil

7. Additional information as required by Part - II of Schedule - VI of the Companies Act, 1956. Rs. (In Lakhs) Rs. (In Lakhs)

A. Expenditure in Foreign Currency: Nil NilB. Earnings in Foreign Exchange: 238.12 148.30

(on cash basis)Software Development ChargesC. C I F Value of Imports: Nil Nil

8. Segment Reporting: The Company has only Software Development activity hence segment report has notbeen given.

9. Related Party:As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures oftransaction with the related parties as defined in Accounting Standards are given below:(I) List of related parties with whom transactions have taken place and relationships:

S. No. Name of the Related Party Relationship

1 Capricorn Systems Inc. Associate Concern

(ii) Transactions during the year with related parties:

S. No. Nature of Transaction Associate Managerial Total Personnel

A) Sales 238.12 238.12



35

CAPRICORN SYSTEMS GLOBAL SOLUTIONS LIMITEDRegd. Office : # 8-2-293/82A/408A, Plot No. 408A, Road No:22A, Jubilee Hills, Hyderabad - 500033

ATTENDANCE SLIP

I hereby record my presence at the 27th ANNUAL GENERAL MEETING of the Company held its Registered# 8-2-293/82A/408A, Plot No. 408A, Road No:22A, Jubilee Hills, Hyderabad - 500033 on Saturday 29thSeptember, 2012 at 11.00 a.m.

DP. Id* Full Name of the Member / Proxy

Client Id*

Reg. Folio No.

* Applicable if shares are held in electronic form ..............................................** Strike out which ever is not applicable Signature of Shareholder / Proxy

Note : Members attending the meeting in person or by proxy are requested to complete the attendance slipduty signed and hand it over at the entrance of the meeting hall.

CAPRICORN SYSTEMS GLOBAL SOLUTIONS LIMITEDRegd. Office : # 8-2-293/82A/408A, Plot No. 408A, Road No:22A, Jubilee Hills, Hyderabad - 500033

PROXY FORM

I / We ____________________________________________________________________ in the district of_________________________________ being a Member / Members of the above named company, here byappoint ___________________________________ of _____________________________________________in the district of __________________ failing him / her ____________________________________________of ________________________________ in the the district of ___________________ as my / our proxy toattended and vote on a poll for me/us and on my/our behalf at the 27th Annual General Meeting of thecompany, to be hed on Saturday 29th September, 2012 at 11.00 a.m. at its registered office situated at# 8-2-293/82A/408A, Plot No. 408A, Road No:22A, Jubilee Hills, Hyderabad - 500033

DP. Id* Signed this ___________ day of _______ 2012

Client Id* .

Reg. Folio No. Signature ...........................

* Applicable if shares are held in electronic form.

Note : This proxy form duly completed should be deposited at the Registered Office of the Company notlater than 48 (Forty Eight) hours before the time fixed for holding the Meeting.

1.00One Rupee

RevenueStamp

(in block letters)Address :

27th Annual R

eport 2011-2012

Capricorn System

s Global Solutions Lim

ited

36

PRINTED MATTERBOOK POST

If Undelivered Please Return to :Capricorn Systems Global Solutions Ltd.,REGISTERED OFFICE# 8-2-293/82A/408A, Plot No. 408A, Road No:22A,Jubilee Hills, Hyderabad - 500033

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