Kapston Services Ltd

Dear Members,

The Board of Directors ("Board") of Kapston Services Limited ("Kapston" or "Company") are pleased to present the Sixteenth Annual Report on the business and operations of your company together with the Audited Financial Statements for the financial year ended March 31,2024.

1. FINANCIAL HIGHLIGHTS

i The summarized Financial Statements of your company are given in the following table below:

(INR in Lakhs)

A detailed performance analysis on various segments, business and operations was provided in the Management Discussion and Analysis Report, which is annexed to this report.

2. STATE OF AFFAIRS/ COMPANY'S PERFORMANCE

The Company is a provider of various manpower solutions, which includes General Staffing, Security Services, Integrated Facilities Management Services and IT Staffing Services as per client's requirements.

The company recorded a total turnover including other income at INR 52,132.91 Lakhs (Previous Year INR 40,103.68 Lakhs) up by 30%; The Profit before Tax stood at INR 992.49 Lakhs (Previous year INR 234.87 Lakhs) up by 322.56%; and the Net Profit after Tax and other comprehensive income at INR 1,291.36 Lakhs (Previous year INR 511.85 Lakhs) up by 152.30%.

3. DIVIDEND

The Board of Directors of the company has not recommended any dividend for the financial year ended March 31,2024.

4. LISTING OF EQUITY SHARES

The securities of the company are listed at National Stock Exchange of India Limited (NSE). The security name ofthe company on NSE is Kapston Services Limited and NSE scrip symbol is ‘KAPSTON'.

The company has paid the listing fee for the financial year 2023-24.

5. TRANSFER TO RESERVES

During the period under review, your company has not proposed to transfer any amount to the General Reserves.

6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The provisions of Section 124 of Companies Act, 2013 are not applicable as the company has not completed seven years from the date of declaration of dividend.

7. SHARE CAPITAL

During the period under review, there has been no change in the Authorized Share Capital of the company. The Authorized Share Capital of the company is INR 11,50,00,000 /- (Rupees Eleven Crores and Fifty Lakhs only) divided into 1,15,00,000 (One Crore Fifteen Lakhs only) equity shares of INR 10/- (Rupees Ten only) each. *

During the period under review, there has been no change in the Paid-up share capital structure of the company. The Paid-Up Capital is INR 10,14,40,610/- (Rupees Ten Crore Fourteen Lakhs Forty Thousand Six Hundred and Ten Rupees Only) divided into 1,01,44,061 (One Crore One Lakh Forty-Four Thousand Sixty- One) equity shares of INR 10/- (Rupees Ten only) each.

The company has not issued any shares with differential rights and hence no information as per the provisions of Section 43(a)(ii) of the Companies Act, 2013 (hereinafter referred as "the Act") read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished and the company has not issued any stock options to its employees.

During the current financial year 2024-25 face value of the equity shares has been sub-divided to Rs.5/- each from Rs. 10/- each after obtaining necessary approvals and the trading with the face value of Rs.5/- is effective from 9 August, 2024.

* Company has passed an ordinary resolution dated July 3, 2024 through postal ballot by remote e-voting for sub-division of 1 (One) equity share of ?10/- (Rupees Ten) each into 2 (Two) equity shares of ?5/- (Rupees Five) each. w.e.f August 9, 2024.

8. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Your company has not given any loans/guarantees and not made any investments during the financial year 2023-24, as specified under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

* The company has incorporated a wholly-owned subsidiary in the name of Kapston Manpower Services Private Limited on 27th July, 2024 and the business of the said company has not yet started.

9. DEPOSITS

During the year under review, the company has neither invited nor accepted deposits from the public/members under Section 73 of the Act, read with the Companies (Acceptance of Deposits) Rules, 2014.

10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year under review, there is no Related Party Transaction and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

Further there are no transactions as per Section 188(1) ofthe Companies Act, 2013, therefore disclosure as per the provision of Section 134 ofthe Act (Form AOC-2) is not applicable.

11. RISK MANAGEMENT

Risk management is the process of identification, assessment and prioritization of risks followed by coordinated efforts to minimize, monitor and mitigate/control the probability and/or impact of unfortunate events to maximize the realization of opportunities. The company has initiated a process of preparing a comprehensive risk assessment and minimization procedure. These procedures are meant to ensure that executive management controls risk by way of a defined framework. The major risks are being identified by the company and its mitigation process/measures being formulated in areas of operations, recruitment, financial processes and reporting, human resources and statutory compliance.

12. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY FROM THE END OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT

Other than those mentioned in this report, there have been no material changes and commitments, affecting the financial position of your company having occurred between the end of the financial year to which the financial statements relate and the date of this report. Further, it is hereby confirmed that there has been no change in the nature of business of the company.

13. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The company is committed to provide a safe and conducive work environment to its employees and has zero tolerance towards any actions, which may fall under the ambit of sexual harassment at the workplace. The company has adopted a policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder. The policy aims to promote a healthy work environment and to provide protection to employees at the workplace and redress complaints of sexual harassment and related matters thereto.

The policy on prevention of sexual harassment is available on the website of the company at https://kapston services.com/investors/#policies

An internal complaints committee, known as the Prevention of Sexual Harassment (POSH) committee, has been constituted to enquire into complaints and to recommend appropriate action, wherever required in compliance with the provisions of the Act. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

a. number of complaints filed during the financial year - NIL.

b. number of complaints disposed of during the financial year - NA.

c. number of complaints pending at the end of the financial year - NIL.

14. MEETINGS OF THE BOARD

During the year, 5 (Five) Board meetings were convened and held. Details of the number of meetings of Board of Directors and committees thereof and the attendance of the Directors in such meetings are provided under the Corporate Governance Report, which forms part of this report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

15. COMMITTEES OF THE BOARD

Detailed composition of the Board committees, number of meetings held during the year under review and other related details are set out in the Corporate Governance Report, which forms a part of this report.

16. CORPORATE GOVERNANCE

A detailed report on Corporate Governance, pursuant to the requirements of Regulation 34 of the Listing Regulations, forms part of the Annual Report as annexure. A certificate from VCAN and Associates, Practicing Company Secretaries, Hyderabad, confirming compliance to conditions of Corporate Governance, as stipulated under the Listing Regulations, is annexed to the Corporate Governance Report Annexure I, which forms part of this Annual Report.

17. POLICY ON DIRECTORS' APPOINTMENT, REMUNERATION AND OTHER DETAILS

The Nomination and Remuneration Committee has adopted a policy as per Section 178(3) of the Companies Act, 2013 for determination of remuneration and the manner of selection of the Board of Directors, CS, CFO and Managing Director.

Criteria for selection of Non-Executive Director

• The Non-Executive Directors shall be of high integrity with relevant expertise and experience in the fields of Service Industry, Marketing, Finance Taxation Law, Governance and General Management.

• In case of appointment of Independent Directors, the committee shall satisfy itself with regard to the criteria of independence of the directors vis-a-vis the company so as to enable the board to discharge its function and duties effectively.

• The committee shall ensure that the candidate identified for appointment as a director is not qualified for appointment under Section 164 of the Companies Act, 2013.

• The committee shall consider the following attributes, whilst recommending to the board the candidature for appointment as a director:

• Qualification, expertise and experience of the directors in their respective fields.

• Personal, professional or business standing.

• Diversity of the Board.

• In case of re-appointment of Non-Executive Directors, the Board shall take into consideration the performance evaluation of the Directors and their engagement level.

Remuneration

The Non-Executive Directors shall not be entitled to receive remuneration except by way of sitting fees, reimbursement of expenses for participation in the board/committee meetings and commission. The Independent Director of the company shall not be entitled to participate in the Stock Option Scheme of the company. The aggregate commission paid to the Non-Executive Directors is within the statutory limit of the company.

Criteria for selection/appointment of Managing Director, Executive Director, CS and CFO

For the purpose of selection of the Managing Director, Executive Director, Company Secretary and Chief Financial Officer, the Committee shall identify persons of integrity who possess relevant expertise, experience and leadership qualities required for the position.

The Committee will also ensure that the incumbent fulfils such other criteria with regard to age and other qualifications as laid down under Companies Act, 2013, or other applicable laws.

Remuneration to Managing Director and Executive Director

• At the time of appointment or re-appointment, the Executive Director and Managing Director shall be paid such remuneration as may be mutually agreed between the Company (which includes the Committee and the Board of Directors) and the Executive Director/Managing Director, within the overall limits prescribed under the Companies Act, 2013.

• The remuneration shall be subject to the approval of the members of the Company in General Meeting in compliance with the provisions of the Companies Act, 2013.

Remuneration Policy for the Senior Management Employees including CFO & CS

In determining the remuneration of Senior Management Employees, the committee shall ensure/consider the following:

(i) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate the person, to ensure the quality required to run the Company successfully;

(ii) there is a balance between fixed and incentive pay, reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

The policy relating to remuneration of Directors, Key Managerial Personnel, Senior Management and other employees is available on the website ofthe Company at https://kapstonservices.com/ investors/#policies

18. BOARD EVALUATION AND ASSESSMENT

The Board of Directors have carried out an annual evaluation of its own performance, Board committees and individual Directors pursuant to the provisions of the Sections 134, 178 and Schedule IV of the Companies Act, 2013. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, execution and performance of specific duties by the Board of Directors, independence, ethics and values, attendance and contribution at meetings etc.

The performance of the Independent Directors were evaluated by the Board after seeking inputs from all the Directors on the effectiveness and contribution of the Independent Directors.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members based on the criteria such as the composition of Committees, effectiveness of Committee meetings, etc.

The Board reviewed the performance of the individual Directors on the basis of the contribution of the individual Director.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive director and non-executive directors. The Independent Directors also assessed the quality, frequency and timeliness of flow of information between the Board and the management that is necessary for effective performance.

• Retirement by Rotation

In accordance with the provisions of Section 152 ofthe Companies Act, 2013 and the Articles ofAssociations of the Company, Mr. Srikanth Kodali (DIN: 02464623), retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for reappointment. The Board recommends his reappointment.

• Appointment of Directors as on the Date of Report

During the year under review, Ms. Vanitha Nagulavari (DIN: 07271674) has been re-appointed as an Independent Director for the second term of 5 consecutive years with effect from 30th August, 2023 and Mr. Srikanth Kodali (DIN 02464623) has been re-appointed as a Managing Director for a period of three years with effect from 29th January, 2024 vide special resolution dated 25th September, 2023 at the 15th Annual General Meeting.

• Reappointment of Executive Chairman after closing of financial year

Dr. Chereddi Ramachandra Naidu (DIN: 02096757) is about complete his tenure as an executive chairman. The Board on the recommendation of Nomination and Remuneration Committee is of the opinion to reappoint Dr. Chereddi Ramachandra Naidu (DIN: 02096757) as an Executive Chairman, for a further period of 3 years w.e.f 29th August, 2024 pursuant to the approval of shareholders in ensuring 16th Annual General Meeting.

• Appointment and Resignation of KMP

During the year under review, Mr. Srikanth Kodali, Managing Director, Mr. Kapil Sood, Chief Financial Officer and Ms. Triveni Banda, Company Secretary* are the key managerial personnel of the company in accordance with the provisions of Section (S) 2 (51) and 203 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managing Personnel) Rules, 2014.

*Ms. Triveni Banda (A68042) has been appointed as the Company Secretary w.e.f. 15th December, 2023 in the place of Ms. Kalluru Manaswini, who has resigned as a Company Secretary w.e.f. 7th December, 2023.

20. DECLARATION BY THE INDEPENDENT DIRECTORS

The Company has received declarations from the Independent Directors that they meet the criteria of independence as prescribed under Section 149(6) of the Act along with rules framed there under and Regulation 16(1)(b) and 25 of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 164(2) of the Act and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

21. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3) ( C) of the Act, the Board of Directors, to the best of their knowledge and information and explanations received from the Company, confirm that:

a) in the preparation of the accounts for the year ended March 31, 2024, the applicable standards have been followed and there are no material departures from the same;

b) they have 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 as at March 31,2024 and of the profit and loss of the Company for the year under review;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared annual accounts of the Company on a 'going concern' basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) they have devised proper systems to ensure compliance with the provision of all applicable laws and that such systems were adequate and operating effectively.

22. EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is placed on the website of the company at https://kapstonservices.com/investors/#annual-return-and-notice

23. CORPORATE SOCIAL RESPONSIBILITY

The Company believes in building and maintaining a sustainable societal value, inspired by a noteworthy vision to actively participate, contribute and impact not just individual lives but create a difference on a social level as well.

In compliance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established the CSR Committee.

The Board has adopted the CSR Policy, as formulated and recommended by the CSR Committee, and is available on the Company's website at https://kapstonservices.com/investors/#policies

The disclosure of contents of CSR policy pursuant to provisions of Section 134(3)(o) of Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is annexed herewith as Annexure II to the Board's Report.

24. PARTICULARS OF EMPLOYEES

The information relating to remuneration and other details as required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is provided as an Annexure III to this report.

There are no employees who draw remuneration in excess of the limits prescribed in Rule 5(2)(i), (ii) and (iii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Pursuant to the provisions of the first proviso to Section 136(1) of the Act, the annual report excluding the remuneration details of top ten employees is being sent to the Members of the Company. Any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

25. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report for the year under review, is presented in a separate section, forming a part of the Annual Report.

26. STATUTORYAUDITORS

M/S NSVR and Associates LLP, Chartered Accountants, (Firm Registration No.0008801S/S200060), Statutory auditors of the company were appointed for a period of five years by the shareholders of the Company to hold office from the conclusion of the 14th Annual General Meeting till the conclusion of 19th Annual General Meeting.

As required under Section 139 of the Companies Act, 2013, the Company has received a written consent from the Auditors to their continued appointment and also a certificate from them to the effect that their existing appointment is in accordance with the conditions prescribed under the Companies Act, 2013 and rules made thereunder.

The Board has duly examined the Statutory Auditors' Report to the financial statements, which is selfexplanatory. The Auditors report for Financial Year 2023-2024 does not contain any qualification, reservation or adverse remark for the year under review. The Auditor's Report is enclosed with the financial statements in this Annual Report. During the year under review, the Auditors have not reported to the Audit Committee any instances of fraud committed against the Company by its officers or employees under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134(3) (ca) of the Act.

27. SECRETARIAL AUDITOR

M/s VCAN & Associates, Practicing Company Secretaries, Hyderabad were appointed as Secretarial Auditors to conduct Secretarial Audit ofthe Company for the financial year 2023-2024 and have submitted the Secretarial Audit Report for the year ending 31 March 2024 which is annexed to this Board's Report as Annexure-IV.

As per amended SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in addition to the above mentioned Secretarial Audit Report, listed company is also required to obtain an Annual Secretarial Compliance Report from a practicing Company Secretary w.r.t. the compliances of all applicable SEBI Regulations, amendments, circulars or guidelines etc., by the Company. Accordingly, the same has been obtained and filed with the concerned Stock Exchanges.

Further pursuant to SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, read with Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) (Amendment) Regulations, 2018, the Company is required to obtain a certificate from Practicing Company Secretary that none of the directors on the Board of the company have been debarred or disqualified from being appointed or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority.

The said Certificate has been obtained from M/s VCAN & Associates, Practicing Company Secretaries, Hyderabad which is annexed to this Board's Report as Annexure- IA

28. COST AUDIT

The Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Act, is not applicable to the Company and accordingly such accounts and records are not made and maintained.

29. INTERNAL AUDITOR

The Board, on the recommendation of the Audit Committee, in its meeting had approved the appointment of M/s TAN & Associates, Chartered Accountant (Firm Registration No. 024082S) as the Internal Auditors of the Company for Financial year 2023-2024 to conduct the internal audit, which is reviewed each year in consultation with the Audit Committee. On a quarterly basis also, Internal Auditors give presentations and provide a report to the Audit Committee of the Company.

The Board based on the recommendation of the Audit Committee, has appointed M/S TAN & Associates, Chartered Accountant (Firm Registration No. 024082S ) as the Internal Auditors for the financial year 20242025.

30. POSTAL BALLOT

The Company has not conducted any Postal Ballot during the year under review. However, the Company has conducted the Postal Ballot during the financial year 2024-25 dated 3rd July, 2024 and the details have been mentioned in Corporate Governance Report.

31. INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. Based on the audit reports your company undertakes corrective action in their respective areas and strengthen the controls.

The Board of Directors of the Company have adopted various policies like Related Party Transactions policy, Whistle Blower Policy, code of conduct for regulating, monitoring and reporting insider trading and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding 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 information.

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 2015, the Board has approved the code of conduct for prohibition of insider trading and the same is being implemented by the Company.

32. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

During the financial year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in the future.

33. VIGIL MECHANISM

In compliance with Section 177(9) of the Act and Regulation 22 of the Listing Regulations, the Company has a Whistle Blower Policy and has established the necessary vigil mechanism for Directors and employees in confirmation with the above laws, to report concerns about unethical behaviour.

The details of the Policy is also available on the website of the Company at https://kapstonservices.com/ investors/#policies

The policy provides for a framework and process, for the employees and directors to report genuine concerns or grievances about leakage of unpublished price sensitive information (UPSI), illegal and unethical behaviour to the Chairman of the Audit Committee.

34. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOL-OGY ABSORPTION

Considering the nature of activities of the Company, the provisions of Section 134 (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 relating to conservation of energy, Research and Development, Technology Absorption are not applicable to the Company.

35. FOREIGN EXCHANGE EARNINGS AND OUTGO

During the financial year under review, there is no foreign exchange earnings and outgo.

36. COMPLIANCE WITH THE SECRETARIAL STANDARDS

Pursuant to the provisions of Section 118 of the Act, the Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India ("ICSI") and notified by the Ministry of Corporate Affairs ("MCA").

37. DISCLOSURE OF ACCOUNTING TREATMENT

The Company in the preparation of financial statements has followed the treatment laid down in the

Accounting standards prescribed by the Institute of Chartered Accountants of India. There are no audit qualifications on the Company's financial statements for the year under review.

• During the year the Company does not have any subsidiary or group or associate company, therefore standalone financial statement is presented.*

• There are no applications made or any proceeding pending against the Company under Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the financial year.

• There are no instances of one-time settlement during the financial year.

• Various policies as approved by the Board of Directors in accordance with the provisions of Companies Act, 2013 and SEBI (LODR) Regulations, 2015 is hosted on the company's website at https://kapstonservices.com/investors/#policies

*During the financial year 2024-25 the Company has incorporated a wholly owned subsidiary named as Kapston Manpower Services Private Limited on 27th July 2024.

39. ACKNOWLEDGEMENT

Your Directors place on record their gratitude to the Central Government, various State Governments and Company's Bankers and advisors for the valuable advice, guidance, assistance, co-operation, and encouragement they have extended to the Company from time to time. The Directors also take this opportunity to thank the Company's Clients, partners, investors, employees and all other Stakeholders, Regulators and Stock Exchange for their consistent support to the Company.