CG-VAK Software & Exports Ltd

To the Members,

The Board of Directors of your Company take pleasure in presenting the 29 Annual Report on the business and operations of your Company and the Audited Financial Accounts for the year ended 31 March 2024. st

During the year under review, your Company has achieved a turnover of Rs. 5,401.68 lakhs as against Rs. 5489.33 lakhs in the previous year. The Profit after Tax stands at Rs.884.43 lakhs as against Rs. 1168.75 lakhs in the previous year. There is a marginal decline in the revenue of the company.

The global revenues for the Company including the business done by the Wholly Owned Subsidiary for the year under review is Rs. 8,064.48 lakhs as compared to Rs. 7,736.56 lakhs in the previous year.

In the financial year 2023-24,due to challenging business environment your Company has maintained the total revenue during the year and the profit after tax has decreased to Rs.884.43lakhs from Rs. 1168.75 lakhs.

The contribution of business from various Geographical areas were:

North America contributed 80% and Rest of the World 20% of the business.

During the year under review, Business from Offshore Software Services is Rs.5397.70lakhs as against Rs. 5485.80 lakhs in the previous year.

Though WHO declared the end to the Covid-19 pandemic, the geopolitical uncertainties continue to have a grip on the world economic growth. The forecast on Global GDP is estimated to be at 3.2% in 2024. Organizations are compelled to overhaul their business processes by leveraging the latest technologies to adapt to the new normal. The proliferation of AI is opening new avenues, creating vast opportunities for IT service providers like us. Increasingly, companies around the globe are turning to offshore service providers to fulfill their software needs, driven by the need for innovation and efficiency in a rapidly evolving technological landscape.

There is a marginal decline in the revenue of the company and we are striving to improve the revenue generation. The decline is due to disruptions, inflation, and geopolitical changes in the economies where we operate. Client retention and satisfaction have been steadily increasing, with numerous client commendations and a significant amount of repeat business. Our clients have particularly appreciated our project management and new technology skills.

The Outsourced Product Development (OPD) market remains a key focus area for the company, where we have achieved notable success. Our Cloud practice has performed exceptionally well and is expected to maintain its growth momentum. Our strategy is to strengthen existing customer relationships and expand our business. Alongside fortifying our presence in current markets, we have plans to penetrate new geographies globally.

Customers are taking a cautious approach in spending due to uncertainty in their respective economies. However, new client addition has been steady from North America, Europe, Australia and Africa. It is also anticipated to grow in the current financial year.

We are striving for positive growth in this year and the Company should perform better in the ensuing Financial Year 2024-25

Your company has a strict quality assurance and control programs to ensure that high level of Quality service is delivered to the customers. Matured and proven quality management systems are in place based on the requirements of ISO 9001:2015 and 27001:2013 standards.

Your Directors recommended a dividend of Rs. 1/- per equity share (i.e. 10% on each equity share having Face value of Rs. 10 each), subject to the approval by the shareholders at the ensuing Annual General Meeting. The total dividend payout will be of Rs.50.50 lakhs. During the previous year ended 2022-2023, your Company has paid a dividend of Rs.50.50 lakhs.

As per Companies (Accounting Standards) Amendment Rules, 2016, dividend will be recognized as liability on approval of shareholders at the ensuing Annual General Meeting.

The dividend, if approved by the shareholders, will be paid to those members whose names appear in the Register of Members as on the date of the Annual General Meeting.

No amount has been transferred to the general reserve.

Pursuant to the provisions of the Act, read with Investor Education and Protection Fund Rules, the shares on which dividends have not been claimed for 7 consecutive years are liable to be transferred in favour of IEPF Authority. The Company has uploaded the details of the shares which are subject to be transferred in favour of IEPF Authority, on the website of the Company (www.cgvak.com). Efforts are also made to coordinate with the Registrar and Share Transfer Agents to locate shareholders who have not claimed their dues.

The Paid-up share capital of the Company as at 31 March, 2024 aggregates to Rs. 5,05,02,000/- comprising 50,50,200 st equity shares of Rs. 10/- each fully paid up.

The Directors have devised proper system to ensure compliance with the applicable Secretarial Standards and that such systems are adequate and operating effectively. The Company has duly complied with Secretarial Standards issued by the Institute of Company Secretaries of India on the Meeting of the Board of Directors (SS-1) and General Meeting (SS-2).

Your Company firmly believes that employees are its most valued resource and their efficiency play a key role in achieving defined goals and building a competitive work environment. Many initiatives have been taken to enhance their Technical, managerial skills. Also, various employee engagement programs have helped the organization to achieve higher productivity levels. In its pursuit to attract, retain and develop best available talents, several programs are regularly conducted at various levels across the Company. Employee relations continued to be cardinal and harmonious across all levels of the Company.

During the year under review CGVAK was recognized and certified as a Great Place to work by the Prestigious Great Place to work Institute, India.

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and on the date of this report.

The trading in the Equity Shares of your Company is under compulsory dematerialization mode. As on 31 March, 2024, Equity Shares representing 95.45% of the equity share capital are in dematerialized form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company's shares.

The Equity Shares of your Company continue to remain listed with BSE Limited. The listing fees for the year 2024-25 have been paid to the Stock Exchange. The Shares of the companies are compulsorily tradable in dematerialized form.

The assets of the Company are adequately insured against fire and such other risks, as are considered necessary by the Management.

The Consolidated Financial Statements of the Company prepared in accordance with the applicable Accounting Standards forms a part of this Annual Report.

The frame work ensures that all the disclosures and information's provided are precise and time bound. Transparency, Accountability, Integrity and Independence are the bottom-line of our Governance. The Company will continue to uphold the true spirit of Corporate Governance and implement best governance practices.

A detailed report on Corporate Governance, pursuant to the requirements of SEBI (LODR) is available as a separate section in this Annual Report. The Auditor's report on Corporate Governance, confirming the compliance of conditions of Corporate Governance as stipulated is annexed as a part of this report.

Pursuant to Regulation 34 of SEBI (LODR), Regulations 2015, the Management Discussion and Analysis Report for the year under review is presented in a separate section forming part of this Annual Report.

Code of Conduct and Policies are hosted in the website of the Company.

https://www.cgvakindia.com/code-of-conduct-and-policies/

The Board met four times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the periods prescribed by the Companies Act, 2013.

The Audit committee consists of Independent Directors namely Mr. K. Kathirvel (Chairman), Mr.R.Jayaraman, Mr. R. Krishnaswamy and Mr. G.S. Swaminathan as other Members.. All the recommendations made by the Audit Committee were accepted by the Board.

CGVAK has adopted a Code of Conduct to regulate, monitor and report trading by designated persons and their immediate relatives as per the requirements under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. A copy of the Policy has been placed at our website at www.cgvak.com for reference.

As per the requirement of Section 134 (3)(m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, the information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given below.

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Companies (Accounts) Rules, 2014:

A) CONSERVATION OF ENERGY

Your Company uses electrical energy for its equipment such as air-conditioners, computer terminals, lighting and utilities at work places. As an ongoing process, the company continued to undertake various measures to conserve energy

B) TECHNOLOGY ABSORPTION

a) Research & Development

The nature of the business of software development involves inbuilt, constant Research and Development as a part of its process of manufacturing (development). The Company is developing applications engines, re-usable codes and libraries as a part of its R&D activities.

b) Technology Absorption

The Company has not absorbed technology from outside.

c) Information regarding imported technology (Imported during last three years)

C) FOREIGN EXCHANGE EARNING AND OUTGO

(Rs. in Lakhs)

In term of the provisions of Section 197(12) of Act read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report.

Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure -1.

The Company has adopted a Risk Management Policy for identifying and managing risk at the strategic, operational and tactical level. The Risk Management policy has been placed on the website of the Company. At present the Company has not identified any element of risk which may threaten the existence of the Company.

There were no loans and guarantees given or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

There were no qualifications, reservations or adverse remarks made either by the Statutory Auditors or by the Practicing Company Secretary in their respective reports. Your Directors have provided explanation in Annexure - 2 for the matter of emphasis in the Auditor's Report.

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also in the Board for approval.

The disclosure on related party is annexed herewith as Annexure - 3.

The current Policy is to have an appropriate mix of executive and independent directors to maintain the Independence of the Board and separate its functions of the governance and management. As on 31 March, 2024, the Board consists ofst 7 members, one of whom is Non-Executive Chairman, one of whom is Executive or whole time Director, one of whom is Non-Executive Women Director and Four are Independent Directors. The Board periodically evaluates the need for change in its composition and size.

The policy of the Company on Directors' appointment and remuneration, including Criteria for determining Qualification, positive attributes, independence of a director and other matters provided under Sub-Section(3) of Section 178 of the Companies Act, 2013 adopted by the Board, is hosted on the website of our Company. We affirm that the remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the company.

As on 31 March, 2024, your Company has only one wholly owned subsidiary. Your Company's Wholly Owned Subsidiary st at USA, CG-VAK Software USA Inc. has made a Sales Turnover of US$ 3.03 million during this year, compared to the US$ 2.87 million during the previous year. There has been an increase in revenue by 5.57% over the previous financial year. During the year, the Board of Directors reviewed the affairs of the wholly owned subsidiary. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and the wholly owned subsidiary, which forms part of the Annual Report. Further, a statement containing the salient features of the financial statement of our wholly owned subsidiary in the prescribed format AOC-1 is appended as Annexure - 4 to the Board's Report. The statement also provides the details of performance, financial positions of the wholly owned subsidiary.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statement, including the Consolidated Financial Statements and related information of the Company and the wholly owned subsidiary are available on our website. These documents will also be available for inspection during the business hours at our Registered Office.

The Company has no other subsidiary/Joint ventures/associates other than the above mentioned.

In accordance with section 92(3) of the Companies Act, 2013, an extract of annual return is placed at the website of the Company https://www.cgvakindia.com/wp-content/uploads/2024/08/Annual-Return-2023-24-draft.pdf

The Provisions of CSR are applicable since 01.04.2020 and CGVAK believes in giving back to the society. A detailed report is appended as Annexure 5.

In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors would like to state that:

1 In preparation of annual accounts for the financial year ended 31 March, 2024, the applicable accounting st standards have been followed.

2 The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the Company for that period.

3 The Directors have taken proper and sufficient care towards the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4 The Directors have prepared the annual accounts on a going concern basis.

5 The Directors have laid down internal financial controls, which are adequate and are operating effectively.

6 The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

The Regional Director (Southern Region), Ministry of Corporate Affairs, Chennai has compounded offenses during the Financial Year 2021-22. The Company had paid a Compounding fees of Rs. 3,41,950, subsequent of which The Regional Director (Southern Region), Ministry of Corporate Affairs, Chennai had issued orders dated 21.09.2021 and 18.11.2021 directing The Registrar of Companies, Coimbatore, Tamil Nadu to withdraw the prosecutions filed. During the Financial year 2022-23 the Company had paid a penalty of Rs. 55,000/- to the Exchange for delay in disclosure of Related Party Transactions, the said penalty has been paid.

During the year, your Company has not accepted/renewed any Deposits.

As per the provisions of the Companies Act, 2013, Mr. G. Suresh retires from office by rotation, and being eligible offer himself for re-appointment at the ensuing Annual General Meeting of the Company. The Board of Directors recommends his re-appointment.

Pursuant to provisions of Section 203 of the Companies Act, 2013, Mr. G. Suresh, Managing Director & CEO, Mr. P. S. Subramanian, Chief Financial Officer and Mr. Harcharan. J, Company Secretary and Compliance Officer are the Key Managerial Personnel of the Company as at 31 March, 2024.

Brief particulars of Directors eligible for reappointment in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Secretarial Standards are annexed to the Notice dated 09 August, 2024 convening the 29 Annual General Meeting.

The company has received necessary declarations from each independent Director under section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149(6) of the Companies Act 2013 and SEBI (LODR) Regulations.

The evaluation framework for assessing the performance of Directors comprises of the following key areas:

1. Attendance of Board Meeting and Board Committee Meetings

2. Quality of Contribution to Board deliberations

3. Strategic perspectives or inputs regarding future growth of Company and its performance

4. Providing perspectives and feedback going beyond information provided by the management

5. Commitment to shareholders and other stakeholder interests

The evaluation involves self-evaluation by the Board Members and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation.

The Company has adopted a Whistle Blower Policy as a mechanism for employees to report to the management concern about unethical behavior, actual or suspected fraud or violation of the company's code of conduct and it affirms that no personnel have been denied access to the Audit Committee. A copy of Whistle Blower Policy has been placed at our website at www.cgvak.com for reference.

The Auditors Report for the financial year 31.03.2024 does not contain any qualification, adverse remarks, reservation or disclaimer.

The secretarial audit report for FY 2023-24 forms part of the Annual Report as Annexure 6 to the Board's Report.

Maintenance of cost records and requirements of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.

The Company has not made any application under the Insolvency and Bankruptcy Code, 2016 during the Financial Year.

There were no such incidents during the Financial Year.

The Company has not made any such valuation during the Financial Year.

The Company has in this place an Anti-Sexual Harassment Policy in line with the requirements of the sexual harassment of women at workplace (prevention, prohibition, redressal) Act, 2013. The Internal Complaints Committee ("ICC") has been setup to redress the complaints received regarding sexual harassment. All employees are covered under this policy.

The following are the complaints received and disposed off during the financial year 2023-24: A. No. of complaints received : 0 B. No. of complaints disposed off : 0

The Company has in place adequate internal financial controls with reference to Financial Statements. Such controls were tested during the financial year and no material weakness in the design or operation was observed.

The Auditors of the Company have not reported any fraud specified under Section 143(12) of the Companies, Act, 2013.

The Directors of your Company would like to take this opportunity to thank one and all associated with it enabling it to scale greater heights and emerge as a recognized software solutions vendor in the industry. The faith and confidence shown on your Company by banks, global clients, government authorities and shareholders has propelled our enthusiasm and strengthen our determination to achieve our vision.

Finally your Directors would like to express their sincere thanks to the dedication and committed hard work of the employees

working in India, USA and at various client locations to reach our corporate vision.