Directors Report of K2 Systems Ltd.

Mar 31, 2014

Dear Members,

We have pleasure in presenting the 25th Annual Report with Audited Statements of Accounts for the year ended 31st March 2014.

FINANCIAL RESULTS: (Rupees in Lakhs) Particulars 2013-2014 2012-2013

Income from Operations 254.65 243.72

Profit before depreciation and Tax 250.07 239.20

Depreciation 0.79 0.79

Profit before Tax 5.37 5.32

Provision for Tax 3.60 (0.30)

Profit after Tax 1.77 5.62

PERFORMANCE REVIEW:

During the year unser review, the Company has recorded a turnover of Rs.254.65 Lakhs and a net profit of Rs. 1.77 Lakhs in the current year against the turnover of Rs. 243.72 Lakhs and a net profit of 5.63 Lakhs in the previous financial year 2012-13

The Company has been continuously working on quality up gradation and austerity measures for achieving efficient running of the organization.

DIVIDEND:

Your Directors have expressed inability to recommend dividend for the year. PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, during the financial year under review.

LISTING:

The equity shares of your company are listed on the Bangalore Stock Exchange Limited.

CAPITAL OF THE COMPANY:

Authorised Share capital of the company stands is Rs.50,000,000/-( Rupees Five Crores Only) divided in to 50,00,000 equity shares of Rs.10/- and Issued, Subscribed , Paid up capital of the company is Rs.39,400,000/- (Rupees Three Crores Ninety Four Lakhs only) divided in to 39,40,000 equity shares of Rs.10/- each.

SUBSIDIARY COMPANY:

Your Company does not have any subsidiary company.

CHANGE OF REGISTERED OFFICE:

During the year, the registered office of the company was shifted from 2-4- 68/Rc/506, Upperpally, Hyderabad-500048 to H.No. 10-4-1/A/8, Flat No. G-3, Ramakrishna Nagar, Srilaxmi Nlayam, Lower Masab Tank, Hyderabad - 500028 w.e.f 26.09.2013.

MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report.

DIRECTORS:

In accordance with the Companies Act, 1956 read with Articles of Association of the company the Director namely Mr. Boga Sharathdhruthi retires by rotation and is eligible for re-appointment. Your Board recommends the re-appointment of the Director.

Pursuant to the notification of Sec. 149 and other applicable provisions of Companies Act, 2013, your Directors are seeking appointment of Mr. K. R. Srinivasa Rao and Mr. B. Nageshwar Rao as Independent Directors for five consecutive years for a term upto 31st March, 2019. Details of the proposal for appointments of Mr. K. R. Srinivasa Rao and Mr. B. Nageshwar Rao are mentioned in the Notice of 25th Annual General Meeting.

During the year, Ms Akella Katyani Mr. D. Nagaraju, Ms. A. Katyayani and A. Venkata Ramana resigned from the board. The Board placed on record its sincere appreciations for the valuable services rendered by them during their tenure as Directors of the Company. Mr. Santosh Kumar Sahu, Company Secretary resigned from the Company w.e.f. 05.08.2013.

DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000 your directors confirm

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accounts on the going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT GO:

The required information as per Sec.217 (1) (e) of the Companies Act 1956 is provided hereunder:

A. Conservation of Energy:

Your Company's operations are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment.

B. Technology Absorption:

1. Research and Development (R&D) : NIL

2. Technology absorption, adoption and innovation : NIL

PARTICULARS OF EMPLOYEES:

There is no employee who is falling under section 217 (2A). Therefore, the disclosures required to be made under section 217 (2A) of the Companies Act, 1956 and the rules made there under are not applicable.

CODE OF CONDUCT:

The Code of Conduct has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. Code of Conduct has also been placed on the website of the company. A declaration signed by the Whole-time Director is given in Annexure.

AUDITORS:

Your directors propose the appointment of M/s. M. M. Reddy & Co., as statutory auditors to hold office until the conclusion of the next Annual General Meeting of the company.

CORPORATE GOVERNANCE:

As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the practicing company secretary forms part of this Report as Annexure.

ACKNOWLEDGEMENTS:

Your directors would like to express their grateful appreciation for assistance and co-operation received from clients, banks, investors, Government, other statutory authorities and all others associated with the company. Your directors also wish to place on record their deep sense of appreciation for the excellent contribution made by the employees at all levels, which enabled the company to achieve sustained growth in the operational performance during the year under review.

For and on behalf of the Boar K2 Systems Limited

Sd/- Boga Prabhakar Place: Hyderabad Whole-time Director Date: 13.08.2014 (DIN: 01832368)

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Mar 31, 2013

Dear Members,

We have pleasure in presenting the 24th Annual Report with Audited Statements of Accounts for the year ended 31st March 2013.

FINANCIAL RESULTS:

(Rupees in Lakhs)

Particulars 2012-2013 2011-12

Income 243.72 1.28.68

Expenditure 2,38,40 1.24,88,218

Profit after Tax 5,62,614 4,78,736

Profit ' (Loss) carried to Balance (41002659) (41,565273) Sheets

PERFORMANCE REVIEW:

The Company has recorded a turnover of Rs. 2.43,72,886/- and a net profit of Rs. 4,78,736/- in the current year against the turnover of Rs. 1,28,67,892/- and a net profit of Rs. 4,78.736/- in the previous financial year ending 31.03.2012.

The Company has been continuously working on quality up gradation and austerity measures for achieving efficient running of the organization.

DIVIDEND:

Keeping the Company's expansion and growth plans in mind, your Directors have decided not to recommend dividend for :he year.

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, during the financial year under review

LISTING:

The equity shares of your company are listed on the Bangalore Stock Exchange Limited.

CAPITAL OF THE COMPANY:

Authorised Share capital of the company stands is Rs.50.000.000/-( Rupees Five Crores Only) divided in to 50,00,000 equity shares of Rs.10/- and Issued. Subscribed , Paid up capital of the company is Rs.39,400,000/- (Rupees Three Crores Ninety Four Lakhs only) divided in to 39.40,000 equity shares o: Rs.10/- each.

SUBSIDIARY COMPANY:

Your Company does not have any subsidiary company.

CHANGE OF REGISTERED OFFICE:

During the year the registered office of the company was shifted from 6-3-650,503B, Maheswaran Chambers, Beside Medinova Diagnostics, Somajiguda, Erramanzyl, Hyderabad- 500082 to 2-4-68. RC 506. Upper pally, Hyderabad-500048 w.e f 09/02/2013.

MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report.

DIRECTORS:

In accordance with the Companies Act. 1956 read with Articles of Association of the company the Directors namely Mr A. Narasimha Sarma and Mrs. Akella Katyayani retires by rotation and are eligible for re-appointment. Your Board recommends the re appointment of the Director above

DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000 your directors confirm

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accounts on the going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

The required information as per Sec.217 (1) (e) of the Companies Act 1956 is provided hereunder:

A. Conservation of Energy:

Your Company's operators are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment.

B. Technology Absorption:

1 Research and Development (R&D) NIL

2 Technology absorption, adoption and innovation NIL

C. Foreign Exchange Earnings and Out Go:

Foreign Exchange Earnings : NIL

Foreign Exchange Outgo : NIL

PARTICULARS OF EMPLOYEES:

There is no employee who is falling under section 217 (2A) Therefore, the disclosures required to be made under section 2'* 7 (2A) of the Companies Act. 1956 and the rules made there under are not applicable.

CODE OF CONDUCT:

The Code of Conduct has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. Code of Conduct has also been placed on the website of the company. A declaration signed by the Managing Director is given in Annexure.

AUDITORS:

Your directors propose the appointment of M/s. M. M. Reddy & Co., as statutory auditors hold office until the conclusion of the next Annual General Meeting of the company.

CORPORATE GOVERNANCE:

As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the practicing company secretary forms part of this Report as Annexure,

ACKNOWLEDGEMENTS:

Your directors would like to express their grateful appreciation for assistance and co-operation received from clients, banks, investors, Government, other statutory authorities and all others associated with the company. Your directors also wish to place on record their deep sense of appreciation for the excellent contribution made by the employees at alf levels, which enabled the company to achieve sustained growth in the operational performance during the year under review

For and on behalf of the Board K2 Systems Limited

Sd/- Boga Prabhakar Director Place : HYDERABAD Date : 08.08.2013

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Mar 31, 2012

Dear Members,

We have pleasure in presenting the 23rd Annual Report with Audited Statements of Accounts for the year ended 31st March 2012.

FINANCIAL RESULTS : (Rupees in Lakhs) Particulars 2011-12 2010-11

Income 3,58,67,892 13,57,629

Expenditure 3,53,29,211 13,88,930

Profit after Tax 5,88,610 (31,301)

Profit / (Loss) carried to Balance Sheet (41,455,400) (44,044,010)

PERFORMANCE REVIEW

The Company has recorded a turnover of Rs.35,867,892/- and a net profit of Rs. 5,88,610/- in the current year against the turnover of Rs. 1,357,629/- and a net Loss of Rs. 31,301 in the previous financial year ending 31.03.2011.

The Company has been continuously working on quality up gradation and austerity measures for achieving efficient running of the organization.

DIVIDEND:

Keeping the Company's expansion and growth plans in mind, your Directors have decided not to recommend dividend for the year.

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, during the financial year under review.

LISTING:

The equity shares of your company are listed on the Bangalore Stock Exchange Limited.

CAPITAL OF THE COMPANY:

Authorised Share capital of the company stands is Rs.50,000,000/-( Rupees Five Crores Only) divided in to 50,00,000 equity shares of Rs.10/- and Issued, Subscribed, Paid up capital of the company is Rs.39,400,000/- (Rupees Three Crores Ninety Four Lakhs only) divided in to 39,40,000 equity shares of Rs.10/- each.

SUBSIDIARY COMPANY:

Your Company does not have any subsidiary company.

MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report.

DIRECTORS:

In accordance with the Companies Act, 1956 read with Articles of Association of the company the Director namely Mr. K. R. Srinivasa Rao retires by rotation and is eligible for re-appointment. Your Board recommends the re appointment of the Director above.

During the year two new directors Mr. Boga Prabhakar and Ms. Boga Sharathdhruthi were inducted in to the Board on 31.07.2012 as additional directors.

DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000 your directors confirm

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accounts on the going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT GO:

The required information as per Sec.217 (1) (e) of the Companies Act 1956 is provided hereunder:

A. Conservation of Energy:

Your Company's operations are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment.

B. Technology Absorption:

1. Research and Development (R&D) : NIL

2. Technology absorption, adoption and innovation : NIL

PARTICULARS OF EMPLOYEES:

There is no employee who is falling under section 217 (2A). Therefore, the disclosures required to be made under section 217 (2A) of the Companies Act, 1956 and the rules made there under are not applicable.

CODE OF CONDUCT:

The Code of Conduct has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. Code of Conduct has also been placed on the website of the company. A declaration signed by the Managing Director is given in Annexure.

AUDITORS:

Your directors propose the appointment of M/s. M. M. Reddy & Co., as statutory auditors to hold office until the conclusion of the next Annual General Meeting of the company.

CORPORATE GOVERNANCE:

As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the practicing company secretary forms part of this Report as Annexure.

ACKNOWLEDGEMENTS:

Your directors would like to express their grateful appreciation for assistance and co- operation received from clients, banks, investors, Government, other statutory authori- ties and all others associated with the company. Your directors also wish to place on record their deep sense of appreciation for the excellent contribution made by the employees at all levels, which enabled the company to achieve sustained growth in the operational performance during the year under review.

For and on behalf of the Board K2 SYSTEMS LIMITED

Sd/- Place: Hyderabad A. Narasimha Sarnia Date: 30.08.2012 Director

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Mar 31, 2011

The Members

We have pleasure in presenting the 22nd Annual Report with Audited Statements of Accounts for the year ended 31st March 2011.

FINANCIAL RESULTS : (Rupees in Lakhs) Particulars 2010-11 2009-10

Income 1357629 4472455

Expenditure 1388930 4724727

Profit after Tax (31301) (252272)

Profit / (Loss) carried to Balance Sheet (42,044,010) (42012709)

PERFORMANCE REVIEW:

The Ministry of Corporate Affairs (MCA) vide notification no. S.O. 447(E) dated 28th February, 2011 amended the existing Schedule VI to the Companies Act, 1956. The Revised Schedule VI is applicable from financial year commencing from 1st April, 2011. The financial statements of your Company for the year ended 31st March, 2011 have been prepared in accordance with the Revised Schedule VI and accordingly, the previous year's figures have been reclassified/ regrouped to conform to this year's classification.

The Company has recorded a turnover of Rs. 1,357,629/- and incurred a net loss of Rs. 31,301/- in the current year against the turnover of Rs. 44,72,455/- and a net loss of Rs. 2,52,272/- in the previous financial year ending 31.03.2010.

The Company has been continuously working on quality up gradation and austerity measures for achieving efficient running of the organization.

DIVIDEND:

Keeping the Company's expansion and growth plans in mind, your Directors have decided not to recommend dividend for the year.

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, during the financial year under review.

LISTING:

The equity shares of your company are listed on the Bangalore Stock Exchange Limited. CAPITAL OF THE COMPANY:

Authorised Share capital of the company stands is Rs.50,000,000/-( Rupees Five Crores Only) divided in to 50,00,000 equity shares of Rs.10/- and Issued, Subscribed and Paid up capital of the company is Rs.39,400,000/- (Rupees Three Crores Ninety Four Lakhs only) divided in to 39,40,000 equity shares of Rs.10/- each.

SUBSIDIARY COMPANY:

Your Company does not have any subsidiary company.

MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report.

DIRECTORS:

In accordance with the Companies Act, 1956 read with Articles of Association of the company the Director namely Mr. A. Venkata Ramana retires by rotation and is eligible for re-appointment. Your Board recommends the re appointment of the Director above in the best interests of the company.

During the year two new directors Mr. A. Narsimha Sarma and Mrs. Akella Katyayani were inducted in to the Board on 21.10.2010 and 07.12.2012 respectively as additional directors.

DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 217(2AA) of the Companies Amendment Act, 2000 your directors confirm

i) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

ii) That the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year.

iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

iv) That the directors had prepared the annual accounts on the going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUT GO:

The required information as per Sec.217 (1) (e) of the Companies Act 1956 is provided hereunder:

A. Conservation of Energy:

Your Company's operations are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment.

B. Technology Absorption:

1. Research and Development (R&D) : NIL

2. Technology absorption, adoption and innovation : NIL

C. Foreign Exchange Earnings and Out Go:

Foreign Exchange Earnings : NIL

Foreign Exchange Outgo : NIL

PARTICULARS OF EMPLOYEES:

There is no employee who is falling under section 217 (2A). Therefore, the disclosures required to be made under section 217 (2A) of the Companies Act, 1956 and the rules made there under are not applicable.

CODE OF CONDUCT:

The Code of Conduct has been circulated to all the members of the Board and Senior Management and the compliance of the same has been affirmed by them. Code of Conduct has also been placed on the website of the company. A declaration to this effect is given in Annexure.

AUDITORS:

Your directors propose the appointment of M/s. Balaji Viswanath & Co., as statutory auditors to hold office until the conclusion of the next Annual General Meeting of the company.

CORPORATE GOVERNANCE:

As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. A report on Corporate Governance, along with a certificate of compliance from the practicing company secretary forms part of this Report as Annexure.

ACKNOWLEDGEMENTS:

Your directors would like to express their grateful appreciation for assistance and co- operation received from clients, banks, investors, Government, other statutory authorities and all others associated with the company. Your directors also wish to place on record their deep sense of appreciation for the excellent contribution made by the employees at all levels, which enabled the company to achieve sustained growth in the operational performance during the year under review.

For and on behalf of the Board K2 SYSTEMS LIMITED

Sd/- Place: Hyderabad A. Narasimha Sarma Date: 02.05.2011 Director