Directors Report of Spanco Ltd.

Mar 31, 2013

The Directors present the 30th Annual Report of the Company together with the Audited Accounts for the year ended March 31, 2013.

FINANCIAL RESULTS:

Your Company''s financial performance during the year under review is summarized below:

(Rs. in Crores)

Particulars Year ended March 31, 2013 March 31, 2012 (12 months) (6 months)

Income from operations and other income 1055.82 976.47

Profit before Finance Cost, Depreciation & Amortization Exp. and Taxation (278.41) 126.51

Less: Depreciation & Amortization Expenses (net of withdrawal from Revaluation Reserve) 45.96 18.75

Less: Finance Cost 119.50 53.30

Profit before taxation (443.87) 54.46

Less: Tax Expense (134.93) 19.91

Less: Taxation for earlier years 1.38 -

Profit after tax (310.32) 34.55

Add: Balance of Statement of Profit & Loss brought forward 164.75 135.37

Amount available for appropriations (145.57) 169.92

Transfer to Debenture Redemption Reserve 7.41 5.17

Balance carried to Balance Sheet (152.99) 164.75

REVIEW OF OPERATIONS

During the year under review, the Company''s income from operations including other income stood at Rs. 1055.82 Crores as compared to Rs. 976.47 Crores in the previous period (6 months).There was a Loss before Finance Cost, Depreciation and Taxation which stood at Rs. 278.41 Crores as against Profit before Finance Cost, Depreciation and Taxation Rs. 126.51 Crores in the previous period (6 months). During the year under review, the net loss of the Company stood at Rs. 310.32 Crores as against Net Profit amounting to Rs. 34.55 Crores in the previous period (6 months).

DIVIDEND

Due to losses incurred by the Company during the year under review, your Directors have decided not to recommend any dividend for the year.

CORPORATE DEBT RESTRUCTURING

The Company has proposed to restructure the loans availed from banks/financial institutions through CDR Mechanism. The major consortium banks have agreed in-principle for the same, subject to confirmation from their Management Committee. The Company has appointed SBI Caps as Nodel Agency for CDR and draft flash report has been circulated. The Company is taking care of all necessary formalities in this regard.

PUBLIC DEPOSITS

During the period under review, the Company has not accepted/renewed any deposits from the Public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and rules made there under.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A report on Management Discussion and Analysis, as stipulated under Clause 49 of the Listing Agreement is covered under separate section and forming part of the Annual Report.

DIRECTORS

During the year under review, Mr. Iqbal Singh Gumber was appointed as an Additional Director of the Company by the Board w.e.f. November 10, 2012 and in terms of the provisions of the Section 260 of the Companies Act, 1956, he holds office up to the ensuing Annual General Meeting of the Company. The Company has received notice under Section 257 of the Companies Act, 1956, proposing his candidature for appointment as Director of the Company, along with the requisite deposit. The Board recommends his appointment as a Director of the Company.

In accordance with the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Subroto Chaudhury, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re- appointment. Your Board recommends his re-appointment.

During the year under review, Mr. Sanjay Kukreja, Mr. Vijay Kumar Chopra, Mr. Vijay Kumar Gupta, Mr. Sunil Sarin, Mr. Pravin Kumar resigned from the directorship of the Company w.e.f. September 4, 2012, October 12, 2012, October 20, 2012, November 9, 2012 and June 10, 2013 respectively. Also Mr. Adarsh Bagaria, Whole time Director of the Company resigned from directorship of the Company w.e.f. November 10, 2012. Mr. Rajiv Chhabra who was appointed as an Additional Director of the Company w.e.f. November 9, 2012, subsequently resigned from the directorship w.e.f. July 4, 2013. The Board places on record its appreciation for the valuable contribution made by them during their tenure as Directors of the Company.

Brief resume of the Directors proposed to be appointed/re-appointed as stipulated under Clause 49 of the Listing Agreement entered into with BSE Limited and National Stock Exchange of India Limited are given in the Notice convening the 30th Annual General Meeting of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to the Directors'' Responsibility Statement, your directors state that:

- in the preparation of the Annual Accounts for the year ended March 31, 2013 the applicable accounting standards have been followed and there are no material departures from the same;

- the selected accounting policies were applied consistently and the Directors 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 as at March 31, 2013 and of the loss of the Company for the year ended on that date;

- proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

- the annual accounts have been prepared on a going concern basis.

AUDITORS

M/s. Khandelwal Jain & Co., Chartered Accountants, Mumbai, the Statutory Auditors of your Company hold office upto the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from them to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Your Directors recommend their re-appointment as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting up to the conclusion of the next Annual General Meeting of the Company and to audit financial accounts for the financial year ending on March 31, 2014.

AUDITORS'' OBSERVATIONS

With respect to the Auditors'' observations regarding delay in statutory payments and default in payment to banks, Financial Institutions and debenture holders, your directors would like to state that due to losses during the year, the Company could not generate sufficient cash flow for payment of the same. The Company is in process to approach CDR Cell for restructuring of its debts.

SUBSIDIARY COMPANIES/JOINT VENTURES AND CONSOLIDATED FINANCIAL STATEMENTS

A statement containing brief financial details of the Company''s subsidiaries for the year ended March 31, 2013 is included in the Annual Report.

The Ministry of Corporate Affairs vide its General Circular No: 2/2011 dated February 8, 2011 have granted general exemption from attaching the Balance Sheets of subsidiary companies with the holding company''s Balance Sheet, if the holding company presents in its Annual Report the Consolidated Financial Statements duly audited by its Statutory Auditors. The Company is publishing consolidated financial statements in the Annual Report, hence the Balance Sheets of subsidiary companies are not attached with the Company''s Balance Sheet. Further, the annual accounts of the subsidiary companies and the related detailed information will be made available upon request to any member of the Company interested in obtaining the same during the Annual General Meeting and are also available for inspection during business hours at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include Financial Results of its subsidiary companies and Joint Ventures and are prepared in strict compliance with applicable Accounting Standards.

CREDIT RATING

Your Company''s ratings has been reviewed to CARE D [Single D] by Credit Analysis and Research Limited (CARE) for Long-term bank facilities and Non-convertible debentures (NCD) and CARE D (Single D) by CARE for Long/Short-term Bank facilities.

SHARE CAPITAL

On May 10, 2012, the Company had issued and allotted 15,00,000 fully paid Equity Shares of Rs. 10/- per share at a price of Rs. 155/- per share (including premium of Rs. 145/- per share) to Mrs. Kavita Puri, Promoter of the Company upon conversion of even number of warrants issued on preferential basis.

Consequent to this, the paid up share capital of the Company has increased from Rs. 31,35,00,000/- (divided into 3,13,50,000 Equity Shares of Rs. 10/- each) to Rs. 32,85,00,000/- (divided into 3,28,50,000 Equity Shares of Rs. 10/- each).

LISTING

The Company''s shares are listed on BSE Limited and National Stock Exchange of India Limited. The scrip of the Company has been suspended from trading at National Stock Exchange of India Limited w.e.f. September 17, 2013 for non-compliance of some of provisions of the Listing Agreement.

DEBENTURES

The Company had issued 20 secured redeemable non- convertible debentures of Rs. 1,000,000 each amounting to Rs. 2 crores on a private placement basis during the year 2008-09 carrying an interest at 11% payable half yearly and the same were due for redemption in two equal installments on July 3, 2012 and 2013.

The Company had issued 200 secured redeemable non- convertible debentures of Rs. 1,000,000 each amounting to Rs. 20 crores on a private placement basis during the year 2008-09 carrying an interest at 11.25% payable monthly and the same were due for redemption in two equal installments on July 3, 2012 and 2013.

The Company had issued 700 secured redeemable non- convertible debentures of Rs. 1,000,000 each amounting to Rs. 70 crores on a private placement basis during the year 2008-09 carrying an interest at 11.25% payable half yearly and the same were due for redemption in two equal installments on July 10, 2012 and 2013.

However, due to losses during the year, the Company could not generate sufficient cash flow for repayment of these debentures on due dates. The Company is in process to approach CDR Cell for restructuring of its entire debt including these debentures.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

As per the provisions of Section 205A read with Section 205C of the Companies Act, 1956, the Company is required to transfer the unpaid dividend remaining unclaimed and unpaid for a period of 7 years from the due date to the Investor Education and Protection Fund (IEPF) set up by the Central Government. The details of amount lying in the Unpaid Dividend Accounts along with due dates for their transfer to the Investor Education and Protection Fund are given in below table. The shareholders whose dividend remained unclaimed are requested to claim it immediately from the Company. Further, the Shareholders are requested to note that no claim shall lie against the said fund or the Company in respect of any amount which remained unclaimed for a period of seven years from the date that these became first due for payment and no payment shall be made in respect of any such claim.

The detail of Unpaid / Unclaimed Dividend are as follows:

Year Dividend Rate per share Date of Declaration Due Date for transfer to IEPF

2005-06 Rs. 1.80 September 29, 2006 October 29, 2013

2006-07 Rs. 1.80 September 29, 2007 October 29, 2014

2007-08 Rs. 2.00 September 19, 2008 October 19, 2015

2008-09 Rs. 0.50 September 29, 2009 October 29, 2016

2009-10 Rs. 1.00 September 24, 2010 October 24, 2017

2010-11 Rs. 1.00 March 20, 2012 April 19, 2019

CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreement, a detailed report on Corporate Governance duly certified by M/s. Manish Ghia & Associates, Practicing Company Secretaries, Mumbai is separately attached to this Annual Report.

PERSONNEL

The employer employee relations remained cordial throughout the year. The Board places on record its sincere appreciation for the valuable contribution made by the employees across all levels of the organization.

In accordance with the provisions of Section 2I7(2A) read with Companies (Particulars of Employees) Rules, 1975, the name and other particulars of employees are to be set out in the Directors'' Report as an addendum thereto. However, as per the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, the report and accounts as set out therein are being sent to all members of the Company excluding the aforesaid information about such employees. Any member, who is interested in obtaining such particulars about employees, may write to the Assistant Company Secretary at the Registered Office of the Company.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO (A) CONSERVATION OF ENERGY

The Company''s operations are not energy-intensive. However, significant measures are taken to reduce energy consumption by using energy-efficient computers and purchasing energy-efficient equipment. During the year, the Company has taken some measures for optimal utilization of electricity by stringent control by re-scheduling of working hours of air-conditioning and lighting during the off working hours. The Company constantly evaluates new technologies and invests to make its infrastructure more energy-efficient. Air- conditioners with energy-efficient screw compressors for central air-conditioning and with split air-conditioning for localized areas are used. As energy costs comprise a very small part of the total expenses, the financial impact of these measures is not material.

(B) TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT

With an object to obtain and deliver the best, your Company successfully deployed a growing and diverse team of R&D specialists who have expertise in hardware, networking systems software, database and application software. This helped the Company to access to the latest technologies and deploy/absorb these latest technologies wherever feasible, relevant and appropriate. The Company has not maintained separate record of the expenditure incurred on Research & Development.

EXTENSION FOR HOLDING ANNUAL GENERAL MEETING OF THE COMPANY

The Company has taken the approval from the Registrar of Companies, Maharashtra, Mumbai, vide letter dated September II, 2013 for extension of the period of holding the Annual General Meeting of the Company for the financial year ended March 31, 2013 by three months i.e. up to December 31, 2013 for availing the time for preparation of the Consolidated Financial Statements of the Company.

ACKNOWLEDGEMENTS

Your Directors wish to express their sincere gratitude to the Union Government and the Government of various States, as also to all the Government agencies, banks, financial institutions, customers, vendors and other related organizations, who has given their continued support and cooperation during the year under review. Your Directors also wish to place on record their deep sense of appreciation for investors, shareholders and employees of the Company for their continued support towards conduct and operations of the Company.

For and on behalf of the Board of Directors

Place : New Delhi Kapil Puri

Date : October 24, 2013 Chairman and Managing Director

---

Mar 31, 2012

The Directors have pleasure in presenting this 29th Annual Report of your Company together with the Audited Accounts for the 6 months period ended on March 31, 2012 (Financial period from October 1, 2011 till March 31, 2012).

FINANCIAL RESULTS:

Your Company's financial performance during the period under review has been encouraging and is summarized below:

(Rs. in Crores)

Particulars Period ended

March 31, 2012 September 30, 2011 (6 months) (18 months)

Income from operations and other income 976.47 2,423.67

Profit before Finance Cost, Depreciation & Amortization Exp. and Taxation 126.51 331.53

Less: Depreciation & Amortization Expenses 18.75 46.17

Less: Finance Cost 53.30 118.09

Profit before taxation 54.46 167.27

Less: Tax Expense 19.91 62.13

Profit after tax 34.55 105.14

Add: Balance of Statement of Profit and Loss brought forward 135.37 50.21

Amount available for appropriations 169.92 155.35

Proposed Dividend - 3.14

Tax on Proposed Dividend - 0.50

Transfer to Debenture Redemption Reserve 5.17 16.34

Balance carried to Balance Sheet 164.75 135.37

REVIEW OF OPERATIONS

During the 6 months period under review, the Company's income from operations including other income stood at Rs. 976.47 Crores as compared to Rs. 2,423.67 Crores in the previous period (18 months) registering a growth of about 20.86% on annualised basis. Profit before Finance Cost, Depreciation & Taxation for 6 months period stood at Rs. 126.51 Crores as against Rs. 331.53 Crores in the previous period (18 months), thereby registering a growth of about 14.49 % on annualised basis. Profit after tax declined marginally by 1.43% on annualised basis and stood at Rs. 34.55 Crores for 6 months period as compared to Rs. 105.14 Crores in the previous period (18 months).

DIVIDEND

Keeping in mind the capital requirement for future growth of the Company and to conserve resources for operations of the Company, your Directors do not recommend any dividend for the period ended on March 31, 2012.

PUBLIC DEPOSITS

During the period under review, the Company has not accepted/renewed any deposits from the Public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and rules made there under.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A report on Management Discussion and Analysis, as stipulated under Clause 49 of the Listing Agreement is covered under separate section and forming part of the Annual Report.

DIRECTORS

During the period under review Mr. Prakash Desai resigned from Directorship of the Company on November 12, 2011. The Board places on record its appreciation for his valuable contribution during his tenure as a Director of the Company.

Mr. Vijay Kumar Chopra was appointed as an Additional Director of the Company by the Board w.e.f. July 1, 2012 and in terms of the provisions of the Section 260 of the Companies Act, 1956, he holds office upto the ensuing Annual General Meeting of the Company.

The Company has received notice under Section 257 of the Companies Act, 1956, proposing his candidature for appointment as Director of the Company, along with the requisite deposit. The Board recommends his appointment as a Director of the Company.

In accordance with the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Adarsh Bagaria, Whole time Director and Mr. Vijay Kumar Gupta, Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Your Board recommends their re-appointment.

Brief resume of the Directors proposed to be appointed/re-appointed as stipulated under clause 49 of the Listing Agreement entered into with BSE Limited and National Stock Exchange of India Limited are given in the Notice convening the 29th Annual General Meeting of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to the Directors Responsibility Statement, your directors state that:

- in the preparation of the Annual Accounts for the 6 months period ended March 31, 2012 the applicable accounting standards have been followed and there are no material departures from the same;

- the selected accounting policies were applied consistently and the Directors 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 as at March 31, 2012 and of the profit of the Company for the period ended on that date;

- proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

- the annual accounts have been prepared on a going concern basis.

AUDITORS

M/s. Khandelwal Jain & Co., Chartered Accountants, Mumbai, the Statutory Auditors of your Company holds office upto the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from them to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Your Directors recommend their re-appointment as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting upto the conclusion of the next Annual General Meeting of the Company and to audit financial accounts for the financial year ending on March 31, 2013.

AUDITORS' OBSERVATIONS

Observations of the Auditors, read together with the relevant Notes to the Accounts and Accounting Policies, are self-explanatory. COST AUDITORS

Pursuant to the provisions of Section 233B of the Companies Act, 1956 and in terms of the Order no. 52/26/CAB-2010 dated May

2, 2011 issued by Central Government, the Company has appointed M/s Sanjay Gupta & Associates, Cost Accountants, New Delhi as the Cost Auditors of the Company for Audit of the cost accounting records maintained by the Company relating to Electricity Industry for the financial year 2011-12, subject to the approval of the Central Government.

SUBSIDIARY COMPANIES/JOINT VENTURES AND CONSOLIDATED FINANCIAL STATEMENTS

Spanco BPO Ventures Limited (SBVL), a wholly owned subsidiary and BPO arm of Spanco Limited catering to global clients spread across four continents with operations in India, US, Europe and Africa. Spanco's expertise in BPO is not just restricted to call centre operations but also in building and managing call centre, data centre infrastructures and manpower outsourcing globally.

Spanco BPO Services Limited, Spanco Respondez BPO Private Limited, Spanco Holdings INC are subsidiaries of Spanco BPO Ventures Limited (SBVL).

Spanco BPO Ventures Limited (SBVL) has incorporated a joint venture / subsidiary company namely Spanco BPO Africa Limited in Mauritius with joint venture partner, Ison Infotel Network Limited, Mauritius with objective to make further downstream investments in companies across the African Countries namely Nigeria, Tanzania, Kenya, Uganda, Burkina Faso, Chad, Niger and Rwanda.

During the period under review, Spanco BPO Africa Limited has made investments in 8 companies namely Spanco Channel BPO Ltd. (Nigeria), Spanco RAPS Kenya Ltd. (Kenya), Spanco RAPS Uganda Ltd. (Uganda), Spanco RAPS Tanzania Ltd. (Tanzania), Spanco RAPS Niger Ltd. (Niger), Spanco RAPS Burkina Faso SARL (Burkina Faso), Spanco RAPS Tchad SARL (Chad), Spanco RAPS Rwanda Ltd. (Rwanda) duly incorporated in Africa. The main object of the companies incorporated in Africa is to carry the business of providing call centre services, business processing operations, communications, telecommunications, IT services etc.

A statement containing brief financial details of the Company's subsidiaries for the period ended March 31, 2012 is included in the Annual Report.

The Ministry of Corporate Affairs vide its General Circular No: 2/2011 dated February 8, 2011 have granted general exemption from attaching the Balance Sheets of subsidiary companies with the holding company's Balance Sheet, if the holding company presents in its Annual Report the Consolidated Financial Statements duly audited by its Statutory Auditors. The Company is publishing consolidated financial statements in the Annual Report, hence the Balance Sheets of subsidiary companies are not attached with the Company's Balance Sheet. Further, the annual accounts of the subsidiary companies and the related detailed information will be made available upon request to any member of the Company interested in obtaining the same during the Annual General Meeting and are also available for inspection during business hours at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include Financial Results of its subsidiary companies and Joint Ventures and are prepared in strict compliance with applicable Accounting Standards.

CREDIT RATING

Your Company's ratings has been reviewed to CARE C [Single C] by Credit Analysis and Research Limited (CARE) for Long-term bank facilities and Non-convertible debentures (NCD) and CARE C/CARE A4 (Single C/A four) by CARE for Long/Short-term Bank facilities.

SHARE CAPITAL

On May 10, 2012 the Company had issued and allotted 15,00,000 fully paid Equity Shares of Rs. 10/ - per share at a price of Rs. 155/ - per share (including premium of Rs. 145/ - per share) to Mrs. Kavita Puri, Promoter of the Company upon conversion of even number of warrants issued on preferential basis.

Consequent to this, the paid up share capital of the Company has increased from Rs. 31,35,00,000 (divided into 3,13,50,000 Equity Shares of Rs. 10/ - per share) to Rs. 32,85,00,000 (divided into 3,28,50,000 Equity Shares of Rs. 10/ - per share).

DEBENTURES

The Company had issued 20 secured redeemable non - convertible debentures of Rs. 1,000,000 each amounting to Rs. 2 Crores on a private placement basis during the year 2008-09 carrying an interest at 11% payable half yearly and the same are due for redemption in two equal installments on July 3, 2012 and 2013.

The Company had issued 200 secured redeemable non - convertible debentures of Rs. 1,000,000 each amounting to Rs. 20 Crores on a private placement basis during the year 2008-09 carrying an interest at 11.25% payable monthly and the same are due for redemption in two equal installments on July 3, 2012 and 2013.

The Company had issued 700 secured redeemable non - convertible debentures of Rs. 1,000,000 each amounting to Rs. 70 Crores on a private placement basis during the year 2008-09 carrying an interest at 11.25% payable half yearly and the same are due for redemption in two equal installments on July 10, 2012 and 2013.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

As per the provisions of Section 205A read with Section 205C of the Companies Act, 1956, the Company is required to transfer the unpaid dividend remaining unclaimed and unpaid for a period of 7 years from the due date to the Investor Education and Protection Fund (IEPF) set up by the Central Government. The details of amount lying in Unpaid Dividend Accounts due for transfer to the Investor Education and Protection Fund are given in the below table. The shareholders whose dividend remained unclaimed for these financial years are requested to claim it immediately from the Company. Further, the Shareholders are requested to note that no claim shall lie against the said fund or the Company in respect of any amount which remained unclaimed for a period of seven years from the date that these became first due for payment and no payment shall be made in respect of any such claim.

The details of Unpaid / Unclaimed Dividend are as follows:

Year Dividend Rate per share Date of Declaration Due Date for transfer to IEPF

2004-05 Rs. 0.50 September 15, 2005 October 15, 2012

2005-06 Rs. 1.80 September 29, 2006 October 29, 2013

2006-07 Rs. 1.80 September 29, 2007 October 29, 2014

2007-08 Rs. 2.00 September 19, 2008 October 19, 2015

2008-09 Rs. 0.50 September 29, 2009 October 29, 2016

2009-10 Rs. 1.00 September 24, 2010 October 24, 2017

2010-11 Rs. 1.00 March 20, 2012 April 19, 2019

CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreement, a detailed report on Corporate Governance duly certified by M/s. Manish Ghia & Associates, Practicing Company Secretaries, Mumbai is separately attached to this Annual Report.

PERSONNEL

The employer employee relations remained cordial throughout the period. The Board places on record its sincere appreciation for the valuable contribution made by the employees across all levels of the organization.

In accordance with the provisions of Section 217(2A) read with Companies (Particulars of Employees) Rules, 1975, the name and other particulars of employees are to be set out in the Director's Report as an addendum thereto. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and accounts as set out therein are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Assistant Company Secretary at the Registered Office.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

(A) CONSERVATION OF ENERGY

The Company's operations are not energy-intensive. However, significant measures are taken to reduce energy consumption by using energy-efficient computers and purchasing energy-efficient equipment. During the period, the Company has taken some measures for optimal utilization of electricity by stringent control by re-scheduling of working hours of air-conditioning and lighting during the off working hours. The Company constantly evaluates new technologies and invests to make its infrastructure more energy-efficient. Air-conditioners with energy-efficient screw compressors for central air-conditioning and with split air-conditioning for localized areas are used. As energy costs comprise a very small part of the total expenses, the financial impact of these measures is not material.

(B) TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT

With an object to obtain and deliver the best, your Company successfully deployed a growing and diverse team of R&D specialists who have expertise in hardware, networking systems software, database and application software. This helped the Company to access to the latest technologies and deploy/absorb these latest technologies wherever feasible, relevant and appropriate. The Company has not maintained separate record of the expenditure incurred on R&D.

ACKNOWLEDGEMENTS

Your Directors wish to express their sincere gratitude to the Union Government and the Government of various States, as also to all the Government agencies, banks, financial institutions, customers, vendors and other related organizations, who, through their continued support and co-operation, have contributed towards the Company's growth and progress during the period under review. Your Directors also wish to place on record their deep sense of appreciation for investors, shareholders and employees of the Company for their continued support towards conduct and operations of the Company.

For and on behalf of the Board of Directors

Place: Mumbai Kapil Puri

Date: August 14, 2012 Chairman and Managing Director

---

Mar 31, 2010

The Directors have pleasure in presenting to you this 27th Annual Report of your Company together with the Audited Accounts for the year ended March 31, 2010.

FINANCIAL RESULTS:

Your Companys financial performance for the year under review has been encouraging and is summarized below:

(Amount Rs. in Lacs)

Particulars Year ended

March 31, 2010 March 31, 2009

Income from operations and other income 120,972.94 67,938.71

Profit before interest & finance charges, depreciation & taxation 17,294.42 7,878.68

Less: Depreciation 1,731.04 1,208.41

Less: Interest & finance charges 5,534.71 3,512.28

Profit before taxation 10,028.67 3,157.98 Less: Provision for tax

- Current 2,878.30 1,435.00

- Deferred 641.41 (367.30)

- Fringe benefits tax - 59.60

-Wealth tax 1.80 1.90

Less: Taxation for earlier years 319.88 68.01

Profit after tax 6,187.28 1,960.77

Add: Balance of Profit & Loss Account brought forward 13.90 4,217.30

Amount available for appropriations 6,201.18 6,178.08

Proposed Dividend 280.65 140.33

Tax on Proposed Dividend 47.70 23.85

Transfer to Debenture Redemption Reserve 850.00 6,000.00

Balance carried to Balance Sheet 5,022.83 13.90



REVIEW OF OPERATIONS

During the year under review, the Companys income from operations with other income stood at Rs. 120,972.94 Lacs as compared to Rs. 67,938.71 Lacs in the previous year registering a growth of about 78%. Profit before interest & finance charges, depreciation & taxation stood at Rs. 17,294.42 Lacs as against Rs. 7,878.68 Lacs in the previous year, thereby registering a growth of about 120%. Profit after tax registered a growth of about 216% and stood at Rs. 6,187.28 Lacs as compared to Rs. 1,960.77 Lacs in the previous year.

DIVIDEND

Keeping in mind the capital requirement for future growth of the Company and to conserve higher resources for operations of the Company, your Directors recommend for approval of Members a dividend of Re. 1.00/- per share on the Capital of 2,80,65,000 Equity shares for the financial year 2009-10. The dividend on the equity shares, if declared as above, would involve an outflow of Rs. 280.65 Lacs towards dividend and Rs.47.70 Lacs towards dividend tax, resulting in a total outgo of Rs. 328.35 Lacs.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A report on Management Discussion and Analysis, as stipulated under Clause 49 of the Listing Agreement is covered under separate section and forming part of the Annual Report.

DIRECTORS

During the year under review, Mr. Ramesh Sharma, Mr. Deepak Vasdev and Mr. Ketan Chokshi have resigned from Directorship of the Company with effect from August 1, 2009, October 7, 2009 and April 30, 2010 respectively. The Board places on record its appreciation for their valuable contribution during their tenure as Directors of the Company.

The Board of Directors of the Company have re-appointed Mr. Kapil Puri as a Chairman and Managing Director and Mr. Adarsh Bagaria as a Whole Time Director of the Company for another period of five years w.e.f. January 21, 2010 subject to approval of members at the ensuing Annual General Meeting of the Company.

Mr. Sunil Sarin, Mr. Subroto Chaudhury and Mr. Vijay Kumar Gupta were appointed as Additional Directors of the Company by the Board effective January 27, 2010, March 29, 2010 and April 12, 2010 respectively. They hold office upto the ensuing Annual General Meeting of the Company. The Company has received notices under Section 257 of the Companies Act 1956, in respect of these Additional Directors proposing their appointments as Directors of the Company, along with the requisite deposits. Resolutions seeking approval of the shareholders for their appointments have been incorporated in the Notice of the ensuing Annual General Meeting.

Mr. Adarsh Bagaria, Whole Time Director and Mr. Deepak Bhagchandaney, Deputy Managing Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Brief resume of the Directors proposed to be appointed/ re-appointed as stipulated under clause 49 of the Listing Agreement with Bombay Stock Exchange Limited are given in the Notice convening this Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to the Directors Responsibility Statement, your Directors state that:

- in the preparation of the Annual Accounts for the year ended March 31, 2010 the applicable accounting standards have been followed and there are no material departures from the same;

- the selected accounting policies were applied consistently and the Directors 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 as at March 31, 2010 and of the profit of the Company for the year ended as on that date;

- proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

- the annual accounts have been prepared on a going concern basis.

AUDITORS

M/s Khandelwal Jain & Co., Chartered Accountants, the Statutory Auditors of your Company, will retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from them to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

Your Directors recommend their appointment as Statutory Auditors of the Company for the Financial Year 2010-2011 and to hold office upto the conclusion of the next Annual General Meeting of the Company.

The comments/observations of the Auditors, if any, are self explanatory and do not call for any further explanation or clarification except in respect of following observation of auditors:

i) Under clause No. (vii) of the annexure to the Auditors Report, it is hereby clarified that considering the growth, the scope and coverage of internal audit system also has evolved and has been enlarged and strengthened from time to time to make it more effective. The company is continuously growing in terms of its operations and exploring various new opportunities in its sector. This is a continuous process and the Management is committed to adopt the best practices to ensure the same.

ii) Under clause No. (ix)(a) of the annexure to the Auditors Report, it is clarified that delay in few cases in depositing statutory dues, arose on account of transactional complexity primarily arising from the lack of timely receipt of information from far off places due to geographical spread of our business operations, which were all subsequently rectified.

iii) Under clause No. (xi) of the annexure to the Auditors Report in respect of auditors observation regarding certain delays in repayment of dues to financial institutions, banks and debenture holders, it is clarified that the delay in payment of dues was temporary in nature arising from mismatches in cash - flows which are attributable to delay in timely realization of receivables from our customers and our investment in growth areas. As at March 31, 2010, there were no delays and all previous delays were duly rectified.

SUBSIDIARY COMPANIES/JOINT VENTURES

During the year under review, the Company disposed off its two wholly owned subsidiaries viz. Spanco Respondez Services Ltd. and Spanco International Re. Limited, Singapore in the best interest of the Company as no business could be commenced in these Companies and these were in-operative since their incorporation.

The Ministry of Corporate Affairs vide its Letter No. 47/459/2010-CL-III dated June 7,2010 have granted exemption to the Company from attaching to its Balance Sheet, the individual Annual Report of its subsidiary companies for the year ended March 31, 2010 in terms of Section 212 (8) of the Companies Act, 1956. As per the terms of Exemption Letter, a statement containing brief financial details of the companys subsidiaries for the year ended March 31, 2010 is included in the Annual Report. Further these documents will be made available upon request to any member of the Company interested in obtaining the same and are also available for inspection during business hours at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include Financial Results of its subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statement and AS-27 on Financial Reporting of Interest in Joint Ventures, the Audited Consolidated Financial Statements are provided in this Annual Report.

CREDIT RATING

During the year under review, your Companys rating has been revised to PR3 (PR Three) with credit watch by Credit Analysis and Research Ltd. (CARE) for issue of Commercial Paper / Short Term Debentures of Rs.50 Crores and also for issue of Commercial papers/Short term Debentures of Rs.50 Crores (carved out of working capital limits). Later on during the year under review, CARE has revised these ratings to PR3 (PR Three).

During the year under review, your Companys rating has been revised to CARE BBB [Triple B] with credit watch by CARE for long term facilities and for Non-convertible debentures having tenure of more than one year. Later on during the current year, CARE has revised these ratings to CARE BBB [Triple B].

ISSUE OF REDEEMABLE DEBENTURES

During the year 2008-09, your Company has issued & allotted 5,00,000 Partly Secured Redeemable Non Convertible Debentures (NCD) of Rs.1000/- each amounting to Rs. 500,000,000/- on private placement basis to UC Mutual Fund Assets Management Company Limited (UCMF) for a period of 364 days. These NCDs were restructured and rolled over by UCMF so as to redeem the same in full upto June 30, 2010.

Out of these NCDs, 300,000 NCDs of Rs.1000/- each amounting to Rs. 300,000,000/- have been redeemed upto March 31, 2010.

ISSUE OF EQUITY SHARES ON PREFERENTIAL BASIS

During the year under review, the Company had issued and allotted 7,415,000 fully paid equity shares of Rs. 10/- per share at price of Rs. 40/- per share on preferential basis to Promoters, FVCI and Flls. Consequent to this, the paid up share capital of the Company increased from Rs. 206,500,000/- (divided into 20,650,000 equity shares of Rs. 10/- per share) to Rs. 280,650,000 (divided into 28,065,000 Equity shares of Rs. 10/- per share). The total proceeds of Rs. 29.66 crores were utilized for the purpose of working capital requirements of the Company during 2009 -10 itself.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement, a detailed report on corporate governance duly certified by Manish Ghia and Associates, Practising Company Secretaries is separately attached to this Annual report.

PERSONNEL

The employer employee relations remained cordial throughout the year. The Board places on record its sincere appreciation for the valuable contribution made by employees across all levels of the organization.

In accordance with the provisions of Section 217(2A) read with Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors Report as an addendum thereto. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and accounts as set out therein are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office and the same will be provided by the Company.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

(A) CONSERVATION OF ENERGY

The Companys operations are not energy-intensive. However, significant measures are taken to reduce energy consumption by using energy-efficient computers and purchasing energy- efficient equipment. During the year, the Company has taken some measures for optimal utilization of electricity by stringent control by re-scheduling of working hours of air-conditioning & lighting during the off working hours. The Company constantly evaluates new technologies and invests to make its infrastructure more energy-efficient. Air-conditioners with energy-efficient screw compressors for central air-conditioning and with split air-conditioning for localized areas are used. As energy costs comprise a very small part of the total expenses, the financial impact of these measures is not material.

(B) TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT

With an object to obtain and deliver the best, your Company successfully deployed a growing and diverse team of R&D specialists who have expertise in hardware, networking systems software, database and application software. This helped the Company to access to the latest technologies and deploy/absorb these latest technologies wherever feasible, relevant and appropriate. The Company has not maintained separate record of the expenditure incurred on R&D.

(C) FOREIGN EXCHANGE EARNINGS & OUTGO

(Amount Rs. in Lacs)

Foreign exchange earned 33.59 1,368.90

CIF value of imports 4,881.25 2,113.89

Expenditure in foreign 281.32 741.68

currency



ACKNOWLEDGEMENTS

Your Directors wish to express their sincere gratitude to the Union Government and the Government of Various States, as also to all the Government agencies, banks, financial institutions, customers, vendors and other related organizations, who, through their continued support and co- operation, have contributed towards companys growth and progress during the year under review. Your Directors also wish to place on record their deep sense of appreciation for investors, shareholders and employees of the Company for their continued support towards conduct and operations of the Company.

For and on behalf of the Board

Kapil Puri

Chairman and Managing Director

Gurgaon

August 27, 2010

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Mar 31, 2000

The Directors present their Seventeenth Annual Report on the business operations of the Company alongwith the Statement of Audited Accounts for the year ended 31st March 2000.

FINANCIAL RESULTS:

Year Ended Year Ended 31st March 2000 31st March 1999 (Rs.) (Rs.)

Income from Operations 52,460,205 10,60,440

Profit before Depreciation

& Taxation 7,129,156 4,94,229

Less: Depreciation 496 51,878

Profit before Taxation 7,128,660 4,42,351

Less: Provision for Taxation 1,119,000 1,63,000

Profit after Tax 6,009,660 2,79,351

OPERATIONS:

During the year under review, the Company has made a foray in the telecom sector. Income from Operations increased substantially to Rs.52,460,205/- as against Rs.10,60,440/- in the previous year. Profit before Depreciation and Taxation stood at Rs. 7,129,156/-. After providing for Depreciation and Taxation of Rs.496/- and Rs. 1,119,000/- respectively, the Net Profit earned by the Company is considerably higher at Rs.6,009,660/- in comparison with Rs. 2,79,351/- earned in the earlier year.

With favourable Government policies for the telecom sector being on cards, your Directors are optimistic of recording better performance during the current year.

DIVIDEND:

With a view to conserve resources, the Directors of the Company have deemed it prudent not to declare any dividend on the paid-up Equity Share Capital of the Company for the year ended 31st March 2000.

Y2K TRANSITION:

The Y2K transition has passed off without any problem.

COMMENCEMENT OF NEW BUSINESS ACTIVITIES:

The Company has commenced activities pertaining to telecom systems, software development and allied activities. Necessary Resolution for undertaking new business activities were passed by the Members of the Company at the Extra-Ordinary General Meeting held on 4th September 1999. The new activities undertaken by the Company provide unlimited opportunities across the globe and your Company is all geared up to exploit the same.

CHANGE OF NAME :

With a view to reflect the new business activities undertaken by the Company, the name of the Company was changed from "Kadambari Leasing Limited" to "Spanco Telesystems and Solutions Limited". The Company has received the fresh certificate consequent to change of name of the Company dated 11th November 1999 from the Registrar of Companies, Maharashtra.

PREFERENTIAL ISSUE OF SHARES :

During the year under review, the Authorised Share Capital of the Company has been increased From Rs. 2,50,00,000/- to Rs. 5,00,00,000/- by creation of 25,00,000 Equity Shares of Rs. 10/- each.

With a view to augment financial resources for undertaking the new business activities in the field of telecom systems, software development and allied activities, your Company made Preferential Issue of 10,00,000 Equity Shares of Rs.10/- each for cash at par aggregating Rs. 1,00,00,000/- to (a) Kapil Puri Group and (b) Others comprising of bodies corporate, individual(s) and other entities. Allotment of these shares has been made by the Board of Directors of the Company.

The new business activities being capital intensive, the Company made another preferential allotment of 22,50,000 Equity Shares of Rs.10/- each for cash at a premium of Rs.5/- per share aggregating Rs.3,37,50,000/- to promoters and others.

CHANGE IN MANAGEMENT CONTROL:

Consequent to the Preferential Allotment of Shares, the Management control of the Company has been acquired by Kapil Puri Group. With the new Promoters taking over the management.of the Company, your Company intends to avail the benefits of their larger size of operations, national presence and extensive reach.

DIRECTORS:

Shri Rajkumar Bahri, Director of Company, retires by rotation at forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

Shri Sanjiv Chainani and Shri Mahendra G. Shah who were appointed as Additional Directors of the Company with effect from 30th September 1999 and Shri Rajesh Chhabria and Shri Kapil Puri who were appointed as Additional Directors of the Company with effect from 21st January 2000 pursuant to the provisions of Section 260 of the Companies Act, 1956 and subject to the Articles of Association of the Company, would vacate their respective office on the date of the ensuing Annual General Meeting of the Company. The Company has received notices under Section 257 of the said act from shareholders proposing the respective candidature of the said Additional Directors for the office of Director of the Company. Accordingly, resolutions have been proposed in the notice of the forthcoming Annual General Meeting of the Company for the appointments of Shri Rajesh Chhabria, Shri Kapil Puri, Shri Sanjiv Chainani and Shri Mahendra G. Shah as Directors of the Company.

During the year under review, Shri Naresh Bahri and Shri Bansilal Tandon, resigned from the Board of the Company. Your Directors place on record their deep appreciation for the valuable contribution made by the outgoing Directors during their association with the Company

APPOINTMENT OF MANAGING DIRECTOR:

The Board of Directors at their Meeting held on 21st January 2000, appointed Shri Rajesh Chhabria as Managing Director of the Company for a period of 5 years with immediate effect. Shri Rajesh Chhabria is expected to play an important role by providing able leadership and direction to the Company in its new business activities pertaining to telecom systems, software development and allied activities. Your Company expects to gain substantially through the sound knowledge and experience possessed by him in the said fields.

SHIFTING OF REGISTERED OFFICE :

During the year under review, the Company has shifted its registered office to A/501, Bezzola Complex, Sion Trombay Road, Opp. Suman Nagar, Chembur, Mumbai- 400 071 with effect from 13th November 1999.

CORPORATE GOVERNANCE

The Securities and Exchange Board of India (SEBI) has introduced a comprehensive code on Corporate Governance. Your Company is required to implement the said code on or before 31st March 2003. Your Company has been following the principles and practices of good Corporate Governance since its inception. A-substantial portion of the code for the Corporate Governance is being complied with by your Company at present and it will be the endeavor of your Directors to ensure its full compliance by 31st March 2003.

AUDITORS:

M/s. Dhirajlal Desai & Co., Chartered Accountants, the Auditors of the Company, are liable to retire at the forthcoming Annual General Meeting and eligible for re-appointment. The members are requested to appoint Auditors and to fix their remuneration.

AUDITORS REPORT:

Observations made in the Auditors Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

FIXED DEPOSITS:

The Company has not accepted or renewed any deposit from public during the year under review.

PARTICULARS OF EMPLOYEES:

During the year under review, none of the employees of the Company was in receipt of remuneration aggregating Rs. 6,00,000/- or more per annum, if employed throughout the year, or Rs. 50,000/- or more per month, in case employed for part of the year. Hence, there are no particulars to be annexed to this report as required under Section 217 (2A) of the Companies Act, 1956 and the rules made thereunder.

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

(A) Conservation of Energy and Technology Absorption:

Considering the Companys existing business activities, your Directors have nothing to state in connection with Conservation of Energy and Technology Absorption.

(B) Foreign Exchange Earnings & Outgo:

During the year under review, the Company did not have any Foreign Exchange Earnings.

However, there was an outgo of Rs. 66,716/- on account of Travelling Expenses.

ACKNOWLEDGEMENTS:

The Directors wish to express their gratitude to the bankers, clients and all the business associates for their continuous support to the Company and to the Shareholders for the confidence reposed in the Companys management. The Directors also convey their appreciation to the employees at all levels for their enormous personal efforts as well as collective contribution.

For and on behalf of the Board KAPIL PURI RAJESH CHHABRIA

Mumbai, Director Managing Director

3rd June 2000