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CORE Education & Technologies
BSE: 512199|NSE: COREEDUTEC|ISIN: INE247G01024|SECTOR: Computers - Software - Training
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Directors Report Year End : Mar '14    « Mar 13
Dear Members,
 
 The Directors have pleasure in presenting the 29th Annual Report of
 your Company along with the audited financial statements for the year
 ended 31st March, 2014.
 
 RESULTS FROM OPERATIONS
 
                                                   (Amt Rs. in Million)
                                                        Standalone
 
                                            2013-14             2012-13
 
 Income from Operations                    6,275.32          1 1,228.40
 
 Other Income                                 25.94               49.58
 
 Variation in Inventory                      530.03            (762.97)
 
 Expenses                                  7,748.01            9,269.06
 
 Exceptional Items                         3,807.42                -
 
 Profit Before tax                        (5,254.16)           2,008.91
 
 Less: Provision for tax (current)             -                 402.03
 
 Excess/(Short) Provision for
  earlier years                                -                   -
 
 Provision for tax (deferred)               (232.84)              20.86
 
 Profit after Tax                         (5,021.32)           1,586.03
 
 Add: Balance B/F from Previous Year       5,942.03            4,713.67
 
 Excess/(Short) Provision for Earlier 
 years                                         -                   -
 
 Profit Available for appropriations       (5021.32)           1,586.03
 
 Debenture Redemption Reserve                  -                  87.83
 
 Transfer to General Reserve                   -                 190.00
 
 Proposed Dividend                           (68.69)              68.69
 
 Provision for Taxes on Dividends            (11.14)              11.14
 
 Minority Interest                              -                   -
 
 Balance C/F to Balance Sheet              1,000.54            5,942.03
 
 Overview
 
 The year 2013-14 was very challenging for the Company. We continued
 with the existing ongoing projects and were not in a position to bid
 for any new projects. As reported previously, the Company''s Corporate
 Debt Restructuring (CDR) proposal for restructuring its debts was
 admitted for approval and was finally approved by CDR Empowered Group
 (CDR EG) on 23rd July, 2014.
 
 Your Company achieved a total operating income of Rs. 6,275.32 million
 as compared to Rs. 1 1,228.40 million during the previous financial
 year with a loss of Rs. 5,254.16 million as compared to profit of Rs.
 2,008.91 million during the previous financial year. Loss after tax was
 Rs. 5,021.32 million as compared to the profit of Rs. 1,586.03 million
 during the previous financial year.
 
 The financial stress still continues to haunt the Company, but
 strategies are being worked for resurrecting the business and realizing
 funds from sale of non-core assets and investment in subsidiaries, for
 repayment of debts.
 
 The losses are mainly attributed towards the writing off of certain
 expenses incurred on ICT projects, Trade receivables and Impairment of
 IPRs.
 
 ICT Projects for five states having project contract value of Rs.
 5,471.70 million were awarded to the Company. However, the Company was
 unable to achieve financial closure for these projects.  As a result,
 the projects were left incomplete and consequently the contracts were
 terminated by the respective State Governments. Since implementation of
 majority of the projects had already commenced and was in progress, the
 Company had already incurred an expenditure of Rs. 614.59 million for
 this partial implementation. On the termination of the contract, the
 company had to write off the expenditure incurred on these projects.
 Also, the bank guarantees of Rs. 131.37 million given for these
 projects has been invoked by the respective State Governments which has
 been charged off as project expenses written off. The Haryana
 Government had issued termination order of the ICT Project in that
 state and also had issued notice for invocation of Bank Guarantee of
 Rs. 295 million. The Company has filed a Special Leave Petition with
 the Hon''ble Supreme Court against the termination order and invocation
 of the Bank Guarantee. The matter is subjudice and pending outcome of
 the legal proceedings, no adjustments has been made to the carrying
 value as at 31st March, 2014 for the receivable of Rs. 748.31 million
 and of the fixed assets of Rs. 1,002.14 million at this stage, for this
 project. These has been drawn as an attention to the audit report for
 the year ended 31st March, 2014.
 
 On the exports and overseas operations, many customers had raised
 quality issues relating to assessment and intervention segment of the
 products. A management committee was formed to analyse and suggest the
 future course of action. Customers in this segment would, generally
 make additional improvements on the products sold to them and further
 sell the upgraded/final products to their customers. During
 negotiations, these customers had alleged that due to defective
 products received, they had lost their contracts with reputed clients
 and have claimed compensation. To avoid any legal claims and disputes
 in future and to have continuity in overseas business operations, the
 committee decided to write off the receivables of Rs. 1,769. 92
 milllion and for settlement with the customers.
 
 The management also reviewed the carrying value of it''s IPR in view of
 the adoption of Common Core States Standard Initiative (CCSSI) in the
 United States of America (USA) where these assets were substantially
 used. The CCSSI is an education initiative in the USA that seeks to
 establish consistent education standards across the states as well as
 ensure that students graduating from high school are prepared to either
 two or four year college programs or enter the workforce. Prior to the
 CCSSI, each state had its own education standards and Company had the
 required resources and capability to deliver the solutions.  However,
 with the change in regulations and requirements, company had been
 investing in upgrading to the CCSSI to deliver the solutions
 consistently and as per requirement. With the CCSSI now in place, all
 the old products of the company that were aligned to the erstwhile
 State Standards have become partially redundant. Whilst the erstwhile
 State Standards will run parallel with the CCSSI for a few years, thus
 making the old products still commercially relevant, the company has,
 out of abundant caution, and with a conservative view, decided to fully
 write down these products. Therefore, management has made provisions
 for impairment of Rs. 1,291.52 million towards the carrying cost of
 such IPRs and treated as an exceptional item.
 
 To mitigate the financial stress, the Company has taken various steps
 including cost cutting exercise and bidding for low capital intensive
 projects with high margin. Also rationalization is done in terms of
 number of employees. The No. of employees have reduced to 106 from 277.
 
 A fire accident occured on 18th July, 2014 at the Corporate office of
 the Company situated at 10th Floor, Lotus Business Park, Off Link Road,
 Andheri (West), Mumbai - 400 053. Because of this incident the Company
 has lost some important data, both in the physical & the digital form
 though there are no major financial losses other than damage to
 property. The Company is in the process of assessing the extent of the
 damage caused to the data and rebuilding / recoupment of such data.
 Dividends and Appropriations In view of the losses incurred and the
 Company admitted for Corporate Debt Restructuring Plan, your Directors
 do not recommend any dividend for the financial year 2013-14.
 
 Transfer to reserves:
 
 There are no transfer of funds to General Reserves during the financial
 year 2013-14.
 
 Changes in Capital Structure
 
 There is no change in Capital Structure of the Company during the year
 under review.
 
 SUBSIDIARY COMPANIES AND PARTICULARS REQUIRED UNDER SECTION 212 OF THE
 COMPANIES ACT, 1956
 
 The consolidated financial statement includes the financial statements
 of the subsidiaries of the Company and forms part of this report. The
 Consolidated Financial Statement has been prepared in accordance with
 applicable Accounting Standards issued by The Institute of Chartered
 Accountants of India. Details of the subsidiary companies are discussed
 in the Management Discussion & Analysis, forming part of this report.
 
 As per the provisions of Section 212 of the Companies Act, 1956
 (hereinafter referred to as ''the Act''), your Company is required to
 attach the Directors'' Report, Balance Sheet, Profit and Loss Account
 and other information of the subsidiaries to its Balance Sheet.
 Government of India (Ministry of Corporate Affairs), vide General
 Circular 2/2011 dated 8th February, 201 1 has granted general exemption
 to all the companies from attaching to its Balance Sheet, the
 individual Annual Reports of all its subsidiary companies, as required
 under Section 212 of the Act, subject to Board approval and fulfillment
 of certain other conditions.  Your Directors believe that the audited
 consolidated accounts present a full and fair picture of the state of
 affairs and financial conditions of the Company and its subsidiaries,
 as is done globally. A statement pursuant to Section 212 of the
 Companies Act, 1956 relating to the Company''s interest in subsidiaries
 is attached to the financial statement and forms part of this Report.
 The annual accounts of these subsidiaries and the related detailed
 information will be made available to any Member of the Company seeking
 such information and are also available for inspection by any Member of
 the Company at the Registered Office of the Company.
 
 BOARD OF DIRECTOR
 
 Board of Directors of the Company comprises of Non-Executive Promoter
 Chairman, Mr. Sanjeev Mansotra; two Executive Directors namely, Mr.
 Naresh Sharma, Executive Director, Mr. Nikhil Morsawala,
 Director-Finance; and two Independent Directors, namely Mr. S. S. Dua
 and Mr. Harihar Iyer. Mr. Pundi L. Narasimham, Independent Director,
 resigned from the Board with effect from 18th July, 2014.
 
 In accordance with the provisions of the Companies Act, 2013, Mr.
 Naresh Sharma, Executive Director, of your Company is retiring by
 rotation at the ensuing Annual General Meeting and expressed his
 willingness to be reappointed as the Executive Director of the Company
 for a period of 5 years from the date of this Annual General Meeting.
 Brief resume of Mr. Naresh Sharma proposed to be reappointed as
 Executive Director, nature of his expertise in specific functional
 areas and names of companies in which he holds Directorships and
 Memberships of the Board Committees, as stipulated in Clause 49 of the
 Listing Agreement with the stock exchanges are provided in the
 Corporate Governance forming part of the Annual Report.
 
 Directors'' Responsibility Statement
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Director''s Responsibility Statement, it is
 hereby confirmed:
 
 (a) that in preparation of the Annual Accounts, the applicable
 accounting standards have been followed and that no material departures
 have been made from the same;
 
 (b) that we have selected such accounting policies and applied them
 consistently and made judgements 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 loss of the
 Company for the year;
 
 (c) that we have taken proper and sufficient care for the maintenance
 of adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities;
 
 (d) that we have prepared the annual accounts on a going concern basis.
 
 Material developments in human resources and industrial relations
 
 The past year has been a challenging year with the slowdown in economy
 coupled with the education sector also facing a slump. This required
 the company to manage its cost more efficiently without compromising on
 its productivity. Core understands the business needs to adapt to the
 economic realities and had taken steps like cutting the strength of its
 India team across functions to maintain the equilibrium in terms of
 right fit for right skill.
 
 Recognizing the necessity to maintain its core team of skilled and
 competent work force every effort would be made to ensure the perfect
 balance in terms of employees'' skills and demand and nurture a core
 team of dedicated employees to face the economic turnaround in the
 future.
 
 BEST PRACTICES
 
 Your Company continues to be a CMMi Level 5 certification and an ISO
 9001:2008 organization.
 
 CORPORATE GOVERNANCE
 
 The Company endeavours to attain highest values of Corporate Standards.
 The Company has adhered to the requirements set out by the Securities
 and Exchange Board of India''s Corporate Governance practices and has
 implemented all the stipulations prescribed, in the Clause 49 of the
 Listing Agreement with Stock Exchanges. The Report on Corporate
 Governance as stipulated under Clause 49 of the Listing Agreement forms
 part of the Annual Report.
 
 The Chairman''s declaration regarding compliance with CETL Code of
 Conduct for Directors and Senior Management personnel forms part of
 report on Corporate Governance.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 Management Discussion and Analysis for the year under review, as
 stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges is presented as a separate section forming part of this
 Annual Report.
 
 AUDITORS & AUDITORS'' REPORT
 
 M/s. Chaturvedi & Shah, Chartered Accountants and M/s. Asit Mehta &
 Associates, Chartered Accountants, the Joint Statutory Auditors of the
 Company, hold office until the conclusion of the ensuing Annual General
 Meeting. The new Companies Act, 2013 has laid down a policy of rotation
 of auditors to ensure appropriate Corporate Governance.  The present
 auditors have held office for more than five years. In keeping with the
 spirit of new legislation, the Board of Directors recommend the
 appointment of M/s. Sushil Budhia Associates as the Auditor for the FY
 2014-15.
 
 The Company has received confirmations from the new auditors to the
 effect that their appointment, if made would be within the prescribed
 limits under Section 139 of the Companies Act, 2013 and that they are
 not disqualified for such reappointment within the meaning of Section
 141 of the said Act.
 
 The notes to Accounts referred to in the Auditor''s Report are self-
 explanatory and therefore do not call for any further Comments.
 
 FIXED DEPOSITS
 
 The Company has not accepted any deposits from the public within the
 meaning of Section 58A of the Companies Act, 1956 and as such, no
 amount of principal or interest was outstanding on the date of the
 Balance Sheet.
 
 EMPLOYEE PARTICULARS
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with Companies (Particulars of Employees) Rules, 1975, as
 amended, the names and other particulars of employees forms part of the
 Directors'' Report.
 
 However, having regard to the provisions of Section 219(1)(b)(iv) of
 the said Act, the Annual Report excluding the aforesaid information is
 being sent to all the members of the Company and others entitled
 thereto,.  Any member interested in obtaining such particulars may
 write to the Company Secretary at the Registered Office of the Company.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 The particulars relating to energy conservation, technology absorption,
 foreign exchange earnings and outgo as required under Section 217
 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of
 particulars in the report of Board of Directors) Rules, 1988 are
 provided in the Annexure I to this report.
 
 TRANSFER OF UNPAID/UNCLAIMED AMOUNTS TO INVESTOR
 EDUCATION & PROTECTION FUND (IEPF)
 
 During the year 2013-14, the company has transferred the Unclaimed
 Dividend declared for the Year 2005-06 to the Investors Education and
 Protection Fund (IEPF) established by the Central Government.  The
 dividend declared for the year 2006-07 has also been transferred to the
 IEPF established by the Central Government in terms of Section 205C of
 the Companies Act 1956. The Unclaimed Dividend for the year 2007-08 &
 onwards can be claimed by the members by Corresponding the same to the
 Company or the Registrar & Transfer Agent of the Company. Members are
 requested to note that dividends not encashed or claimed within 7 years
 from the date of transfer to the Company''s unpaid dividend account
 will, as per Section 205A of the Companies Act, 1956, be transferred to
 the IEPF.
 
 Pursuant to the provisions of the Investor Education & Protection Fund
 (Uploading of information regarding unpaid and unclaimed amounts lying
 with companies) Rules, 2012, the Company has uploaded the details of
 unpaid and unclaimed amounts lying with the Company as on 27th
 September, 2013 (date of last Annual General Meeting) on the company''s
 website www.core-edutech.com and also on the Ministry of Corporate
 Affairs website.
 
 Acknowledgements
 
 We thank our customers, investors, bankers and other stakeholders for
 their continued support during the year. We place on record our sincere
 appreciation of the contribution made by employees at all levels. Our
 consistent growth was made possible by their hardwork, solidarity,
 cooperation and support and look forward to their continued support.
 
                                         For and on behalf of the Board
 
                                                       Sanjeev Mansotra
 Date: 14th August, 2014                                       Chairman
Source : Dion Global Solutions Limited
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