TERA SOFTWARE LIMITED
ANNUAL REPORT 2011-2012
Your Directors have pleasure in presenting the Eighteenth Annual Report and
the audited accounts of the company for the year ended 31st March
2012 together with Auditors` report thereon.
a) Financial Results:
(Rs. In Lakh)
PARTICULARS Year Ended Year Ended
Gross Income 20,163.47 12,637.64
Expenditure 15,646.46 10,650.37
Profit before interest,
depreciation & tax 4,517.01 1,987.27
(Financial Cost) 938.36 241.93
depreciation & tax 3,578.65 1,745.34
Less: Depreciation 834.36 275.44
Profit before tax 2,744.29 1,469.90
Less: Provision for
tax Current year 435.97 529.58
Current Tax Expense
Earlier Years (6.91) 24.50
Deferred tax 458.78 887.84 (68.17) 485.91
Profit after tax 1,856.45 983.99
Add: Balance brought
Previous Year 1,573.54 1,380.38
for distribution 3,429.99 2,364.37
Less: Transferred to
General Reserve 1000.00 500.00
Proposed Dividend @20% 250.24 250.24
(Previous Year 20%)
Tax on distributable
profits 40.59 1,290.83 40.59 790.83
Balance Carried to
Balance Sheet 2,139.16 1,573.54
Your Directors are pleased to recommend a dividend of 20% absorbing a sum
of Rs. 290.83 Lakhs including the tax of distributable profits.
c) Performance of the Company:
The Company achieved a turnover of Rs. 20,163.47 lakhs during the year and
earned a net profit after tax of Rs. 1 856 47 Lakhs.
During the current year your company has added following three new business
segments AADHAAR, NPR (National Population Register) and SWAN (State Wide
Area Network). Collectively they account for a healthy order book on hand
to be executed over next three years. During the year your company as an T3
F4 empanelled vendor for Unique Identification Authority of India, have
enrolled 13.5 Million citizens with Bio-metric and Demographic information.
Your company stood in top 3 companies with AADHAAR market share of 6.71%.
Your company had established the required infrastructure and skillset to
enroll 0.12 million citizens per day with which can enroll to a capacity of
36 million per year in coming years. Your Company is entitled to enroll
about 5 crore citizens per year. Central government has planned to cover
the entire Indian population of 120 Crores in about 4 years with coverage
of 10 lakhs population per day
Your company under National Population Register project under the Registrar
General of India has completed the (phasel) digitization of citizen
database and is geared up to take up the phase two i.e biometric enrollment
in the year FY 2012-13. Your Company is entitled to enroll about 5 crore
citizens per year. Central government has planned to cover the entire
Indian population of 120 crores in about 4 years with coverage of 10 lakhs
population per day.
Your company firmly believes that bringing in of new customers and adding
value to the existing relationships with our current customers will only
help in getting additional business opportunities for your company. During
the year client base of your company increased from 21 to 30.
Your company has acquired the following certifications which bring in the
required pre qualifications and delivery of quality services in managing
and implementing UIDAI (AADHAAR), NPR and other e-governance projects.
* Information Security Management System - ISO 27001:2005 for Software
development, IT Enabled Services and IT Infrastructure Management.
* Information Technology Service Management System: ISO 20000:2005 for
Software development, IT enabled Services and IT Infrastructure Management.
* Enhanced the ISO 9001:2008 quality management system with enrollment,
data capturing, De-Duplication and supply & maintenance of Biometric
* Provisional STQC certificate for the supply and delivery of L1 Identity
Solutions Inc, USA Biometric devices for UIDAI projects.
E-governance in India is steadily evolving from basic digitization of
government data and processes to actually facilitating delivery of various
citizen services on-line. A common vision and strategy is being deliberated
and firmed up across all levels of government central, state and local
bodies. This approach has huge potential in garnering cost savings,
increasing transparency, and presenting a seamless view of government to
A well connected citizen to government eco system has huge potential for
both the partners. Citizens will continue to enjoy speedy, transparent and
convenient services, whilst the government gets increasingly integrated
into the community welfare and more importantly is in a position to focus
real time on reallocation of resources where they are needed the most. A
social transformation happens when citizens are empowered to help
themselves in dealing with various government segments, saving time and
money for all concerned and elevating overall levels of satisfaction for
Your company has pioneered many a prestigious projects in this domain of e-
governance for various government agencies at the state and central
level. The company today is standing on the threshold of contributing
meaningfully to the National e-Governance mission. It has ambitions and
plans in further designing creative solutions across a wide spectrum of
industries for the dual benefit of citizens and the government, once the
basic citizen identification biometric infrastructure is in place. The
national e-Governance plan has a five year outlay of Rs. 80,000 crore. Your
company is focusing to have a market share of 6%. This turns out to be a
potential business of approximately Rs. 5000 Crore in the coming years.
Your company continues to invest in the core e-governance solution
capabilities to address this potential market in the next 5 years.
Your company is also planning to diversify into B2C services in the
segments of Toll collection, Utility bill collection, Financial Inclusion
by adopting mobile technologies to integrate into the current Citizen
As your Company enters a key strategic period in its evolution, the year
ahead will be marked by growth in revenue and profits, whilst further
strengthening our focus on customers and delivery.
d) Management Discussion and Analysis Report:
As per the requirements of Clause 49 of the Listing Agreement with the
Stock Exchanges, a separate Management`s discussion and Analysis Report is
enclosed as Annexure -1 to the Directors` Report.
e) Corporate Governance:
As per the requirements of Clause 49 of the Listing Agreement with the
Stock Exchanges, a separate report on Corporate Governance along with the
certificate issued by the Company`s Statutory Auditors M/s. Narven
Associates, Chartered Accountants thereupon is given as Annexure - II to
the Directors Report.
f) Listing of Shares on Stock Exchanges:
At present the Equity Shares of your Company are listed on the Bombay Stock
Exchange Limited and Bangalore Stock Exchange Limited. The listing fee was
paid up to date.
g) Fixed Deposits:
The Company has accepted Rs. 36.00 Lakhs as fixed deposits during the year
to which the provisions of Section 58A of the Companies Act, 1956 apply.
There are no deposits outstanding as at the end of the financial year 2011-
In accordance with the provisions of the Companies Act, 1956, and the
Articles of Association of the Company, Dr.T Hanuman Chowdary, Director and
Sri .R.S.Bakkannavar, Director will be retiring at this annual general
meeting and being eligible offer themselves for reappointment. During the
financial year, Sri N.V.V Prasad, Executive Director and Sri M.V.S.R.
Prasad, Additional Director of the Company resigned on 29.08.2011 and
accepted by the Board at their meeting on 30.08.2011 and the same was
informed to members of the Company at their Annual General Meeting held on
M/s. NARVEN ASSOCIATES, Chartered Accountants retire at the ensuing Annual
General Meeting, and are eligible for reappointment. They have furnished
the requisite certificate to the effect that their reappointment, if made,
would be in accordance with section 224 (1B) of the Companies Act, 1956.
j) Conservation of energy, technology absorption and foreign exchange
The particulars as required U/S 217(1) (e) of the Companies Act, 1956, read
with the Companies (Disclosure of particulars in the report of the Board of
Directors) Rules 1988 are:
1. Conservation of energy: The Company does trading of various kinds of
computer items and provides IT enabled services and does not use any
energy. The electricity power consumption under LT is minimalhence the
Company is not an energy intensive unit. However, the Company installed
power efficient transformers and UPS systems to save the power cost.
2. Technology absorption, adaptation & innovation: The Company has not
imported any technology.
3. Foreign Exchange Earnings and outgo:
i. Earnings in Foreign Currency (FOB): NIL
ii. Expenditure in Foreign Currency (CIF):
(Rs. in Lakh)
Particulars Current Year Previous Year
Capital Contracts 343.88 198.06
Trading goods 22.48 31.33
Traveling 0.74 5.11
Total 367.10 234.50
iii. Value Of Imports On CIF Basis In Respect Of
Particulars Current Year Previous Year
Traded goods 22.48 1,150.15
Capital goods 343.88 398.55
TOTAL 366.36 1,548.70
k) Internal Control Systems:
Your Company has a well defined and documented Internal Control Systems
which is adequately monitored.
l) Directors` Responsibility Statement:
Pursuant to the requirement under section 217(2AA) of the Companies Act,
1956, with respect to Directors` Responsibility Statement, it is hereby
a. That in the preparation of the accounts for the financial year ended 31
st March, 2012 the applicable accounting standards have been followed along
with proper explanation relating to material departures;
b. That the directors have selected such accounting policies and applied
them consistently and made adjustments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for the year under review;
c. That the directors 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 the directors have prepared the accounts for the financial year
ended 31st March, 2012 on a going concern basis.
Your directors thank the clients, vendors, investors and bankers for their
continued support. Your directors place on record their appreciation of the
contribution made by the employees at all levels. Your directors thank the
Government of India, State Governments, Electronic Corporation of India
Limited and Other Government Agencies for their support during the year and
look forward to their patronized support.
For and on behalf of the Board of Directors
(T. Gopichand) (K. Rama Rao)
Vice Chairman and Managing Director Wholetime Director
Date : 22.08.2012
MANAGEMENT DISCUSSIONS AND ANALYSIS
A. Cautionary Statement:
Statements in the Management Discussion and Analysis Report describing our
Company`s objectives, expectations or predictions may be forward looking
within the meaning of applicable regulations and other legislations. Actual
results may differ materially from those expressed in the statement.
Important factors that could influence Company`s operations include global
and domestic financial market conditions affecting the interest rates,
availability of resources for the financial sector, market for lending,
changes in regulatory directions issued by the Government, tax laws,
economic situation and other relevant factors.
B. Opportunities and Threats:
With the introduction of the concept of e-governance, both the Central and
State Governments are keen on implementing different projects to keep the
activities of the Governments transparent, timely and cost effective. There
is an absolute increase in the fund allotment by the Governments for
implementing the projects. This creates an opportunity for the experienced
and expert organizations to broaden their horizon and support the
Government in faster implementation of the projects.
The increased volume of business attracts more number of players in the
field and the competition becomes severe. Only the effective and efficient
organizations could stand a competitive situation. The management is
confident that with its exposure and experience in this field of e-
governance, it stands a better chance than others.
The enrolment of AADHAAR cards was postponed by UIDAI Authority for
This may adversely affect the execution of pending orders from NPR and
AADHAAR in 16 states.
However the company will be able to maintain the revenues once the AADAHAAR
enrolment process commences.
C. Internal control systems and their adequacy:
The Company through its extensive experience has a system that ensures
control over various functions in its business. On the financial side,
periodic audits by internal auditors and statutory auditors provide a means
whereby any weakness is exposed and rectified.
D. Financial Performance with respect to Operational Performance:
The management has established a tight and prudent financial control system
in the Company. The financial highlights are shown in the Directors` report
and the audited balance sheet, profit and loss account.