DIRECTORS' REPORT

Dear Members,

The Directors have great pleasure in presenting the Twenty Seventh Annual Report together with the Audited financial statements of your Company for the Financial Year ended 31st March, 2018.

FINANCIAL HIGHLIGHTS (Standalone and Consolidated)

The finiancial performance of your company is stated hereunder: (Rs. In Lakhs)

STATE OF THE COMPANY’S AFFAIRS:

During the year 2017-18, there was no significant change in the business model of the company.

DIVIDEND

Your Directors are pleased to recommend a dividend of 15% on the Equity Shares of the Company for the year ended 31st March, 2018. The dividend, if approved by the Shareholders will be paid within the statutory period out of the profits of the Company to all those equity shareholders whose names appear on the Register of Members of the Company as on Friday, 27th July, 2018 being the record date.

SHARE CAPITAL

During the year under review, your Company has not issued any type of Shares. Hence there is no change in the share capital of the company.

FUTURE PROSPECTS

Your Company currently enjoys 100% occupancy level. At present, there is no proposal for any further expansion.

TRANSFERS TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to section 124 of the Companies Act, 2013 (“the Act”) read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“The Rules”), all unpaid or unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government, after completion of seven consecutive years from the date of transfer to unpaid dividend account. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall also be transferred to the demat account of IEPF Authority.

MCA issued notification dated 16th October, 2017 wherein if the seven consecutive years expired as per section 124 of the Companies Act, 2013 during 7th September, 2016 to 31st October, 2017 the shares pertaining to the dividend have to be transferred to IEPF account. In compliance with the provision, during the financial year 2017-18 the Company had sent individual notices to the eligible shareholders and advertised in the newspapers (Business standard - Leading English Newspaper All India edition and Malai sudar- Regional language newspaper) seeking action from the shareholders who have not claimed their dividends for seven consecutive years or more for the dividend declared during the financial year ended 31st March, 2009 and 31st March, 2010. Accordingly, after the expiry of due date for claiming the unpaid/ unclaimed dividend, the Company has transferred such unpaid or unclaimed dividends and also the corresponding shares for the Financial Year ended 31st March, 2010 to IEPF authority.

Members/claimants whose shares, and/or unclaimed dividend, have been transferred to the IEPF Demat Account or the Fund, as the case may be, may claim the shares or apply for refund of dividend by making an application to the IEPF Authority in Form IEPF-5 (available on http://www.iepf.gov.in) along with requisite fee as decided by the IEPF Authority from time to time. The Member/claimant can file only one consolidated claim in a Financial Year as per the IEPF Rules.

Transfer of Unpaid/ Unclaimed Dividend Amount/ Shares pertaining to the dividend declared financial year ended 31st March, 2011 to Investor Education and Protection Fund (IEPF)

The due date for transfer of unpaid/unclaimed dividend amount and corresponding shares for the dividend declared during the financial year ended 31st March, 2011 is 31st July, 2018. Hence, the company has made a necessary advertisement in newspaper and issued the individual intimation letter to the eligible shareholders. Details of shares/shareholders in respect of which dividend has not been claimed, are provided on the website of the company www.elnettechnologies.com. (Investors/Compliances/unpaid dividend data/ year 2018). Members are requested to ensure that they claim the dividends and shares referred above, before they are transferred to the said Fund.

CASH FLOW STATEMENT

In compliance with the provisions of Section 134 of Companies Act, 2013 and Regulation 34(2)(c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Cash flow statement for the financial year ended 31st March, 2018 forms part of this Annual Report.

LIQUIDATION OF SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATMENTS

The board of directors of Elnet Software City limited (“subsidiary company”) at its meeting held on 28th August, 2017 made a declaration of solvency and approved the proposal for voluntary liquidation of the company and appointment of liquidator which was subject to the approval of members. The Members of the subsidiary approved the proposal by a special resolution passed on 1st September, 2017. The voluntary liquidation of the subsidiary has been completed and the asset in the form of cash has also been distributed to the shareholders of the subsidiary Company. The necessary e-forms have been filed with Registrar of companies, Chennai. The subsidiary company is ceased to be subsidiary thereon. The Liquidator has made an application for dissolution of the company before the Honorable National Company Law tribunal, Chennai Bench under the provisions of Insolvency and bankruptcy code, 2016 read with rules thereon. Pursuant to the same, the Holding Company lost control on the subsidiary company w.e.f 01st September 2017 and hence consolidation has been prepared till that date as per Ind AS.

The statement pursuant to section 129 of the Companies Act, 2013 in the prescribed Form AOC-1 relating to disclosure of subsidiary company (Under liquidation as on 31.03.2018) is enclosed as ANNEXURE-II

NUMBER OF MEETINGS OF THE BOARD & COMMITTEES

The Board of Directors met 05 (five) times during the financial year ended 31st March, 2018. i.e., 12th May, 2017, 06th July, 2017, 07th September, 2017, 08th December, 2017 and 09th February, 2018. The gap between the Board meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The particulars of meeting of all Committees held during the financial year ended 31st March, 2018 are given in the Corporate Governance report forming part of this Annual Report.

AUDIT COMMITTEE

Pursuant to section 177(8) of Companies Act 2013, the particulars of Composition and all other details about Audit Committee have been detailed in the Corporate Governance Report forming part of this Annual Report.

DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARD ALONG WITH REASONS

The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year the Board of Directors has considered all the recommendations made by the Audit Committee and has accepted and carried on the recommendations suggested by the Committee to its satisfaction. Hence there are no recommendations unaccepted by the Board of Directors of the Company during the year under review.

CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL CHANGE IN DIRECTORS - APPOINTMENT AND RESIGNATION

During the year ended 31st March, 2018, Dr. Rajendra Kumar (DIN: 02677079) chairman and Nominee director on Board of the company resigned with effect from 28th August, 2017 due to nomination withdrawn by ELCOT (Nominating Authority).

During the financial year ended 31st March, 2018, Thiru R. Sudalaikannan (DIN: 03607537) was appointed as the Chairman and Nominee Director on Board of the Company at the board of Directors Meeting held on 08th December, 2017 as per the nomination issued by ELCOT (Nominating Authority). Thiru R. Sudalaikannan (DIN: 03607537) resigned from the post of Chairman and Nominee Director of the Company with effect from 20th March, 2018 due to nomination withdrawn by ELCOT (Nominating Authority).

During the year ended 31st March, 2018, Thiru K. Padmanaban (DIN: 00297842) resigned from the post of Nominee Director of the Company with effect from 28th February, 2018 as per the nomination withdrawn by ELCOT (Nominating Authority).

RE-APPOINTMENT

During the year ended 31st March, 2018, pursuant to Section 152(6) (c) of Companies Act 2013, Thiru C. Ramachandran IAS (Retd) (DIN: 0050893) who was being longest in office, retired by rotation, offered himself and re-appointed at the 26th Annual General Meeting held on 06th July, 2017.

CHANGE IN KEY MANAGERIAL PERSONNEL

Mr. T Joswa Johnson was appointed as Company Secretary and Compliance Officer (Key Managerial Personnel) of the Company at the Board of directors meeting held on 08th December, 2017 with immediate effect in accordance with Section 203 of Companies Act, 2013 in place of Mr. S. Lakshmi Narasimhan, Company Secretary and Compliance Officer (Key Managerial Personnel) who resigned from the services of the Company after the closure of business hours on 10th November, 2017.

Mrs. E. Kamakshi was appointed as the Chief Financial officer (Key Managerial Personnel) of the Company at the Board of directors meeting held on 09th February, 2018 with immediate effect in accordance with Section 203 of Companies Act, 2013 in place of Mr. T. K Karthik Chief Financial officer (Key Managerial Personnel).

EXTRACT OF THE ANNUAL RETURN

Pursuant to the provisions of Section 134(3) (a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended March 31, 2018 made under the provisions of Section 92(3) of the Act is attached as ANNEXURE- IV forms part of this Report.

INDEPENDENT DIRECTORS’ DECLARATION

The Company has received declarations from all Independent Directors of the Company confirming that they continue to meet with the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 25 & 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

CORPORATE GOVERNANCE REPORT

Pursuant to Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with schedule-V thereof, the report on Corporate Governance and also the certificate of practicing Company Secretaries regarding compliance with the conditions of Corporate Governance has been furnished in the Annual Report as ANNEXURE-VII and forms part of the Annual Report.

MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with schedule-V thereof, the Management Discussion and Analysis report has been annexed to the Boards Report as ANNEXURE-VI and forms a part of the Annual Report.

COMPLIANCE WITH CODE OF CONDUCT

The Company has framed a Code of Conduct for the Board of directors and Senior Management personnel of the Company. The Code of Conduct is available on the Company’s website http://www.elnettechnologies.com/Document/Code-of-Conduct.pdf. All the Board of directors and senior management personnel have affirmed compliance with the Code of conduct as on 31st March, 2018.

As required under Regulation 34(3) and Schedule V(D) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 a declaration from Tmt Unnamaai Thiagarajan, Managing director to this effect is annexed to the report on Corporate governance which forms part of this Annual Report.

LISTING OF SHARES

The equity shares of the Company are listed on the Stock Exchange viz., BSE Limited (BSE). The Company has paid the applicable listing fees to the Stock Exchanges within the stipulated time.

DEMATERIALISATION OF EQUITY SHARES

As on 31st March, 2018, 38,23,535 numbers of equity shares are held in Dematerialized form, which constitutes 95.58% of total shareholding.

ACCEPTANCE OF FIXED DEPOSITS

During the year under review, your Company neither accepted any deposits nor there were any amounts outstanding at the beginning or end of the year which were classified as ‘Deposits’ in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Companies Act, 2013 is not applicable.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Sections 134(3)(c) and 134(5) of the Act, in relation to the audited financial statements of the Company for the year ended March 31, 2018, the Board of Directors hereby confirms that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures wherever applicable

b) the Directors 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 your Company as at 31st March, 2018 and of the profit of your Company for the year ended on that date.

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities

d) the Directors have prepared the annual accounts on a ‘going concern’ basis

e) the Directors have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively and

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

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In compliance with the requirements of Section 135 and Schedule VII of the Companies Act, 2013 read with The Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Board of Directors have framed a policy on CSR as recommended by the CSR committee duly constituted and the said policy is available on the Company’s website http://www.elnettechnologies.com/Document/CSR%20Policy.pdf. The composition and terms of reference of the CSR Committee is detailed in the Corporate Governance Report forming part of this Annual Report.

The disclosure on Corporate Social Responsibility initiatives during the financial year has been provided in ANNEXURE-V which forms part of this Annual Report.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, as amended M/s. MSKA and Associates, Chartered Accountants, Chennai, were appointed as Statutory Auditors of your Company in the 26th Annual General Meeting of the Company for a term of 5 years till the conclusion of 31st Annual General Meeting.

Earlier, pursuant to first proviso of section 139 of companies Act 2013, the company has to place the ratification of appointment of statutory auditors at every Annual General Meeting. But, pursuant to The Companies (Amendment) Act, 2017 dated 3rd January, 2018 and commencement of amended provision as per notification dated 07th May, 2018, the provision with respect to ratification of appointment of auditors at every Annual General Meeting was omitted. Hence, the Company is not required to place the shareholders resolution for approval for ratification of the appointment of Statutory Auditors till the conclusion of their tenure i.e., 31st Annual General Meeting of the Company. However, the Remuneration to Statutory Auditors was approved by the members at the 26th AGM only for the financial year 2017 - 18. Hence, the Shareholders Resolution for approving the remuneration for the remaining period of tenure has been placed in the notice of 27th AGM.

The Annual Accounts of the Company including its Balance Sheet, Statement of Profit and Loss and Cash Flow Statement including the Notes and Schedules to the Accounts have been audited by M/s. MSKA Associates, Chartered Accountants, Chennai.

The Independent Auditors Report given by the Auditors on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

SECRETARIAL AUDITOR

Pursuant to the Section 204(1) of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board of Directors had appointed M/s. BP & Associates, Practicing Company Secretaries, Chennai as the Secretarial Auditors of the Company for conducting the Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the Financial Year 2017-18 does not contain any adverse remark, qualification or reservation or disclaimer which requires any explanation/ comments by the Board. The Secretarial Audit Report is forming part of this Annual Report.

INTERNAL AUDITOR

Pursuant to Section 138 of the Companies Act 2013 read with rule 13 of The Companies (Accounts) Rules, 2014 and all other applicable provisions (including any amendment thereto) if any of the Companies Act 2013 M/s. Ajay kumar and associates, Chartered Accountants, Chennai was appointed as the Internal Auditors of the Company for the Financial Year 2017-18.

The audit conducted by the Internal Auditors is based on an internal audit plan, which is reviewed each quarter in consultation with the Audit Committee. These audits are based on risk based methodology and inter alia involve the review of internal controls and governance processes, adherence to management policies and review of statutory compliances. The Internal Auditors share their findings on an ongoing basis during the financial year for corrective action. The Audit Committee oversees the work of Internal Auditors.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS

During the Financial Year 2017-18, your Company has complied with applicable Secretarial Standards, namely SS-1 & SS-2 issued by the Institute of Company Secretaries of India.

PARTICULARS OF EMPLOYEES

The information as required under the provisions of Section 197(12) of the Companies Act, 2013 and read with rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in ANNEXURE - I attached herewith which forms part of this report.

CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION/FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Conservation of Energy:

C. Foreign Exchange Earning and Outgo:

Total Foreign exchange earned : NIL Total Foreign exchange outgo : NIL

ANNUAL BOARD EVALUATION AND FAMILIARIZING PROGRAMME

The Board has carried out an annual evaluation of its own performance, the directors and also committees of the Board based on the guideline formulated by the Nomination & Remuneration Committee. Board composition, quality and timely flow of information, frequency of meetings, and level of participation in discussions were some of the parameters considered during the evaluation process. A note on the familiarizing programme adopted by the Company for the orientation and training of the Directors and the Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Corporate Governance Report which forms part of this Report. Further, the Independent Directors of the Company met once during the year on 09th February, 2018 to review the performance of the Nonexecutive directors, Chairman of the Company and performance of the Board as a whole.

NOMINATION AND REMUNERATION POLICY

The Company believes that a diverse and inclusive culture is integral to its success. A diverse Board, among others, will enhance the quality of decisions by utilizing different skills, qualifications, professional experience and knowledge of the Board members necessary for achieving sustainable and balanced development. Accordingly, Board based on the recommendation of the Nomination and Remuneration Committee has formulated a policy on remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The policy covers the appointment, including criteria for determining qualification, positive attributes, independence and remuneration of its Directors, Key Managerial Personnel and Senior Management Personnel. The Nomination and Remuneration Policy may be accessed on the Company’s website at the link: http://www.elnettechnologies.com/Document/ nomination%20and%20remuneration%20policy.pdf

ESTABLISHMENT OF VIGIL MECHANISM/ WHISTLE BLOWER POLICY

Pursuant to Section 177(9) of Companies Act 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has formulated a whistle blower mechanism for directors and employees to report concerns about unethical behavior, actual or suspected frauds or violation of the Company’s code of conduct and ethics. The Audit Committee of the Board oversees the functioning of Whistle Blower Policy. The Whistle Blower Policy covering all employees and directors is available in the Company’s website http://www.elnettechnologies.com/Document/Whistle%20Blower%20Policy.pdf

PARTICULARS OF LOANS, INVESTMENT OR GUARANTEES

The Company has not given any loans or guarantees covered under the provision of section 186 of the Companies Act, 2013. The details of the investments made by the Company are given in the notes to the financial statements which forms part of this Annual Report.

RISK MANAGEMENT POLICY

Pursuant to section 134(3)(n) of the Companies Act, 2013 the Company has framed Risk Management Policy which lays down the framework to define, assess, monitor and mitigate the business, operational, financial and other risks associated with the business of the Company. The Company has been addressing risks impacting the Company in Management Discussion and Analysis Report which forms part of this Annual Report.

During the year the Company has not identified any element of risk which may threaten the existence of the Company.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company firmly provides a safe, supportive and friendly workplace environment - a workplace where our values come to life through the underlying behaviors. Positive workplace environment and a great employee experience are integral parts of our culture.

During the financial year, the Company has not received any complaints of sexual harassment from any of the women employees of the Company.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year, the Company has not entered into any new contracts / arragements with related parites which qualify as material in accordance with the Policy of the Company on materiality of related party transactions.

There are no materially significant related party transactions that may have potential conflict with interest of the company at large.

The details of the related party transactions as per Indian Accounting Standards (Ind AS) - 24 are set out in Note No. 39 to the Standalone Financial Statements of the Company.

Form AOC-2 pursuant to Section 134 (2) (h) of the Companies Act, 2013 read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is set out the ANNEXURE - III to the report.

The policy on Related Party Transactions as approved and can be accessed through weblink.

http://www.elnettechnologies.com/Document/Related%20Party%20Transaction%20policy.pdf

REPORT AS PER SECTION 134 READ WITH RULE 8 AND SUB RULE 5 OF COMPANIES ACCOUNTS RULES 2014

Change in nature of business, if any: NIL

Name of Companies which have become or ceased to be its subsidiaries, Joint Ventures or associate companies during the year: Elnet software city limited (Under liquidation)

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE.

There have been no significant and material orders passed by the courts or regulators or tribunals impacting the going concern status and Company’s operations. However, members’ attention is drawn to the statement on contingent liabilities and commitments in the notes forming part of the Financial Statements.

INTERNAL CONTROL AND SYSTEMS AND THEIR ADEQUACY

The Company has an adequate internal control system which commensurate with the size, scale and complexity of its operations. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and there by strengthen the controls. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report.

DISCLOSURE REGARDING FRAUDS

The Statutory auditors of the Company has stated that there was no material fraud by the Company or on the Company by its officers or employees was noticed or reported during the course of our audit in their Independent Auditors Report which forms part of this Annual Report. Hence, there is no requirement to report the same to Audit Committee or Board of Directors of the Company

PERSONNEL

Employee relations have been very cordial during the financial year ended 31st March, 2018. The Board wishes to place on record its appreciation to all the employees in the Company for their sustained efforts and immense contribution to the high level of performance and growth of the business during the year. The Management team of the Company comprises of experienced passionate driven professionals committed to the organizational goals.

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to the Government of Tamil Nadu, Electronics Corporation of Tamil Nadu Ltd., (ELCOT), Axis Bank - Thiruvanmiyur Branch, State Bank of India - Industrial Finance Branch, Chennai, Canara Bank - Tidel Park Branch, Axis Bank - Chennai Main Branch, Mylapore and the Company’s customers for their support and co-operation extended during the year. Your Directors also wish to place on record their appreciation for the good work put in by the employees of your Company.

For and on behalf of the Board of Directors,

Place : Chennai Tmt. Unnamalai Thiagarajan

Date : 25^th May, 2018 Managing Director

DIN:00203154