[formerly known as datanet systems limited]

Engaging vision... Nurturing growth...www.wepsolutions.com

[Formerly known as Datanet Systems Limited]

WeP Solutions Limited

Seventeenth Annual Report 2011-12

02


Mr. Ram N Agarwal

Mr. G H Visweswara

Mr. H V Gowthama

Mr. Sudhir Prakash

Dr. A L Rao

Mr. B R Ganesh

Mr. Shankar Jaganathan

Mr. H K Nanjunda Swamy

-

-

-

-

-

-

-

-

Chairman & Non-Executive Director

Whole-time Director

Independent Director






Board of Directors

Mr. Sanjeev Arora

Mr. Sandeep Goyal

Mr. S Kannan

Ms. Smitha Swamy

-

-

-

-

Business Head

Chief Financial Officer

Company Secretary &

Compliance Officer

HR Head

Management Team

M/s. N M Raiji & Co

Chartered Accountants, Mumbai

Auditors

HDFC Bank Limited

Axis Bank Limited

Corporation Bank

Bankers

40/1-A, Basappa Complex

Lavelle Road

Bangalore – 560 001

Ph: 91 80 66112000

Fax : 91 80 66112055

www.wepsolutions.com

Registered Office

Cameo Corporate Services Limited

# 1, Subramanian Building

Club House Road

Chennai – 600 002

Email : [email protected]

Share Transfer Agents

Contents

Business Overview .................................................................................

Directors' Report .....................................................................................

Report on Corporate Governance ..........................................................

Auditor's Report ......................................................................................

Financial Statements ..............................................................................

04

07

13

19

22

0303

Seventeenth Annual Report 2011-12Engaging vision... Nurturing growth...

WePeople

People Power• Our People are present pan India reaching out to diverse

locations

• Our People have built enduring and thriving partnerships

with global technology leaders as well as our prized

partners enabling us to achieve more growth

• Our People across the country co-ordinate with several

government agencies to achieve expansion of business

• Our talented leadership has rich experience and always

guides us in right directions

Management

Employees

Suppliers

CustomerAuthorised

ServicePartner

CustomerService

Representative

TechnicalSupport

• Our customer focused service chain, enriched by

regular customer interactions provides customized and

valuable business propositions for customers

• Our tech-savvy talent pool satiates the increasing

demand by focusing on IT driven governance

• Our teams are always pro-actively looking for new

initiatives (such as Go Green) and mechanisms to add

new dimensions and values to the services offered.

• Our team's experience and business relationships

across sectors enable us to design & deliver solutions to

all types of enterprises to suit their MPS needs

Locations

Customers

Devices

1500+

600+

19000+

Business Overview Managed Printing Solutions (MPS)

in India

Our MPS Business

MPS being the next level opportunity of the printing,

copying and scanning industry culminates the

optimised management of the printing/copying

/scanning requirements of organizations. The MPS

market is still under explored in India despite India

being one of the fastest growing world markets in the

sector. The impact of economic downturn in India made

most organizations to re-think their costs. MPS

became an attractive proposal because it offers to

lower costs while enabling businesses to focus on their

core tasks. The majority of MPS commitments come

from Mid market and Large Enterprise level of

accounts. However Small and Medium Enterprises are

also opening towards the innovative ideas of cost

reduction and are now considered a potential market in

India for MPS.

Some of the major sectors that understand the benefits

of MPS are Education, BFSI, Manufacturing, Health

Care and IT. Most of MPS tie-ups are with local

branches of multinational organizations or rapidly

emerging national firms. The future for MPS is

promising with high prospects of this service getting

assimilated with mainstream practices of most

enterprises.

WeP started the MPS business in the year 2002,

progressively growing to over 1500+ locations across

India for 600+ customers with 19000+ devices. WeP

offers the best answer for managed printing solutions

providing more time for an organization to focus on

their core business area. MPS not only helps in

overcoming hassles of printing but also in reducing

costs related to printing.

The current economic climate has awakened business

leaders across the nation to the growing need of

keeping costs in check while freeing the primary work

force in their businesses to focus on mission-critical

tasks and roping in experts for enhanced efficiency and

end-user experience. WeP’s MPS portfolio answers

exactly these demands while incorporating

increasingly optimal workflow processes into

organizations.04


Customer Centric Operations Policy

As a pioneer in MPS business we have experience of close to a decade, skills and

knowledge to understand and relieve the customer of the hassles in printing and

imaging needs. Being our privileged customers, organizations enjoy the benefits

of -

• A single window solution for multi-location support under a central contract

• Eliminating maintenance costs associated with printing and copying

• Reducing staff time related to support of the printing and imaging devices

• Controlling the overall cost of printing

• Various customized reports to optimize printing infrastructure

• Avail the next level solutions of MPS like Document Management Solutions,

Secure printing, Follow me printing, Color printing.

• Secure destruction of e- waste with no hassles

• Choice from among many high value and popular brands of equipments.

Our offerings in MPS

Bulk Printing Solutions (BPS)

We perform Bulk Printing Solutions (BPS) and large scale

printing jobs for clients. Depending on the requirements of

clients, we offer this both onsite and offsite.

Asset Plus Solutions (APS)

We offer APS under MPS, giving customers an option of

enjoying full benefits of printing with no capital investment

from their side.

Full Service Solution (FSS)

We offer to influence with our MPS knowledge and embark

on efficient administration of the customer’s existing

printer infrastructure with FSS modules.

05


Value Game Changer

Explore high value and high margin products in areas catering to new geographies a n d / o r n e w c u s t o m e r segments. At this stage, WeP Solutions will invest in creating intellectual property.

Phase 1

Phase 2

Phase 3

Revenue Acquisition

Identify a business meeting the requirements of adding to the top-line with flexibility in terms of speed, knowledge of the product market, similar customer segment and which involves minimal outflow of cash.

Value Accretion and Risk Mitigation

Identify a new business segment or a horizontal, catering mostly to the existing customer segment of WeP Solutions.

Growth Strategy

06


Performance

Directors

Directors’ Responsibility Statement

The Management Discussion and Analysis forms part of the Annual Report.

Based on the requisitions received from a majority of shareholders holding more than 51% of the equity shares, Mr. Ram N Agarwal was appointed as Additional Director of the company with effect from 12th November, 2011 subject to the confirmation by members at the General Meeting.

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the Directors’ Responsibility Statement, it is hereby confirmed that:

(a) In the preparation of the annual accounts for the financial year ended 31st March 2012, the applicable accounting standards have been followed along with proper examination relating to material departures;

(b) The Directors have selected such accounting policies and applied them consistently except where otherwise stated in the notes on accounts and made judgments 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 loss of the company for the year under review;

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

(d) The Directors have prepared the accounts for the financial year ended 31st March 2012 on a ‘Going Concern’ basis.

Directors’ ReportYour Directors present the 17th Annual Report and the audited accounts of your Company for the year ended 31st March 2012.

Financial Highlights

Particulars

Revenue from Operations

For the year ended 31st March 2012

For the year ended 31st March 2011

Other Income

Total Revenue

Profit Before Depreciation, Interest & Tax

Finance Cost

Depreciation and Amortisation

3,340.65

19.65

3,360.30

1,014.21

54.92

594.71

( . in lakhs)`

3,716.86

0.44

3,717.30

736.05

141.53

701.84

Provision for Tax

Profit before Tax

Earnings Per Share (Equity shares, par value ` 10/-each)

Basic/Diluted (`. per share)

35.00

329.59

(144.73)

474.32

4.21

14.83

(122.16)

(49.20)

(72.96)

(0.65)

Exceptional Items

Profit/ (loss) for the Year

07


Dividend

Corporate Governance

Depository System

Retirement Of Directors

Public Deposits

Research & Development

In view of the accumulated losses and to conserve the retained earnings to enable the company in its growth path, your Board of Directors do not recommend payment of dividend.

Your company adheres to all the Corporate Governance Code as prescribed by the Stock Exchanges and Securities and Exchange Board of India (SEBI). A detailed report on Corporate Governance is provided in this Annual Report. The Auditor's Certificate on compliance with the standards also forms part of this Annual Report.

Equity shares of your company are compulsorily tradable in dematerialized form. Your company has signed agreements with National Securities Depository Limited and Central Depository Services (India) Limited for dematerialization of its equity shares.

As per the provisions of the Companies Act, 1956 three sitting Directors out of eight are required to retire by rotation. Accordingly, Mr. H V Gowthama, Mr. B R Ganesh and Mr. H K Nanjunda Swamy are due to retire by rotation.

Mr. H V Gowthama and Mr. B R Ganesh, being eligible for reappointment, offer themselves to be the Directors of the company. In view of their valuable contribution, your Board recommends their reappointment. Mr. H K Nanjunda Swamy has expressed his unwillingness to continue as a Director of the company. The Board places on record its appreciation for the services rendered during his tenure as a Director.

Your Company has not accepted any deposits from the public during the year under review.

Since your company is mainly a solution provider, your company has not so far invested in Research and Development. However, your Board is considering of setting up of an in-house research and innovation team to help the growth of the business in the years to come.

Subsidiary Company

Employee Stock Option Plan

Auditors

Personnel

Human Resources

Acquisitions

As on 31st March 2012, company has no subsidiary. Hence requirement of reporting the statement pursuant to Section 212 of the Companies Act, 1956 and other statutory financial statements of a subsidiary does not arise.

During the year the company has not granted any ESOP. There is an ESOP Scheme 2011, available with the company approved by the members at the 16th General Meeting held on 27th September 2011.

M/s N M Raiji & Co., Mumbai are the Statutory Auditors of the Company, who are eligible and seek to be reappointed as Statutory Auditors for the year 2012-13. Suitable resolution is proposed in the notice sent to shareholders for the 17th Annual General Meeting.

There are no employees drawing remuneration in excess of limits specified in Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended.

Your Directors take this opportunity to record their appreciation for the contribution of all employees of your company during the year.

Your Company entered in to a Scheme of Arrangement u/s 391 to 394 of the Companies Act 1956, with M/s. WeP Peripherals Limited whereby the Printer Business is proposed to be demerged into the Company w.e.f. April 1, 2012 by way of issue of equity shares of the Company. The Scheme has been approved by the Shareholders and the Creditors of the Company and approval is pending with the Hon'ble High Court of Karnataka.

08


Annexure to Directors’ Report

Information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988

The company’s operations are not energy intensive. However, considering the fact that “Energy Saved is Energy Produced” your company and all the staff members avoid wastage of power usage wherever possible. Our expenditure on account of power consumption is reasonable.

During the year earning in foreign exchange is ̀ NIL (previous year Rs. Nil). Outgo on account of foreign currency during the year was ̀ 63.04 Mn (previous year ̀ 73.82 Mn)

A. Conservation of Energy

B. Foreign Exchange Earnings and Outgo

G H VISWESWARAWHOLE TIME DIRECTOR

For and on Behalf of the Board of Directors

BangaloreDate: 11th August 2012

G H VISWESWARAWHOLE TIME DIRECTOR

For and on Behalf of the Board of Directors


Conservation of Energy, Technology Absorption and Foreign Exchange Earnings / Outgo

The particulars as prescribed 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 given in the Annexure to this report.

Acknowledgments

Your Directors take this opportunity to thank all the shareholders, investors, vendors, customers, banks and the government / statutory authorities for their support. Your Directors wish to place on record their appreciation for the commitment and significant contribution made by the employees.

09


10


Business Performance

The global economy saw a slow recovery in the financial year 2011-12. The continued stress in the Euro zone made it difficult to post a decent comeback. The Indian economy was not untouched by those factors. Indian economy continued to face challenges of inflation, rising costs and sluggishness in Government sector. Added to that was the highly volatile currency which had its worst depreciation in the recent years affecting all sections of the economy.

WeP Solutions Limited (WeP) is in the business of providing pan India Managed Printing Solutions (MPS) to its customers. Over the years we have developed unique and customized solutions for our customers depending upon their needs while ensuring that we add value to their business.

WeP's Revenue for the year 2011-12 was ` 371.72Mn as against ̀ 336.03Mn in 2010-11 signifying a growth of 10.6%. Of this, the Services revenue grew only by 6.8% from ` 313.39Mn in 2010-11 to ̀ 334.79Mn in 2011-12.

The company’s installed base increased to over 19000 spread across more than 1500 locations in India with more than 600 Corporate customers. Our focus continues to be on the Top 2000 corporate customers in India in order to grow in the MPS space.

MANAGEMENT DISCUSSION AND ANALYSISInvestors are cautioned that this discussion contains statements that involve risks and uncertainties. Statements in this report

on Management discussion and analysis relating to the Company’s objectives, projections, estimates, expectations or

predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements

are based upon certain assumptions and expectations of future events. Actual results could however differ materially from

those expressed or implied. Important factors that could make a difference to the Company’s operations include global and

domestic demand supply conditions, selling prices, raw material costs and availability, changes in government regulations and

tax structure, general economic developments in India and abroad, factors such as litigation, industrial relations and other

unforeseen events. The Company assumes no responsibility in respect of forward looking statements made herein which may

undergo changes in future on the basis of subsequent developments, information or events.

Segment Wise Revenue 2011-12

24%

25%1%6%

34%

10%

Pharmaceuticals & Healthcare Services

Software/BPO BFSI

Manufacturing Others

Revenue

380

370

360

350

340

330

320

310

300

290

280Total Revenue Service Revenue

336.03

371.72

2010-112011-12

`. in Mn

313.39

334.79

No of printers

25000

20000

15000

10000

5000

02010-11 2011-12

16000+

19000+

SWOT AnalysisWe appreciate the market realities, stiff competition faced by your company mostly from the unorganized and local service providers and accordingly your Board acknowledges the following major SWOT specific to your company.

1. Pan India support structure with geographical reach.

2. Long standing partnerships with Global technology providers.

3. Empanelment with many Government nodal Agencies.

4. Experience in handling turnkey projects.

5. Providing a Customised and Valuable business proposition for customer.

1. Inadequate Inventory Management and Supply Chain Process.

2. Inability to undertake large projects which require substantial investment for want of long term funds.

3. Inadequate skill sets for moving up the value chain from a pure MPS player to a Document Management Solutions provider.

1. Increased focus on IT driven Governance.

2. Adoption of MPS concept by all types of enterprises.

3. Significant movement ahead by customers to look for total Document Management Solutions for their enterprises.

1. Continued pressure for reduction in operational expenses by companies especially in an increasing cost scenario.

2. Stiff competition from multiple players specifically from the unorganized sector forces us to cut our prices.

3. Assets under deployment are reaching their cycle of replacement, thereby creating a pressure on the investment plans and cash flows of the company.

4. Significant revenues of the company are from the Banking, Financial Service and Insurance (BFSI) Segments. Any direct or indirect impact on the BFSI industry can impact the revenues of the company.

5. As the company is largely dependent on imports for its supply of consumables and spares, rupee depreciation impacts the margin of the company significantly.

Strengths

Weaknesses

Opportunities

Threats

11


During the year the company’s EBITDA margins have fallen to 19.8% from 30.2% in FY 2010-11. The primary reasons for the drop in EBITDA margins are due to increase in material costs owing to steep depreciation of the rupee and increase in consumption of spares. During the year the company also enhanced the charge off on account of consumption of spares to reflect a more appropriate picture. This resulted in an additional impact of ̀ 8.56Mn.

The company made a net loss in the year of ` 7.29Mn for 2011-12 as against a profit of ̀ 47.43Mn in the year 2010-11. As explained above during the year the company’s margin was impacted by the material cost. Added to this was the higher interest cost of ̀ 8.6Mn (increase over previous year) resulting from a higher capital deployment and high interest rates vis a vis the previous year. The company invested in 2011-12 for expansion and consequently the depreciation was higher by ` 10.71Mn. The company is confident that these investments made will result in higher growth in the coming periods.

The company has taken several steps including controlling costs so as to restore profitability.

Internal control systems and their adequacy

Human resource development / Industrial relations

The Company has established adequate internal control systems which provide reasonable assurances with regard to safeguarding Company’s assets, promoting operational efficiencies and ensuring compliance with various statutory provisions. The Audit Committee reviews the adequacy of internal control systems, audit findings and suggestions.

Happy people result in happy Customers. WeP believes that success of any company lies in making the customers happy and satisfied. With a primarily solution oriented business, people form an important resource to ensure that this objective is achieved. WeP has progressive policy of development of its human resources through continuous training and motivation to achieve greater efficiencies and competencies. Safety, welfare and training at all levels of our employees continue to be areas of major focus for the Company.

120

100

80

60

40

20

0

-20

EBITDA PAT

2010-112011-12

`. in Mn 101.42

73.60

47.43

-7.29

Risk And Mitigants

Foreign Exchange Risks

Mitigants

Receivable Risks

Mitigants

A good amount of import of stocks is done in order to meet the consumables, spares and printers requirement. The time elapsed from the date of order, receipt of the stock from the vendor and supply to the customer has remained in the range of 30 to 45 days. Further, the credit period from the vendor is an average period of 45 days. This time lag is potent enough to affect the profitability of your company due to fluctuation in the currency exchange rate. In the last one year the Indian rupee has depreciated by almost 14% vs the US Dollar and 16% against the JPY, which are the currencies regularly dealt by the company.

Your company has a defined policy for managing its foreign exchange exposure. The Audit Committee of the Board and management reviews the hedging policy on a quarterly basis and takes appropriate decision from time to time in order to minimize the impact of such volatility.

During the year, the company faced challenges in improving its receivables position. While the average number of days of sales outstanding improved, the company found a tendency in customers to delay payments. Delays in payments impact our ability to meet our working capital requirements on time and puts pressure on our borrowings thereby increasing finance costs.

Your company is carefully monitoring and controlling the financial exposure to those customers whom it considers as credit risk. Further, the company has introduced stricter credit controls and pressurising customers to accept advance payment terms.

Inventory Obsolescence Risk

Mitigants

Acquisition Risk

Mitigants

The company needs to maintain printers for a long period of time. These models are constantly upgraded by the principal suppliers. However the company needs to maintain adequate stocks of spares and toners at all its customer locations in order to meet the customer requirements. These spares may or may not be used. This leads to the risk of obsolescence. At times we are required to maintain inventory for demo equipments, replacement for repairs and normal distribution stocks. Your company faces the risk of obsolescence in the event of not being able to sell or deploy the above stocks.

Your company is conscious of these risks and tracks and monitors its inventory at regular intervals to minimize obsolescence. Your company continuously monitors the stock levels of such items and ensures they are within the reasonable limits.

Your company is actively pursuing acquisition, merger, de-merger opportunities. In the event of any such corporate action materializing your company would be forced with integration issues, managing the morale of the new work force, overlaps and other related issues.

Your company has a comprehensive due diligence review process covering aspects of financial, legal, technological, human and cultural issues before deciding on such corporate action.

12


Report On Corporate Governance

Company’s Governance Philosophy

Code of Conduct:

Corporate Governance refers to a combination of laws, regulations, procedures, implicit rules and good corporate practices which ensure that a company meets obligations to optimize shareholders value and fulfill its responsibilities to the community, customers, employees, Government and other segments of society. Emphasizing on transparency, empowerment, accountability and integrity are essential ethics for a good corporate citizen.

Your company is fully aware of its responsibilities towards its stakeholders and the benefits of being a good corporate citizen. Our business modules revolve around the core values of excellence, integrity, responsibility, accountability, innovative, law abiding and empowerment.

Your Company has a Code of Conduct for its senior employees and Directors and it is available on its website.

Board of Directors

As on 31st March 2012, the Board of Directors of your Company comprises of Eight (8) Directors of which One is the Executive Director and all the other Seven (7) Directors are Non-Executive. The Company has a Non-Executive Chairman. The composition of the Board is as per clause 49 of the Listing Agreement and exceeds the percentage stipulated therein fo independent director. Your Directors are eminent persons and professionals with rich experience in management, finance, law and banking.

No Director of the Company is a member in more than 10 committees or acts as Chairman of more than 5 committees across all companies, in which he is a director.

During the year under review Seven (7) Board Meetings were held on 30th April 2011, 9th July 2011, 6th August 2011, 27th September 2011,12th November 2011, 17th December 201 1 and 31st January 2012.

The details of composition, Directors’ attendance and other particulars are as under:

No. of Board meetings held during the year

Ram N Agarwal* Non-Executive Chairman

7 6 Yes

H K Nanjunda Swamy Non Executive and Independent

7 4 No

Sudhir Prakash Non Executive and Independent

7 5 Yes

B R GaneshNon Executive and Independent 7 6 Yes

G H VisweswaraExecutive Director Whole-time Director 7 7 Yes

H V GowthamaNon Executive and Independent 7 7 Yes

Shankar JaganathanNon Executive and Independent 7 7 Yes

Dr. A L RaoNon Executive and Independent 7 6 Yes

Name of the Director CategoryNo. of

meetings attended

Whether attend the last AGM

*Appointed as Additional Director and Non Executive Chairman with effect from 12th November 2011.

13


Audit CommitteeAs a measure of good corporate governance, an Audit Committee has been constituted consisting of independent directors. The terms of reference include:-

1. Oversee the Company’s financial reporting process and disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

2. Review the adequacy of internal control systems, internal audit reports and their compliance thereof.

3. Recommend the appointment of statutory auditors, fixation of audit fee and approval for payment for other services.

4. Review with management the quarterly and annual financial statements before submission to the Board.

The following Directors are members of the Audit Committee.

Mr. H V Gowthama - ChairmanMr. B R GaneshMr. Sudhir PrakashMr. H K Nanjunda Swamy

During the Financial Year 2011-12, the Audit Committee meetings were held on 30th April 2011, 6th August 2011, 12th November 2011 and 31st January 2012.

Meetings and attendance during the year are as below:

Members

No. of meetings

held

No. of meetings attended

H V Gowthama

B R Ganesh

Sudhir Prakash

H K Nanjunda Swamy

4

4

4

4

4

3

3

3

Remuneration of Directors

shares, dematerialisation of shares, non-receipt of share certificates and other related issues.

The following Directors are members of the Shareholders’ / Investors’ Grievance Committee

Mr. H K Nanjunda Swamy - ChairmanMr. B R GaneshMr. H V Gowthama

The committee meets as and when required. As on 31.03.2012, there were no outstanding complaints or shares pending for transfer.

A Share Transfer Committee has been constituted to approve the share transfers, transmission, split, consolidation, issue of new certificates, rematerialisation of shares, etc. The Committee meets as often as required.

The following Directors are members of the Share Transfer Committee:

Mr. H V Gowthama - ChairmanMr. G H VisweswaraMr.H K Nanjunda Swamy

Details of last three Annual General Meetings (AGM)

Share Transfer Committee

General Body Meeting

Postal Ballots

Disclosures

During the year under review, no Postal Ballot was conducted.

Other than the transactions disclosed in the Notes 2.29 of the financials, there are no materially significant related party transactions with the Company’s Promoters, Directors, the management and their relatives that may have potential conflict with the interest of the company at large.

There were no instances of non-compliance by the Company nor have any penalties, strictures been imposed on them by Stock Exchanges or SEBI or any other statutory authority during the last year on any matter related to capital market.

Year Date Time

2010-11

Venue

Conference Hall, Basappa Complex, Lavelle Road, Bangalore – 560 001

27th Sept.2011

3.30 PM

2009-10Hotel Ajantha Paradise Pvt. Ltd., Bangalore

8thOct.2010

4.30 P M

2008-0924thSept.2009

9.30 A.M

Hotel Ajantha Paradise Pvt. Ltd., Bangalore

Shareholders’ / Investors ' Gr ievance Committee

To facilitate prompt redressal of investors’ complaints and to strengthen investor relations, an Investors’ Grievance Committee has been constituted. The Committee looks into redressal of investors’ grievances pertaining to transfer of

a. Whole Time Director- G H Visweswara*

Particulars March 31, 2012

Remuneration to Director 190,400

Contribution to PF and other funds 9,600

b. Non Executive Directors

Particulars March 31, 2012

Sitting Fees 344,000

* G.H Visweswara appointed as Whole Time Director w.e.f. 12th November 2011

14


Means of Communication

General Shareholder Information

The Company’s quarterly and annual financial results in the proforma prescribed by the Stock Exchanges are approved and taken on record by the Board within the prescribed time frame and sent forthwith to all Stock Exchanges in which the Company’s shares are listed. The financial results were published in “Financial Express“ and/or “Business Standard” and “Hosa Digantha“ in vernacular (Kannada) newspaper.

Information about the Company in general, its financial results and other information including official press releases can be accessed at the Company’s website www.wepsolutions.com

The Management Discussion and Analysis forms part of the Annual Report.

CFO certification forms part of this Annual Report

Auditor's report on compliance of provisions of corporate governance forms part of this Annual Report

The Company’s financial year begins on April 1 and ends on March 31 each year. Quarterly financial results of the company are filed with the Bombay Stock Exchange within the stipulated time. The results are also published in leading financial news papers and in a vernacular news paper immediately after the approval of the financials by the Audit Committee/Board. The financial results are also uploaded in the Company’s website.

Annual General Meeting : Friday,21st September 2012

Time : 4.00 PM

Venue : Basappa Complex, Lavelle Road, Bangalore – 560001

Book Closure Dates : 14.09.2012-21.09.2012 (Both days inclusive)

Listing DetailsCompany’s equity shares continue to be listed in Bombay Stock Exchange Limited (BSE) and the company has paid Listing fee for the current year.

Company Code in BSE : 532373.

International Securities Identification Number (ISIN): INE434B01029

Index Comparison

Market Price Data(Source: www.besindia.com)

MonthOpen Price

High Price

Low Price

Close Price

No. of Shares

Jun 11

Jul 11

Aug 11

Sep 11

Oct 11

Nov 11

Dec 11

Jan 12

Feb 12

Mar 12

19.05

21.60

24.75

19.30

20.25

17.25

15.20

17.19

16.50

15.57

27.82

26.20

24.75

23.00

23.50

23.20

19.50

17.19

17.00

16.47

18.25

18.05

14.10

15.00

15.40

15.00

13.10

12.05

13.15

13.00

19.73

23.00

18.00

20.60

18.00

15.70

15.00

15.59

13.85

13.88

3,61,521

1,31,054

66,583

99,263

50,368

49,025

41,301

36,539

45,834

50,385

5

Price 50D MA 200D MA

10

15

20

25

30

Price

Aug 11 Nov 11 Feb 12 May 12

Price Movement

15


20

Jun 11

0

-20

-40

-60

Sep 11 Dec 11 Mar 12 Jun 12

WEPSOLN SENSEX

% C

ha

ng

e [

Price

/ P

oin

ts]

Less than 5000

5001 - 10000

10001 - 20000

20001 - 30000

30001 - 40000

40001 - 50000

50001 - 100000

100001 and above

TOTAL

1,767

543

240

133

70

43

82

106

2,984

1,436,260

3,790,000

3,389,950

3,299,800

2,435,660

1,944,980

5,565,010

90,765,080

112,626,740

1.28

3.36

3.01

2.93

2.16

1.73

4.94

80.59

100.00

Value of shares held (`) No. of share holders

Value of shares held

% to the total paid up capital

% of share holders

59.21

18.20

8.04

4.46

2.35

1.44

2.75

3.55

100.00

Distribution of shareholdings as at March 31, 2012

Dematerialisation of shares

Trading of shares of the company is under compulsory electronic mode. As on 31st March 2012 11,013,885 equity shares of the company representing 97.79% of the total subscribed capital of the company were dematerialised.

Electronic

Physical

TOTAL

11,013,885

248,789

11,262,674

97.79

2.21

100.00

Particulars No. of shares

% ofholding

As on 31.03.2012

Address for Correspondence

Registrar and Transfer Agents

All communications to the company may be made at the Registered Office of the Company is situated at

# 40/1-A, Basappa Complex,Lavelle Road, Bangalore – 560 001Telephone : 080-66112000Email: [email protected]

Share transfer in physical form and other communication regarding share certificates, change of address etc., should be sent to our Registrar and Transfer Agents at the following address

Cameo Corporate Services Limited“Subramanian Building” V Floor No.1, Club House RoadChennai – 600 002.Tel: +(91) (044) 28460390E-mail: [email protected]

17


Chief Financial Officer (CFO) Certification

BangaloreDate: 25th May 2012

I, Sandeep Kumar Goyal, Chief Financial Officer, WeP Solutions Limited, to the best of my knowledge and belief, certify that:

(a) We have reviewed balance sheet and profit and loss account for the year ended 31st March 2012 and all its schedules and notes on accounts, as well as the cash flow statement and directors’ report and to the best of our knowledge and belief report that:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the company’s code of conduct.

(c) We are responsible for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee , deficiencies in the design or operation of such internal controls, if , any , of which we are aware and we have taken proper steps to rectify these deficiencies.

d) We have disclosed to the auditors and the Audit Committee

(i) Significant changes in internal control over financial reporting during the year ;

(ii) Significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

(iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company’s internal control system over financial reporting.

Declaration by Whole-time Director for affirmation of compliance of code of conduct:

I, G H Visweswara, Whole-time Director hereby affirm that all the members of the Board and Senior management have complied with the code of conduct of the company.

Auditor's Certificate On Corporate Governance

To the Members of WeP Solutions Limited (Formerly known as Datanet Systems Limited)

We have examined the compliance of conditions of Corporate Governance by WeP Solutions Limited (Formerly known as Datanet Systems Limited) (the Company) for the year ended 31st March, 2012 as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was carried out in accordance with the Guidance Note on Certification of Corporate Governance issued by the Institute of Chartered Accountants of India and was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, and the representation made by the Directors and the management, we certify the company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement during 2011-12

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.


For N.M. Raiji & Co.,Chartered AccountantsFirm Reg. No :108296W

J.M. GandhiPartnerMembership No: 37924


Sandeep Kumar GoyalChief Financial Officer

G H VisweswaraWhole Time Director

18

WeP Solutions Limited WeP Solutions Limited

1. We have audited the attached Balance Sheet of WEP SOLUTIONS LIMITED as at 31st March 2012, and also the related Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with generally accepted auditing standards applicable in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statements. An audit includes examining on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 duly amended by the DCA notification GSR 766 (E) dated 25th November 2004, (hereinafter to be referred to as “the Order”) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order, to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

b. In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books.

c. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the Accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e. On the basis of written representations received from the directors as on 31st March 2012 and taken on the record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. In our opinion and to the best of our information and according to explanations given to us, the said Balance Sheet and Profit and Loss Account read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India

I) In the case of the Balance Sheet of the state of affairs of the Company as at 31st March 2012

ii) In the case of Profit and loss Account of the Loss for the year ended on that date

iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Auditor’s Report To The Members Of WeP Solutions Limited

For N.M. Raiji & Co.,Chartered AccountantsFirm Reg. No :108296W

J.M. GandhiPartnerMembership No: 37924

Place: Bangalore Date: 25th May 2012

19


[Referred to in paragraph 3 of the our report of even date to the Members of WEP SOLUTIONS LIMITED on the financial statements for the year ended March 31, 2012].

(i) (a) The Company is maintaining proper records of fixed assets showing full particulars, including quantitative details and the situation of fixed assets.

(b) A major portion of fixed assets have been physically verified by the management during the year. In our opinion, the frequency of verification of the fixed assets by the management is reasonable having regard to the size of the company and nature of its assets. The discrepancies noticed have been properly dealt with in the books of account;

(c) The assets disposed off during the year are not significant and therefore do not affect the going concern assumption.

(ii) (a) According to the information and explanations given to us, the inventory has been physically verified by the management at the end of the year.

(b) In our opinion and according to the information and explanations given to us, the procedure for physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business;

(c) In our opinion, the company has maintained proper records of inventory. The discrepancies noticed on verification as compared to books stocks have been properly dealt with in the books of account.

(iii) The company has not taken/granted any loans secured or unsecured, to/from parties covered in the register maintained under section 301 of the Companies Act, 1956.

(Iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services.

Annexure To The Auditor’s Report

(v) The company has maintained the details of all contracts and arrangements that need to be entered into the register maintained under section 301 of the companies Act 1956;

(vi) The company has not accepted any deposit from public; hence the provisions of section 58A and 58AA of the Companies Act, 1956 are not applicable.

(vii) In our opinion, the company has a system of internal audit, which is commensurate with the size and nature of business.

(viii) According to the information and explanations given to us and on the basis of our examination of books of accounts, maintenance of cost records has not been prescribed for the operations of the company by the Central Government under clause (d) sub section (1) of Section 209 of the Companies Act, 1956.

(ix) (a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employee State Insurance, Income Tax, Sales Tax, Service Tax, Custom duty, Excise duty, Cess and any other applicable statutory dues with the appropriate authorities and no undisputed amounts were outstanding as at 31st March 2012 for a period of six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the company examined by us, there are no dues of sales tax, income tax, customs duty, service tax, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

(x) As at the balance sheet date, the company has neither accumulated losses in excess of fifty percent of its net worth and has not incurred cash loss in the current financial year and in the immediately preceding financial year.

20


(xi) Based on our audit procedure and on the basis of the information and explanations given to us by the management, the company has not defaulted in repayment of dues to any financial institution or bank.

(xii) According to the information and explanation given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a Chit Fund or Nidhi / Mutual Benefit Fund / Society; hence the provision of clause (xiii) of the paragraph 4 of the Order is not applicable to the Company.

(xiv) The Company does not deal or trade in shares, securities, debentures and other investments.

(xv) According to the information and explanation given to us, the Company has not given any guarantee for loans taken by others from any bank or financial institutions.

(xvi) During the year, the Company has taken a term loan. In our opinion and according to the information and explanation given to us the term loans have been applied for the purposes for which they were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of Balance Sheet of the Company, we state that the funds raised on short-term basis have not been utilised for long term investment.

(xviii) According to the information and explanations given to us the company has not made any preferential allotment of shares to parties covered in the register maintained under section 301 of the Companies Act 1956.

(xix) During the year the company does not have any outstanding Debentures.

(xx) During the year the Company has not raised any money by way of public issue.

(xxi) Based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For N.M. Raiji & Co.,

Chartered Accountants

Firm Reg. No: 108296W

J.M. Gandhi

Partner

Membership No: 37924

Place: Bangalore

Date: 25th May 2012

21


Balance SheetWeP Solutions Limited(Formerly known as Datanet Systems Limited)Balance Sheet as at March 31, 2012

As At31-Mar-12

Note No.As At

31-Mar-11Particulars

EQUITY AND LIABILITIES

Shareholders' FundsShare CapitalReserves & Surplus

Non current LiabilitiesLong Term BorrowingOther Long Term LiabilitiesLong Term Provisions

Current LiabilitiesShort Term BorrowingsTrade PayablesOther Current LiabilitiesShort Term Provisions

TOTAL

ASSETS

Non current AssetsFixed Assetsi) Tangible assetsii) Intangible assetsDeferred tax assets (Net)Long term Loans and AdvancesOther non current assets

Current AssetsInventoriesTrade ReceivablesCash and cash equivalentsShort term loans and advances

Significant Accounting Policies and Notes on Accounts

TOTAL

I

1a)b)

2a)b)c)

3a)b)c)d)

II

1a)

b)c)d)

2a)b)c)d)

2.12.2

2.32.42.5

2.62.72.82.9

2.10

2.112.122.13

2.142.152.162.17

1 & 2

112,620,905 58,676,023

171,296,928

34,375,000 3,846,437 1,757,784

39,979,221

73,686,173 63,081,757 23,645,857

360,169 160,773,956

372,050,105

121,423,419 2,050,205 6,673,863 1,320,383

34,224 131,502,094

114,166,492 105,766,369

236,929 20,378,221

240,548,011

372,050,105

112,620,905 66,796,737

179,417,642

- 4,352,836 2,742,633 7,095,469

58,469,213 94,651,331 15,376,829

58,011 168,555,384

355,068,495

109,541,786 3,690,368 1,753,841 2,203,904

- 117,189,899

115,445,462 97,192,238

7,873,020 17,367,876

237,878,596

355,068,495

As per our report attachedFor N M Raiji & CoChartered AccountantsFirm's Registration No. : 108296W

For and on behalf of the Board of Directors

J M GandhiPartnerMembership No. : 37924


H V GowthamaDirector

Ram N AgarwalChairman

Sandeep GoyalChief Financial Officer

S KannanCompany SecretaryPlace: Bangalore

Date : 25th May 2012

`


22


in

Profit and Loss StatementWeP Solutions Limited(Formerly known as Datanet Systems Limited)Profit and Loss Statement for the year ended March 31,2012

2012Note No. 2011 Particulars

REVENUERevenue from OperationsOther Income

Total Revenue

EXPENDITURECost of Material consumedPurchases of stock-in-trade (net of capitalisation)Changes in inventories of stock-in-tradeEmployee Benefits expenseOther expenses

Total Expenses

Profit Before Depreciation, Interest, Exceptional Item and Tax

Depreciation and amortization expense

Profit Before Interest, Exceptional Item and Tax

Finance costs

Profit Before Tax and Exceptional Item

Exceptional items

Profit Before Tax

Tax expensea) Current Taxb) MAT Credit entitlementc) Deferred Taxd) Deferred Tax relating to previous year

Profit/(Loss) for the year

Earnings Per Share (Weighted average number of shares)(Equity Shares par value ` 10/- each) - Basic - DilutedNumber of shares used in computing earnings per share - Basic - Diluted

Significant Accounting Policies and Notes on Accounts

III

IIIa)b)c)d) e)

f)

g)

IV

V

VI

VII

2.182.19

2.20

2.212.222.24

2.33

1 & 2

371,685,670 44,215

371,729,885

150,138,324 24,493,197

7,139,665 29,887,084 86,467,012

298,125,282

73,604,603

- -

(4,920,021)-

(7,295,716)

(0.65) (0.65)

11,262,674 11,262,674

334,064,510 1,964,676

336,029,186

102,567,448 36,116,711

(15,772,918) 31,763,576 79,932,710

234,607,527

101,421,659

2.10

2.23

70,184,169 59,471,044

3,420,434 41,950,615

14,153,153 5,491,898

(10,732,719) 36,458,717

2.25 1,483,018 3,500,000

(12,215,737) 32,958,717

3,418,780 (3,414,060) (3,875,577)

(10,601,941)

47,431,515

4.21 4.21

11,262,674 11,262,674










`

23


in

Significant Accounting Policies And Notes on Accounts

Company Overview

1. Significant accounting policies

WeP Solutions Limited (formerly known as Datanet Systems Limited) is the pioneer of Managed Printing Solutions in India. With our extensive network and expertise in the business we have grown over the period and manage close to 19000+ printers/copiers across 1500+ locations for 600+ customers.

We are the first Indian company to provide pan India printing solutions and set organization free from hassle of managing printers to focus better on their core business. Besides reducing printing cost to Organization, MPS contributes to environmental objectives of organizations.

"The presentation of the accounts is based on the Revised Schedule VI of the Companies Act 1956, applicable from the current financial year. Accordingly previous year figures are realigned to make it comparable with current year. Assets and Liabilities are bifurcated into current and non current based on 12 months period from the balance sheet date, as operating” cycle of the company is determined less than 1 year."

The Financial Statements are prepared as a going-concern under historical cost convention on an accrual basis and in accordance with the provision of section 211(3C) and other provisions of the Companies Act, 1956.

The preparation of financial statements in accordance with the generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimate is recognised in the period in which the estimates are revised and in any future period affected.

1.1 Basis of preparation of financial statements

1.2 Use of Estimates

1.3 Fixed assets, intangible assets, leased assets and work-in-progress

1.4 Depreciation and amortization

Fixed assets are stated at historical cost less accumulated depreciation. Costs include expenditure directly attributable to the acquisition of the asset. Borrowing costs directly attributable to the construction or production of qualifying assets are capitalized as part of the cost.

Intangible assets are stated at the consideration paid for acquisition less accumulated amortization. Advances paid towards the acquisition of fixed assets outstanding as of each balance sheet date and the cost of fixed assets not ready for use before such date are disclosed under capital advance.

Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Lease rentals in respect of assets taken under operating leases are charged to profit and loss account on a straight line basis over the lease term.

Spares issued for fixed assets after the depreciated life of the original asset are capitalised.

Assets acquired on acquisition of MPS business are depreciated based on estimated useful life, which is higher than the rates specified in Schedule XIV.

Spares issued for fixed assets after the depreciated life of the original asset are capitalised and depreciated over 24 months

Individual Assets costing less than ` 5,000 are depreciated in full in the year of purchase.

50.00%

20.00%

20.00%

25.00%

25.00%

25.00%

AssetDepreciation Rate Applied

Rates as per Schedule XIV

Computers

Furniture and Fixtures

Office Equipments

Plant and Equipments

Plant and Equipment - on Use and Pay

Vehicles

16.21%

6.33%

4.75%

4.75%

16.21%

9.50%

24


Depreciation for assets purchased / sold during the period is proportionately charged.

Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

Borrowing Cost incurred in connection with borrowing of funds for the acquisition, production or construction of an asset that necessarily takes substantial period of time to get ready for its intended use/sale are capitalised as part of that assets. Other borrowing costs are recognised as an expense in the period they are incurred.

Inventories are valued at lower of cost and net realizable value, including necessary provision for obsolescence. Cost is determined using the weighted average method.

Accounting for contingencies (gain or loss) arising out of contractual obligations are made only on the basis of mutual acceptance.

Event occurring after the date of Balance Sheet are considered upto the date of approval of the accounts by the Board of Directors, where material.

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognized over the life of the contract.

Non monetary foreign currency items are carried at cost.

1.5 Impairment of Assets

1.6 Borrowing Cost

1.7 Inventories

1.8 Contingencies and events occurring after the Balance Sheet date

1.9 Foreign Currency Transactions

AssetAmortization

Rate

Acquired Computer Software – ERP Systems

New Computer Software – ERP Systems

30.77%

25.00%

1.10 Revenue Recognition

1.11 Employee Benefits

Leave Accrual:

1.12 Tax Expense

1.13 Provisions and contingent liabilities

Sales of Product/Service are accounted net of Excise duty, Sales Tax /VAT, Service Tax and discounts on accrual basis. .

Gratuity: The Company provides gratuity benefit to the employees for which the fund is maintained with LIC. This is the defined benefit plan and the obligation of the company is calculated on the basis of actuarial valuation.

The Company allows accumulation/encashment of leave. Such accumulation can be utilized by obtaining leave in the subsequent period of employment or at the time of separation for a specified period. The obligation as on the balance sheet date is provided on the basis of actuarial valuation.

Current tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance of the provisions of the Income-tax Act, 1961, and based on expected outcome of assessments/appeals.

Deferred tax is recognised on timing difference between taxable and accounting income for the year and quantified using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date.

Deferred tax asset relating to unabsorbed depreciation / business losses/ losses under the head “ capital gains” are recognised and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised

Other deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against such deferred tax assets can be realised.

Provisions are recognised when the Company has a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

25


2.1.2 Shares in the company held by each shareholder holding more than 5 percent shares :

Name of Shareholder As at

March 31, 2012As at

March 31, 2011

WeP Peripherals LimitedNo of Shares% Holding

WeP TrustNo of Shares% Holding

Mr. Ram N AgarwalNo of Shares% Holding

2,120,751 18.83%

614,232 5.45%

2,290,824 20.34%

2,125,351 18.87%

614,232 5.45%

2,021,550 17.95%

2.1 Share Capital

Particulars As at

March 31, 2012As at

March 31, 2011

Authorised30,000,000 ( PY : 15,000,000) Equity Shares of ` 10 each

Issued, Subscribed and Paid-Up 11,262,674( PY 11,262,674) Equity shares of ` 10 each fully paid upLess: Allotment money in arrears

TOTAL

300,000,000 300,000,000

112,626,740 5,835

112,620,905

150,000,000 150,000,000

112,626,740 5,835

112,620,905

2.1.1 The reconciliation of the number of shares outstanding at the beginning and at the end of the year :

Particulars As at

March 31, 2012As at

March 31, 2011

Shares outstanding at the beginning of the year

Shares Issued during the year

Shares bought back during the year

Cancellation of Shares held by Employee Welfare Trust

Capital Reduction pursuant to Scheme of Arrangement

Shares outstanding at the end of the year

11,262,674

-

-

-

-

11,262,674

12,601,300

10,471,681

-

736,400

11,073,907

11,262,674

2. Notes on Accounts for the year ended March 31,2012

All figures are reported in Rupees, except data relating to number of Equity Shares or unless stated otherwise

The previous period figures have been regrouped/reclassified, wherever necessary to conform to the current period presentation

26


`in

2.3 Long Term Borrowing

Particulars As at

March 31, 2012As at

March 31, 2011

Secured-Term Loan from bankCurrent maturities of long term borrowing(Secured by hypothecation of the assets under use and pay block of the fixed assets and a Corporate Guarantee from a shareholder)(Repayable in 16 Quarterly Installments commencing from February 2012)

TOTAL

46,875,000 (12,500,000)

34,375,000

-

-

2.4 Other Long Term Liabilities

Particulars As at

March 31, 2012As at

March 31, 2011

Customer Deposits

TOTAL

3,846,437

3,846,437

4,352,836

4,352,836

2.5 Long Term Provisions

Particulars As at

March 31, 2012As at

March 31, 2011

Employee Benefits

TOTAL

1,757,784

1,757,784

2,742,633

2,742,633

2.2 Reserves And Surplus

Particulars As at

March 31, 2012As at

March 31, 2011

Capital ReserveOpening BalanceAddition on Acquisition of businessAddition due to reduction of capitalClosing Balance

Securities Premium AccountOpening BalanceShare issue expenseClosing Balance

Subsidy from GovtOpening balanceClosing balance

Surplus in Profit and Loss AccountOpening balanceAdd :- Current year profit/(loss)Closing balance

TOTAL

141,896,696 - -

141,896,696

7,500,000 (825,000) 6,675,000

899,000 899,000

(83,498,959) (7,295,716)

(90,794,673)

58,676,023

-31,239,291

110,657,405141,896,696

7,500,000-

7,500,000

899,000899,000

(130,930,474)47,431,515

(83,498,959)

66,796,737

27


`in

2.7 Trade Payables

Particulars As at

March 31, 2012As at

March 31, 2011

Trade payables

TOTAL

63,081,757

63,081,757

94,651,331

94,651,331

2.6 Short Term Borrowings

Particulars As at

March 31, 2012As at

March 31, 2011

a) SecuredLoans repayable on DemandFrom BanksCash Credit Account(Secured by Hypothecation of Current Assets)Working capital demand loan(Secured by Hypothecation of Current Assets)

b) UnsecuredFrom OthersLoan from corporate

TOTAL

53,686,173

20,000,000

-

73,686,173

-

-

58,469,213

58,469,213

2.9 Short Term Provisions

Particulars As at

March 31, 2012As at

March 31, 2011

Employee Benefits

TOTAL

360,169

360,169

58,011

58,011

2.8 Other Current Liabilities

Particulars As at

March 31, 2012As at

March 31, 2011

Customer DepositsCurrent maturities of long term borrowingFor ExpensesIncome received in advanceStatutory paymentsOther payables

TOTAL

611,400 12,500,000

7,119,291 471,625

2,704,036 239,505

23,645,857

- 13,205,028

67,680 2,104,121

-

15,376,829

28


`in

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29


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2.11 Deferred Tax

Particulars As at

March 31, 2012As at

March 31, 2011

Deferred Tax AssetProvision for doubtful debtsExpenses allowed on actual payment basis u/s 43B of I.T Act 1961Carried Forward Losses and Depreciation*Amortisation of Demerger expenditure u/s 35DD of I.T.Act 1961Less: Deferred Tax LiabilityDepreciation Difference

Net Deferred Tax Asset / (Liability)

10,874,199 646,638

11,457,885 1,066,277

17,371,136

6,673,863

8,500,684

10,601,940

17,348,783

1,753,841

*Company has created Deferred Tax Asset on carry forward income tax losses on the basis of estimated profit from existing contracts signed with Customers as on Balance Sheet date.

2.12 Long Term Loans And Advances

Particulars As at

March 31, 2012As at

March 31, 2011

Unsecured - Considered goodSecurity Deposits

TOTAL

1,320,383

1,320,383

2,203,904

2,203,904

2.14 Inventories

Particulars As at

March 31, 2012As at

March 31, 2011

Stock-in-Trade - In Stock - In TransitSpares and Consumables - In Stock - In Transit

TOTAL

16,737,693 2,603,911

92,581,120 2,243,768

114,166,492

25,427,868 1,053,402

81,019,994 7,944,198

115,445,462

2.13 Other Non Current Assets

Particulars As at

March 31, 2012As at

March 31, 2011

Interest Accrued on Fixed Deposits

TOTAL

34,224

34,224

-

-

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2.15 Trade Receivables

Particulars As at

March 31, 2012As at

March 31, 2011

Unsecured

Outstanding for a period exceeding six months from the due dateConsidered goodConsidered doubtful

Less: Provision for Doubtful debts

Sub total

Other debtsConsidered goodConsidered doubtfulSub total

TOTAL

14,830,186 33,515,792

33,515,792

14,830,186

90,936,183 -

90,936,183

105,766,369

8,877,654 26,200,291

26,200,291

8,877,654

88,314,584 -

88,314,584

97,192,238

2.17 Short Term Loans And Advances

Particulars As at

March 31, 2012As at

March 31, 2011

Unsecured - Considered gooda) Other Loans and advances i) Advance Income Tax (net of provision) ii) Balances with Customs, VAT and Service Tax input credit iii) Others

TOTAL

9,884,446 3,480,165 7,013,610

20,378,221

3,559,006 334,389

13,474,481

17,367,876

2.18 Revenue From Operations

Particulars April 1, 2011 to March 31, 2012

April 1, 2010 toMarch 31,2011

Sale of ProductsSale of Printing ServicesOther Operating Revenue

36,267,815 334,790,143

627,712 371,685,670

20,481,465 313,387,103

195,942 334,064,510

2.16 Cash And Cash Equivalents

Particulars As at

March 31, 2012As at

March 31, 2011

Current Account Balances with banksCash on handCheques on hand

TOTAL

235,172 1,757

- 236,929

70,881 2,139

7,800,000 7,873,020

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2.19 Other Income



Interest IncomeMiscellaneous incomeCredit Balances written back

44,215 - -

44,215

- 152,507

1,812,169 1,964,676

2.20 Cost Of Material Consumed



Opening stock Add: Transfer on acquisition of business Add: Purchases during the year Less: Closing Stock

Cost of material consumed

88,964,192 -

155,999,020 94,824,888

150,138,324

27,490 48,580,454

142,923,696 88,964,192

102,567,448

2.21 Changes In Inventories Of Stock-in-trade



Opening stockStock-in-TradeAdd: Transfer on acquisition of businessSub total

Closing StockStock-in-TradeSub total

26,481,270 -

26,481,270

19,341,605 19,341,605

7,139,665

- 10,708,352 10,708,352

26,481,270 26,481,270

(15,772,918)

2.22 Employee Benefit Expenses



Salaries and WagesContribution to provident and other fundStaff welfare expenses

TOTAL

26,689,451 1,243,669 1,953,964

29,887,084

29,481,365 1,051,686 1,230,525

31,763,576

2.23 Finance Cost



Interest ExpensesOther borrowing cost

TOTAL

13,480,200 672,953

14,153,153

4,487,194 1,004,704

5,491,898

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2.24 Other Expenses



Power and fuelInsuranceRepairs & MaintenanceRentRates and taxesCarriage and Freight outwardsSupport ChargesAuditors' Remuneration for Audit fees including Limited Review for Taxation mattersAdvertisement and sales promotionDirectors' Commission and Sitting feesLoss on disposal of assets(net)Traveling and ConveyanceCommunicationsLegal and Professional chargesManpower support service chargesOffice MaintenanceProvision for Doubtful DebtsBad Debts Written offExchange Differences (Net)Miscellaneous expenses

TOTAL

1,600,733 315,575

1,356,195 7,522,651 1,813,514

11,523,740 24,816,306

250,000 50,000

1,852,041 344,000

1,575,404 3,593,239 4,712,550 1,309,179

10,299,039 2,807,238 7,315,502

- 1,984,076 1,426,030

86,467,012

1,690,154 324,779

2,641,134 8,007,594 1,579,295

10,774,530 25,269,288

100,000 40,000

2,224,875 3,000

- 2,963,157 4,299,193 1,189,089 7,798,790 3,831,993 5,553,318

206,600 668,337 767,584

79,932,710

2.25 Exceptional Items



Business Acquisition ExpensesLegal and Professional chargesStamp Duty

TOTAL

750,000 733,018

1,483,018

3,500,000 -

3,500,000

2.26 Contingent Liabilities in respect of:

2.28 Segment Reporting

Letters of Credits opened by Banks for purchases of Spares and Consumables ` 19,278,624 (Mar 2012), ̀ Nil (Mar 2011)

2.27. The company was hitherto following a policy of charging off spares issued to the field over a period of 9 months.From the current year the spares issued for assets after depreciated life are capitalised and depreciated over a period of two years and other spares are charged off on issue. Due to this change, loss before tax is higher by ̀ 8,559,841.

As the Company's activities falls within a single business segment, viz "Managed Printing Solutions", the disclosure requirements of Accounting Standard 17 on "Segment Reporting" notified by the Companies(Accounting Standard) Rules 2006, are not applicable.

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2.29 Related Party Transaction

Name of Related Party Relationship

Mr. G H VisweshwaraMr. Ram Narayan AgarwalWeP Peripherals Ltd.

2.29.1 List of related parties

Key Management PersonnelPromoter DirectorCompany in which Promoter Director have Significant Influence

2.29.2 Transactions with Key Management Personnel



Remuneration to Director*Contribution to PF and other funds

190,400 9,600

Nil Nil

* G.H Visweswara appointed as Whole Time Director w.e.f. 12th November 2011

2.29.3 Transaction with other related parties

Transactions April 1, 2011 to March 31, 2012


Sale of Goods and ServicesPurchase of Goods and Services

2,976,723 36,043,856

1,158,135 26,464,778

WeP Peripherals Limited

2.29.4 Amount due to related parties



Remuneration/expenses to Directors

Amount due to WeP Peripherals Limited

Nil

4,649,554

1,000,000

730,484

2.30 Employee Benefit Plans

The company provides to its employees following retirement benefits:I) Gratuityii) Leave Accrual

Gratuity: The Company provides gratuity benefit to the employees for which the fund is maintained with LIC. This is the defined benefit plan and the obligation of the company is calculated on the basis of actuarial valuation.

Leave Accrual: The company allows accumulation / encashment of leave. Such accumulation can be utilized by obtaining leave in the subsequent period employment or encashment at the time of separation. The obligation as on the balance sheet date is provided on the basis of actuarial valuation.

Principal Actuarial Assumptions

ParticularsAs at

March 31, 2012As at

March 31, 2011

Expected Rate of Return on Assets (p.a)Salary EscalationDiscount Rate

0.00%7.00%8.40%

0.00%7.00%8.10%

Disclosure envisaged in revised AS 15 in respect of gratuity are given below:

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Amount recognized in the Balance Sheet are as follows

ParticularsAs at

March 31, 2012As at

March 31, 2011

Present value of Funded ObligationsFair value of plan assetsPresent value of unfunded obligations

Net Liability

--

819,527

819,527

--

892,846

892,846

Amount reflected in the P&L account is as follows

ParticularsAs at

March 31, 2012As at

March 31, 2011

Current Service CostInterest CostExpected Return on Plan AssetsActuarial Gain/(Loss)Benefits PaidTotal included in employee benefit Expected Return on Plan assets

237,48589,207

-(17,112)

---

-------

Reconciliation of Benefit Obligation & Plan Assets for the Period

ParticularsAs at

March 31, 2012As at

March 31, 2011

Change in Defined Benefit Obligation

Opening Defined Benefit ObligationCurrent Service CostInterest CostActuarial Losses / (Gain)Benefit Paid

Closing Defined Benefit Obligation

Change in Fair Value of AssetsContribution by EmployerBenefit PaidClosing Fair Value of Plan Assets

Expected Employers Contribution Next Year

- 237,485

- - -

237,485

- - -

77,895

- - - - -

-

- - -

58,011

2.31 Disclosures of dues/payments to Micro, Small And Medium Enterprises to the extent such enterprises are identified by the Company:

The company has not received any intimation from the suppliers regarding the status under the Micro, Small and Medium Enterprises Development Act 2006 (the Act) and hence disclosure regarding:

a. Amount due an account of suppliers as at the end of the accounting year;b. Interest Paid during the year; c. Interest payable at the end of the year;d. Interest accrued and unpaid at the end of the accounting year; has not been provided.

The Company is making efforts to get the confirmations from the suppliers as regarding their status under the Act.

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2.32 Additional Information pursuant to the provisions of Part II of Schedule VI to the Companies Act 1956.

b. Value of Imports on CIF basis

Particulars March 31, 2012 March 31, 2011

Stock-in-Trade and Spares & Consumables 62,982,221 73,821,803

c. Expenditure in Foreign Currency


Travelling 55,075 -

d. Spares and Consumables consumption detail


Indigenous-

Consumption during the year

% of total consumption

Imported-

Consumption during the year

% of total consumption

TOTAL

98,095,991

65%

52,042,333

35%

150,138,324

56,673,529

55%

45,893,919

45%

102,567,448

2.33 Earning Per Share(EPS) computed in accordance with Accounting Standard 20.


Basic/Diluted

Profit/ (Loss) after tax as per accounts

Number of Shares issued

(Weighted average no.)

Earning Per Share (after exceptional item)

(of nominal value of equity share of ` 10/- each)

(7,295,716)

11,262,674

(0.65)

47,431,515

11,262,674

4.21

a.In the absence of a homogenous unit, it is not practicable to give quantity details of Purchases, Sales and Closing Stock.

2.34 As per Scheme of Arrangement u/s 391 to 394 of Companies Act 1956, Printer division of WeP Peripherals Limited is proposed to be demerged into the Company w.e.f. April 1, 2012 by way of issue of equity shares of the Company. The Scheme has been approved by the Shareholders and the Creditors of the Company and approval is pending with the Hon'ble High Court of Karnataka.








S KannanCompany Secretary

Place: BangaloreDate : 25th May 2012

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Cash Flow Statement WeP Solutions Limited(Formerly known as Datanet Systems Limited)Cash Flow Statement for the year ended March 31,2012

2012 2011Particulars

CASH FLOW FROM OPERATING ACTIVITIES

Profit Before Tax

Add :DepreciationProvision for doubtful debtsLoss / (Profit) on Sale of Fixed AssetsInterest ExpenseOperating profit before working capital changes

Working Capital ChangesInventoriesTrade ReceivablesOther Current AssetsTrade Payable, Liabilites and Provisions

Cash Generated from Operations

Direct taxes paid

NET CASH FROM OPERATING ACTIVITIES

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed AssetsProceeds from Sale of Fixed Assets

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOW FROM FINANCING ACTIVITIESShare Issue ExpensesInterest paidProceeds from Borrowings

NET CASH FROM FINANCING ACTIVITIES

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS - ( A + B + C )

Cash and Cash equivalents at the beginning of the year add: Transfer on acquisition of MPS Business

CASH AND CASH EQUIVALENTS AT END OF THE YEAR









A

B

C

70,184,169 7,315,502 1,575,404

14,153,153

1,278,970 (15,889,632)

(1,339,109) (36,989,636)

(82,700,860) 699,818

(825,000) (14,153,153)

62,091,960

(12,215,737)

93,228,228 81,012,491

(52,939,407)

28,073,084

(821,940)

27,251,144

(82,001,042) (82,001,042)

47,113,807

47,113,807

(7,636,091)

7,873,020

236,929

59,471,044 5,759,918

38,646 4,487,194

(56,129,165) (46,950,805) (12,668,880)

59,108,627

(67,067,567) 358,853

(4,487,194) 15,455,990

32,958,717

69,756,802 102,715,519

(56,640,223)

46,075,296

-

46,075,296

(66,708,714) (66,708,714)

10,968,796

10,968,796

(9,664,622)

24,131 17,513,511

7,873,020


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38


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WeP Solutions Limited(Formerly known as Datanet Systems Limited)

Regd. Office: 40/1-A, Basappa Complex,Lavelle Road, Bangalore - 560 001

Tel.: +91-80-66112000 Fax: +91-80-66112055www.wepsolutions.com

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[formerly known as datanet systems limited]

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