Director's Report

To

The Members

Goldstone Technologies Limited

Your Directors have pleasure in presenting the Twenty First Annual Report of your Company and the Audited Financial Accounts for the year ended on March 31, 2015.

Financial Results :

Review of Operations :

During the year under review, your Company has reached a consolidated turnover of Rs.697.18 Million as compared to Rs.736.49 Million for the previous financial year. The Standalone turnover was Rs.290.66 Million as against a turnover of Rs.261.76 Million during the previous year. The Consolidated Net (Loss) for the year 2014-2015 was (Rs.27.27) Million in comparison with Net profit of Rs.19.64 Million during the previous year and the Standalone Net (Loss) is (Rs.38.01) Million during the year and in comparison with Net profit of Rs.10.81 Million during the previous year. However the consolidated cash profit for the FY 2014-15 has been reported at Rs. 20.38 Million as compared to Rs.67.30 Million in the previous year and Standalone cash profit has been reported at Rs.9.61 Million as compared to Rs.58.33 Million during the previous year.

Dividend :

During the year the Company does not have adequate profits and hence, your Board has not recommended any dividend for the financial year 2014-15.

Share Capital :

The Paid up capital as on 31st March, 2015 was Rs.18,78,20,660 (having 1,87,82,066 Equity Shares @ Rs. 10/- each). During the year under review the company has not issued any shares either to the public or to the promoters During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on March 31, 2015 none of the Directors of the Company hold shares or convertible instruments of the Company.

Finance :

Cash and cash equivalents as at 31st March, 2015 was Consolidated Rs.177.36 Million & Standalone Rs.27.15 Million the Company continuous to focus on judicious management of its working capital, receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

Directors :

Mr. L.P.Sashikumar Director, who retires by rotation at the 21st Annual General Meeting and being eligible, offer himself for re-appointment.

As per the resolution passed by the Board of Directors in their meeting held on 27th May, 2015 Subject to the approval of the Members of the Company Mr.PS.Parthasarathy has been appointed as Managing Director of the Company for a period of two years with effect from 27th May, 2015.

Mr.K.S.Sarma, Mr. Vedula Venkata Ramana, Mrs. Promilla Shankar have been appointed as independent directors of the Company for a term of 5 (Five) years from 27th September, 2014 to 26th September, 2019 not liable to retirement by rotation.

Mrs. Promilla Shankar has resigned from her position w.e.f 12th July, 2015.

All independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement.

Board Evaluation :

Pursuant to the Provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy :

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings :

During the year Seven Board Meetings and Four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

Meeting of Independent Directors :

The details on the separate meeting of Independent Directors is reported in the Corporate Governance Report.

Familiarization Programme for Independent Directors :

The details on the familiarization programme for Independent Directors is reported in the Corporate Governance Report.

DIRECTOR'S RESPONSIBILITY STATEMENT:

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed.

ii) The directors have selected such accounting policies and applied them consistently 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 profit or loss of the Company for the year under review.

iii) 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.

iv) The directors have prepared the annual accounts on a going concern basis.

v) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

Consolidated Financial Statements:

During the year the Board of Directors ('the Board') reviewed the affairs of the Subsidiaries. In accordance with Section 129 (3) of the Companies Act, 2013 and applicable Accounting Standards we have prepared consolidated financial statements of the Company and its subsidiaries which will form part of the Annual Report. Further a statement containing the salient features of the financial statements of our subsidiaries in the prescribed format AOC-1 are appended to the Board's report.

In accordance with Section 136 of the Companies Act, 2013 the Audited financial statements including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries are available on the website of the Company www.goldstonetech.com . These documents will also be available for inspection during the business hours at the registered office of the Company.

Subsidiaries and Associates

As on 31 st March, 2015 we are having two wholly owned subsidiaries namely Staytop Systems Inc and Staytop Systems and Software Pvt Ltd. Till date Staytop Systems and Software Pvt Ltd has no business operations. Further the Company does not have any other Associates or Joint Ventures.

Further as per the revised Clause 49 of the Listing Agreement the Company has framed a policy on Material Subsidiaries as approved by the Board same has been uploaded on the Company's website www.goldstonetech.com .

During the year no further investments were made in the subsidiaries.

Statement containing salient features of financial statements of subsidiaries

Pursuant to sub-section (3) of Section 129 of the Act, the statement containing the salient feature of the financial statement of a company's subsidiary or subsidiaries, associate company or companies and joint venture or ventures is in the prescribed format AOC-1 are appended as Annexure 1 to the Board's report.

Report on the performance of Subsidiaries, Joint Ventures and Associates:

Further, brief about the business of the each of the Subsidiaries and Associates is given hereunder:-

Performance of the Staytop Systems Inc;

Staytop Systems, Inc., (a foreign wholly owned subsidiary company of Goldstone Technologies Limited) is engaged in business of IT Consulting and Staffing across USA.

Till date the Staytop Systems and Software Pvt Ltd has no business operations and the Company has no associates as well as Joint Ventures.

Internal control systems and their adequacy:

The Company has an Internal Audit and Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit function 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 thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

Insurance:

All the properties of your Company including its building, plant & machinery and stocks have been adequately insured.

Statutory Auditors:

M/s. P. Murali & Company (FRN: 007257S), Chartered Accountants, Hyderabad, Statutory Auditors of the Company holds office in accordance with the provisions of the Companies Act, 2013 up to the conclusion of forth-coming Annual General Meeting and are eligible for re-appointment. Pursuant to the provisions of the Section 139 (2) of the Companies Act, 2013 and based on recommendations of the Audit Committee they being eligible, offer themselves for re-appointment. They have furnished a certificate stating that their re-appointment, if made, will be within the limits laid down under Section 141 (3) (g) of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014.

The Audit Committee of your Company meets periodically with Statutory Auditors and Internal Auditors to review the performance of the Internal Audit, to discuss the nature and scope of statutory auditors functions, and to discuss auditing, internal control and financial reporting issues. To ensure complete independence, the statutory auditor and the internal auditor have full access to the Members of the Audit Committee to discuss any matter of substance.

Related Party Transactions;

There are no materially significant related party transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website www.goldstonetech.com  none of the Directors has any pecuniary relationships or transactions vis-d-vis the Company.

The details of contracts or arrangements with related parties made by the company during the year 2014-15 is enclosed in form AOC-2 as Annexure-2 to the Board's report.

Secretarial Audit:

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s. VCSR & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as " Annexure 3 to the Board's Report"

Risk Management Policy

In terms of the requirements of Section 134 (3) (n) and clause 49 of the Listing Agreement read with relevant provisions of the Companies Act, 2013, the Company has developed and implemented the Risk Management Policy and constituted the Risk Management Committee and the Committee reviews the same periodically. The details of the Policy are reported in the Report on Corporate Governance which forms part of the Board's Report.

At present the company has not identified any element of risk which may threaten the existence of the company.

Code of Conduct:

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviors of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "code of business conduct" which forms an Appendix to the Code. The Code has been posted on the Company's website www.goldstonetech.com .

The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. In addition to the above as per Clause 49 of the Listing Agreement read with Schedule IV of the Companies Act, 2013 duties of the Independent Directors and code of Independent Directors have been placed on the website of the Company www.goldstonetech.com .

All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard.

Declaration given by Managing Director of the Company regarding compliance of Code of Conduct enclosed as Annexure to the Corporate Governance Report.

PREVENTION OF INSIDER TRADING:

In Pursuance of SEBI (Prohibition of Insider Trading) Regulations, 2015 the Company has framed adopted the following policies for regulating, monitoring and reporting of trading by Insiders and uploaded in website of the Company.

i) Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders;

ii) Code of Practices & Procedures for Fair Disclolsure of Unpublished Price Sensitive Information;

The Board is responsible for implementation of the Code. All Board of Directors and the designated employees have confirmed compliance with the Code.

Vigil mechanism / whistle blower policy:

As per the provisions of the Section 177 (9) & (10) of the Companies Act, 2013 read with amended Clause 49 of the Listing. Agreement, the Board had its meeting held on 17th May, 2014 adopted a Vigil Mechanism called 'Whistle Blower Policy' for directors and employees to report the management /Audit Committee instances of unethical behavior, actual or suspected, fraud or violation of company's code of conduct or ethics policy. The Vigil Mechanism also provided adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit committee in exceptional cases further it has also been uploaded in the Company's web site; www.goldstonetech.com .

Extract of Annual Return:

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure 4 to the Board's Report".

Stock Exchange Listing:

Presently, the Equity Shares of the Company are listed on National Stock Exchange of India Limited (NSE) and the Bombay Stock Exchange Limited (BSE). The Company confirms that it has paid Annual Listing Fees due to all the Stock Exchanges where the Company's securities are listed for the year 2015-16.

Corporate Governance and Management Discussion & Analysis Reports

As per the Clause 49 of the Listing Agreement the Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are set out as separate Annexures, together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

Managing Director and CFO Certification:

As required under the SEBI Guidelines, the Managing Director and the CFO Certification is attached to Corporate Governance Report.

Material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year i.e., 31.03.2015 to which financial statements relate and the date of the Board's Report:

There were no material changes and commitments affecting the financial position of the company between the end of the financial year i.e., 31.03.2015 and date of this report.

Particulars of Conservation of energy / technology absorption, foreign exchange earnings and outgoings :

Particulars in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Companies (Disclosure of particulars in the Directors Report) Rules 1988 are as follows:

A. CONSERVATION OF ENERGY:

Your company's operations involve low energy consumption. However, adequate measures have been taken to conserve and reduce the energy consumption.

B. TECHNOLOGY ABSORPTION:

Your Company continues to use state-of-the-art technology for improving the productivity and quality of its products and services. To create adequate infrastructure, your company continues to invest in the latest hardware and software.

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is enclosed as Annexure 5 to the Board's report.

Personnel:

Personnel relations have remained very cordial during the period.

Acknowledgements:

Your Directors convey their sincere thanks to CITI Bank and Central Bank of India for their support, guidance and assistance.

Your Directors thank all the Employees of your company for their dedicated service, which enabled your company to achieve satisfactory results and performance during the year. Your Directors thank the shareholders for their support and confidence reposed in the company and the management and look forward to their continued co-operation and support.

For and on behalf of the Board

Sd/- L P Sashikumar Director DIN: 00016679

Sd/- P.S.Parthasarathy Managing Director DIN: 01837281

Place: Secunderabad

Date: 05th August, 2015