BSE: 7469 | NSE: 512199 | ISIN: INE247G01024
Market Cap: [Rs.Cr.] 137.40 | Face Value: [Rs.] 2
Industry: Computers - Education
Your Directors have pleasure in presenting the 28th Annual Report on business andoperations of your Company along with the audited financial statements for the year ended31st March, 2013.
RESULTS OF OPERATIONS:
|Income from Operations||19,074.83||16,378.57||11,228.40||8,783.88|
|Variation in Inventory||(913.83)||(641.96)||(762.97)||349.75|
|Profit Before tax||3,826.98||4,281.73||2,008.91||2,353.12|
|Less: Provision for tax (current)||1,097.12||1027.39||402.03||449.01|
|Excess/(Short) Provision for earlier years||0||(124.74)||0||(124.74)|
|Provision for tax (deferred)||20.88||148.17||20.86||148.17|
|Profit after Tax||2,708.98||3,230.92||1,586.03||1,880.68|
|Add: Balance B/F from Previous Year||8,785.90||5,879.16||4,713.67||3,157.16|
|Excess/(Short) Provision for Earlier years||0||(124.74)||0||(124.74)|
|Profit Available for appropriations||2,708.98||3,230.92||1,586.03||1,880.68|
|Debenture Redemption Reserve||87.83||57.73||87.83||57.73|
|Transfer to General Reserve||190.00||188.00||190.00||188.00|
|Provision for Taxes on Dividends||11.14||10.95||11.14||10.95|
|Balance C/F to Balance Sheet||11,135.40||8,785.90||5,942.03||4,713.67|
The year 2012-13 was generally a steady year for your Company, though the beginning ofthe headwinds that were to afflict the entire industry were being felt towards the end ofthe year. On a consolidated basis, your Company achieved a total operating income of Rs.19,074.83 million as compared to Rs. 16,378.57 million during the previous financial year.Similarly, profit before tax was Rs. 3,826.98 million as compared to Rs. 4,281.73 millionduring the previous financial year. Profit after tax was Rs.2,708.98 million as comparedto Rs. 3,230.92 million during the previous financial year.
The headwinds that were felt towards the end of the year turned into a virtual tornadofor the Company in the first quarter of current financial year 2013-14. The Company facedsignificant financial stress due to decrease in sales revenue, increase in overdue tradereceivables and payables and non-availability of assessed working capital limits. All thiswas the result of the economic and liquidity stress felt by various governments across theworld, leading to significant cuts in public expenditure in areas including education.Since the company mainly follows the Business to Government model, cuts in governmentexpenditure significantly impact the order flow and cash flows of the Company.
The Companys order book for the current year declined significantly in the USAdue to fewer RFPs being issued at the beginning of this calendar year. In addition to the"sequester" effect that kicked in for the Federal Government of the USA, theimplementation of the Common Core Standard across the United States from the next academicyear 2014 significantly reduced the order flow for the current year. This in turn willadversely impact the volume of exports that the company will execute from its OffshoreDevelopment Centers in India, putting further strain on Indian Operations. Thissubstantial impact on the Company is expected to taper off over the next two to threeyears, once the implementation of the Common Core Standard gathers full steam.
In India, the Company was plagued by very high receivables from State Governmentcustomers, largely due to liquidity constraints faced by both the Central and StateGovernments. The companys market capitalization also witnessed a drastic fall,impacting the fund raising exercise of the company. The Company was able to complete onlyone tranche of fund raising USD 50 million out of a total expected raise of USD 150million.
The cumulative impact of the reduced order flow in the USA, the reduced cash flows inIndia and the inability to complete the USD 150 million fund raising exercise due toadverse market conditions was seen in the financial performance of the first quarter ofthe current year, which saw a loss of Rs. 3,336.95 million. The revenue trends witnessedin the first quarter are expected to continue through the year.
To mitigate the financial stress, the Company has taken various steps including costcutting exercise and opted for Corporate Debt Restructuring (CDR) plan. Considering theabove and based on a detailed plan for the next 12 months prepared by the Management andapproved by the Board of Directors, the Company is confident of meeting its obligations asand when they fall due.
Dividends and Appropriations:
In view of the Corporate Debt Restructuring Plan, your Company does not recommend anydividend to the members for the financial year 2012-13.
Transfer to reserves:
The Company proposes to transfer Rs. 190 Million (Previous year Rs. 188 Million) to theGeneral Reserve. An amount of Rs. 11,135.40 million (Previous year Rs. 8,785.90 million)has been proposed on consolidated basis to be retained in the Profit and Loss Account onconsolidated basis.
A brief overview of our business operation is provided in this section which isdiscussed in detail in the Management Discussion and Analysis section, forming part ofthis report.
In the US, CORE has a presence in over 42+ States and provides Technology enabledEducation Solutions across four key elements of education delivery, namely Assessment andIntervention, Governance, Advanced Technologies and Consulting Solutions. Assessment andIntervention products aims to effectively and actively track, measure and improve studentproficiency as well as ensure continuous progress toward key educational objectives. WhileGovernance segment is focused on meeting the compliance and accountability needs of schooldistricts, government and corporate entities through a variety of special needs studentservices and student tracking and ID software solutions.
Currently approximately 79% of the Consolidated revenues are generated from the USbusiness, and during the year under review, CORE Education & Consulting SolutionsINC., USA, one of our main wholly owned subsidiaries in the US registered a Profit afterTax, to USD 16.8 million ( Rs. 914.24 million). Overall we saw a decrease of 6.2% in therevenues of our US subsidiaries (comprising CECS Inc, CETI Inc and CITS Inc) from Rs.9,233.8 million in FY12 to Rs. 8,658.06 million in the current year FY 2012-13. Profitafter tax for our US subsidiaries was at Rs. 1,327.9 million in FY 2012-13 compared to Rs.1,246.9 million in FY 2011-12. New clients contracted by your company during the yearinclude Miami Dade Public Schools, Duval County Public Schools & Gadsden County PublicSchools.
CORE is actively involved in forging partnerships with other successful companies toprovide hardware products along with managed IT solutions, integrated innovative productswithin classroom management, assessment, and improvement. CORE has partnered with T-Mobileto offer broadband connectivity for all of our mobile devices. In another partnership,CORE tied up with Anthro Corp to create a security/charging cabinet for the Kuno solution.
ITN Mark is based in Manchester with a nationwide branch network consisting of 13sites. CORE is keen to tap its U.K. teacher supply solutions from primarily providing onlyteachers and teaching assistants to also providing special education need specialists,nursery and support staff as well. In addition, CORE plans to provide temporary educationprofessionals to academies or schools in the UK that are directly funded by the centralgovernment.
Currently approximately 10% of the consolidated revenues are generated from the UKbusiness, and during the year under review, CORE Education & Consulting Solutions (UK)Limited registered revenue of Rs.1,890.7 million, growth of 18.82% compared to Rs. 1,591.2million in FY 2011-12.
Middle East and North Africa Business
CORE BIT Campus spread over an area of 4 acres in Ras-al-Khaimah had a goodacademic year 2012-13 with total of 226 students studying in campus. Your Company alsoparticipated in GETEX Exhibition at Dubai International convention centre in April 2012.For the current academic year 2013-14, there are 125 new enrollments across multiplecourses.
During FY 13, your Company made significant inroads in the Middle East & Africaregion with a strong business pipeline. Core has expanded its Teacher Supply Business inMiddle East and has successfully signed few Letter of Intent (LOI) in Ghana and Kenya.Company has also secured an order for providing Campus Management Solution and isaggressively looking to sell other technology enabled solutions such as FAIM across theregion.
During FY 2012-13, the India business witnessed a sharp rise in receivables from itsState Government customers. This put a lot of stress on the liquidity position in India.As a result, the Company decided to consciously slow down its growth in the ICT Segment.Whilst the company did receive new orders for implementation of Information &Communication Technology (ICT) and Computer Aided Learning (CAL), it had to perforceabandon three projects mid-way through implementation in the first quarter of FY 2013-14due to lack of financial closure.
In Vocational business, in addition to the existing contracts under the SwarnajayantiGram Swarojgar Yojana (SGSY), Swarna Jayanti Shahari Rozgar Yojana (SJSRY) &Government Hostel Scheme- Maharashtra. Your Company has bagged significant contracts withone them being, the contract from Ministry of Rural Development (MORD) to train and place2,000 students from North Eastern states. We were also awarded the contract from SocialJustice and Special Assistance Department, Government of Maharashtra to conduct trainingfor 7,820 students in Government hostels across Mumbai and Nagpur region. Anotherimportant contract is from Gujarat Knowledge Society to provide training and conduct examsfor 11,800 students in Gujarat.
The Company deployed customized version of its turnkey examination management toolEdMastery for Central Board of Secondary Education (CBSE). COREssolution helped CBSE to automate the process of generation and distribution of questionpapers and marking schemes across the 12,000+ CBSE affiliated schools. The solutionprovided password protected unique question paper to every school. This solution alsoprovides the web based online test- Performance Analysis Test (PAT) across differentcountries.
We have signed an MoU with EdCIL, a Public Sector Enterprise under Ministry of HumanResource Development (MHRD), Government of India to develop solutions for the Educationsector in India and at International level through the innovative knowledge base of EdCILin educational arena and our knowledge and experience in providing technology basedsolutions for Education Training, Content Development and Skill Testing.
Changes in Capital Structure
Allotment of equity shares against conversion of Foreign Currency Convertible Bonds(FCCBs):
Pursuant to the approval received from the Members at the 24th AGM held on September24, 2009. The company had launched and priced the issue of USD 60 Million 7% ConvertibleBonds with an upsize option of USD 15 million, convertible into ordinary / equity sharesof the Company. The issue was fully subscribed and closed on 6th May 2010, with anaggregate issue of USD 75 million. The Bonds mature over a period of 5 years and 1 daywith the maturity date 7th May, 2015. The Bonds carry YTM and coupon of 7% p.a. Theinitial conversion price of the said bonds, was fixed at 10% premium over the referenceshare price of Rs. 247.09 calculated in accordance with the applicable rule andregulations governing the issue, under the guidelines issued by the Reserve Bank of Indiaand the Securities and Exchange Board of India in this regard, which works out to Rs.271.80. The fixed exchange rate for the issue was USD 1 = Rs. 44.43. During the year underreview, bonds worth USD 10,150,000 were converted (P.Y. USD 15,696,000 ) against which theCompany had allotted 1,659,173 equity shares (P.Y. 25,65,749) of Rs. 2 each at a premiumof Rs. 269.80 per equity share. As on 31st March, 2013, the end of the year, USD48,937,000 bonds (P.Y. USD 59,087,000 bonds) were outstanding for conversion.
CORE Employee Stock Option Scheme:
The Company introduced and implemented the CORE Employee Stock Option Scheme (thescheme) in CORE ESOS 2007 and CORE ESOS 2009, in accordance with the Securities andExchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999 (the Guidelines). The detailed disclosure required under the relevantguidelines is attached herewith and forms part of this report.
During the year, 48,326 equity shares (P.Y. 169,628 equity shares) under CORE ESOS 2007and 303,986 equity shares (P.Y. 591,328 equity shares) under CORE ESOS 2009, were allottedagainst the exercise of stock options by the eligible employees / Directors.
Considering all the allotments above, during the year 2012-2013, the paid-up sharecapital of your Company stands increased from Rs. 224,944,682/- comprising 112,472,341equity shares of Rs. 2/- each to Rs. 228,967,652 comprising 114,483,826 equity shares ofRs. 2/- each.
SUBSIDIARY COMPANIES AND PARTICULARS REQUIRED UNDER SECTION 212 OF THE COMPANIES ACT,1956
Being a Global Corporate entity, your Directors believe that the Consolidated Resultsrepresent the performance of the Company in a more comprehensive manner as compared to thestand alone operations. In view of that and also as required under the Listing Agreementswith the Stock Exchanges, a Consolidated Financial Statement of the Company and all itssubsidiaries are attached and forms part of this report. The Consolidated FinancialStatement has been prepared in accordance with applicable Accounting Standards issued byThe Institute of Chartered Accountants of India. Details of the subsidiary companies arediscussed in the Management Discussion & Analysis, forming part of this report.
As per the provisions of Section 212 of the Companies Act, 1956 (hereinafter referredto as the Act), your Company is required to attach the Directors Report,Balance Sheet, Profit and Loss Account and other information of the subsidiaries to itsBalance Sheet. Government of India (Ministry of Corporate Affairs), vide General Circular2/2011 dated 8th February, 2011 has granted general exemption to all the companies fromattaching to its Balance Sheet, the individual Annual Reports of all its subsidiarycompanies, as required under Section 212 of the Act, subject to Board approval andfulfillment of certain other conditions. Your Directors believe that the auditedconsolidated accounts present a full and fair picture of the state of affairs andfinancial conditions of the Company and its subsidiaries, as is done globally. A statementpursuant to Section 212 of the Companies Act, 1956 relating to the Companys interestin subsidiaries is attached to the financial statement and forms part of this Report. Theannual accounts of these subsidiaries and the related detailed information will be madeavailable to any Member of the Company seeking such information and are also available forinspection by any Member of the Company at the Registered Office of the Company.
BOARD OF DIRECTORS
Board of Directors of the Company comprises of Non-Executive Promoter Chairman, Mr.Sanjeev Mansotra; three Executive Directors namely, Mr. Naresh Sharma, Executive Director,Mr. Nikhil Morsawala, Director- Finance and Prof. Dr. Arun Nigavekar, Executive Director;and three Independent Directors, namely Mr. S. S. Dua, Mr. Harihar Iyer and Mr. Pundi L.Narasimham. Four Directors of the Company, namely Mr K C Ganjwal, Mr M. N. Nambiar, MrAwinash Arondekar and Ms Maya Sinha have resigned during the period under report. One newDirector, namely Mr. Pundi L. Narasimham, was appointed during the period under report.
In accordance with the provisions of the Act and the Articles of Association of yourCompany, Prof. Dr. Arun Nigavekar, Executive Director of your Company, is retiring byrotation at the ensuing Annual General Meeting and expressed his unwillingness to continueto be reappointed as Director of the Company.
Brief resume of Mr. Pundi L. Narasimham appointed as an Additional Director at theBoard Meeting held on 14th August, 2013, proposed to be reappointed as Director, nature ofhis expertise in specific functional areas and names of companies in which he holdsdirectorships and memberships/chairmanships of Board Committees, as stipulated in Clause49 of the Listing agreement with the stock exchanges are provided in the report onCorporate Governance forming part of the annual report.
Directors responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Act, with respect toDirectors Responsibility Statement, it is hereby confirmed:
(a) that in preparation of the Annual Accounts, the applicable accounting standardshave been followed and that no material departures have been made from the same;
(b) that we have selected such accounting policies and applied them consistently andmade judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for the year;
(c) that we have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) that we have prepared the annual accounts on a going concern basis.
Material developments in human resources and industrial relations
The ability to attract and retain talented employees is critical to business success ofany organization. At Core, we recognize that each individual is unique and brings his/herunique talents to the organization.
As part of our talent management strategies, we practice Strategic Talent Acquisition,which takes a long-term view of not only filling vacancies for today, but also using thecandidates to fill positions in the future to create sufficient talent pool. This hashelped in ensuring the availability of the right talent at the right time and sometimeseven ahead of time. With a view to develop future capabilities, Core is also involved inCampus hiring to develop new potential and through highly skilled training programmes tonurture the skills of these new talents to enhance the talent pool for future assignments.
We have been successful in building a culture of personal growth and have been able toengage talented people. This has been possible with a robust performance managementsystem. We are committed to cultivating a performance-driven culture that rewards resultsand recognise excellence. The objective of the performance management system is to aligneach individual goal to the companys business goals. Our strong performancemanagement system provides the ongoing processes and practices to maintain a stellarworkforce.
Employee development planning is an ongoing activity and people are trained in theareas of technical competencies and behavioral competencies such as leadershipdevelopment, organizational change management, team building and management of diverseteams. The environment of continuous learning enables employees to shoulder higherresponsibilities with lan.
These initiatives provide a platform to the employees to understand the organizationand imbibe its culture. It promotes the sense of working at an individual level andcollective level to integrate their goals with the companys goal.
Corporate Social Responsibility
As a socially responsible organization, Core has been part of various initiativesduring the course of the year towards contributing to a better society. Prominent amongstthese initiatives have been the Blood Donation Camp organised at its office premisesacross various locations in Mumbai in association with the Umang Foundation which receivedan overwhelming response from its employees. It saw participation from employees at alllevels come together to contribute towards this noble cause making it a huge success. Suchwas the popularity of the initiative that we had people from other organizations in andaround also participating in the Camp.
The organization has also been at the forefront of creating environmental awarenessamongst its employees. In order to create a better environment and increase the GreenCover in the city it organized a tree plantation drive whereby free saplings weredistributed to all its employees to be planted in areas in and around their localities.Core had also organized various sessions to spread awareness amongst its employees on theimportance of following a healthy lifestyle through interactive mediums like games andactivities.
Core has always been aware of its responsibilities as an organization with a SocialConscience and it would always be its endeavor to contribute to socially relevant issuesin the years to come.
During the year, your Company has achieved CMMi Level 5 certification. The Companycontinues to be an ISO 9001:2008 organization and working towards achieving ISO 27001certification, a standard for Information Security Management Systems.
The Company endeavours to attain highest values of Corporate Standards. The Company hasadhered to the requirements set out by the Securities and Exchange Board of IndiasCorporate Governance practices and has implemented all the stipulations prescribed, in theClause 49 of the Listing Agreement with Stock Exchanges. The Report on CorporateGovernance as stipulated under Clause 49 of the Listing Agreement forms part of the AnnualReport.
The Chairmans declaration regarding compliance with CETL Code of Conduct forDirectors and Senior Management personnel forms part of report on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis for the year under review, as stipulated underClause 49 of the Listing Agreement with the Stock Exchanges is presented as a separatesection forming part of this Annual Report.
AUDITORS AND AUDITORS REPORT
M/s. Chaturvedi & Shah, Chartered Accountants and M/s Asit Mehta & Associates,Chartered Accountants, the Joint Statutory Auditors of the Company, hold office until theconclusion of the ensuing Annual General Meeting and are eligible for re-appointment.
The Company has received confirmations from the auditors to the effect that theirre-appointment, if made would be within the prescribed limits under Section 224(1B) of theCompanies Act, 1956 and that they are not disqualified for such reappointment within themeaning of Section 226 of the said Act.
The notes to Accounts referred to in the Auditors Report are self-explanatory andtherefore do not call for any further Comments.
The Company has not accepted any deposits from the public within the meaning of Section58A of the Act and as such, no amount of principal or interest was outstanding on the dateof the Balance Sheet.
In terms of the provisions of Section 217(2A) of the Act, read with (Particulars ofEmployees) Rules, 1975 as amended, the names and other particulars of employees forms partof the Directors Report.
However, having regard to the provisions of Section 219(1) (b) (iv) of the said Act,the Annual report excluding the aforesaid information is being sent to all the members ofthe Company and others entitled thereto. Any member interested in obtaining suchparticulars may write to the Company Secretary at the registered office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO
The particulars relating to energy conservation, technology absorption, foreignexchange earnings and outgo as required under Section 217(1) (e) of the Companies Act,1956 read with Companies (Disclosure of particulars in the report of Board of Directors)Rules, 1988 are provided in the Annexure I to this report.
TRANSFER OF UNPAID / UNCLAIMED AMOUNTS TO INVESTOR EDUCATION PROTECTION FUND (IEPF)
During the year 2012-13, the company has transferred the Unclaimed Dividend declaredfor the Year 2004-05 to the Investors Education and Protection Fund (IEPF) established bythe Central Government. The dividend declared for the year 2005-06 is being transferredwithin the stipulated period to the IEPF established by the Central Government in terms ofSection 205C of the Companies Act 1956. The Unclaimed Dividend for the year 2006-07 &onwards can be claimed by the members by Corresponding the same to the company or theRegistrar & Transfer Agent of the company. Members are requested to note thatdividends not encashed or claimed within 7 years from the date of transfer to theCompanys unpaid dividend account will, as per Section 205A of the Companies Act,1956, be transferred to the IEPF. No claim shall lie against the Company or the said Fundin respect of any amounts, which were unclaimed and unpaid for a period of seven yearsfrom the dates they first became due for payment and no payment shall be made in respectof any such claims.
We thank our customers, investors, bankers and other stakeholders for their continuedsupport during the year. We place on record our sincere appreciation of the contributionmade by employees at all levels. Our consistent growth was made possible by theirhardwork, solidarity, cooperation and support and look forward to their continued support.
|For and on behalf of the Board|
|Place: Mumbai||Sanjeev Mansotra|
|Date: 14th August, 2013||Chairman|
ANNEXURE TO DIRECTORS REPORT
Particulars pursuant to Companies (Disclosure of Particulars in the Report of the Boardof Directors) Rules, 1988:
A) Details on conservation of Energy
Though the operations of your Company are not energy-intensive, significant measuresare taken to reduce energy consumption. We constantly evaluate new technologies and investto make our infrastructure more energy-efficient.
Some of the energy efficient practices adopted across the facilities of the Company toreduce consumption of power are:
- Installation of energy efficient lighting.
- Use of energy efficient computers and by purchasing energy-efficient equipment.
- Energy monitor and controlling system.
- Incorporating new technologies in the air-conditioning systems at all upcomingfacilities to optimize power conservation.
- Identification and replacement of outdated and low-efficient UPS systems in a phasedmanner.
- Installation of LCD monitors (Energy Efficient) in place of normal CRT monitors,therby saving energy.
- Turning of lights in all floors when COREans are not working.
- Turning off the Air conditioners during non peak hours and on weekends.
- Toughened glass windows to reduce infrared radiation.
- Effective management of ventilation to ensure acceptable air quality.
Our strategy to adopt the best practices, latest technologies and high levels ofefficiency in our operations will help us build an environment where energy is conserved.
B) Technology Absorption and research & Developments
Research and Development for new solutions and services, designs, frameworks,processes, and methodologies continue to be of top priority for us. This allows us toenhance quality, productivity and customer satisfaction through continuous innovation. TheCompany believes that technological obsolescence is a reality. Only progressive researchand development will help us to accomplish future challenges and opportunities. We investand encourage continuous innovation.
c) Foreign Exchange Earnings and outgo:
The Company continued to be net foreign earner during the year.
Total foreign exchange earned by the Company during the year under review was Rs.3,391.73 million as compared to Rs. 2,796.15 million during the previous year.
Total foreign exchange outflow during the year under review was Rs. 301.94 million, asagainst Rs. 325.33 million during the previous year.
Disclosure pursuant to the provisions of Securities and Exchange Board of india(Employee Stock option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as on31st March, 2013
India Infoline Research
Sanjeev Mansotra , Chairman & CEO Core Group
Nikhil Morsawala , Director (Finance)
Arun Nigavekar , Executive Director
Naresh Sharma , Whole-time Director
Company Head Office / Quarters:
UnitNo 1-4 Bldg No4 Sector III,
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