3i infotech ltd share price Directors report


FOR THE FINANCIAL YEAR 2021-22

Your Directors present the Twenty Ninth Annual Report (the "Report") of the Company along with the audited financial statements for the financial year ended March 31, 2022.

OVERVIEW

As informed to the Members in the previous annual report for the financial year 2020-21, the Company had conducted a slump sale of the global software products business carried on by the Company and its subsidiaries in India and across the world on a going concern basis to Azentio Software Private Limited, India, Azentio Software Private Limited, Singapore ("Azentio Singapore") and Azentio Singapores subsidiaries in the relevant jurisdictions (collectively "Azentio"), pursuant to inter alia the business transfer agreement dated December 28, 2020 executed between the Company and Azentio. The aggregate consideration for this transaction was 1000,20,00,000 (Indian Rupees One Thousand Crores Twenty Lakhs). The slump sale was completed on March 31, 2021, except for subsidiaries in Saudi Arabia and Thailand where regulatory approvals were yet to be received.

During financial year 2021-22, the Company has, on November 12, 2021, completed the slump sale of the software products business of its subsidiary in Saudi Arabia on a going concern basis to Azentio. After the end of financial year 2021-22, on June 30, 2022, the sale of software products business of its subsidiary in Thailand on a going concern basis to Azentio has also been completed.

The Foreign Currency Convertible Bonds ("Bonds") of the Company were due for redemption on March 31, 2025. During the year, pursuant to approval of the Reserve Bank of India, the holders of the Company and the Board of Directors of the Company ("Board"), all outstanding Bonds were redeemed in full on December 2, 2021.

Further, pursuant to approval of the Board and Preference Shareholders of the Company, the Company has completed redemption of 0.01% Cumulative Non-Convertible Redeemable Preference Shares of face value 5/- each ("Class A Preference Shares") and 0.10% Cumulative NonConvertible Redeemable Preference Shares of face value 5/- each ("Class B Preference Shares") during the year on May 27, 2021 and November 15, 2021 respectively on such terms as agreed between the preference shareholders and the Company. With this redemption, all preference shares issued by the Company stand duly redeemed.

During financial year 2020-21, the Company had filed a Scheme of Arrangement between the Company and its Shareholders under Sections 230 to 232 of the Companies Act, 2013 (the "Scheme" and the "Act"), with the stock exchanges with a view to reduce the issued, subscribed and paid-up equity share capital of the Company to one tenth to set off the amount so released against the accumulated losses of the Company, thereby having a positive impact on the reserves and surplus of the Company. The Scheme was implemented during the year upon receiving approvals of the shareholders of the Company and the Securities and Exchange Board of India ("SEBI"). A detailed update is given separately in this Report under the heading ‘Scheme of Arrangement.

In July 2021, CRISIL Ratings has reaffirmed the rating at ‘CRISIL BBB- while assigning a ‘Stable outlook. Similarly, one of the other rating agencies, CARE Ratings has also reaffirmed rating of the Company as "CARE BBB-; Stable" (Triple B Minus; Outlook: Stable) in September 2021.

Financial Performance of the Company on Standalone and Consolidated basis:

Standalone sales and other income for financial year 202122 stood at 269.10 Crores as against 250.42 Crores for financial year 2020-21. On a consolidated basis, sales and other income for financial year 2021-22 stood at 690.78 Crores as against 632.21 Crores for financial year 2020-21. After meeting all expenditures, the Company made a total comprehensive income of (65.29) Crores on a consolidated basis against total comprehensive income of 2.33 Crores on a standalone basis.

Rs. in Crores
Particulars Standalone Consolidated
2021-22 2020-21 2021-22 2020-21
Total Income (I) 269.10 250.42 690.78 632.21
Total Expenses (II) 239.87 286.74 725.04 351.38
Total Exceptional items (III) (20.80) 290.51 (19.84) -
Profit / (Loss) before Tax (I-M+III) 8.43 254.19 (54.10) 280.83
Tax expense
Current Tax

-

-

3.43 23.06
Deferred Tax -

-

(0.46)

-

Adjustment of tax relating to earlier periods 0.00 0.15 0.42

-

Profit / (Loss) for the year 8.43 254.05 (57.49) 257.77
Profit / (Loss) for the year from Discontinued Operations 0.00 70.37 0.00 133.39
Other Comprehensive Income
A. Other Comprehensive income not to be reclassified to profit and loss in subsequent year:
Remeasurement of gains / (losses) on defined benefit plans (6.10) (2.80) (7.97) (4.43)
Income tax effect

-

-

0.17 0.46
B. Other Comprehensive income to be reclassified to profit and loss in subsequent years:
Other Comprehensive income for the year, net of tax
Total Comprehensive income for the year 2.33 321.61 (65.29) 387.19
Profit for the year attributable to:
Equity holders of the parent

-

-

(57.49) 391.16
Non-controlling interests
Other Comprehensive income for the year attributable to:
Equity holders of the parent -

-

(7.80) (3.97)
Non-controlling interests

-

-

-

-

Total Comprehensive income for the year attributable to:
Equity holders of the parent

-

-

(65.29) 387.19
Non-controlling interests

-

-

-

-

Earnings per equity share for profit attributable to equity shareholders
Basic EPS 0.50 2.01 (3.44) 1.59
Diluted EPS 0.50 2.01 (3.44) 1.59

TRANSFER TO RESERVES

There is no amount proposed to be transferred to general reserve this year.

DIVIDEND

During the year, the Company has not paid any dividend to holders of Class B Preference Shares and Class A Preference Shares for the financial year 2021-22.

During the year, upon receipt of approval from the holder of Class A Preference Shares and holders of Class B Preference Shares on March 2, 2021, the Company completed early redemption of its Class A and Class B Preference Shares on May 27, 2021 and November 15, 2021 respectively.

Your Directors regret to state their inability to recommend any dividend on equity shares for the financial year ended March 31, 2022.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations"), as amended, the Dividend Distribution Policy of the Company is available on the Companys website at https://www.3i-infotech.com/ investors/ under "Corporate Governance" in the Investors section.

BUSINESS

The business activities of the Company are broadly divided into two categories, viz. IT Solutions and Transaction Services. The IT Solutions business comprises of Cloud Computing, Application-Automation-Analytics (AAA), Platform Solutions (BPaaS, KPaaS), Infrastructure Management Services, Application Development, Digital Transformation Consulting and NextGen Business services (5G, SASE, Edge Computing, Cognitive Computing, IIoT, Cyber Security Services, etc.) while Transaction Services comprise of BPS and KPO services covering management of back-office operations. After the sale of its software products business on March 31, 2021, the Company has developed and begun to deliver IT Solutions out of which some of them are mentioned below, while it continues to operate its services business.

NuReTM addresses design, construction and managing of full-stack cloud solutions including, maintaining crucial operational applications supporting the entire eco-system in the cloud.

> NuRe Edge: 5G ready platform that delivers Secure Access Service Edge (SASE) and 5G Edge services from any device and anywhere. It is a cost effective and easy to deploy solution that breaks conventional and complex boundaries of enterprise security.

> NuRe 3i: With NuRe 3i you can migrate your applications and infrastructure to cloud and enhance your business performance, efficiency and productivity by unlocking cloud benefits with right platform, tools and services.

> NuRe Desk: NuRe Desk enables borderless perimeter of your global workforce to work from anywhere, bringing their own devices and their own network connectivity. On an average, 3i Infotech can give users savings of about 20% to 30% compared to leading solutions with our own self-managed application infrastructure.

> NuRe 3i+ : NuRe 3i+ is a next generation Oracle Cloud Infrastructure (OCI) for the most secured, optimised and simplified digital transformation. NuRe 3i+ and Oracle collaborate to provide a powerful, singlevendor, application and database platforms for todays data driven enterprises. Nure 3i+ helps verticals like banking, financial services & insurance (BFSI), public and government sectors, healthcare, media and entertainment to seamlessly migrate to NuRe 3i+ platforms.

Altiray?, the Companys Services landscape, is well integrated across domains and emerging technologies. Its digital frameworks are optimised to deliver the much- needed core transformation in businesses. Based on a curated technology stack, the solutions enable easy technology adoption and are effortlessly scalable. Mobility, together with new-age technologies like Blockchain, Artificial Intelligence, IoT, Augmented / Virtual Reality (AR / VR), is an imperative part of digital transformation and Altiray?s offerings cater to all levels of the mobility maturity curve, covering Consulting, Design & Development, Data Testing, Support, Data Intelligence & Co-Innovation Services.

The contribution of IT Solutions to the revenue for the year was 90% and that of Transaction Services was 10%.

The Company has presence in more than 15 countries across 4 continents. The Company has a strong foothold and customer base in South Asia, Asia Pacific (APAC), Middle East and Africa (MEA), Kingdom of Saudi Arabia (KSA) and North America geographies. The Company has marketing network around the world, including US, Europe, MEA and APAC.

During the financial year 2020-21, the Company and its subsidiaries in USA, UK, Kenya, UAE, Malaysia, Thailand and Saudi Arabia entered into business transfer agreements on December 28, 2020 (BTA) with Azentio Software Private Limited (and its affiliates) towards the slump sale of the global software products business of the Company and its subsidiaries on a going concern basis to Azentio, subject to the receipt of requisite approvals.

The Companys software products business, consisting of the business, intellectual property and employees inter alia in India, USA, UK, Kenya, UAE, Malaysia, Singapore, Thailand and Saudi Arabia, has been transferred under the BTA.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During the year under review, the voluntary winding up of Elegon Infotech Limited, a wholly owned subsidiary of the Company based in China, was completed on June 28, 2021.

Further, on February 17, 2022, a wholly owned step- down subsidiary of the Company was incorporated in Malaysia by the name of NuRe Digital Sdn Bhd to tap business opportunities in Malaysia. NuRe Digital Sdn Bhd is a wholly owned subsidiary of 3i Infotech Asia Pacific Pte Limited, a wholly-owned subsidiary of the Company based in Singapore.

As on March 31, 2022, there are 23 subsidiaries (including step-down subsidiaries) in 3i Infotech group. There has been no material change in the nature of the business of subsidiaries, except to the extent of sale of existing software products business to Azentio and its affiliates.

As per the first proviso to Section 129(3) of the Companies Act, 2013 ("the Act") read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of subsidiaries / associate companies / joint venture in the prescribed Form AOC-1 is enclosed to the consolidated financial statements. This statement also mentions highlights of performance of subsidiaries /associate companies / joint venture and their contribution to the overall performance of the Company during the year.

Pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company, along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company.

This Report has been prepared based on the standalone financial statements of the Company and highlights the performance of the subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company during the period under review.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Act, your Directors hereby confirm that:

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

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and profit of the Company for the financial year ended on that date;

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

d) they have prepared the annual accounts on a going concern basis;

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

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

Further, the financial statements are prepared in accordance with Ind AS as prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended. Based on the reviews of internal, statutory and secretarial auditors, external consultants, the management and respective committees of the Board, the Board is of the opinion that the Companys system of internal financial controls was adequate and the operating effectiveness of such controls was satisfactory during the financial year 2021-22.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Particulars of loans, guarantees or investments granted / made during the year are given under the notes to standalone financial statements forming part of this Report.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the year under review, all the contracts / arrangements / transactions entered into by the Company with related parties referred to in Section 188 of the Act were in the ordinary course of business and on an arms length basis. During the year, the Company has not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on related party transactions.

Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arms length basis, Form AOC-2 is not applicable to the Company.

The Company has in place a Policy on Materiality of Related Party Transactions and a Policy on dealing with Related Party Transactions. The said policy can be viewed on the Companys website by accessing the following Link: https://www.3i-infotech.com/investors/ under "Corporate Governance" in the Investors section.

Details regarding related party disclosures are given under the notes to standalone financial statements which form part of this Report.

SCHEME OF ARRANGEMENT

The Board, at its meeting held on June 29, 2018, had approved a Scheme of Arrangement between the Company and its Shareholders under Sections 230 to 232 and other applicable provisions of the Act. The Scheme provided for a two-step process for reducing the equity share capital of the Company:

a) Reduction of equity share capital of the Company on the Record Date (as defined in the Scheme) by reducing the face value of the equity shares of the Company from 10 to 1 (The capital so reduced was to be utilised to write off the accumulated losses of the Company.) and

b) Consolidation of 10 equity shares of the Company of 1 into one fully paid-up equity share of the Company of face value of 10 each immediately upon such reduction.

As already informed to the Members, during financial year 2020-21, the Company filed the draft Scheme with the Honble National Company Law Tribunal ("NCLT"), Special Bench, Mumbai on May 25, 2020 seeking directions to convene equity shareholders meeting towards approval of the Scheme. Pursuant to directions issued by NCLT Special Bench, vide its order dated June 1, 2020, the Company convened and held meeting of the equity shareholders of the Company on July 21, 2020 through video conferencing / other audio visual means, where the equity shareholders approved the Scheme with requisite majority. The NCLT granted an exemption to the Company from calling a meeting of its preference shareholders and secured and unsecured Creditors. The Company, thereafter, filed a petition with the Honble NCLT, Mumbai Bench on August 3, 2020 seeking sanction / approval of the Scheme. NCLT admitted the petition on October 27, 2020 and later fixed February 2, 2021 for the final hearing and disposal of the petition. After the end of the financial year 2020-21, the matter was listed for pronouncement on April 26, 2021 and NCLT sanctioned the Scheme on this date allowing the Companys application.

During financial year 2021-22, the Board, at its meeting held on August 10, 2021, fixed Tuesday, August 31, 2021 as the Record Date for the purpose of determining the shareholders whose shares would be reduced and consolidated pursuant to the Scheme approved by Honble NCLT, Mumbai Bench. In view of this, the trading in equity shares of the Company was temporarily suspended from the opening of business hours on August 30, 2021 till October 21, 2021. Later, on October 22, 2021, trading in the equity shares of the Company commenced again on BSE Limited and National Stock Exchange of India Limited in a new ISIN.

After implementing the Scheme during financial year 2021-22, the Company has, on November 12, 2021, completed the slump sale of the software products business of its subsidiary in Saudi Arabia on a going concern basis to Azentio. After the end of financial year 2021-22, on June 30, 2022, the sale of software products business of its subsidiary in Thailand on a going concern basis to Azentio has also been completed. It is clarified that certain contractually agreed post-completion actions will be completed on or prior to mutually agreed timelines. The Company has receivables from and payables to Azentio for various transactions such as part consideration receivable, debtors collection receivable for services provided to Azentio, shared premises, etc. The reconciliation and closure of all transactions is still going on.

After slump sale of the software products business of the Company during financial year 2020-21, the Company has completed the first year of operations of services business, which is on the improvement path. At the same time, new Management of the Company is in the process of settling certain legacy issues consequent to this slump sale transaction, which inter alia include intercompany reconciliations, group companies receivables & payables, etc. Any unidentified issues emerging out of past transactions in future might need to be dealt with by the Management with proper due diligence and on case-to-case basis, as and when they become known and applicable.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

During financial year 2020-21, the Company executed inter alia a business transfer agreement with Azentio on December 28, 2020 (BTA) towards sale of its global software products business (including that of its

worldwide subsidiaries) as a going concern on a slump sale basis to Azentio and its affiliates, subject to receipt of requisite approvals. The Companys software products business consisting of the business, intellectual property and employees inter alia in India, USA, UK, Kenya, UAE, Malaysia, Singapore, Thailand and Saudi Arabia were sought to be transferred under the BTA. The software products business in the other jurisdictions was sought to be transferred pursuant to offshore business transfer agreements. This sale was concluded on March 31, 2021 across all geographies, except Thailand and Saudi Arabia where regulatory approvals were still awaited. During the year, the sale of products business of the Companys subsidiary in Saudi Arabia was completed on November 12, 2021 upon receipt of requisite regulatory approvals.

After the end of financial year 2021-22, on June 30, 2022, the sale of software products business of its subsidiary in Thailand on a going concern basis to Azentio has also been completed.

Except for the above, there have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and as on the date of this Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Companys operation in future.

REPORT ON CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements. The Corporate Governance Report along with auditors certificate thereon in terms of Regulation 34 read with Schedule V of the Listing Regulations is appended herewith as Annexure I to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of provisions of Regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report is given under a separate section forming part of this Report.

BUSINESS RESPONSIBILITY REPORT (BRR)

Regulation 34 of the Listing Regulations mandates the inclusion of the BRR as part of the Annual Report for the top 1000 listed entities based on market capitalisation. In compliance with the Listing Regulations, BRR forms part of this Report and is appended hereto as Annexure II.

ANNUAL RETURN

In accordance with the Act, the annual return in the prescribed format is available on the Companys website at the following link: https://www.3i-infotech.com/investors/ under Corporate Governance in the Investors section.

CAPITAL

a) Preference Share Capital:

During the year under review, the Company has not allotted any preference shares.

As informed earlier to the Members, pursuant to the terms agreed for sale of software products business as a going concern on a slump sale basis, preference shareholders of the Company approved amendment in terms of Class A and Class B Preference Shares and their early redemption on March 2, 2021. Thereafter, upon receiving the proceeds of sale of products business, early redemption of all Class A and Class B Preference Shares was completed on May 27, 2021 and November 15, 2021 respectively.

b) Equity Share Capital:

1) Allotment under Employee Stock Options Scheme (ESOS):

During the year under review, the Company has, on various dates, allotted in all 6,277,170 equity shares under Employee Stock Option Scheme 2007 and Employee Stock Option Scheme 2018.

Considering these allotments, the issued, subscribed and paid-up capital of the Company as on March 31, 2022 stood at 1,679,426,570 consisting of 167,942,657 fully paid-up equity shares of face value 10/- each.

2) Allotments against conversion of Foreign Currency Convertible Bonds (FCCBs):

During the year, the Company has not allotted any equity shares against conversion of FCCBs.

ALL the outstanding FCCBs of the Company were redeemed before maturity on December 2, 2021.

The Company has neither issued equity shares with differential rights as to dividend, voting or otherwise nor any sweat equity shares to the employees of the Company under any scheme.

EMPLOYEE STOCK OPTION SCHEMES

The Employee Stock Option Schemes of the Company in force are in compliance with the Act and the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and there has been no material change in the said schemes during financial year 2021-22. Disclosures reLating to the said schemes as required under the SEBI (Share Based EmpLoyee Benefits and Sweat Equity) Regulations, 2021 are available on the Companys website at the following Link: https://www.3i-infotech.com/ investors/ under Corporate Governance in the Investors section.

The Company has received a certificate from the SecretariaL Auditors of the Company that its share-based scheme(s) have been impLemented in accordance with the SEBI (Share Based EmpLoyee Benefits and Sweat Equity) ReguLations, 2021 (formerly the SEBI (Share Based Employee Benefits) Regulations 2014) and the same is available for inspection by Members in electronic mode.

PUBLIC DEPOSITS

During the year, the Company has not invited / accepted any deposit under Sections 73 and 76 of the Act.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

During the year under review and thereafter, tiLL the date of this Report, the foLLowing changes have happened in the composition of the Board of Directors and the KMP of the Company:

1. The Board, at its meeting held on February 19, 2021, had approved the appointment of Mr. Thompson Gnanam (DIN: 07865431) effective March 18, 2021 as an Additional WhoLe-time Director (to be designated as CEO and MD - Designate) on the Board of the Company and aLso approved his terms of remuneration. During the year, Mr. Thompson Gnanam was appointed as Managing Director and GLobaL CEO of the Company by the Board effective April 1, 2021. The shareholders, vide resolution passed through Postal BaLLot on September 19, 2021, have also approved his appointment and terms of remuneration as Managing Director and GLobaL CEO for a period of 5 years effective April 1, 2021.

2. Mr. Avtar Singh Monga (DIN: 00418477) was appointed as an AdditionaL (Independent NonExecutive) Director effective ApriL 1, 2021. His appointment was approved by the sharehoLders vide PostaL BaLLot resoLution passed on September 19, 2021.

3. Mr. Padmanabhan Iyer (DIN: 05282942) resigned as Managing Director and GLobaL CEO and CFO of the Company on ApriL 1, 2021 as required under the products business saLe transaction of the Company and was redesignated as Non-Executive Director of the Company effective ApriL 1, 2021. Thereafter, he resigned as Non-Executive Director on June 9, 2021.

4. Mr. MrinaL Ghosh was appointed as Chief FinanciaL Officer ("CFO") of the Company effective ApriL 1, 2021. He resigned from the position of CFO with effect from September 14, 2021, pursuant to his resignation from the empLoyment of the Company.

5. Mr. Harish Shenoy, Chief Performance Officer of the Company was designated by the Board as a Key ManageriaL Person effective August 10, 2021. Later, he was appointed as CFO - Designate of the Company effective February 9, 2022 and, Later, ceased to be CFO - Designate effective May 9, 2022 foLLowing appointment of Mr. Sanjay Rawa as the CFO. Mr. Harish Shenoy continues to be a KMP of the Company in his capacity as the Chief Performance Officer of the Company.

6. Mr. Rajeev Limaye, Company Secretary and CompLiance Officer of the Company, resigned from the empLoyment of the Company effective November 30, 2021 in order to pursue opportunities overseas.

7. Mrs. Varika Rastogi was appointed as Company Secretary and CompLiance Officer of the Company with effect from December 15, 2021.

8. Mr. Pravir Kumar Vohra (DIN: 00082545), Non-Executive Director, retired by rotation at the 28th AnnuaL GeneraL Meeting ("AGM") of the Company heLd on December 15, 2021. The resoLution for his re-appointment on the Board was not passed with requisite majority. In view of this, Mr. Pravir Kumar Vohra ceased to be a Non-Executive Director of the Company effective December 15, 2021.

9. Mr. Sriram Venkataramanan (DIN: 03631606) was appointed as an Additional (Non-Executive) Director effective January 13, 2022. Later, his appointment as Non-Executive Director was approved by the shareholders vide Postal Ballot resolution passed on March 27, 2022.

10. Mr. Rajeev Kumar Sinha (DIN: 01334549) ceased to be a Nominee Director on the Board of the Company effective January 25, 2022 pursuant to withdrawal of his nomination by IDBI Bank Limited.

11. Dr. Aruna Sharma (DIN: 06515361) was appointed as an Additional (Non-Executive) Director effective February 1, 2022. Her appointment as a Non-Executive Director was approved by the shareholders later vide Postal Ballot resolution passed on March 27, 2022.

12. Mr. Sandeep Kumar Gupta (DIN: 08911963), Nominee Director - Indian Bank, ceased to be a Director of the Company effective February 9, 2022 in accordance with section 167(1)(b) of the Act i.e. vacation of office of Director being unable to attend any meeting of the Board of Directors held during a period of twelve months.

13. CA Uttam Prakash Agarwal (DIN: 00272983) was appointed as an Additional (Independent Non-Executive) Director effective March 16, 2022. His appointment as Independent Non-Executive Director has been approved by the shareholders vide Postal Ballot resolution passed on May 12, 2022.

14. Mr. Sanjay Rawa has been appointed as the Chief Financial Officer of the Company effective May 9, 2022.

As on the date of this Report, the Board of the Company consists of 7 Directors, out of which four are Independent Directors (including one woman Independent Director), two are Non-Executive Directors and one is an Executive Director.

In accordance with Section 152 (6) and other applicable provisions of the Act read with Articles of Association of the Company, Mr. Sriram V. is liable to retire by rotation at the ensuing AGM of the Company and, being eligible, has offered himself for re-appointment. The Board recommends his re-appointment at the ensuing AGM for your approval. As stipulated under Regulation 36 of the Listing Regulations, a brief profile of the Director proposed to be re-appointed is given in the Notice convening the ensuing AGM, which is included in the Annual Report 2021-22.

None of the Independent Directors have had any pecuniary relationship or transaction with the Company during financial year 2021-22, except to the extent of their directorship. None of the Directors or KMP of the Company is related inter-se.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from each Independent Director as per provisions of Regulation 25(8) of the Listing Regulations and Section 149 (7) of the Act, that he / she meets the criteria of independence laid down in Regulation 16(1)(b) read with Regulation 25(8) of the Listing Regulations and Section 149 (6) of the Act.

NUMBER OF MEETINGS OF THE BOARD

There were 11 (Eleven) meetings of the Board of Directors held during the year. The details of the same are given in Corporate Governance Report section that forms part of this Report. The intervening gap between two consecutive Board Meetings did not exceed 120 days.

POLICIES AS PER THE LISTING REGULATIONS

The Listing Regulations mandated all listed companies to formulate certain policies. These policies are available on the website of the Company at https://www.3i-infotech. com/investors/ under "Corporate Governance" in the Investors section. The policies, list of which is given below, are reviewed periodically by the Board and amended from time to time:

• Whistle Blower Policy;

• Policy on Remuneration of Directors, Key Managerial Personnel and other Employees;

• Corporate Social Responsibility Policy;

• Policy for determining Material Subsidiaries;

• Policy for determination of Materiality of event or information;

• Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions;

• Policy and Procedure for Inquiry in the event of leak or suspected leak of Unpublished Price Sensitive Information;

• Dividend Distribution Policy;

• Risk Management Policy;

• Policy for Board Diversity;

• Policy for Preservation of Documents; and

• Policy for Prohibition of Fraudulent and Unfair Trade Practices relating to securities.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The current policy is to have appropriate mix of Executive, Non-Executive and Independent Directors to maintain the independence of the Board. The Company has put in place a policy on Remuneration of Directors, Key Managerial Personnel (KMP) and other employees including criteria for determining qualifications, positive attributes, independence of directors and other matters provided under Section 178 (3) of the Act, the Policy can be viewed on the website of the Company by accessing the following link: https://www.3i-infotech.com/investors/ under "Corporate Governance" in the Investors section.

PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS

In terms of the provisions of the Act and the Listing Regulations, your Company has laid down criteria for performance evaluation of Directors and Chairperson of the Board and also the process for such performance evaluation. Schedule IV of the Act states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the Director being evaluated. The Companys policy relating to appointment and remuneration of Directors, KMPs and other employees, including criteria for determining qualifications, positive attributes and independence of a director are covered under the Corporate Governance Report, which forms a part of this Report.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

As per provisions of the Listing Regulations and the Act, the Company has formulated Familiarisation Programme for Independent Directors. The same is available on the website of the Company at https://www.3i-infotech.com/ investors / under "Corporate Governance" in the Investors section. At the time of appointment of an Independent Director, the Company issues a formal letter of appointment to an Independent Director outlining his / her role, function, duties, responsibilities, etc. The terms and conditions for appointment of Independent Directors are also available on the website of the Company at the location mentioned above.

The Board Members are provided with necessary documents / brochures, reports and internal policies to enable familiarizing them with the Companys procedures and practices. Periodic presentations are made at the Board Meetings on business performance updates of the Company, global business environment, business strategy and risk involved.

COMMITTEES OF THE BOARD

As per recent amendments in Regulation 21 of the Listing Regulations, top 1000 listed entities determined on the basis of market capitalisation as on March 31, 2021 are required to constitute Risk Management Committee. Accordingly, the Board, at its meeting held on October 25, 2021, has formed a Risk Management Committee, currently comprising of Mr. Avtar Singh Monga as the Chairperson and Mr. Ashok Shah, Dr. Aruna Sharma, Mr. Thompson Gnanam and Mr. Harish Shenoy as its members.

As on March 31, 2022, the Board has six committees:

i. Audit Committee;

ii. Nomination and Remuneration Committee;

iii. Stakeholders Relationship Committee;

iv. Corporate Social Responsibility Committee;

v. Risk Management Committee; and

vi. Operations Committee (non-mandatory committee).

A detailed note on the composition of the Board and its committees is provided in the Corporate Governance Report.

VIGIL MECHANISM

In line with the provisions of the Act and the Listing Regulations, the Company has devised and implemented a vigil mechanism in the form of "Whistle Blower Policy". As per the Policy, the Company has an internal committee comprising of the Head-HR and the Compliance Officer of the Company to oversee the functioning of the vigil mechanism as mandated by the Act and assist the Audit Committee thereunder. The Whistle Blower Policy framed by the Company is available on the website of the Company at https://www.3i-infotech.com/investors/ under Corporate Governance in the Investors section.

The detailed information regarding the committees of the Board, including composition of the Audit Committee, has been given in the Corporate Governance Report which forms an integral part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies, associates and joint ventures and form part of this Report. The Audited Consolidated Financial Statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS").

INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY

Your Company has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements. Your Company also ensures that internal controls are operating effectively.

STATUTORY AUDITORS

During the year, in view of provisions of section 139 of the Act and the rules made thereunder, the Board, upon recommendation of the Audit Committee, approved the re-appointment of GMJ & Co., Chartered Accountants as Statutory Auditor of the Company for a second term of five years, subject to the approval of the shareholders.

Upon receipt of approval from the shareholders at the 28th AGM of the Company, GMJ & Co., Chartered Accountants, have been appointed as the Statutory Auditor of the Company to hold office for a second term of five years from the conclusion of the 28th AGM held on December 15, 2021, till the conclusion of the 33rd AGM to be held in 2026.

The requirement for the ratification of auditors appointment at every AGM has been omitted pursuant to Companies (Amendment) Act, 2017 notified on May 7, 2018.

STATUTORY AUDITORS REPORT

The Auditors Report for the financial year 2021-22 does not contain any qualifications, remarks or reservations. The Auditors Report is enclosed with the financial statements in this Annual Report.

SECRETARIAL AUDITORS REPORT

Pursuant to the provisions of Section 204 of the Act and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. BNP & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2021-22.

The Secretarial Audit Report is appended as Annexure III to this Report. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks.

REPORTING OF FRAUD BY AUDITORS

During the year under review, neither the statutory auditor nor the secretarial auditor has reported to the Audit Committee any instances of fraud committed against the Company by its officers or employees under Section 143 (12) of the Act, the details of which would need to be reported in the Boards Report.

SECRETARIAL STANDARDS

The Company complies with all the mandatory secretarial standards issued by the Institute of Company Secretaries of India as may be applicable.

LISTING ON STOCK EXCHANGES

The Companys equity shares are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).

FCCBs of the Company, which were listed on Singapore Exchange Securities Trading Limited (SGX), have been prematurely redeemed on December 2, 2021 and hence, cease to be listed on the SGX.

CONSERVATION OF ENERGY

Although the operations of the Company are not energy intensive, the management is highly conscious of the criticality of the conservation of energy at all operational levels. The requirement of disclosure of particulars with respect to conservation of energy as prescribed in Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is not applicable to the Company and hence, are not provided.

TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION

The Company continues to use the latest technologies for improving the productivity and quality of its services and products.

During the year, your Company has taken the following technology initiatives:

• Information and Cyber Security Awareness programmes;

• Strengthened its IPRs through technology innovation and appropriate security controls;

• Improved utilisation and delivery productivity by use of LEAN IT techniques for project delivery; and

• Partnerships with major technology providers and publishers for win-win relationships and go-to- market strategies.

RESEARCH AND DEVELOPMENT (R & D)

The solutions offered by the Company for various market segments are continuously developed and upgraded through the Global Development Centres (GDCs).

The GDCs function as the product research and development arm of the Company and focus on developing and expanding the Companys products and IPRs.

With a focus to further enhance the Companys software products based on market needs, the GDCs work in line with the Companys strategy for growth.

Expenditure on R & D

Rs. in Crores

Particulars 2021-22 2020-21
Revenue Expenditure - 22.59
Capital Expenditure 8.05

-

Total 8.05 22.59
Total R&D expenditure as a percentage of total standalone revenue 2.99% 10.87%

QUALITY

The Company is committed to providing innovative and high-quality products and services that meet or exceed customer expectations.

This includes-

• Maintaining a quality focus on continuous improvement to our Products, Process and Services and

• Process adherence and governance ensuring lower Defect & On Time delivery.

The Companys Quality Management System (QMS) addresses process required for entire Software Development Cycle (SDLC) and Project Management Life Cycle (PMLC) supported with industry standard templates and guidelines to ensure disciplined project execution, thereby transforming business from taking corrective & preventive measures to the state of predicting outcomes. This framework is designed based on the CMMi Process framework to enhance productivity and to reduce inefficiencies.

The Company has achieved CMMi Level 3 certification to meet the Companys commitment towards quality & business process with further plans to extend the certification to CMMi Level 5.

FOREIGN EXCHANGE EARNINGS AND OUTGO

a) Activities relating to exports, initiatives taken to increase exports, development of new export markets for products and services and export plans

Around 13% of the revenue of the Company is derived from exports.

b) Foreign Exchange earnings and expenditure

Details of earnings and expenditure in foreign currency (excluding earnings and expenditure of UAE Branch) during the year are as below:

Rs. in Crores
Particulars FY 2021-22 FY 2020-21
Earnings 28.22 121.76
Expenditure 2.20 5.82

PERSONNEL

The Company has continued to improve the quality of Human Resource. The key facet has been better levels of productivity as compared to earlier years which has contributed to operating financial parameters showing a strong uplift. Regular interactions and career enhancements by way of bigger roles to talented employees have helped in strengthening the confidence of the employees in the tough financial scenario of the Company. The talent pipeline is looking healthy though attrition and retention remains a challenge for the industry and more so for the Company.

Your Company will continue to focus and build the human potential which would help in improving operating parameters in the coming year.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is provided in a separate annexure forming part of this Report. Having regard to the provisions of the first provision to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

Disclosures pertaining to the remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in this Report as Annexure IV.

Prevention of Sexual Harassment at Workplace

The Company has in place a policy aiming at prevention of sexual harassment at all workplaces of the Company in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Company has complied with provisions relating to constitution of Internal Complaints Committee by setting up such Committee in the Company in accordance with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to consider and redress complaints received with respect to sexual harassment. The details of complaints received during the year are given separately in Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a CSR Committee. A brief outline of the CSR policy of the Company and the statutory disclosures with respect to CSR Committee and an Annual Report on CSR activities for financial year 2021-22 as required under Rule 8 (1) of the CSR Rules are set out in Annexure V of this Report. The CSR Policy as recommended by CSR Committee and as approved by the Board is available on the website of the Company at https://www.3i-infotech.com/investors/ under "Corporate Governance" in Investors section.

During the year, the Company has not spent any amount on CSR activities in view of losses incurred as per provisions of the Act.

MAINTENANCE OF COST RECORDS

Maintenance of cost records as specified by the Central Government under the provisions of Section 148(1) of the Act is not required for the business activities carried out by the Company.

DISCLOSURE REQUIREMENTS

Disclosures required under the Listing Regulations are provided in the Corporate Governance Report. The Corporate Governance Report along with auditors certificate thereon, BRR and the Management Discussion and Analysis Report forms part of this Report.

FUTURE OUTLOOK

The business outlook and the initiatives proposed by the management to address its financial risks have been discussed in detail in the Management Discussion and Analysis Report which forms a part of this Report.

ACKNOWLEDGEMENTS

The Directors are thankful to the Members for their confidence and continued support. The Directors are grateful to the Central and State Government, Stock Exchanges, Securities & Exchange Board of India, Reserve Bank of India, Customs and other government authorities, Lenders and last but not the least, its trusted clients for their continued support.

The Directors would like to express their gratitude for the unstinted support and guidance received from alliance partners and vendors.

The Directors would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork and professionalism.