3i Infotech Ltd Directors Report.
FOR THE FINANCIAL YEAR 2016-17
Your Directors present the Twenty Fourth Annual Report (the "Report") of the Company along with the Audited Financial Statements for the year ended March 31, 2017.
a) Performance of the Company
The Management is pleased to inform the shareholders that after a period of 5 years, the Company has posted a Net
Profit after Tax (called Total Comprehensive Income under the Indian Accounting Standards notified by the Ministry of Corporate Affairs) of Rs.95.09 crores for the financial year 2016-17. On the operational front, the Company made significant efforts during the year towards improving operational performance across its core businesses and is fully geared to progress on its growth aspirations. The thrust in the coming years, starting from FY 2017-18, is not only to strengthen the CompanyRs.s position in chosen areas but also to pick up momentum and grow.
b) Update on Debt Realignment Scheme (DRS)
As of the date of this Report, the Company has allotted equity shares to 64% of its Lenders. The allotment in respect of the remaining Lenders is expected to be completed shortly. The Company has also successfully implemented the restructuring of its Foreign Currency Convertible Bonds (FCCBs) during the year.
The Company has been servicing its Lenders and FCCB holders on a regular basis since April 1, 2016.
We are further pleased to announce that on June 28, 2017, the Company pre-paid a part of the principal outstanding debt due to the DRS Lenders amounting to Rs.38.5 crores. This amount represents 6 monthly instalments of the Principal Amount which were due for repayment from April 30, 2018 as per the terms of the DRS approved by its Lenders.
c) Financial Performance of the Company on Standalone and Consolidated basis
Rs. in crores
|Total Revenue (I)||344.87||429.38||1,055.91||1,132.68|
|Total Expenses (II)||253.78||654.92||953.33||1,402.41|
|Profit/(loss) before exceptional items and tax (I-II)||91.09||(225.54)||102.58||(269.73)|
|Profit/(loss) before tax||91.09||(448.00)||102.58||(438.60)|
|Deferred Tax Expense||(1.49)||85.88||0.27||81.53|
|Adjustment of tax relating to earlier periods||0.32||5.82||2.40||25.66|
|Profit/(Loss) for the year||92.26||(539.70)||94.07||(551.75)|
|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||4.32||(0.97)||7.01||(1.79)|
|Income tax effect||(1.49)||0.34||(0.43)||0.02|
|B. Other Comprehensive income to be reclassified to profit and loss in subsequent periods:||-||-||-||-|
|Other Comprehensive income for the year, net of tax||2.83||(0.63)||6.58||(1.77)|
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX||95.09||(540.33)||100.65||(553.52)|
|Total comprehensive income for the year, net of tax attributable to:|
|Profit for the year attributable to:|
|Equity holders of the parent||-||-||94.73||(548.96)|
|Other comprehensive income for the year attributable to:|
|Equity holders of the parent||-||-||6.58||(1.77)|
|Total comprehensive income for the year attributable to:|
|Equity holders of the parent||-||-||101.31||(550.73)|
|Earnings per share for profit attributable to equity shareholders|
During the year under review, standalone sales and other income stood at Rs.344.87 crores. After meeting all the expenditures, the Company made a total comprehensive income of Rs. 95.09 crores on standalone basis. Further, during the year under review, consolidated sales and other income stood at Rs.1055.91 crores. After meeting all expenditures, the Company made a comprehensive income of Rs.100.65 crores on a consolidated basis.
TRANSFER TO RESERVES
There is no amount proposed to be transferred to general reserve this year.
During the year, the Company has issued Class B Preference Shares of Rs.5/- each to some of the Lenders as per the terms of Debt Realignment Scheme (DRS). An amount of Rs.3,466,352 was paid as preference dividend to Class B Preference Shareholders on preference shares issued upto March 31, 2017. The payment of the abovementioned dividend was made as part of the contractual obligations of the Company with respect to the issue of these preference shares.
The Company has also paid a dividend of Rs.330,343 as preference dividend to Class A Preference Shareholders for the period from April 1, 2012 to April 30, 2017 as per the terms of issue of Class A Preference Shares.
After payment of preference dividend, the profits available for distribution to equity shareholders work out to be Rs.92.26 crores. As the Members are aware, the Company had not declared dividend on equity shares in the last few years in view of losses incurred by the Company. Though the Company has earned net profits during the financial year ended March 31, 2017, as per the terms of the Master Restructuring Agreement (MRA) dated March 30, 2012, entered into by the Company with IDBI Bank Limited, the Monitoring Institution and the CDR Lenders, the Company is prohibited from declaring or paying any dividend on its equity shares without prior approval of Lenders/ CDR Empowered Group. In view of this fact, your Directors regret to state their inability to recommend any dividend on equity shares for the year ended March 31, 2017.
Your Company has a comprehensive set of IP based software solutions (20+), coupled with a wide range of IT Services to address the dynamic requirements of a variety of industry verticals including Banking, Insurance, Capital Markets, Asset & Wealth Management (BFSI). The Company also provides solutions for other verticals such as Government, Manufacturing, Distribution, Telecom and Healthcare.
The business activities of the Company are broadly divided into two categories, viz. IT Solutions and Transaction Services. IT Solutions business comprises of software products and IT enabled services while the transaction services comprise of BPO and KPO services. The Company has a good product portfolio and has dominant presence in fast growing emerging economies.The Product Business of the Company has a wide base with more than 1000 active customers who are satisfactorily using the Companys products.
The contribution of IT Solutions to the revenue for the year was 95% and that of Transaction Services was 5%. Your Company has presence in 50 countries across six operational geographies, viz. South Asia, Asia Pacific (APAC), Middle East and Africa (MEA), Kingdom of Saudi Arabia (KSA), Western Europe (WE) and North America (US). Your Company has marketing network around the world, including US, WE, MEA and APAC. The business of your Company is largely divided into Emerging Markets and Developed Markets. The share of the Emerging Markets to total revenue of the Company is about 67% while that of Developed Markets is about 33%. For detailed operations and business performance and analysis, kindly refer the Management Discussion & Analysis which forms a part of this Report.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
During the year under review, the Company has neither raised its stake, on its own or through its subsidiaries in any of the companies, nor divested its stake in any of its subsidiaries. As on March 31, 2017, the number of subsidiaries is 23 (twenty three).
As per the first proviso to Section 129(3) of the Companies Act, 2013 (the "Act") read with Rule 5 of Companies (Accounts) Rules, 2014, the statement containing salient features of the financial joint ventures in the prescribed Form AOC-1 is enclosed with the consolidated financial statements. Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company.
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 the Annual Report.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review, all the contracts or arrangements or transactions entered into by the Company with related parties referred to in Section 188 of the Companies Act, 2013 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 on dealing with Related Party
Transactions. The said policy can be viewed on the Companys website in the Investors section by accessing the following link: http://www.3i-infotech.com/content/investors/-2/ under "Corporate Governance".
Details regarding related party disclosure are given under the notes to standalone financial statements which form part of the Annual Report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
During the year, the Shareholders approved the following Resolutions through Postal Ballot concluded on May 13, 2016:
1. Increase in Authorised Share Capital of the Company to the extent of 20 crore equity shares of Rs.10 each and consequent amendment to the Memorandum of Association of the Company;
2. Amendment to the Articles of Association of the Company;
3. (i) Issue as part of the proposed restructuring of the outstanding USD 125,356,000 5% convertible bonds due 2017 (the "5% Bonds") and USD 2,435,000 4.75% convertible bonds due 2017 (the "4.75% Bonds", and together with the 5% Bonds, the "Existing Bonds"), new foreign currency convertible bonds to the holders of the Existing Bonds in exchange for the Existing Bonds, and
(ii) amend the terms of the outstanding Existing Bonds (to the extent not exchanged) including extension of the maturity and reduction of the rate of interest; and
4. Issue of equity shares against conversion of a portion of the outstanding amounts due to the Lenders.
The details of results of this Postal Ballot conducted during the year are given in Annexure I in the Corporate Governance Report.
Except as stated 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 financial statements relate and as on the date of the 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 Corporate Governance Report along with auditors certificate thereon in terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR") read with Schedule V of said regulations is appended herewith as Annexure I to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of provisions of Regulation 34 of SEBI LODR, the Management Discussion and Analysis Report is given under a separate section forming part of this Annual Report.
EXTRACT OF ANNUAL RETURN
In terms of the requirements of Section 92 (3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form MGT- 9 is appended herewith as Annexure II and forms part of this Report.
a) Preference Share Capital
During the year under review, as per the terms of DRS, the Company had allotted 0.10% Cumulative Non- Convertible Redeemable Preference Shares (Class B Preference Shares) of face value of Rs.5/- each at par to its Lenders.
Details of the allotments are as follows:
|Date of Allotment||No. of Class B Preference Shares allotted|
|September 29, 2016||43,44,31,627|
|January 2, 2017||18,95,05,860|
|March 22, 2017||2,14,76,000|
|March 31, 2017||4,78,57,000|
Existing preference shares of the Company before the above allotments were designated as Class A Preference Shares. After taking into account the above allotments, the preference share capital of the Company as on March 31, 2017 was Rs.4,11,63,52,435 consisting of 13,00,00,000 Class A Preference Shares of Rs.5/- each and 69,32,70,487 Class B Preference Shares of Rs.5/- each.
b) Increase in Authorised Capital
In order to issue additional share capital as required under DRS, it was felt necessary to increase the authorised share capital of the Company. Pursuant to approval of the Members obtained through Postal Ballot, results of which were declared on May 13, 2016, the authorised share capital of the Company was increased to Rs.3,155 Crores (Rupees Three Thousand One Hundred Fifty Five Crores only) divided into 220 Crore (Two Hundred Twenty Crore) equity shares of Rs.10/- each, 20 Crore (Twenty Crore) preference shares of Rs.5/- each (called Class A Preference Shares), 150 Crore (One Hundred Fifty Crore) preference shares of Rs.5/- each (called Class B Preference Shares) and 105 Crore (One Hundred Five Crore) preference shares of Rs.1/- each (called Class C Preference Shares).
c) Paid-up Equity Share Capital
1) ESOS allotments:
The Company has not allotted any shares under the Employees Stock Option Schemes (ESOS) during the year.
2) Allotments against conversion of Foreign Currency Convertible Bonds (FCCBs):
During the year, the Company had received one conversion notice from an FCCB holder against which 6,37,193 Equity Shares were allotted by the Company at a premium of Rs.6.50/- per share on July 26, 2016. During the year, the Company had proposed an exchange offer to its FCCB holders under the Debt Realignment Scheme (DRS) Package of the Company. FCCB holders opting for the exchange offer were given new FCCBs in exchange for their existing FCCBs. Terms of FCCBs of the remaining FCCB holders were amended as per resolutions passed at the meetings of the FCCB holders. As per terms of new FCCBs and the amended FCCBs, a portion of the FCCBs underwent automatic conversion into equity shares against which the following allotments were made to the FCCB holders on December 12, 2016:
a) 1,90,356 Equity Shares of face value of Rs.10/- each were allotted at a premium of Rs.155.935/- per share to the holders of existing FCCBs held under ISIN XS0308551166;
b) 1,51,65,824 Equity Shares of face value of Rs.10/- each were allotted at a premium of Rs.6.50/- per share to the holders of existing FCCBs held under ISIN XS0769181982 and
c) 13,32,09,406 Equity Shares of face value of Rs.10/- each were allotted at par to the holders of new FCCBs held under ISIN XS1423751418.
The conversion price of the amended FCCBs was as per the original terms of the respective issue of FCCBs (as adjusted for bonus, where applicable). The initial automatic conversion price of the new FCCBs was Rs.10/- per share. In case of any subsequent conversions of the new FCCBs at the option of the FCCB holders, the conversion price would be Rs.12.50/- per share.
3) Allotment of Equity Shares under the Debt Realignment Scheme (DRS) Package:
During the year under review, the Company has allotted 39,36,44,696 Equity Shares to some of the Lenders of the Company including the lenders of the Companys subsidiaries and lenders of facilities guaranteed by the Company and lessors of the Company ("DRS Lenders") as per the terms of DRS package, the details of which are as follows:
|Date of allotment||No. of shares allotted|
|September 29, 2016||25,74,40,351|
|January 2, 2017||10,82,89,063|
|March 31, 2017||2,79,15,282|
Further, 14,85,65,586 Equity Shares of face value of Rs.10/- each were allotted to FCCB holders on December 12, 2016 against automatic conversion of a portion of the existing and new FCCBs as per the terms of DRS. Details of these allotments are mentioned under point no. 2 above.
As a result of the aforesaid allotments, the paid-up equity share capital of the Company stands at Rs.11,83,65,14,030 and the issued equity share capital of the Company stands at Rs.12,23,67,26,040 as on March 31, 2017.
The difference between Issued and Paid-up Equity Share Capital is on account of 4,00,21,201 equity shares of Rs.10/- each held in abeyance at the request of an FCCB holder, which were subsequently alloted on June 8, 2017.
The Company has neither issued equity shares with differential rights as to dividend, voting or otherwise nor any shares (including sweat equity shares) to the employees of the Company under any Scheme.
EMPLOYEES STOCK OPTION SCHEMES
As per SEBI Circular (CIR/CFD/POLICY CELL/2/2015) dated June 16, 2015 relating to requirements specifiedunder the SEBI (Share Based Employee Benefits) Regulations 2014, details of the Employee Stock Option Schemes (ESOS) of the Company are given in Annexure III to this Report.
During the year, the Company has not invited/accepted any deposit under Section 73 of the Act.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
During the year under review, Mr. Padmanabhan Iyer (DIN-05282942) was appointed as an Executive Director for a period of 3 years with effect from May 18, 2016. Later, on June 7, 2016, Mr. Madhivanan Balakrishnan (DIN-01426902) resigned as the Managing Director & Global CEO of the Company. Pursuant to resignation of Mr. Madhivanan Balakrishnan, Mr. Padmanabhan Iyer was elevated to the position of the acting Chief Executive Officer of the Company. Thereafter, Mr. Padmanabhan Iyer was appointed as Managing Director & Global CEO for a period of 5 years effective August 11, 2016. At the 23rd Annual General Meeting of the Members of the Company, the Members approved the appointment of Mr. Padmanabhan Iyer as Managing Director and Global CEO for a period of 5 years and remuneration payable to him for a period of 3 years by way of special resolution.
On January 23, 2017, Mr. Shanti Lal Jain (DIN-07692739) was appointed as Nominee Director representing Allahabad Bank on the Board of Directors of the Company.
Further, Mr. Rajeev Limaye was appointed as Company Secretary and Compliance Officer
The Directors place on record their sincere appreciation towards services rendered by Mr. Madhivanan Balakrishnan during his tenure as Managing Director of the Company.
In accordance with Section 152 (6) and other applicable provisions of Companies Act, 2013, Ms. Sarojini Dikhale (DIN-02755309), being a Non-Executive Director, is liable to retire by rotation at the ensuing Annual General Meeting (AGM) of the Company and, being eligible, has offered herself for re-appointment. The Board recommends her re-appointment at the ensuing AGM for your approval. As stipulated under the Regulation 36 of SEBI LODR, a brief resume of the Director proposed to be re-appointed is given in the Notice convening the ensuing AGM, which is included in the Annual Report 2016-17.
As on the date of this Report, the Board of the Company consists of 6 Directors, out of which two are Independent Directors, two are Nominee Directors, one is a Non-Executive Director and one is an Executive Director.
None of the Independent Directors have had any pecuniary relationship or transaction with the Company during financial year 2016-17, 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 SEBI LODR and Section 149 (7) of Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149 (6) of
Companies Act, 2013.
NUMBER OF MEETINGS OF THE BOARD
Nine meetings of the Board of Directors were held during the year. The details of the same are given in Corporate Governance Report section that forms part of the Annual Report. The intervening gap between two consecutive Board Meetings did not exceed 120 days.
POLICIES AS PER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR") mandated all listed companies to formulate certain policies. The Company has in place all such policies, the list of which is given below:
Whistle Blower Policy;
Policy relating to Remuneration of Directors, Key Managerial Personnel and other Key Employees;
Corporate Social Responsibility Policy;
Policy for determining Material Subsidiaries;
Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions;
Policy for Board Diversity and
Policy for Preservation of Documents.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In terms of the provisions of the Act and SEBI LODR, your Company has laid down criteria for performance evaluation of Directors and Chairman of the Board and also the evaluation process for the same. 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.
It is a practice of the Board of Directors to annually evaluate its own performance and that of its committees and individual directors. Accordingly, the performances of the members of the Board as a whole and of individual Directors were evaluated at the meeting of the Committee of the Independent Directors and the Board of Directors held on April 30, 2017.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
As per provisions of SEBI LODR, and the Act, the Company has formulated Familiarization Programme for Independent Directors. 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.
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.
As on the date of this Report, the Board has four committees:
i. Audit Committee
ii. Nomination and Remuneration Committee
iii. Stakeholders Relationship Committee
iv. Corporate Social Responsibility Committee
In line with the provisions of the Act and SEBI LODR, 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 address the functioning of the vigil mechanism as mandated by the Act and assist the Audit Committee thereunder.
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 the Annual Report. The audited Consolidated Financial Statements have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India and the Act.
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.
M/s. Lodha & Co., Chartered Accountants and M/s. GMJ &Co., Chartered Accountants were appointed as the Joint Statutory Auditors of the Company at the AGM held on December 7, 2016 till the conclusion of the Twenty Fourth AGM of the Company to be held in the year 2017. As per the provisions of Section 139 of the Act, M/s. Lodha & Co. will retire at the ensuing AGM. The Audit Committee and the Board recommend ratificationof appointment of M/s. GMJ & Co., Chartered Accountants as Statutory Auditors of the Company till the conclusion of the Twenty Fifth AGM of the Company. The Company has received a letter from statutory auditors that their re-appointment, if made, would be within limits as prescribed under Section 141 (3)(g) of the Act and they are not disqualified for re-appointment.
The Auditors Report does not contain any qualifications. However, there is an emphasis of matter in the Auditors Report on standalone financial statements for the year ended March 31, 2017 with respect to remuneration paid to the Managing Director & Global CEO of the Company during financialyear 2016-17. Your Directors would like to inform that the Company has made an application to Central Government for waiver of excess remuneration paid to Mr. Padmanabhan Iyer, Managing Director & Global CEO of the Company for the financial year 2016-17. Since the appointment of Mr.Padmanabhan Iyer as Managing Director and Global CEO for a period of 5 years and remuneration payable to him for a period of 3 years has been approved by Shareholders by way of a special resolution at the AGM held on December 7, 2016, the Company could not seek prior approval of the Central Government for payment of remuneration in excess of limit prescribed in Schedule V of the Act due to paucity of time.
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 Security Awareness programmes;
Strengthened its IPRs through technology innovation and appropriate security controls;
Improved utilization 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. Besides this, the Company is also in the process of upgrading its varied product lines to standard and latest technological platforms.
With a focus to further enhance the Companys software products i.e. its Intellectual Property based on market needs, the GDCs work in line with the Companys strategy for growth.
Expenditure on R & D
Rs. in crores
|Total R&D expenditure as a percentage of total standalone revenue||3.54%||0.61%|
The Company is committed to provide innovative and high quality products and services that meet or exceed customer expectations.
Maintaining a quality focus on continuous improvement to our Products, Process and Services and
Process adherence and governance ensuring lower defect and On Time delivery.
The Companys Quality Management System (QMS) addresses process required for entire Software Development Life 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 and 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 is in the process of getting CMMi Level 3 certificationby September 2017 to meet the Companys commitment towards quality and business process, with further plans to extend the certification to CMMi Level 5 andTMMi 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
More than 17.25% of the revenue of the Company is derived from exports.
b) Foreign export earnings and expenditure
During the year 2016-17, the expenditure in foreign currencies amounted to Rs.8.25 crores on account of professional charges, cost of outsourced services and bought out items, travelling and other expenses and interest (excluding expenditure incurred by Dubai Branch). During the same period, the Company earned an amount equivalent to Rs.48.13 crores in foreign currencies as income from its operations abroad (excluding income from Dubai Branch).
The Company has continued to improve the quality of Human Resources. The key facet has been better levels of productivity as compared to earlier years which has contributed in 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 proviso 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, the said annexure is open for inspection at the Registered Officeof 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 the Annual 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. An Internal Complaint Committee has been set up in the Company to consider and redress complaints received with respect to sexual harassment. During the year under review, the Complaint Committee has not received any grievances or complaints of the nature covered under the said Act.
CORPORATE SOCIAL RESPOSIBILITY ("CSR")
In compliance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, ("CSR Rules") the Company has constituted Corporate Social Responsibility (CSR) Committee. A brief outline of the CSR policy of the Company and the statutory disclosures with respect to the CSR Committee and an Annual Report on CSR for
FY 2016-17 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.
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 2016-17. The Secretarial Audit report is appended asAnnexure VI to this Report. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks
Disclosures required under Regulations of SEBI LODR are shown under the Corporate Governance Report (CGR). The CGR along with auditors certificate thereon and the Management Discussion and Analysis form part of this Report.
The Company will continue to technologically upgrade its products and concentrate on the Software Products, IT Services and IT enabled Services for its growth. 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 which forms a part of this Report.
FORWARD LOOKING STATEMENTS
This Report along with its annexures and Management Discussion and Analysis contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words anticipate, believe, estimate, expect, intend, will and other similar expressions as they relate to the Company and/or its businesses are intended to identify such forward looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto.
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, 2017 and of the loss 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.
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 2016-17.
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 and Exchange Board of India, Reserve Bank of India, Customs and other government authorities, Lenders, CDR Cell, CDR Empowered Group, FCCB holders 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 team work and professionalism.
|For and on behalf of the Board|
|Ashok Shah||Padmanabhan Iyer|
|July 22, 2017 at Navi Mumbai||Chairman||Managing Director & Global CEO|