asm technologies ltd share price Directors report

To the Boards Members,

We are pleased to present the 30th Annual Report together with the Audited Accounts of your Company for the year ended 31st March 2022

1. Financial Results

(Rs. In Mn.)

2021-2022 2020-2021
Income from Software services and Products 1410.71 1132.17
Other operating income 61.42 34.56
Employee benefits expense 936.78 730.27
Finance Costs 31.35 18.93
Depreciation 18.08 10.07
Other expenses 300.61 227.86
Profit/(Loss) before tax 185.31 179.60
Current Tax 54.93 44.45
Deferred Tax Income/expense (8.42) 0.98
Excess provision of earlier years 7.03 7.64
Profit/(Loss)for the year 131.77 126.53
Other Comprehensive Income
A (i) Items that will not be reclassified to profit or loss Remeasurement of defined benefit plans 2.34 (1.45)
(ii) Income tax relating to items that will not be reclassified to profit or loss Deferred tax on remeasurement of defined benefit plans (0.59) 0.37
B (i) Items that will be reclassified to profit or loss Changes in fair value of investments in equity instruments 26.39 (1.19)
(ii) Income tax relating to items that will be reclassified to profit or loss Deferred tax on changes in fair value of investments in equity instruments (6.64) 0.30
Total comprehensive income for the year 153.27 124.56

2. Results of Operation

ASM along with its subsidiaries provide world class consulting and product development services in the areas of Engineering Services, Product R&D Services and Digital Transformation with successful Offshore Development with Support Centers in India and Overseas for its global clientele.

During the financial year, the Company explored new growth opportunities and performed significantly well in both the domestic as well as international markets. The performance reflects ASMs journey to reposition itself as a unique technology solutions provider that is committed to develop an emerging breed of platforms, thus enabling its customers to gain competitive advantage through the Companys future ready digital transformation initiatives.

On the standalone front your company registered a total revenue of Rs.1410.71 Mn for the year ended 31st March 2022.

Domestic sales was Rs. 606.84 Mn while Export sales was Rs. 803.87Mn. EBIDTA was at Rs.234.74 Mn and Net profit after tax was Rs.131.77 Mn.

The Consolidated total revenue for the year ended 31st March 2022 was Rs.1916.73 Mn. EBIDTA was at Rs. 279.18 Mn and Net Profit after tax at Rs. 139.01 Mn.

3. Dividend/ Transfer to reserves

During the year 2021-22 the company declared an Interim dividend of Rs. 1.00/- on 7th August, 2021 and 2nd Interim dividend of Rs. 2.50/- on 30th October, 2021 followed by 3rd Interim dividend of Rs.2.50/- on 1st February 2022. In keeping with the Dividend policy your Directors are pleased to recommend for approval of the members a final dividend of Rs.2.50/- per equity share of Rs 10/-each for the financial year 20212022. The dividend amount paid/payable if approved by shareholders will be Rs. 25.75 Mn.

The dividend payout for the year under review has been formulated in accordance with the Companys policy to pay sustainable dividend linked to long term growth objectives of the company to be met by internal cash accruals and the shareholders aspirations.

Your Company has not transferred any amount to reserve for the Financial Year ended 31st March, 2022.

The paid up Share Capital of your Company is Rs. 100 Mn divided into 100,00,000 equity shares of Rs 10/- each. Your company had offered Right Entitlements 1 Rights Equity Shares for every 10 fully paid up Equity Shares held during the financial year under review.

4. Subsidiary Companies

The consolidated Accounts of your Company and its subsidiaries viz., ASM Digital Technologies Pte Ltd (Formely known as Advanced Synergic Pte Ltd), Singapore, ASM Digital Technologies Inc (Formely known as Pinnacle Talent Inc), USA, ASM Technologies KK, Japan, RV Forms & Gears LLP,ASM Digital Engineering Pvt Ltd. and ASM HHV Engineering Pvt Ltd( wef 21.01.2022) duly audited, are presented as part of this Report in accordance with Indian Accounting Standards ( IndAs) and the Listing Regulations with the Stock Exchange, wherever applicable. The statement pursuant to the provisions to Section 129(3) of the Companies Act 2013, containing salient features of the financial statement of the Companys Subsidiaries in Form AOC1 is given in Annexure - II. The Accounts of the Subsidiaries audited for the purpose of consolidation shall be placed on your Companys website and made available for inspection by any Shareholder at the Companys Registered Office and at the respective registered offices of the Subsidiary companies. Copies can be made available on request, to the shareholders of the Company.

Your Company has formulated and adopted a "Policy for determining Material Subsidiaries" so that your company could identify such subsidiaries and formulate governance framework for them. The Policy for determining ‘material subsidiaries is posted on Companys website: disclosures

5. Future Outlook

This has been provided in letter to the shareholders

6. Management Discussion and Analysis Report

Management Discussion and Analysis Report as required under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements ) Regulations 2015, is disclosed separately in the Annual Report.

7. Board Meetings

During the year under review the Board of Directors held 7 meetings, on 26.05.2021, 08.07.2021, 07.08.2021, 30.10.2021, 14.01.2022, 01.02.2022 and 15.02.2022 The maximum interval between two meetings did not exceed 120 days.

8. Directors and Key Managerial Personnel

As per the provision of companies Act 2013 Ms. Preeti Rabindra (DIN 00216818) Director, retires by rotation and being eligible, offers herself for re-appointment at the ensuing Annual General Meeting (AGM).

The Board recommends his appointment for consideration of members of the Company. Brief profile of Ms. Preeti Rabindra is given in the notes to the Notice of the ensuing AGM.

9. Disclosure on compliance with Secretarial Standards

Directors confirm that the Secretarial Standards issued by the Institute of Company Secretaries of India, have been complied with.

10. Independent Directors

Your Company has laid down procedures to be followed for familiarizing the Independent Directors with your Company, their roles, rights, responsibilities in your Company and to impart the required information and training to enable them contribute significantly to your Company. All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Act and Regulation 16(1)(b) of Listing Regulations. The Independent Directors have also confirmed that they have complied with the Companys Code of Conduct. All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Act and Regulation 16(1)(b) of Listing Regulations.

11. Directors Responsibility Statement

Pursuant to the provisions of Section 134 (5)of the Companies Act 2013, the Directors hereby confirm that:

a) in the preparation of the annual financial statements for the year ended 31st March 2022 the applicable accounting standards has been followed along with proper explanation relating to material departures:

b) the Directors 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 at the end of the financial year and of the profit or loss of the company for that period;

c) the Directors 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) the Directors have prepared annual accounts of the company on a going concern basis.

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

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

12. Significant and material orders passed by the regulators or courts and Material Changes and commitments affecting the financial position of the company.

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the company and its future operations. There are no material changes and commitments, if any, affecting the financial position of the company which occurred between the end the financial year of the company to which the financial statements relate and the date of this report.

13. Audit Committee

The Audit committee met four times during the financial year under review and all its recommendations were accepted by the Board.

Your Company has established the Vigil Mechanism, an Ombuds process which is a channel for receiving and redressing of employees complaints. This mechanism covers questionable financial or accounting matters and reporting fraudulent financial information to the shareholders, the government or any other legal authority. This meets the requirement under Section 177(9) and(10) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

14. Nomination and Remuneration Committee and Stakeholders Relationship and Share Transfer Committee

The Nomination and Remuneration Committee has framed a policy for selection and appointment of Directors including determining qualifications of Independent Director, Key Managerial Personnel, Senior Management Personnel and their remuneration as part of its charter and other matters provided under Section 178(3) of the Companies Act, 2013. A copy of the policy forms part of this report vide Annexure- I. The Nomination and Remuneration Committee of a company has been obligated under Section 178 of the Act to formulate a policy for recommending to the Board of directors of the company for setting the criteria based on which the performance of every Director including the performance of the Board as a whole shall be assessed by the Board of Directors of the Company.

15. Familiarisation Programme

The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors. The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of Listing Regulations, is uploaded on the website of the Company.-https://www.asmltd. com/policy-disclosures

16. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed BMP & Co., LLP, Company Secretaries, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit in Form MR3 for the financial year ended March 31, 2022 is annexed as Annexure - III to the Report. There are no qualifications, reservations or adverse marks made by Secretarial Auditor in the Report.

17. Auditors Report

There are no qualifications, reservations or adverse remarks made by M/s B K Ramadhyani & Co, LLP, Chartered Accountants Statutory Auditors, in their report for the financial Year ended 31st March, 2022. The Statutory Auditors have not reported any incident of fraud under Section 143(12) of the Act and the rules made thereunder to the Audit Committee of the company in the year under review.

18. Conservation of energy, technology absorption and Foreign Exchange Outgo

The companys operations involve low energy consumption. However the efforts to conserve and optimize the use of energy through improved operational method and other means will continue.

The company has not imported any technology. Foreign exchange earnings and outgo

During the financial year under review 56.98% of the revenue came from export of software services resulting in a foreign exchange inflow of Rs. 803.87 Mn and the foreign exchange outgo on account of overseas salaries, traveling etc was Rs. 122.31 Mn.

19. Public Deposits

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

20. Disclosures as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act , 2013

Your Company has in place a Prevention of Sexual Harassment ( POSH) Policy in line with the requirements of Sexual harassment of Women at Workplace ( Prevention, Prohibition and Redressal) Act 2013. Your Company has through the Policy constituted a committee and has established a grievance procedure for protection against victimization. Your Company is committed to provide a healthy environment to all employees conducive to work without the fear of prejudice and gender bias. During the year under review , there were no cases filed pursuant to the said Act.

Number of complaint filed during the financial year 2021-22 Nil
Number of complaint disposed off during the financial year 2021-22 Nil
Number of complaint pending as end of the financial year Nil

21. Details of Adequacy of Internal Financial Controls

Your Company has deployed adequate Internal Control Systems in place to ensure a smooth functioning of its business. The processes and systems are reviewed constantly and improved upon to meet the changing business environment. The Control Systems provide a reasonable assurance of recording the transactions of its operations in all material aspects and of providing protection against misuse or loss of Companys assets. The Internal auditors periodically review the internal control systems, policies and procedures for their adequacy, effectiveness and continuous operation for addressing risk management and mitigation strategies.

22. Particulars of Loans, guarantees or investments

During the Financial Year under review, your Company had given Corporate Guarantee to its subsidiary, RV Forms & Gears LLP and ASM Digital Engineering Pvt Limited and loan to RV forms and Gears LLP at prevailing bank lending rate for meeting its working capital requirements. The balance outstanding as on 31st March, 2022 is Rs 254.13 Mn.

23. Risk Management Policy

The Risk management Policy of your company continuously evaluates the various risks surrounding business and seeks to review and upgrade its risk management process. To further the endeavour your Board constantly formulates strategies directed at mitigating these risks which get implemented at the Executive Management level and a regular update is provided to the Board.

24. Credit rating of securities:

(a) credit rating obtained in respect of various securities: NA

(b) name of the credit rating agency; NA

(c) date on which the credit rating was obtained: NA

(d) revision in the credit rating: NA

(e) reasons provided by the rating agency for a downward revision, if any: NA

25. Corporate Social Responsibility Policy (CSR)

Your company has formulated CSR policy which is posted on the website at disclosures. In pursuance to the provisions of Section 135 and Schedule VII of the Companies Act, 2013 the company constituted a CSR Committee of the Board to (a) formulate and recommend a CSR policy (b) recommend the amount of expenditure to be incurred on the CSR activities and (c) monitor implementation of the CSR policy from time to time. The terms of reference of the CSR committee are in accordance with Section 135 of the Companies Act 2013. The Annual Report on CSR in the prescribed format is enclosed to this Report as Annexure-IV.

26. Related Party Transactions

The company has in place formulated a Policy on materiality of Related Party transactions for dealing with such transactions in line with the requirements of the Listing Regulations with the Stock Exchange. . The policy on related party transactions is available on the Companys website at - policy-disclosures.

Particulars of contracts or Arrangements with related parties referred to in Section 188(1) of the Companies Act 2013 in the format specified as Form AOC2 forms part of this Report as Annexure- V

27. Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board is required to monitor and review the Board evaluation framework. In line with the Corporate Governance Guidelines,

Annual Performance Evaluation is conducted for all Board Members as well as the working of the Board and its Committees. The Board works with the Nomination and Remuneration committee to lay down the evaluation criteria for the performance of executive/nonexecutive/independent directors through a peer evaluation, excluding the director being evaluated through a Board effectiveness survey. The questionnaire of the survey forms an integral part of reviewing the functioning and effectiveness of the Board and for identifying possible paths for improvement. Each Board member is required to evaluate the effectiveness of the Board and its committees on various parameters and feed back on each Director is part of the survey. The outcome of the Board evaluation for the financial year 2021-22 was discussed by the Board at their meeting held on 15th February 2022.

28. Remuneration to Director and Employees

Details/Disclosures of ratio of remuneration to each Director to median employees remuneration as required pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and details of remuneration paid to Employees vide Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure- VI

29 Corporate Governance Report

Your Company has taken adequate steps to adhere to all the stipulations as laid down in Pursuant to Schedule V (C) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. As required, a Report on Corporate Governance is provided elsewhere in this Annual Report along with Auditors Certificate on compliance thereof.

30. Auditors

M/s. B K Ramadhyani & Co. LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company at the 25th Annual General Meeting (‘AGM) held on June 20, 2017 for a period of 5 years, up to the conclusion of 30th AGM. M/s. B K Ramadhyani & Co. LLP are eligible for re-appointment for a further period of 5 years. M/s. B K Ramadhyani & Co. LLP have given their consent for their re-appointment as Statutory Auditors of the Company and has issued certificate confirming that their re-appointment, if made, will be within the limits prescribed under the provisions of Section 139 of the Companies Act, 2013 (‘the Act) and the rules made thereunder. M/s. B K Ramadhyani & Co. LLP have confirmed that they are eligible for the proposed appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made thereunder. As confirmed to Audit Committee and stated in their report on financial statements, the Auditors have reported their independence from the Company and its subsidiary according to the Code of Ethics issued by the Institute of Chartered Accountants of India (‘ICAI) and the ethical requirements relevant to audit. Based on the recommendations of the Audit Committee and the Board of Directors, it is hereby proposed to re-appoint M/s. B K Ramadhyani & Co. LLP, Chartered Accountants, having registration No.0028785/S200021, as the Statutory Auditors of the Company for the second and final term of five consecutive years, who shall hold office from the conclusion of this 30th AGM till the conclusion of the 35 th AGM of the Company. The requirement for the annual ratification of auditors appointment at the AGM has been omitted as per Companies (Amendment) Act 2017 notification on May 7 2018.

Total fees for all services paid by the Company and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/network entity of which the statutory auditor is a part is given below

Rs. in Mn.
Payment to Statutory Auditors FY 2021-22
Audit Fees 1.15
Others Service 0.09
Reimbursement of expenses 0.00
Total 1.24

31. Acknowledgments

Your Directors take this opportunity to express their gratitude to -

Our esteemed customers, shareholders, vendors, business partners, advisors and consultants for their unstinted support. The contribution made by our employees at all levels. Our consistent growth was made possible by their solidarity, cooperation and support.

- State Bank of India, (India), HSBC Bank Ltd (India), Axis Bank Ltd., (India), Indian Bank, (Singapore), HSBC Bank, (USA) and First Federal Bank, (USA) , for their support and guidance.

- Customs, Reserve Bank of India, Software Technology Parks (STPI) and NASSCOM, Central & State Governments, Software Technology Park (STPI) and NASSCOM for their continued support.

For and on behalf of the Board of Directors
ASM Technologies Ltd.
Place : Bangalore M. R. Vikram Rabindra Srikantan
Date : 30.05.2022 Chairman Managing Director