Cigniti Technologies Ltd Directors Report.

Dear Members,

The Board of Directors hereby submits the report of the business and operations of your Company along with the audited financial statements, for the financial year ended March 31, 2019. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

FINANCIAL HIGHLIGHTS:

The performance during the period ended 31st March, 2019 has been as under:

(Rs. In Lakhs)
Particulars 2018-2019 2017-2018
Consolidated Standalone Consolidated Standalone
Total Income 84332.10 28991.49 69385.93 24617.58
Total Expenditure 70109.17 22274.23 66091.94 21793.55
Profit (Loss) Before Tax 14222.93 6717.26 3293.99 2824.03
Provision for Tax (512.83) 745.83 76.66 282.96
Profit (Loss) after Tax 14735.76 5971.43 3217.33 2541.07
Transfer to General Reserves 0 0 0 0
Profit available for appropriation 14735.76 5971.43 3217.33 2541.07
Balance Carried to Balance Sheet 14735.76 5971.43 3217.33 2541.07

STATE OF AFFAIRS/COMPANYS PERFORMANCE:

Software has become an integral part of our lives. Your Companys vision is to help companies improve the quality of software being delivered worldwide. More than 40% of the software development efforts are spent in testing. By focusing on a niche like software testing, your Company hopes to make a mark in the IT industry. Your Company aims to be thought leaders in software testing using a combination of onsite consulting, off shore test execution and application of tools and frameworks that will reduce the number of post release defects and do it faster. The total revenue of the Company for the financial year under review on consolidated basis was Rs. 84332.10 lakhs as against Rs. 69385.93 lakhs for the previous financial year. The company recorded a net profit of Rs. 14735.76 lakhs for the financial year 2018-19 as against the net profit of Rs. 3217.33 lakhs for the previous year. On Standalone basis, the total revenue of the Company for the financial year 2018-19 was Rs. 28991.49 lakhs as against Rs. 24617.58 lakhs for the previous financial year. The net profit for the financial year 2018-19 is Rs. 5971.43 Lakhs as against the net profit of Rs. 2541.07 lakhs for the previous year.

During the period under review and the date of Boards Report there was no change in the nature of Business.

FUTURE PROSPECTS & OUTLOOK

In the wake of Digital Transformation wave, Organizations of all sizes, globally are witnessing rapid changes in the psyche of their digitally-empowered and omni-channel customers. Increasing product quality expectations with declining patience levels is mandating the need to deliver a premium customer experience assuring software quality at high speeds. New age digital businesses require outstanding QE services that are driven by AI and automation and built for a DevOps environment. We at Cigniti are the Worlds largest Independent Quality Engineering company bringing the power of AI to Agile and DevOps, to accelerate the Digital Transformation for our clients. Leveraging AI-driven Quality Engineering, Cigniti is assisting the digital transformation efforts of organizations by assuring high quality at high speed. With our current positioning and market leadership in Quality Engineering, we find ourselves in an extremely favorable spot in the ecosystem and on an aggressive growth path. In the past few years, the profile of testing services industry has changed; it is no longer about undertaking testing in a more professional way, based on employing career testers only. It is also about scale, automation and adoption of rapid development methodologies. Leading industry analysts such as Gartner, Forrester, Nelson Hall and others have reiterated that specialized testing services market will continue to grow. And we are seeing this acceptance across all geographies which are translating into business deal wins for us. Analysts also have continued to recognize us as Leaders in the Quality Engineering space.

Cignitis practical approach with AI-powered continuous testing platforms provide a strongly differentiated value add to our clients. To maintain our position as leaders in Quality Engineering, we continue to forge newer partnerships while foraying into diverse new industry verticals and sub-verticals in an attempt to increase not just the breadth but also the depth of our presence. Our newly appointed board of directors armed with multi-decades of industry experience are playing a crucial role in shaping our vision and aligning the organization to stay relevant in the market. We have continued to get 4/4 on Client satisfaction index from a majority of our customers and this strong trust of clients is helping us win new business, mostly in form of client referrals which are culminating into multimillion-dollar accounts. These are exciting times for Cigniti with a very strong business revenue pipeline, heightened focus on sales and marketing while we continue to file new patents for our proprietary innovation & intellectual property. We have aggressive targets for growth and profitability and look forward to a great year ahead.

MATERIAL CHANGES & COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this report.

DIVIDEND

Though the Company made profits for the current year, there are unabsorbed carry forward losses, hence your Directors regret their inability to recommend dividend for the year under review. However, once the reserves are build and your Company achieves the leadership position, a generous Dividend policy can be adopted.

TRANSFER TO RESERVES

Your Company has not transferred any amount to reserves during the year under review and proposes to retain the entire amount in its Statement of Profit and Loss/retained earnings.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards (Ind AS) 110 and Ind-AS 28 on consolidated financial statements, your Directors have provided the consolidated financial statements for the financial year ended March 31, 2019 which forms part of the Annual Report.

INFORMATION ABOUT THE FINANCIAL PERFORMANCE/FINANCIAL POSITION OF THE SUBSIDIARIES/BRANCHES/ASSOCIATES/JOINT VENTURES:

Your Company has four wholly owned foreign subsidiary companies (WOS), one Indian wholly owned subsidiary companies (WOS) and two foreign Branches.

Cigniti Technologies Inc., USA, (Foreign WOS) Cigniti Technologies (Canada) Inc., (Foreign WOS) Cigniti Technologies (UK) Limited, UK (Foreign WOS) Cigniti Technologies (Australia) Pty. Limited, Australia (Foreign WOS) Gallop Solutions Private Limited (Indian WOS) Cigniti Technologies Limited, South Africa (Foreign Branch) Cigniti Technologies Limited, Dubai (Foreign Branch)

As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary companies is prepared in Form AOC-1 and is attached as Annexure-A and forms part of this report.

In accordance with the provisions of the Companies Act, 2013, the Balance sheet, Statement of Profit and Loss and other documents of the subsidiary companies are being made available on the website of the Company i.e. www.cigniti.com.

AUDITORS

The members of the Company at their Annual General Meeting held on 30th June, 2017 have appointed M/s. S R Batiliboi & Associates, LLP, as statutory auditors of the Company to hold office until the conclusion of 24th Annual General meeting of the Company. Further your Directors have appointed M/s. Sarath

& Associates, Chartered Accountants, Hyderabad as internal Auditors in its meeting held on 21st May, 2018. Deviations are reviewed periodically and due compliance ensured. Summary of Significant Audit Observations along with recommendations and its implementations are reviewed by the Audit Committee and concerns, if any, are reported to Board.

Further the Cost Audit is not applicable to your Company.

AUDITORS REPORT AND SECRETARIAL AUDITORS REPORT

The statutory auditors report and secretarial auditors report do not contain any qualifications, reservations or adverse remarks.

During the year, the statutory auditors and secretarial auditor have not reported any instances of frauds committed in the Company by its officers or Employees to the Audit Committee under section 143(12) of the Companies Act.

Report of the secretarial auditor is given as an Annexure F which forms part of this report.

DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of section 134 (5) of the Companies Act, 2013, the Board of Directors hereby confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no 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 at the end of the financial year and of the profit and loss of the company for that period; (c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) They have prepared the annual accounts on a going concern basis; and (e) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and operating effectively.

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

Further, there are no qualifications, reservations or adverse remarks made by the Statutory Auditors/Secretarial Auditors in their respective reports.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

None of the directors of the company are disqualified under the provisions of the Companies Act, 2013 (‘Act) or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All Independent Directors have provided confirmations as contemplated under section 149(7) of the Act.

Appointments/Re-appointments

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. K. Ch. Subba Rao, Non-Independent and Non-Executive Director retires by rotation and being eligible, offers himself for re-appointment. During the year, Mr. K. Ch. Subba Rao was re-designated as a Non-Executive, Non-Independent Director, w.e.f. 21st May, 2018. As per the requirements of Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended) and Clause 1.2.5 of the Secretarial Standard 2 (Revised) as issued by the Institute of Company Secretaries of India, a statement containing the requisite details of Mr. K. Ch. Subba Rao seeking re-appointment is given below:

Name Shri K. Ch. Subba Rao
DIN 01685123
Date of Birth 01/02/1956
Age 63 years
Profile Mr. K. Ch. Subba Rao is a post graduate in science and has got varied experience in Real Estates and other related activities. He has 3 decades of rich experience in real estate and logistic business. He is a successful entrepreneur who co-founded one of South Indias largest transport and logistics organization which continues to grow stronger since inception.
Qualification Master of Science
Experience and Expertise in specific function area Business and General Administration
Terms and conditions of appointment Appointed w.e.f. 21st May, 2018 as Non-Executive, Non Independent
or re-appointment along with details of remuneration sought to be paid. Director liable to retire by rotation as per the provisions of the Companies Act, 2013 (as amended)
Remuneration last drawn by such person Nil
Date of first appointment on the Board 01/12/2003
Membership/Chairmanship of Committees of the
Nil
Board of Directors of the Company
Other Directorships and Membership of other Inspiria-Const & Developers Private Limited
Boards Pixetron Video Display Solutions Private Limited

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Companys policy on directors appointment and remuneration and other matters provided in section 178(3) of the Act have been disclosed in the Corporate Governance report, which forms part of the Directors Report.

CORPORATE GOVERNANCE

Corporate Governance is about maximizing shareholder value legally, ethically and sustainably. At Cigniti, we believe, a sound corporate governance is critical to enhance and retain investor trust. The goal of corporate governance is to ensure fairness information about the Company for every stakeholder. Our disclosures seek to attain the best practices in international Corporate Governance. A separate section on Corporate Governance for fiscal 2018 forms part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of the provisions of Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Managements discussion and analysis is set out in this Annual Report.

RELATED PARTY TRANSACTIONS

During the year none of the transactions with related parties were covered under the scope of section 188(1) of the Act. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and is enclosed as Annexure-B.

PARTICULARS OF EMPLOYEES

A table containing the particulars in accordance with the provisions of section 197(12) of the act, read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure-C to this report.

A statement containing the name of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lakhs or more, or employed for part of the year and in receipt of Rs. 5 lakhs or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as Annexure-C to this report.

EMPLOYEE STOCK OPTION SCHEME

During the year, the company had granted options under Cigniti ESOP scheme 2015. Details of the options up to 31st March 2019 are set out in the Annexure-D to this report, as required under clause 12 of the Securities and Exchange Board of India (Employee Stock Options Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014.

EXTRACT OF ANNUAL RETURN

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 is included as Annexure-E and forms part of this Report and is disclosed on website of the Company at https://www.cigniti.com/investors

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Independent Directors are familiarized about the Companys operations and businesses. Interaction with the Business heads and key executives of the Company is also facilitated. Detailed presentations on important policies of the Company is also made to the directors. Direct meetings with the Chairman is further facilitated to familiarize the incumbent Director about the Company/its businesses and the group practices.

The details of familiarisation programme held in FY 2018-19 are also disclosed on the Companys website at https://www.cigniti.com/investors/familiarisation programme.

DISCLOSURE OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. The Company maintains appropriate system of internal control, including monitoring procedures, to ensure that all assets are safeguarded against loss from unauthorized use or disposition. Company policies, guidelines and procedures provide for adequate checks and balances, and are meant to ensure that all transactions are authorized, recorded and reported correctly.

During the period under review, there is no material or serious observations have been noticed for inefficiency or inadequacy of such controls.

CORPORATE SOCIAL RESPONSIBILITY

With the mission to discover once again the social responsibility of developing economic, social and environmental capital towards sustainability, Cigniti crafted CSR projects in achieving the mission. Your Company believes and strives hard in sustainable development of society in which the enterprise draws economic and natural resources by enriching its capacity in contributing to the significant positive change in the economy. The CSR committee has been formed to achieve the mission and implement the CSR objectives.

An elaborate report on CSR is published elsewhere in this annual report.

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Conservation of Energy:

Your Companys operations are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment.

B. Technology Absorption:

Your Company has not undertaken any research and development activity for any manufacturing activity nor was any specific technology obtained from any external sources which needs to be absorbed or adapted.

C. Foreign Exchange Earnings and Out Go:

Foreign Exchange Earnings: Rs. 291,49,66,692/-

Foreign Exchange Outgo: Rs. 14,89,62,536/-

MECHANISM FOR EVALUATION OF THE BOARD

Evaluation of all Board members is performed on an annual basis. The evaluation is performed by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.

In line with Securities and Exchange Board of India Circular No. SEBI/HO/CFD/CMD/CIR/P/2017/004, dated January 5, 2017 and the Companies Amendment Act, 2017 the Company adopted the recommended criteria by Securities and Exchange Board of India.

The Directors were given evaluation forms for the following: (i) Evaluation of Board; (ii) Evaluation of Committees of the Board; (iii) Evaluation of Independent Directors; (iv) Evaluation of Chairperson;

(v) Evaluation of Non-Executive and Non-Independent Directors; and

(vi) Evaluation of Managing Director.

The Directors were requested to give following ratings for each criteria:

1. Fair;

2. Satisfactory; and

3. Very satisfactory.

The Directors have sent the duly filled forms to Nomination & Remuneration committee. Based on the evaluation done by the Directors, the Committee has prepared a report and submitted the Evaluation Report. Based on the report, the Board of Directors has informed the rankings to each Director and also informed that the performance of Directors is satisfactory and they are recommended for continuation as Directors of the Company.

COMMITTEES OF THE BOARD

As on March 31, 2019, the Board had five committees: the Audit Committee, the Nomination & Remuneration Committee, the Stakeholder Relationship Committee, the Risk Management Committee and Corporate Social Responsibility Committee.

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

BOARD MEETINGS

During the year 2018-19, four Board meetings were held, the details of which are given in the Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of loans, guarantees or investments made under section 186 of the companies Act, 2013 are given in the note to the financial statements.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators/courts that would impact the going concern status of the Company and its future operations.

SHARE CAPITAL

During the year, your Company has allotted 4,16,240 equity shares of Rs. 10/- each to employees under Cigniti ESOP scheme. Consequently, the paid up share capital of the Company has increased to Rs.27,66,42,690/- divided into 2,76,64,269 equity shares of Rs. 10/- each.

PUBLIC DEPOSITS

Your Company has not accepted any deposits falling within the meaning of Sec.73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules 2014, during the financial year under review.

INSURANCE

The properties and assets of your Company are adequately insured. Further the Directors have been adequately covered under D&O policy.

RISK MANAGEMENT POLICY

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well-structured risk management process.

DISCLOSURE REQUIREMENTS

Details of the familiarization programme of the independent directors are available on the website of the Company (https://www.cigniti.com/investors/ familiarisation programme).

Policy for determining material subsidiaries of the Company is available on the website of the Company (https://www.cigniti.com/investors/Policies).

Policy on dealing with related party transactions is available on the website of the Company (https:// www.cigniti.com/investors/Policies).

The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns. The provisions of this policy are in line with the provisions of the section 177(9) of the Act and Regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (https://www.cigniti.com/investors/Policies).

CODE OF CONDUCT FOR THE PREVENTION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015 and the applicable U.S Securities laws. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company securities.

The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading, is available on our website (https://www.cigniti.com/ investors/Code of conduct for prohibition of Insider Trading.pdf).

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed during the calendar year.

• No. of complaints received: Nil

• No. of complaints disposed o : Nil

ACKNOWLEDGEMENTS

The Board thank customers, vendors, investors and bankers for their continued support during the year. It places on record its appreciation of the contribution made by employees of the company at all levels. The Board thanks the governments of various countries where the company has operations. It also thanks the Government of India, particularly the Ministry of Communication and Information Technology, the Ministry of Commerce, the Ministry of Finance, the Ministry of Corporate Affairs, the Customs and Excise Departments, the Income Tax Department, the Reserve Bank of India, the State Governments, and other government agencies for their support, and looks forward to their continued support in the future.

The Board also wishs to place on record their appreciation of business constituents like SEBI, BSE, NSE, NSDL, CDSL etc. for their continued support for the growth of the Company.

For and on behalf of the Board

Cigniti Technologies Limited

Sd/-

C. V. Subramanyam

Chairman & Managing Director DIN: 00071378

Place: Hyderabad

Date: 02.05.2019