Hinduja Global Solutions Ltd Directors Report.
Your Directors are pleased to present their Report on the business and operations of your Company along with the Audited Financial Statements (Standalone and Consolidated) for the financial year ended March 31, 2019.
(Rs. in million* except per share data)
|FY 2019||FY 2018||FY 2019||FY 2018|
|Revenue from Opeations||21,964||20,587||47,855||38,494|
|Other Operating Income||-||-||312||-|
|Depreciation & Amortization||972||837||1,968||1,413|
|Profit Before Tax and Exceptional items||2,966||2,460||2,482||2,664|
|Profit Before Tax||2,966||2,460||2,482||2,544|
|Provision for tax (including Deferred Tax)||661||334||718||553|
|Profit After Tax||2,305||2,126||1,764||1,991|
|Less: Non-controlling Interest||-||(8)||(15)|
|Add: Balance brought forward from Previous year||8,394||6,507||7,114||5,063|
|Add/(Less): Adjustments & Appropriation:|
|Adjustments during the year||-||11||(412)||295|
|Dividend Distribution Tax||(43)||(42)||(43)||(42)|
|Balance Carried Forward||10,448||8,394||8,223||7,114|
|Earnings per share (R)|
|- Fully Diluted||110.52||102.04||84.96||96.31|
*(1 million = Rs.10 lakhs)
The Standalone and Consolidated Financial Statements for the year ended March 31, 2019, have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) and Companies (Indian Accounting Standards) Amendment Rules, 2016, as prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable.
The financials for the year under review are not comparable with the reported financials of the previous year due to following reasons:
As reported last year, the Scheme of Amalgamation of the Company (the Scheme) with its wholly owned subsidiary in India namely HGS International Services Private Limited ("HGSISPL") was sanctioned by the Honble National Company Law Tribunal (NCLT), Mumbai Bench, vide its Order dated June 20, 2018. The Scheme became effective on August 01, 2018 but made operative from April 01, 2017 being the appointed date as per the Scheme. Accordingly, HGSISPL got amalgamated with the Company on April 01, 2017 and stands dissolved without winding up. Consequent to the amalgamation of HGSISPL with the Company, the standalone and consolidated financials for FY 2018 have been recast and hence would not match with the financials for FY 2018 as published in the Annual Report of FY 2018.
As reported last year, effective April 02, 2018 and April 03, 2018, the Company through its overseas subsidiaries, acquired CMH Services Subsidiary LLC, USA and Element Solutions LLC, USA, respectively. Further, in July 2018, HGS Population Health LLC, USA, the holding company, merged into CMH Services Subsidiary LLC, USA. Thereafter, the name of CMH Services Subsidiary LLC, USA was changed to HGS AxisPoint Health LLC. In view of these acquisitions, the financials of FY 2019 are not comparable with the financials of FY 2018.
On a Consolidated basis, your Company registered a strong performance during the financial year ended March 31,2019. Compared to the previous financial year, Revenues from Operations and Other Operating Income increased by 25.1% from R 38,494 million to R 48,167 million. FY 2019 reported Other Operating Income of R 312 million from sale of contracts of GuidePoint business of HGS AxisPoint Health LLC.
Out of the growth of 25.1%, around 8.4% revenue growth came from the two acquisitions (AxisPoint Health and Element Solutions) made in early April 2018, around 11.3% from organic growth and around 5.4% came on account of exchange rate fluctuations. The Company saw strong growth in revenues across all verticals, especially healthcare, telecom and technology.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) excluding Other Income grew 8.6% from R 4,061 million to R 4,411 million. This growth in EBITDA was achieved despite significant drop in revenues of the India domestic CRM business, increase in minimum wages in the state of Karnataka and challenging business environment in UK due to the uncertainties about Brexit. EBITDA for FY 2018 and FY 2019 has been computed on the same basis i.e., excluding gains and losses on account of fluctuations in foreign exchange currencies.
Other Income during FY 2019 rose by 22.7% from Rs.363 million to Rs.445 million. This increase is on account of interest on tax refunds and foreign exchange variations.
PAT (Profit after Tax) for FY 2019 decreased from Rs.1,991 million to Rs.1,764 million, a drop of 11.4%. This drop is on account of increase in depreciation (including accelerated depreciation of assets of some of the delivery sites/centres which were closed due to adverse business conditions and accelerated depreciation for self-developed software) and increase in interest costs (including cost of deferred compensation for the acquisitions made during FY 2019 and borrowings made to fund loss making businesses).
On a Standalone basis, in FY 2019 Revenues from Operations grew by 6.7% from Rs.20,587 million to Rs.21,964 million. This revenue growth has to be seen in the context of the India domestic CRM business which was down by around 7%. Increase in Other Income was on account of exchange rate variations and interest on income tax refunds. Increase in depreciation was on account of accelerated depreciation of the assets of delivery sites which have been shut down due to adverse business scenario. EBITDA for FY 2019 increased by 13.9% from Rs. 3,185 million to Rs. 3,627 million. PAT in FY 2019 grew by 8.4 % from Rs. 2,126 million to Rs. 2,305 million.
A review of the Financial and Operating Performance of the Company and its key subsidiaries have been given in the Management Discussion and Analysis section which forms part of this Report as Annexure E.
Other financial highlights:
Cash flow from operations and after working capital changes: Rs. 1,705 million in FY 2019 as compared to Rs. 3,432 million in FY 2018, a decrease of 50%;
CAPEX: Rs. 1,861 million as compared to Rs. 1,214 million in FY 2018;
Gross Debt of Rs. 6,022 million as at March 31, 2019 (as compared to Rs. 5,854 million as at March 31,2018, i.e. an increase of Rs. 168 million during the year);
Net Worth: Rs. 16,436 million as at March 31,2019 as compared to Rs. 15,195 million as at March 31, 2018, an increase of 8.2%.
Revenue by Origination Geography-US: 71%; Canada: 12%; UK & Europe: 6% and India: 11%.
Revenue by Verticals-Healthcare: 52%; Telecom and Technology: 18%; Consumer: 12%; Banking and Financial Services: 8% and Others: 10%.
Client Wins: 41 new clients across BPM and HRO.
Active Clients: 237 core BPM clients and 656 Payroll processing, HRO and F&A clients.
Delivery Centres: 73 global delivery centres across seven countries at the end of the FY 2019.
Employee Headcount: 42,190 as on March 31,2019; of which India: 57%, Philippines: 20%, USA: 9%, Canada: 6%, Jamaica: 5% and UK: 3%.
Your Directors are pleased to recommend a Final Dividend of Rs. 2.50 per equity share (25% on face value of Rs. 10/- each) for the year ended March 31, 2019, subject to your approval. This is in addition to the three Interim Dividends aggregating to Rs. 7.50 per equity share of Rs. 10 each for the financial year 2018-19 declared by the Board of Directors on August 9, 2018, November 2, 2018 and February 7, 2019, respectively and have been duly paid. The total dividend for the financial year ended March 31, 2019 would be Rs. 10 per equity share (100% on face value of Rs. 10/- each), if approved by the Members.
The world is witnessing rapid changes led by consumer preferences, disruptive technologies and competitive forces and concerns over data privacy. Businesses are constantly looking for solutions to enhance customer experience, increase sales, add customers and reduce costs. To meet the changing needs of businesses, Business Process Management (BPM) players are combining analytics, automation and digital technologies to offer new business models and alternate delivery channels.
The Global BPM spend is estimated to have grown by 4.5% in FY 2018 to touch US$ 198 billion. As per NASSCOM, the growth of the Indian BPM industry remains steady, reaching an estimated US$ 34.8 billion in revenue for FY 2019, an increase of 7.2% on year-on-year basis. The domestic BPM market is expected to have grown at 7.7% in rupee terms to reach Rs. 286 billion in FY 2019.
As per IT and Business Process Association of the Philippines (IBPAP), revenues for the Philippines BPM industry are estimated to have grown by around 6% in 2018 to touch $24.8 billion and directly employing around 1.23 million people.
Detailed information pertaining/relating to Business Review has been provided in the Management Discussion and Analysis section which forms part of this Report as Annexure E.
HGS International, Mauritius, a wholly-owned subsidiary of your Company, is primarily engaged in investment activity. HGS International owns 100% of the share capital of Hinduja Global Solutions Inc., USA, C-Cubed N.V., Curacao, Hinduja Global Solutions Europe Ltd., UK, HGS St. Lucia Ltd., Saint Lucia and Hinduja Global Solutions MENA FZ- LLC, Dubai. HGS International jointly with HGS UK Limited owns 100% of the share capital of HGS AxisPoint Health LLC.
HGS International owns 95.2% of the common shares of HGS Colibrium Inc., with one of its founders owns balance share capital. HGS International holds 76% of share capital of Hinduja Global Solutions UK Ltd while the balance 24% is held by Hinduja Global Solutions Europe Ltd., UK.
Revenue for FY 2019 was US$ 1.6 million as compared to US$ 4.5 million for FY 2018.
Hinduja Global Solutions Inc., USA (HGS Inc.), HGS Inc., a wholly-owned subsidiary of HGS International, Mauritius, specializes in marketing and provision of both voice and non-voice related Customer Contact and Business Process Outsourcing services to its clientele. Its wholly-owned subsidiaries are HGS (USA) LLC, HGS Canada Inc., HGS EBOS LLC and HGS Healthcare LLC.
The Consolidated Revenue was US$ 506.7 million for FY 2019 as compared to US$ 431.8 million in FY 2018.
HGS (USA), LLC, a wholly-owned subsidiary of HGS Inc., USA, operates in three cities in the US. It partners with Fortune 1000 companies and Government agencies to provide comprehensive Customer Relationship Management programs in the verticals of consumer goods and services, e-commerce, telecom and media. HGS (USA), LLC also sub contracts work to HGS India and its branch in the Philippines and to Jamaica. For FY 2019, it recorded revenue of US$ 104.7 million as against revenue of US$ 86.7 million in FY 2018.
HGS Healthcare, LLC, is a wholly-owned subsidiary of HGS (USA), LLC, and renders business process management services to healthcare clients, primarily in the Payer Segment. HGS Healthcare renders services from three cities in the US as well as sub contracts work to HGS India and its branch in Philippines and to Jamaica. For FY 2019, it recorded revenue of US$ 272.6 million as compared to US$ 251.9 million in FY 2018.
HGS EBOS, LLC, is a wholly-owned subsidiary of HGS Inc., and renders business process management services to healthcare clients, primarily in the Provider Segment. HGS EBOS renders services in USA as well as sub contracts work to HGS India and its branch in Philippines. For FY 2019, it recorded revenue of US$ 48.4 million as compared to USD 32.5 million in FY 2018.
HGS Canada Inc., a wholly-owned subsidiary of HGS Inc., USA, is a Canadian Contact Center service provider servicing marquee customers across verticals such as Media, Telecom, Technology and Banking & Financial Services. HGS Canada offers technical support, inbound and outbound sales, customer care and customer retention in English and French languages. For FY 2019, it recorded revenue of CAD 105.8 million as compared to revenue of CAD 77.2 million in FY 2018.
Hinduja Global Solutions Europe Ltd., is the UK-based wholly owned subsidiary of HGS International, Mauritius focusing on providing consulting services for BPM, call center services and offshoring services to UK-based clients. It owns 24% stake in Hinduja Global Solutions UK Ltd (and 100% stake in HGS France SARL, France (a non-operating company).
For FY 2019, it recorded revenue of GBP 2.5 million as compared to GBP 1.6 million in FY 2018.
Hinduja Global Solutions UK Ltd., is a leading contact center company with centers in London, Preston and Selkirk (Scotland). It offers a range of services for inbound and outbound interactions to marquee customers across verticals such as Government, FMCG, Financial Services, Automobiles and Retail. Its inoperative branch in Rotterdam (Netherlands) was wound up in FY 2018 while the other inoperative branch in Hamburg (Germany) is in the process of being wound up.
For FY 2019, it recorded revenue of GBP 32.9 million as compared to GBP 33.1 million in FY 2018.
HGS St. Lucia Ltd., Saint Lucia, is the holding company of Team HGS Ltd., Jamaica.
Team HGS Ltd., Jamaica, began call center operations in FY 2013 at Kingston, Jamaica and continues to show strong performance. It services local Jamaican clients as well as US clients from healthcare and other verticals. Revenue for FY 2019 was Jamaican Dollars 3,877.6 million compared to Jamaican Dollars 3,585.7 million in FY 2018.
Hinduja Global Solutions MENA FZ-LLC: It has an office in Dubai Internet City with the objective to build sales pipeline and provide technology based support services to other HGS entities. In FY 2019, it recorded revenues of AED 1.4 million as compared to AED 2.0 million in FY 2018.
HGS Colibrium Inc., USA: It offers platform-based services to help health insurance companies enroll customers. Revenue for FY 2019 was US$ 3.8 million as compared to USD 4.9 million for FY 2018.
HGS AxisPoint Health LLC: The share capital of this company is held as follows: HGS International, Mauritius holds 51% and Hinduja Global Solutions UK Ltd. holds the balance 49%.
Effective April 02, 2018, HGS International and Hinduja Global Solutions UK Ltd. jointly acquired 100% of CMH Services Subsidiary LLC, USA. Further in July 2018, HGS Population Health LLC,USA, the holding company, merged into CMH Services Subsidiary LLC, USA. Thereafter, the name of CMH Services Subsidiary LLC, USA was changed to HGS AxisPoint Health LLC.
In December 2018, HGS AxisPoint Health LLC had sold some customer contracts and transferred employees related to its GuidePoint division for a consideration of USD 5.30 million which was duly received.
HGS AxisPoint Health LLC, through its CarePoint division, is engaged in providing care management services and case management programs that provide quantified results for payers and their members with predictive intelligence, laser-focused targeting, pulsed interventions, and a digital health experience.
For FY 2019, it recorded revenue of US$ 30.8 million.
Element Solutions LLC: Effective April 03,2018, Hinduja Global Solutions UK Ltd;, acquired 57% stake in Element Solutions LLC and the balance 43% is held by its Founders.
The Company is engaged in providing digital marketing services, digital consulting services as well as cloud migration and cloud monitoring services.
For FY 2019, it recorded revenue of US$ 15.5 million.
Particulars of Loans, Guarantees and Investments
Particulars of Loans, Guarantees and Investments as per Section 186 of the Companies Act, 2013 have been disclosed in this Annual Report as a part of the Notes to the financial statements.
Increase in Authorized Share Capital
The members of the Company had approved resolutions relating to the consolidation /increase in Authorized share capital of your Company from Rs. 25,00,00,000/- (Rupees Twenty Five Crores) divided into 2,50,00,000 (Two Crores Fifty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten) each to Rs. 27,65,00,000 (Rupees Twenty-Seven Crores Sixty Five Lakhs) divided into 2,75,00,000 (Two Crores Seventy Five Lakhs) Equity shares of Rs. 10/- (Rupees Ten) each and 1,50,000 (One Lakh Fifty Thousand) 1% Participatory Redeemable Non-Cumulative Preference Shares of Rs. 10/- (Rupees Ten) each and consequent alteration to Clause V of the Memorandum of Association of the Company on June 07, 2018 provided in the Postal Ballot Notice dated April 25, 2018.
Such consolidation/increase in Authorized Share Capital and consequent alteration to Clause V of the Memorandum of Association of the Company were subject to the sanction of the Scheme of Amalgamation of HGS International Services Private Limited (Transferor Company), a wholly owned subsidiary of the Company with the Company (the Scheme) by the Honble National Company Law Tribunal, Mumbai Bench (NCLT) and the effective date of such consolidation/increase in Authorized Share Capital and consequent alteration to Clause V of the Memorandum of Association of the Company was to be the date on which certified copy of the Order of the NCLT sanctioning the Scheme was filed by the Transferor Company and the Company with the Registrar of Companies, Maharashtra. The NCLT had sanctioned the Scheme on June 20, 2018 and both the Transferor and the Company had filed the certified copy of the Order with the Registrar of Companies, Maharashtra on August 01,2018 i.e., within thirty days of receipt of the Order as required by the statutory provisions.
Effective August 01, 2018, HGS International Services Private Limited, stands dissolved without winding up and its Authorized share capital stands consolidated with the Authorized Share Capital of the Company resulting into increase in Authorized Share capital of the Company.
Communications and Public Relations
HGS is evolving its positioning in the market place to emphasize the unique ways the Company creates value for its clients by putting the customer first, being brilliant at the basics, leveraging its deep domain expertise and intelligently innovating to support its clients business process optimization and digital transformation. The focused approach to buyer education and messaging that leverages our go-to-market positioning is resonating among key stakeholders, including through media such as Forbes.com, Healthcare Call Center Times and Beckers Hospital Review.
In an independent report by Apollo Research (February 2019) measuring market share of voice in select media, among the top 22 BPO competitors, HGS ranked in the top 5 across North America and the UK on key topics relevant to its industry.
In India, HGS continues to leverage media as a key channel to enhance visibility and thought leadership amongst key stakeholders including investors, clients, employees and government. HGS is amongst the leading voices in the BPM industry, working on driving the transformation message. HGS is also using news media and social media to reach out to prospective employees and establish itself as an "Employer of Choice". The annual Investor Meet is another key channel that is helping increase awareness and engagement with investors and communicate HGS perspectives to the market.
HGS has redesigned its website to make it more accessible and engaging for all site visitors. Our design team focused on making the web experience more fluid, device agnostic and more intuitive to the buyer journey-with quick access to key thought leadership, case studies and service line content. HGS also incorporated new messaging and robust content that offers transformative solution alternatives for customers and prospects in all key business sectors.
In FY 2019, HGS has been recognized by industry analysts and third-party organizations. HGS won a record 25 awards and recognition across the globe including: named Leader in the Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP) for the 9th consecutive year, Training Magazines 2019 Top 125 Training Organizations, NASSCOM Customer Services Excellence Award in transformation category and Institute of Human Resources Development (IHRD) Great HR Practices Award. HGS has leveraged these distinctions as credentials to reach industry influencers, analysts, advisers, potential customers, current customers, potential and current employees.
HGS continues to work towards creating an inclusive and transparent culture at the workplace. Different platforms-e-mailers, newsletters, blogs and articles are leveraged to share views and news with our employees around the world. The Company intranet-HGS Connect, is an integrated, two-way communication platform which serves as a one-stop solution across the globe. This internal portal also serves as a time-out for employees offering various business and fun elements to enable them to be empowered with business knowledge and interact with each other on a common platform. Additionally, various other digital and non-digital channels are being used to engage HGS employees globally.
Corporate Social Responsibility (CSR)
As a socially responsible corporate entity, the CSR initiatives of your Company continues to aim at the overall development of the Society, with major thrust on upliftment of the economically and socially weaker communities of the society. Towards achieving such objective, CSR initiatives/ activities undertaken by your Company essentially focus on following core areas: Healthcare, Education and Community Development. CSR projects for honing the vocational skills of the youth and of the differently abled are also undertaken with the objective of enhancing their employment opportunities and livelihood.
Your company would continue to carry out CSR activities in the aforementioned areas and will undertake CSR activities as specified in Schedule VII to the Companies Act, 2013 including any amendment to the said Schedule.
During the year, your Company had won two CSR awards i.e. CSR Project of the Year award for Treat to Cure MDR-TB Eradication Program and Stakeholders Engagement Award-"Voluntary initiatives across the cities".
The Corporate Social Responsibility Committee ("CSR Committee") of the Company as at March 31, 2019,consisted of following Members:
Mr. Anil Harish (Independent Director)-Chairman, Mr. Ramkrishan P. Hinduja (Non-Executive, Non-Independent Director), Member, Ms. Vinoo S. Hinduja (Non-Executive, Non-Independent Director), Member, *Mr. Rajendra P. Chitale (Independent Director), Member and *Mr. Rangan Mohan (Independent Director), Member.
*Mr. Rajendra P. Chitale and Mr. Rangan Mohan, Independent Directors ceased to be members of the Committee effective July 03, 2019 since they ceased to be Independent Directors of the Company on the expiry of their tenure from the said date.
Effective May 30, 2019, Mr. Pradeep Mukerjee, an Independent Director was appointed as a member of the Committee.
During the Financial Year 2018-19, one meeting of CSR Committee was held on January 10, 2019.
In terms of the CSR Policy of the Company, the CSR Forum, consisting of senior employees of the Company, identify and evaluate CSR projects/ initiatives and recommend the same for the consideration of the CSR Committee. The CSR Committee reviews the recommended projects/ initiatives and the expenditure to be incurred as per the provisions of the Companies Act, 2013 and the Rules made thereunder. The CSR Committee post review, recommends CSR projects/ initiatives to the Board of Directors for approval. The Board reviews and approves the CSR Projects/ initiatives recommended by the CSR Committee. The CSR Forum monitors the progress of the approved CSR Projects/initiatives and provides periodical updates on status of implementation, expenditure incurred/ to be incurred and beneficiaries of such projects to the CSR Committee and to the Board.
The Report on CSR activities, in the format as required under Companies (Corporate Social Responsibility) Rules, 2014, is set out in Annexure G forming part of this Report. The CSR Policy of the Company is available on the website of the Company at www.teamhgs.com/ investors/corporate-policies.
Directors Responsibility Statement
The financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) to the extent applicable, as prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Rules, 2016, as amended thereof.
As stipulated under the provisions contained in Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, the Directors, based upon the information and explanations obtained by them as also documents made available to them and to the best of their knowledge, and belief, states that:
a) in preparation of the Annual Accounts for the financial year ended March 31,2019, the applicable accounting standards have been followed and there have been no material departures in the adoption and application thereof;
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 towards the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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 adequate internal financial controls to be followed by the Company and that they 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 are adequate and are operating effectively.
The Company has in place internal financial controls framework which inter alia consist of Function wise Status of Testing (Risk and Control Matrix, Test of Design, Test of Operating Effectiveness), Summary of Controls (Key and Non-Key), Process level controls (Process/ Function wise), IT General controls (Application wise and Process wise) and Summary of Gaps in Process Level Controls, IT General Controls, etc. Total number of controls in FY 2018-19 has decreased due to consolidation of similar manual controls falling part of the same activity.
Total number of automated controls have increased due to elimination of manual controls and putting automated controls in place. Such framework is periodically internally tested as well as reviewed and tested by the external consultant. Based upon the said framework and the compliance systems established and maintained by the Company, work performed by the statutory, internal and secretarial auditors, including audit of internal financial controls over financial reporting, the reviews carried on by the Management, confirmations provided by the external consultants and update on such Framework presented to the Audit Committee and to the Board, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2018-19.
Number of Meetings of the Board
Eight meetings of the Board were held during the financial year 2018-19 on the following dates i.e., April 25, 2018, May 30, 2018, August 09, 2018, August 16, 2018, August 24, 2018, November 02, 2018, February 07, 2019 and March 29, 2019. The time gap between any two meetings did not exceed one hundred and twenty days. The further details in this regard are given in the Corporate Governance Report, which forms part of this Report as
Declaration by Independent Directors
As required under Section 149(7) of the Companies Act, 2013, (the Act) all the Independent Directors on the Board have given declaration of their independence confirming that they meet the criteria of independence laid down in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Regulations). In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the Regulations and are independent of management.
Pursuant to Section 134, 178 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the year under review, the performance evaluation for Financial Year 2018-19 of individual directors (Independent Directors and Non-Independent Directors), Committees of the Board and of the Board as a whole, based upon the Rating Document which consists of criteria for evaluation of performance was carried out by the Board of Directors (the Board). The Nomination and Remuneration Committee (the NRC) and the Board have earlier approved the Rating Document. The NRC has confirmed that the manner of carrying out performance evaluation on the basis of Rating Document is appropriate and is an effective process of evaluation.
The performance of the Individual Directors was inter alia evaluated on criteria such as: Exercise of independent judgment, offering constructive contribution to the Boards discussions and deliberations based on his/ her expertise and domain knowledge, Non-partisan appraisal of issues, etc., Evaluation of the performance of the Committees of the Board and the Board as a whole was inter alia based on the following criteria: structure of the Committees/Board, frequency, regularity and discussions at the meetings of the Committees/Board, functioning of the Committees/Board, mandate and composition of the Committees/Board, effectiveness of the Committees, contribution of the Committees to the decisions of the Board, etc.,
The Board based upon "evaluation process" carried out, concluded that overall performance of each of the Directors is "aleast satisfactory" and on certain criteria "exceptional". The Board also concluded that the performance of the Committees of the Board and the Board as a whole is "Satisfactory".
At the separate meeting of Independent Directors held during the Financial Year ended March 31,2019 (without the attendance of Non-Independent Directors and the Members of the Management), performance evaluation of Non-Independent Directors, the Chairman of the Company and the Board as a whole was carried out for the Financial Year 2018-19 on the basis of aforementioned criteria. The Independent Directors also assessed the quality, quantity and timeliness of the flow of information between the Companys Management and the Board.
The Independent Directors concluded that there has been a constructive contribution from each of the Non-Independent Directors and overall their performance is satisfactory and in the best interest of the Company. As regards the evaluation of performance of the Chairman of the Board, based upon the criteria considered by the Independent Directors, they concluded that the performance of the Chairman of the Board is outstanding and that he steers the Company to perform better in the challenging business and economic environment. They also concluded that the Board as a collective body is proactive and participating Board and its functioning is towards the wellbeing and in the best interest of the Company and aims at enhancing the performance of the Company and that the performance of the Board is more than satisfactory. Relevant information is provided by the management on timely basis as also periodical presentations are made which has enabled in depth discussions on key matters at the meetings of the Committees and the Board. They concluded that the flow of information between the Companys Management and the Board in terms of quality, quantity and timeliness is satisfactory.
At the Nineteenth Annual General Meeting of the Members of the Company held on July 03, 2014, Mr. Rajendra Prabhakar Chitale (DIN: 00015986) and Mr. Rangan Mohan (DIN: 01116821) were appointed as Independent Directors of the Company for a period of five consecutive years from July 03, 2014 to July 02, 2019 (both days inclusive). Mr. Rajendra P. Chitale and Mr. Rangan Mohan have not sought reappointment for a second term of consecutive five years from July 03, 2019 as such their tenure as Independent Directors of the Company expired effective July 03, 2019.
The Board placed on record its sincere appreciation for the contribution, guidance and advice provided by Mr. Rajendra P Chitale and Mr. Rangan Mohan during their tenure as Independent Directors which has immensely benefitted the Board and the Company.
In terms of the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Ms. Shanu S. P. Hinduja, Director and Co-Chairperson (DIN:06512872) is liable to retire by rotation at the ensuing Twenty Fourth Annual General Meeting and being eligible, offers herself for re-appointment.
None of the Directors of the Company are disqualified for appointment/continue to act as Director under Section 164 of the Companies Act, 2013.
Details relating to the composition of the Board, meetings of the Board held during the year ended March 31,2019, attendance of the Directors thereat have been provided in the Report on Corporate Governance which forms part of this Report as Annexure C.
Appointment of Independent Directors
The Company is required to appoint two Independent Directors to comply with SEBI (LODR) Regulations, 2015 and the Company has initiated the process of identification of potential candidates. Based on the recommendation of Nomination and Remuneration Committtee, the criteria for selection would include; veracity of the independence, fulfillment of criteria for appointment as per the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, industry expertise, functional specialization, international experience etc.,
The Nomination and Remuneration Committee and the Board, at the meetings held on August 5, 2019 and August 23, 2019 have been updated on the process and progress relating to appointment of Independent Directors.
Audit Committee constituted by the Board pursuant to the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI (LODR) Regulations, 2015 is in place. As at March 31,2019, the Committee consisted of following Members:
Mr. Anil Harish
Mr. Ramkrishan P Hinduja
(Non-Executive, Non-Independent Director), Member,
*Mr. Rajendra P Chitale (Independent Director), Member and
*Mr. Rangan Mohan (Independent Director), Member
*Mr. Rajendra P. Chitale and Mr. Rangan Mohan, Independent Directors ceased to be members of the Committee effective July 03, 2019 since they ceased to be Independent Directors of the Company on the expiry of their tenure from the said date.
Effective May 30, 2019, Mr. Pradeep Mukerjee, an Independent Director was appointed as a member of the Committee.
Recommendations made by the Audit Committee during the year under review have been accepted by the Board.
Further details pertaining to the Audit Committee are included in the Corporate Governance Report, which forms part of this Report as Annexure C.
Key Managerial Personnel
In terms of Section 203 of the Companies Act, 2013, the Company has following Key Managerial Personnel: Mr. Partha DeSarkar, Manager (designated as Chief Executive Officer); Mr. Srinivas Palakodeti, Chief Financial Officer and Mr. Makarand D. Dewal, Company Secretary.
There was no change in the Key Managerial Personnel during the Financial Year 2018-19.
Manager and Chief Executive Officers confirmation towards Code of Conduct
The Manager and Chief Executive Officers confirmation to the effect that all members of the Board and Senior Management Personnel have affirmed compliance with the Code of Conduct for the year ended March 31,2019 forms part of this Report as Annexure A.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo forms part of this Report as Annexure B.
Report on Corporate Governance
As required under Schedule V of the SEBI (LODR) Regulations, 2015, a detailed report on Corporate Governance forms part of this Report as Annexure C.
The Statutory Auditors of the Company have examined the compliance of conditions of Corporate Governance as stipulated in Schedule V (C) of the SEBI (LODR) Regulations, 2015 and have certified compliance thereof. Their certificate is attached as Annexure D to this Report.
Report on Management Discussion and Analysis
In terms of the Provisions of Regulation 34 of the SEBI (LODR) Regulations, 2015, a separate report on
Management Discussion and Analysis is annexed to this Report as Annexure E.
Two ESOP Schemes, viz. Hinduja Global Solutions Limited Employees Stock Options Plan 2008 and Hinduja Global Solutions Limited Employees Stock Options Plan 2011 have been in operation during the Financial Year 2018-19. These ESOP Schemes are in compliance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014. The particulars of aforesaid ESOP Schemes are available on the Companys 4 website www.teamhgs.com/investors/other-reports.
No changes have been made to the aforesaid ESOP Schemes during the Financial Year 2018-19.
Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act, 2013, an Extract of Annual Return as on Financial Year ended March 31, 2019, in the prescribed format, is available on the Companys website www.teamhgs.com/ investors/other-reports and forms part of this Report as Annexure F.
Related Party Transactions
All contracts /arrangements /transactions entered into with the related parties during the Financial Year 2018-19 are in the ordinary course of business and at arms length basis and therefore, outside the purview of Section 188(1) of the Companies Act, 2013 and same are disclosed in the financial statements of the Company. Policy on Related Party Transactions as recommended by the Audit Committee and adopted by the Board is available on the Companys website at www. teamhgs.com/investors/corporate-policies. Information on related party transactions pursuant to Section 134(3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given in Form AOC-2 and the same forms part of this Report as Annexure H.
Material changes and commitments affecting the financial position of the Company between the end of the financial year and date of the Report
There were no material changes and commitments affecting the financial position of the Company between the end of the Financial Year and date of the Report.
Policy on Directors Appointment and Remuneration
Policy on Directors Appointment and Remuneration and on other matters provided in Section 178(3) of the Companies Act, 2013 have been disclosed in the Corporate Governance Report, which forms part of this Report as Annexure C and available on the Companys website at www.teamhgs.com/investors/corporate- policies.
Whistle Blower Policy and Vigil Mechanism
The Company has a Whistle Blower Policy and Vigil Mechanism in place and is available on the website of the Company at www.teamhgs.com/investors/corporate- policies. The details of this Policy are disclosed in the Corporate Governance Report, which forms part of this Report as Annexure C.
As reported last year, one complaint was received during the year which was investigated and post investigation requisite action was taken. Apart from that, no complaint was received during the year under the Policy.
Internal Complaints Committee
Pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has in place an Internal Complaints Committee (ICC) as also Policy on appropriate social conduct at workplace. The Policy is applicable to all employees of the Company at all locations. Employees, for the purpose of this policy, shall include all persons engaged in the business and operations of the Company and shall include permanent, temporary and part-time employees. In addition, this Policy shall also be applicable to all third parties such as visitors, clients, customers, contractors, service providers, and any other person authorized to be present within the premises/ workplace of the Company. Reference to the Companys workplace includes Companys premises, as well as the premises of other third parties, vendors and associates of the company where the employees of the Company are required to perform work or that are visited by the employees of the Company arising out of or during the course of employment;
The Reports of the ICC are periodically placed before the Board of Directors for review and suggestions as an ongoing process, initiatives are taken by the Management to make the work place safer for the employees. The status of complaints received, disposed of by the ICC and pending as at March 31, 2019 is as under:
a. Number of complaints received : 25
b. Number of complaints disposed of : 22
c. Number of complaints pending as at March 31,2019 :
3 Risk Management Policy
Your Company has formulated Risk Management Policy & Procedures which inter alia identifies risks, taking into consideration the business and operations of the Company and adoption of mitigation measures. The Policy & Procedures identify elements of risks which in the opinion of the Board may threaten the existence of the Company. The details of the Policy & Procedures are given in the Management Discussion and Analysis Report (MDA) annexed to this Report as Annexure E.
The Risk Management Committee consisting of the Chief Executive Officer, Chief Financial Officer and Executive Vice President-Legal, Compliance and Risk Management, periodically review the Enterprise Risk Management framework, as well as the risks that matter and update on the same is provided to the Audit Committee and the Board. The suggestions of the Audit Committee and the Board are implemented wherever feasible. The Risk Management Committee met three times during the year to review and update the Companys Enterprise Risk Management Framework. As per the extant SEBI Listing Regulations, the Company is not required to constitute a Risk Management Committee consisting of Directors.
Fixed Deposits from Public
Your Company has not accepted any fixed deposits from the public during the year under review and as such, no amount on account of principal or interest on fixed deposits was outstanding as on the Balance Sheet date.
At the Twenty Second Annual General Meeting (AGM) of the Company held on September 28, 2017, M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) were appointed as the Statutory Auditors of the Company for a period of five consecutive years, i.e. from the conclusion of the Twenty Second AGM up to the conclusion of the Twenty Seventh AGM.
Pursuant to the Companies (Amendment) Act, 2017, notified on May 7, 2018, ratification of appointment of Auditors at every subsequent AGM after their appointment is not required. However, the Company has taken on record confirmation from the said Statutory Auditors confirming that they are eligible to continue to act as Statutory Auditors of your Company.
The Auditors Report contains Unmodified Opinion on the financial statements (standalone and consolidated) for the year ended March 31, 2019 of the Company and there are no qualifications in their Report.
Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed Ms. Rupal D. Jhaveri, Practicing Company Secretary [FCS No. 5441 and Certificate of Practice No.4225], as the Secretarial Auditor to carry out the Secretarial Audit for the Financial Year 2018-19.
The Secretarial Audit Report in the prescribed format, for the Financial Year 2018-19, forms part of this Report as Annexure I. The Report does not contain any qualifications, reservations or adverse remarks.
Maintenance of Cost Records and Appointment of Cost Auditor
The Company is not required to maintain cost records pursuant to Section 148 of the Companies Act, 2013 and thus not required to appoint a Cost Auditor.
Disclosures as required under 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 amendments thereto are given in Annexure J to this Report.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 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 are provided in the Annual Report.
Having regard to the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours (i.e. 10:00 am to 6:00 pm) and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.
In accordance with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, details of foreign employees, excluding directors and their relatives, have not been included in the Annual Report. Members interested in obtaining the said information may write to the Company Secretary at the Registered Office of the Company and the requested information shall be furnished to such member without any fee and free of cost.
Significant and Material Orders
There are no significant and material orders passed by the Regulators or Courts or Tribunals that would impact the going concern status and your Companys operations in the future.
Internal Financial Controls and its adequacy
The Board has adopted policies and procedures for ensuing the orderly and efficient conduct of its business, including Internal Financial Controls (including Internal Financial Controls over Financial Reporting) and their adequacy are included under the heading Internal Controls in the Management Discussion and Analysis section, which forms part of this Report as Annexure E.
Your Directors express their grateful appreciation for the co-operation and support received from the customers, vendors, business associates investors, financial institutions, bankers, the Government of India, State Governments, Governments of various countries in which your company operates, regulatory authorities and the society at large. Your Directors place on record their sincere appreciation for the dedicated efforts, commitments and contribution of employees at all levels of the Company which has enabled the Company to achieve consistent growth in challenging business environment.
For and on behalf of the Board of Directors
|Ramkrishan P. Hinduja|
|Place : Mumbai||Chairman|
|Date : August 23, 2019||(DIN: 00278711)|