Inspirisys Solutions Ltd Directors Report.
THE MEMBERS OF INSPIRISYS SOLUTIONS LIMITED
(Formerly Accel Frontline Limited)
The Directors are pleased to present the 24th Annual Report of the Company together with the Standalone and Consolidated Audited Financial Statements of the Company for the financial year ended 31st March, 2019.
1. FINANCIAL RESULTS
Rs in lakhs
|March 2019||March 2018||March 2019||March 2018|
|Earnings before interest, tax, depreciation and amortization (EBITDA)||2,699||500||2,620||2,109|
|Depreciation and amortization expense and impairment loss||469||670||450||643|
|Profit / (loss) before tax and exceptional items||405||(2,093)||518||(344)|
|Profit / (loss) before tax||405||(3,659)||518||6,317|
|Profit / (loss) for the year from continuing operations||67||(3,868)||183||5,092|
|Profit from Discontinued operations||-||6,207||-||-|
|Less: Tax Expense||-||(1,129)||-||-|
|Profit for the year from discontinued operations||-||5,078||-||-|
|Profit for the year||67||1,210||-||-|
|Other comprehensive income for the year, net of tax||(136)||137||26||59|
|Total comprehensive income for the year||(69)||1,347||209||5,151|
2. BUSINESS PERFORMANCE
Revenue at a Consolidated basis stood at Rs. 55,392 lakhs for FY 2018-19 as against Rs. 49,291 lakhs in the previous year. Revenue from standalone operations stood at Rs. 45,262 lakhs which is a growth of 11% over the e. FY 2017-18 Rs. 40,724 lakhs. The EBITDA on a consolidated basis was Rs. 2,699 lakhs and on a standalone basis stood at Rs. 2,620 lakhs.
3. PREFERENTIAL ALLOTMENT OF EQUITY SHARES
Thecompanyhasissuedand(at a price of Rs. 62.14 per equity share) and 56,25,000 equity shares (at a price of Rs. 54.30 per equity share) to CAC Holdings March, Corporation, 2019 and 19th June, 2019
The reason for preferential allotment of Equity Shares to CAC Holdings Corporation, Japan, the promoter of the Company, is to enable themtoinfuseadditional capital in the Company for business expansion and growth and for general corporate purposes including, but not limited to, recapitalizing the overseas wholly owned subsidiaries, bringing down the short term and long term borrowings of the Company and / or to investinnewbusinessopportunities. The capital infusion has also increased the net-worth of the Company on standalone basis and on a consolidated basis making the Company net-worth
4. INCREASE IN AUTHORISED SHARE CAPITAL
The company has increased the authorised capital from Rs. 33,00,00,000 (Rupees Thirty Three Crore only) divided into 3,30,00,000 (Three Crore Thirty Lakhs) equity shares of Rs. 10 (Rupees Ten only) each to Rs. 50,00,00,000 (Rupees Fifty Crore only) divided into 5,00,00,000 (Five Crore) equity shares of Rs. 10 (Rupees Ten only) each by an Ordinary resolutionpassed at the Extra Ordinary General Meeting held on 22nd March, . 2019.
The Directors do not recommend any dividend for the year ended 31st March, 2019 due to inadequate profits.
6. HUMAN RESOURCES DEVELOPMENT
EMPLOYEES ARE THE ASSETS OF THE COMPANY - The Company understands this and also believes in transforming manpower resources from "Asset" to "Strategic Asset" by increasing their capabilities. The Company recognises people as the primary source of its competitiveness and continues its focus people development by leveraging technology. In line with this business philosophy, the Company continues to initiate training of resources to keep up with the new technological challenges, meet the market requirements and deliver high quality services to our clients. The thrust of Human Resource has been on improvement of the performance of employees through training and development. Employee relations remained cordial throughout the year and the Company had 2,080 permanent employees on its rolls as on 31st March, 2019. The Board places on record its sincere appreciation for the valuable contributionmade by the employees across all levels in the growth of the Company.
7. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
The Company has adopted a Policy on Prevention Sexual Harassment at Workplace which is in line with the requirements of The Sexual Harassment of Women at the Prohibition & Redressal) Act, 2013.workplace(Prevention,
The policy has been formed in order to prohibit, prevent or deter the commission acts of sexual harassment at workplace.
Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under the Policy and the Policy is gender neutral. During the year under review complaints received by the ICC has been addressed and closed and there were no cases pending for disposal.
8. BUSINESS EXCELLENCE AND QUALITY INITIATIVES
The Company continues to maintain highest levels of quality enhance customer satisfaction.
During the year under review, the company kept the Quality Management Systems updated with continued investment in technologies, infrastructure and processes.
The company has certifications for:
ISO 9001:2015 (Quality Management System)
ISO 27001:2013 (Information Security Management System)
ISO 20000-1:2011 (Service Management System)
CMMI Level 3 Dev 1.3
The Company has various policies,in the last quarter of processes and systems in place that will not only enable strengthening and smooth operations but also improve the quality of functioning operations.
9. DOCUMENTS PLACED ON THE WEBSITE (www.inspirisys.com)
The following documents have been placed on the companys website in compliance with the Companies Act:
a. Financial Statements of the Company and Consolidated Financial Statements.
b. Separate audited accounts in respect of subsidiaries as per fourth proviso to Section 136(1).
c. Details of Vigil Mechanism for Directors and Employees to report genuine concerns as per proviso to Section 177(10).
d. The terms and conditions of appointment of on Independent Directors.
e. Details of unpaid dividend as per Section 124(2).
10. SUBSIDIARY COMPANIES
The Company operatingthe continued wholly owned subsidiaries in United States of America, Japan, UAE and United Kingdom which are not listed in India or abroad as of date. The Company also has a wholly owned unlisted Indian Subsidiary which closed down its operationsin the last quarter of FY 18-19. The Statutory Audit Report of the Subsidiary Companies for the financial year are placed before the Audit Committee and reviewed by them. Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary.
Pursuant to the provisions of sub-section (3) of Section 129 of the Act and read with rule 5 of the Companies (Accounts) ofRules, 2014, the salient features of the financial Statement of the subsidiaries are set out in the prescribed Form AOC-1, which forms part of the Annual Report.
The Board would like to mention that following the decision to close down the operations of the wholly owned Indian Subsidiary Inspirisys Solutions IT Resources Limited (Formerly Accel IT Resources Limited) (WOIS), it decided to impair its investments and write off the Loans and Advances provided to the Indian subsidiary company during the year under review. The WOIS main business was into training on Computer Hardware and Network Maintenance and it was operating 7 training centers and had the head office in Chennai. The WOIS has been incurring losses since 2009-10 and accumulated tolosses have already wiped out the Net Worth of WOIS. The Revenue from operations started moving south wards due to change in the method of training adopted by the students and there was complete shift in the business model which impacted the growth of the company. Though the WOIS had worked out various business strategies and changed the business model to be in line with the current trend, the same did not yield any result in growing the revenues and the losses continue to mount. With the WOIS Net Worth becoming negative the WOIS was not considered as a going concern by its auditors and by the auditors of Inspirisys Solutions Limited. After having explored various options, the company finally concluded that the business turn around is not feasible and decided to shut down the operations Financial Year 2018-19 in order to bring down the losses. The WOIS is not considered as a going concern and is therefore not in a position to repay the loans and advances paid by the Company. The Company in its Board Meeting held on 09th May, 2019 has approved the impairment of its investments in the WOIS and also has written off Loans and Advances which is aggregating to Rs. 792 lakhs upto 31st March, 2019 provided to WOIS.
11. CORPORATE GOVERNANCE REPORT REQUIRED UNDER SEBI (LODR) REGULATIONS, 2015
As per SEBI LODR Regulations, 2015, Corporate Governance Report with Auditors Certificate on Compliance with the conditions of Corporate Governance is attached and form part of this report.
12. MANAGEMENT DISCUSSION & ANALYSIS
In terms of Regulation 34 of SEBI (LODR) Regulations, separate Annexure II to this Report is enclosed where the Management Discussion and Analysis and various initiatives and future prospects of the Company are provided.
13. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section Board of Directors of the Company hereby confirms that: i. in the preparationof the annual accounts for the financial year ended 31st March, 2019, applicable Accounting Standards have been followed and there were no material departures from the same; ii. we 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 31st March, 2019 and of the profit and loss of the Company for the year ended on that date; iii. we have taken proper and sufficient care for the maintenance of adequate accounting records accordance with the provisions of the Companies Act, s as prescribed under Rule 8(3) of the 2013 for safeguarding of the assets of the Company and for preventingand detectingfraudandotherirregularities; iv. we have prepared the annual accounts for the financial year ended 31st March, 2019 on a going concern basis; v. we have laid down internal financial controls and the same have been followed by the Company and that such internal financialcontrols are adequate and operating effectively; and vi. we have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
14. IMPORTANT DISCLOSURES MADE BY THE COMPANY UNDER REGULATION 30 OF THE SEBI (LODR) REGULATIONS, 2015 TO THE STOCK EXCHANGES
Alteration of Articles of Association of the company.
Change of name of the company from Accel Frontline Limited to Inspirisys Solutions
To increase the authorised share capital ofthe Company No. from Rs. 33,00,00,000 (Rupees Thirty Three Crore only) divided into 3,30,00,000 (Three Crore Thirty Lakhs) equity shares of Rs. 10 (Rupees Ten only) each to Rs. 50,00,00,000 (Rupees Fifty Crore only) divided into 5,00,00,000 (Five Crore) equity shares of Rs. 10 (Rupees Ten only) each.
To issue and allot 42,30,000 equity shares and 56,25,000 equity shares of Rs. 10 each to CAC Holdings Corporation, of Japan on preferential basis.
Receipt of Trading approvals for 42,30,000 equity shares and 56,25,000 equity shares issued on preferential allotment basis.
Receiptofrequestforde-classification of Accel Limited, Accel Systems Group Inc., and Mr. N.R. Panicker as promoters of the company, termination of Shareholders Agreement and Share Subscription Agreement both dated 09th December, 2013, submission of the extract of the minutes of the meeting considering the request of Accel Limited, Accel Systems a Group Inc., and Mr. N.R. Panicker to be de-classified as promoters of the company and submission of application with the stockexchangesforde-classification of Accel Limited, Accel Systems Group Inc., and Mr. N. R. Panicker as promoters of the Company.
Reappointment of M/s. Walker Chandiok & Co LLP, 134(5) of the Act, the Chartered Accountants, as Statutory Auditors for a second term of 5 years.
Appointment of Mr. Koji Iketani as an Additional Director (Non-Executive, Non-Independent) with effect from 19th June, 2019.
Updates on the change of name of the wholly owned subsidiaries.
15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has strong commitment towards conservation in of energy and adoption of latest technology in its areas of operations. The Companies (Accounts) Rules, 2014, are set out in an Annexure-III to this Report.
16. SEPARATE MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met on 05th February, 2019 and evaluated the performance of Non- Independent Directors and the Board as a whole. Details regarding the same is provided in the Corporate Governance Report.
17. EVALUATION OF THE BOARDS PERFORMANCE
The Board has carried out an evaluation of its own performance, also that of its Directors individually and its Committees. The manner in which the evaluation has been carried out is explained in the Corporate Governance report.
18. AUDITORS .
a) Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s.. Walker Chandiok & Co LLP, Chartered Accountants (Firms Registration 001076N/N500013) were reappointed as the Statutory Auditors of the Company for a period of 5 yearstillthe conclusion of the 29th Annual General Meeting.
b) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment Remuneration Managerial Personnel) Rules, 2014, and the Company has appointed Mr. M.Alagar, Practicing Company Secretary (Membership No. F7488 and CoP No. 8196) of M/s. M.Alagar & Associates, Practicing Company Secretaries, Chennai to undertake the Secretarial Audit of the Company for the financial year ended 31st March, 2019. The Secretarial Audit Report is annexed as Annexure V to this report. The said Secretarial Audit Report does not contain any qualifications, adverse remarks.
19. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report. No employee draws remuneration in excess of the limits in terms of the provisions of the Section 197(12) of the Companies Act, 2013 read with Rules 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for inspection at the Registered Office of the Company. Any interested in obtaining a copy of the same may write to the Company Secretary.
20. FIXED DEPOSITS FROM PUBLIC
The Company has not accepted any deposits within the meaning of sub-section (31) ofSection2 and Section the Companies Act, 2013 and the Rules framed thereunder from public and as such, no amount on account of principal or interest on deposits from public were outstanding as on the date of the Balance Sheet.
21. CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013, Corporate Social Responsibility Committee was formed to recommend: (a) the policy on Corporate Social Responsibility and (b) implementation CSR Projects or Programs to be undertaken by the Company as per CSR Policy for consideration and approval by the Board of Directors. The policy on Corporate Social Responsibility is posted on the companys website www.inspirisys.com. Detailed report on CSR activities forming part of this annual report.
22. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMPs) Directors
Mr. Malcolm F. Mehta, Director is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.
Mr. Koji Iketani was appointed as the Additional Director (Non-Executive, Non-Independent) of the Company with effect from 19th June, 2019 and holds office this Annual General Meeting and Mr. Koji Iketani will be appointed as a Director by the shareholders of the company in the ensuing Annual General Meeting
Based on the performance evaluation and recommendationof the Nomination Committee, the Board at its meeting held on 08th August, 2019 has reappointed Mrs. Ruchi Naithani and Mr. Raj Khalid, as an Independent Directors for a second term of five years.
The Directors have recommended the appointment / reappointment for the approval of Shareholders. The brief profile of the Directors are furnished in the Notice convening the AGM of the Company.
23. NAME CHANGE OF SUBSIDIARIES
The name of the following wholly owned subsidiaries have been changed:
|Sl. No.||Country||Old Name||New Name|
|1||Japan||Accel Japan KK||Inspirisys Solutions Japan KK|
|2||United Kingdom||Accel Technologies Limited||Inspirisys Solutions Europe Ltd.|
|3||United States of America||Accel North America Inc.,||Inspirisys Solutions North America, Inc.,|
|4||India||Accel IT Resources Limited||Inspirisys Solutions IT Resources Limited 73 of|
Your Directors take this opportunity to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank all valuable stakeholders viz., customers, suppliers, alliance partners, bankers and other business associates for the continued and excellent support given by them to the Company and their confidence reposed in the management. The Directors acknowledge the unstinted commitment and of the valuable contribution of all employees of the Company. Your Directors also appreciate and value the trust reposed in them by Members of the Company
|For and on behalf of the Board of Directors|
|Place: Chennai||Malcolm F. Mehta|
|Date: 08th August, 2019||Chairman & Chief Executive Officer|