nucleus software exports ltd share price Management discussions


OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forming Part of the Financial Statements for the year ended March 31, 2022

Managements discussion and analysis of the financial condition and results of operations include forward-looking statements based on certain assumptions and expectations of future events. The Company cannot assure that these assumptions and expectations are accurate. Although the Management has considered future risks as part of the discussions, future uncertainties are not limited to Management perceptions.

A. Industry Structure and Development

As the pandemic continued to cast its shadow over the last financial year, the Indian IT industry achieved a key milestone by crossing $200 bn in total revenue & 5 Mn in total workforce as per the NASSCOM report. Indian IT industry is also poised to play a greater role in raising services exports to $1 trillion a year by 2030.

IT industry has been at the centre of the digital evolution enabling various companies globally to migrate their business models online, evolve & innovate their product offerings and to keep them connected with their end customers. Fintechs have played a crucial role and continue to thrive on account of the opportunities created by the digital transformation and venture capitalists support.

Attrition also continued to plaque the IT industry during the last year and companies had to derive multiple strategies that focused on attracting & retaining talent, also enabling a hybrid work model i.e., best of both the at-home and in-office experiences.

B. Company Background

The Company was incorporated on January 9, 1989 as Nucleus Software Exports Private Limited with its registered office at 33-35 Thyagraj Nagar Market, New Delhi, India. Subsequently in October 1994, it was converted into a Public Limited Company. In August 1995, Nucleus made an Initial Public Offer and is currently listed at National Stock Exchange of India Ltd. and BSE Ltd.

Nucleus Software is the leading provider of lending and transaction banking products to the global financial services industry. Its software powers the operations of more than 200 Financial Institutions in over 50 countries, supporting retail banking, corporate banking, cash management, internet banking, automotive finance and other business areas.

Nucleus Softwares flagship products, built on the latest technology are:

• FinnOne NEO™: The next-generation digital lending solution that is built on an advanced technology platform, designed to shape the future of lending across Retail, Corporate and Islamic sectors for banks and other financial service companies. The 10-time winner of Worlds Best Selling Lending Solution, helps digitize the complete loan lifecycle.

• FinnAxia™: An integrated global transaction banking solution used by banks worldwide to offer efficient and Innovative global payments and receivables, liquidity management and business internet banking services.

• PaySe™: The worlds first online & offline digital payment solution designed and created with an aim to democratize money by making banking services available to the unbanked in remote geographies.

Nucleus Software operates through integrated and well networked subsidiaries in India, Japan, the Netherlands, Singapore, USA, Australia and South Africa. Since 1995 product development has been our core strength and the Company has chosen to exclusively develop products and further add value through dedicated Research and Development initiatives.

Over the years we have gained deep experience working closely with Global leaders in the Banking and Financial Services industry. Headquartered in Noida, India, the Company has seven subsidiaries, as described in table 1 below.

Date of Incorporation Name of Subsidiary Company Location Percentage of Share holding
February 25, 1994 Nucleus Software Solutions Pte. Ltd., Singapore 100%
August 5, 1997 Nucleus Software Inc. USA 100%
November 2, 2001 Nucleus Software Japan Kabushiki Kaisha Japan 100%
February 3, 2006 Nucleus Software Netherlands B.V. Netherlands 100%
April 21, 2008 Nucleus Software Ltd. India 100%
February 3, 2014 Nucleus Software Australia Pty. Ltd. Australia 100%
February 10, 2015 Nucleus Software South Africa (Pty) Ltd. South Africa 100%
Table 1

The Company has branch offices in Chennai, Pune and Mumbai in India and in London (UK) and Dubai.

The Singapore subsidiary has a representative office in Jakarta in Indonesia and in Manila in the Philippines. These subsidiaries/ branch offices help the Company in providing front-end support to customers and explore new opportunities.

Some notable accolades won over the years are as follows:

• Nucleus Software received an award for the Annual Report (for FY 20-21) from League of American Communication Professionals (LACP). We won the Platinum Award for excellence within the Industry for FY 2020-21 - Technology- Software and the Technical Achievement Award for overall excellence in the art and method of Annual Report communications.

• Nucleus Software was awarded the "Best Technological Innovation in Payments (B2B)" award at the Seamless Middle East 2020 conference in Dubai

• Nucleus Software received first position at the "Corporate Governance and Sustainability Vision Awards 2021", held by Indian Chamber of Commerce

• FinnOne Neo has been recognized as the "#1 Leader in the Lending Solutions Category in the Indian Domestic Sales League Table 2019" and recognized as "#2 Leader in the Lending Solutions Category in the Global Sales League Table 2019" by IBS Intelligence.

• FinnOne Neo also wins the "Best Lending Implementation" award for the project at Roha Housing Finance in the IBS Intelligence FinTech Innovation Awards 2019". Powered by our solution, RattanIndia Finance wins theCelent Model Bank Award 2020 for Retail Lending powered by FinnOne Neo

• Nucleus Software Annual Report FY19-20 won the "Platinum Award for excellence within the Industry - Technology-Software" and a ranked amongst the "top 100 Annual Reports" worldwide by League of American Communications Professionals LLC (LACP).

• Nucleus Software received an award in "Mid Corporate Segment-for Excellence in IT & IT Enabled Services", at SME Business Excellence Awards, 2019, organized by Dun & Bradstreet Information Services India Pvt. Ltd (D&B).

• Nucleus Software Annual Report FY18-19 won the "Platinum Award for excellence within the Industry - Technology-Software" and a ranking of # 21 amongst the top 100 Annual Reports worldwide by League of American Communications Professionals LLC (LACP)

• "Best Lending Technology Implementation of the Year" award at the BFSI Innovative Technology Awards 2018 for project Lending on cloud for Sai Point Finance with FinnOne Neo.

• Received an award in "Mid Corporate Segment-for Excellence in IT/ITES Sector", at SME Business Excellence Awards, 2017 organized by Dun & Bradstreet Information Services India Pvt. Ltd (D&B).

C. The Way Forward

Technological advancements continue to disrupt the traditional banks and FIs. Digital, Real-time, 24/7 availability, personalized customer experience, self-service etc have become the basic norm for how financial services are perceived nowadays.

Emergence of fintech and neo-banks are making the entire banking process more convenient and hassle-free for customers.

We at Nucleus Software continue our journey of providing world class IT solutions to customers in the BFSI domain. We are taking our digital capabilities to the existing and new customers while also investing in disruptive innovation that will drive digital transformation in the future. As per NASSCOMs CXO Survey 2022, globally, 70% of end-user companies aim to significantly increase their digital investments - which paints a bright future for IT companies like ours that are helping in digital transformations of many Financial Institutions.

We remain committed to catalysing the growth in our company with focus on latest technology stack, right talent, collaboration with FinTechs and continuous innovation in our product offerings.

D. Company Management

An active and well-informed Board is necessary to ensure the highest standards of corporate governance. At Nucleus, a well-qualified Board manages the Company. The Board at Nucleus comprises ten members; five Board members are Non-Executive Independent Directors including two women Directors and the other five are Executive Directors, including one woman director. All Independent Directors, with their diverse knowledge and expertise, provide valuable contribution in the deliberations and decisions of the Board, maintaining the requisite independence. It develops and promotes the vision, culture and values of the Company and provides entrepreneurial leadership to the Company within a framework of prudent and effective controls. Only a strong global team can drive excellent performance especially in a challenging business environment.

Particular emphasis was placed on attracting, developing and retaining talent, especially in emerging markets, through specifically designed programs. Focus on leadership development for young leaders and mid-level managers continued through our flagship programs - LEAD (Leadership Engagement Action & Development) and YLP (Young Leaders Program). These programs have contributed immensely towards building the organizational culture, individual effectiveness and leadership competencies .Through these efforts we continue to build a robust Brand Nucleus with business from all global markets, supported through an effective distribution network of partnerships, alliances and acquisitions to achieve seamless and high quality delivery resulting in a high level of customer satisfaction.

E. OPPORTUNITIES AND THREATS

Banks and Financial Institutions are continuously investing in technologies to meet their customers expectations. They are investing to upgrade their technology stacks adding digital capabilities and looking for solutions which are scalable, robust and can be easily integrated with their ecosystem. Pandemic has also ensured that banking customers energetically adopt new digital capabilities for better and convenient banking experience. Customers now prefer to connect digitally for their banking needs. Regulators worldwide are pushing for reforms in Banking technologies and its adoption by Banks & Financial Institutions. There is wider acceptance of Open Banking Initiatives, Cloud Infrastructure, Digital Products to name a few, which would fuel the growth for Nucleus Software. The growth of FinTechs and neo-banks have become a threat for the traditional players and to counter them they are increasing the pace of digital initiatives.

The Indian IT industry also saw unprecedented and unfathomable attrition, popularly known as the Great Resignation, which presented itself as a threat to an IP driven company like ours. Nucleus initiated unprecedented hikes to the entire Nucleus family, to curtail and reduce risk of attrition. In addition, we recruited 400 freshers from 45 cities across India to fulfil the growth requirements aligned to our long-time commitment in investing in young minds and young talent. We believe that the long-term effects of these investments will certainly yield great returns.

F. OUTLOOK

Despite the challenges faced by Nucleus Software during the last fiscal year, we continued our journey as a preferred partner for banking and financial organizations worldwide. We continued investing in research & development to create innovative solutions, modules and new line of businesses. The Banking and Financial Services sector is going through unique challenges catapulting them into the future, forcing them to rapidly accelerate their digital transformation efforts. Speed of transformation is expected owing to the change in consumer behaviour and their need for personalized digital experience.

Banks must re-imagine the customers banking experience and align their technology and processes accordingly. While the digitization of banking processes is inevitable, the right formulation and execution of digital strategy is extremely critical for stability, security and long-term success. One of the key elements to a successful digital strategy is choosing the right partner and Nucleus Software has been their preferred choice. We are focused on delivering value to our customers with our end-to-end FinnOne NEO™ and FinnAxia ™ suites that provide a choice of Cloud or On-Premises deployment.

G. RISKS AND CONCERNS

These are discussed in detail in the Risk Management chapter provided later in this Annual Report.

H. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal control systems are a set of policies, processes and procedures put in place to help achieve the strategic objectives of an organization. Good controls encourage operational efficiency and compliance with laws and regulations, as well as minimizing the chance of errors, theft and fraud. At the same time internal controls also enhance the reliability and accuracy of accounting data. The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. This has been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. The management assessed the effectiveness of the Companys internal control over financial reporting (as defined in Regulation 17 of SEBI Regulations 2015) as of March 31, 2022.

BSR & Associates LLP, the statutory auditors of the Company, have audited the financial statements included in this annual report and have issued an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting. The Board of Directors has also appointed Internal Auditors as recommended by the Audit Committee with a well-defined internal audit scope. The Internal Auditor reports to the Chairman of the Audit Committee and presents significant audit observations to the Audit Committee. Based on the report of the Internal Auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls. The CEO/CFO certification provided elsewhere in this report also places responsibility on the CEO and CFO to continuously ensure adequacy of our internal control systems and procedures.

I. Material developments in Human Resources

Nucleus HR function focuses on creating a conducive work environment that fosters collaboration and promotes individual growth. Our vision is "To be a culturally strong organization". With a strong culture, all our associates understand what is required of them and act in accordance with the core values. Culture is the underlying fabric that holds our organization together. Since the fabric is strong, we endure even major challenges. Your Company demonstrated resilience by bouncing back from the ransomware attack and emerged much stronger. Also the teams were quick to respond to the challenges that Covid posed, with a very active and committed taskforce working relentlessly round the clock.

Your Company Business HR partners ensured continuous employee connects with focus on employee wellbeing and engagement. Conducted "Monthly Managers Meet" on relevant topics including how to manage the teams during work from home & New Hire Culture acclimatization. With continuous focus on recognition & appreciation, special appreciation initiatives were launched with resounding response from all.

To hire quality talent, improved the referral programs and strengthened the partner networks. Your Company continuously review and improvise the policies for attracting and retaining talent. The policies are aligned to the implicit and explicit needs of Company employees. Happy to share that the Company introduced monthly well-being leave for women associates, as part of women empowerment initiatives. Many more programs are in the road map for next year.

J. FINANCIAL PERFORMANCE

The Company has adopted Indian Accounting Standards (IndAS) with effect from April 1, 2017 (transition date being April 1, 2016) pursuant to notification issued by Ministry of Corporate Affairs dated February 16, 2015 notifying the Companies (Indian Accounting Standards) Rules, 2015. Accordingly, the financial results have been prepared in accordance with Indian Accounting Standards (Ind-AS) as prescribed under Section 133 of the Companies Act, 2013 read with relevant rules issued thereunder. Consequently the results for the year ended March 31, 2017 have been restated to comply with Ind AS to make them comparable.

The financial statements are prepared in accordance with the Companies (Accounting Standards) Rules, 2015, notified under section 133 of the Act and other relevant provisions of the Act. Accounting policies have been consistently applied except where a newly issued accounting standard, if initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Management evaluates all recently issued or revised accounting standards on an ongoing basis.

The Company has seven subsidiary companies, all of which are wholly-owned subsidiaries. The Company discloses standalone audited financial results on a quarterly and annual basis, consolidated un-audited financial results on a quarterly basis and consolidated audited financial results on an annual basis.

The financial results of the Company have been discussed in this report in two parts:

i) Nucleus Software Exports Limited (Standalone) which excludes the performance of subsidiaries of the Company, discussed in this chapter and

ii) Nucleus Software Exports Limited (Consolidated) including performance of subsidiaries of Nucleus Software, and has been discussed in the later chapters of this report.

Standalone financial results are as below:

(Rs in crore)

For the Year Ended Mar 31, 2022 % of Revenue 2021 % of Revenue Growth %
Revenue from Operations 448.06 100.00 454.36 100.00 (1.39)
Expenses
a) Employee benefit expense 335.88 74.96 277.47 61.07 21.05
b) Operating and other expenses 75.77 16.91 54.80 12.06 38.25
c) Finance costs 0.39 0.09 0.77 0.17 (49.44)
Total Expenses 412.04 91.96 333.04 73.30 23.72
Operating Profit(EBITDA) 36.02 8.04 121.32 26.70 (70.31)
Depreciation 13.23 2.95 11.43 2.52 15.73
Operating Profit after Interest and Depreciation 22.79 5.09 109.89 24.18 (79.26)
Other Income 34.07 7.60 36.63 8.06 (6.98)
Profit Before Tax 56.86 12.69 146.52 32.25 (61.19)
Taxation 14.76 3.29 34.48 7.59 (57.18)
Profit After Tax 42.10 9.40 112.04 24.66 (62.42)
Other Comprehensive Income (11.18) (2.50) 1.75 0.39 (738.86)
Total Comprehensive Income for the year 30.92 6.90 113.79 25.04 (72.82)

Revenue from Operations

Our revenues from software development comprise of income from time and material, fixed price contracts and Annual technical service contracts. Revenue from time and material contracts is recognised as the services are rendered and revenue from fixed price contracts comprising of license, related customization and implementation is recognised in accordance with the output method based on percentage completion. Revenue from annual technical service contracts is recognized on a pro rata basis over the period in which such services are rendered.

During the year, the revenue from operations is Rs 448.06 crore, against Rs 454.36 crore for the previous year.

Revenue from Products

We are a Product Company and derive most of our revenues from Products and related services. Categorized under revenue from "Products", it comprises of license fee, revenue from customization and implementation of products and postproduction maintenance support. Product revenue for the year is Rs 410.00 crore, 93% of the total revenue, against Rs 424.51 crore, 93% of total revenue, in the previous year.

Revenue from Projects and Services

Software services rendered by the Company, classified under this segment, typically consist of development of software to meet specific customer requirements. These services consist of application development & maintenance, testing, consulting and infrastructure management services with a strong banking domain focus. Software projects and services revenue for the year is Rs 38.06 crore, 7% of the total revenue, against Rs 29.85 crore, 7% of the total revenue, in the previous year.

Revenue from Various Geographies

Your Company is incorporated in India and caters to customers situated all across the globe and hence significant part of the revenue is derived from international sales. For the year 52% revenue was derived from overseas. The graph below presents a geography-wise distribution for the year as well as the previous year.

Employee Benefit Expense

Employee benefit expense includes salaries paid to employees in India, with fixed, variable and incentives components; provision for gratuity and compensated absence, contribution to provident fund and expense on staff welfare activities. The employee benefit expenses have increased by 21.05 % to Rs 335.88 crore, 74.96% of revenue against Rs 277.47 crore, 61.07% of revenue in the previous year. The increase is primarily due to increase in employee compensation.

(Rs in crore)

For the Year Ended March 31, 2022 % of Revenue 2021 % of Revenue Growth %
Salaries 311.19 69.45 255.14 56.15 21.97
Contribution to provident and other funds 15.51 3.46 13.79 3.04 12.47
Gratuity 4.51 1.01 3.99 0.88 13.07
Staff welfare 4.67 1.04 4.55 1.00 2.62
Total Employee Benefit Expenses 335.88 74.96 277.47 61.07 21.05
Revenue 448.06 100.00 454.36 100.00 (1.39)

Operating and Other Expenses

Operating and other expense primarily consist of outsourced technical service expense, expenses on travel to execute work at client site and for other related activities, cost of software purchased for delivery to clients, bandwidth and communication expense, infrastructure charges, expenses on account of brand building activities, training and recruitment costs, legal and professional charges, repairs and maintenance charges, insurance, provision for doubtful debts, contribution to CSR activities and others.

Operating and other expenses at Rs 76.15 crore, 17% of revenue for the year, an increase of 37.03% against Rs 55.57 crore, 12.23% of revenue in the previous year.

For the Year Ended March 31, 2022 % of Revenue 2021 % of Revenue Growth %
Outsourced Technical Service Expense 16.32 3.64 12.99 2.86 25.61
Cost of software purchased for delivery to clients 1.03 0.23 0.62 0.14 65.60
Travelling 0.95 0.21 1.02 0.22 (6.46)
Power and fuel 2.67 0.60 2.70 0.59 (1.18)
Rent 0.34 0.08 0.45 0.10 (23.60)
Rates &Taxes 1.18 0.26 0.26 0.06 352.31
Repair and maintenance 3.86 0.86 4.61 1.01 (16.35)
Legal and professional 6.61 1.48 3.74 0.82 76.86
Directors remuneration 1.64 0.37 1.65 0.36 (0.85)
Conveyance 0.36 0.08 0.34 0.07 5.79
Communication 1.09 0.24 0.99 0.22 10.14
Information technology expenses 18.39 4.10 11.96 2.63 53.77
Provision for doubtful debts/advances/other current assets 1.28 0.29 (3.38) (0.74) (137.82)
Commission to channel partners 0.47 0.10 (0.23) (0.05) (303.26)
Training and recruitment 2.47 0.55 0.96 0.21 157.05
Conference, exhibition and seminar 0.13 0.03 0.15 0.03 (11.73)
Advertisement ,business development and promotion 1.00 0.22 1.11 0.24 (9.74)
Insurance 0.40 0.09 0.40 0.09 1.18
Finance Cost 0.39 0.09 0.77 0.17 (49.44)
Sales & marketing fee 8.75 1.95 7.90 1.74 10.79
Net loss on sale of fixed assets/discarded assets - - 0.11 0.02 -
Withholding tax charged off 2.48 0.55 3.50 0.77 -
Business Management & Consultancy Expenses 1.43 0.32 - - -
Miscellaneous expenses 0.88 0.20 1.29 0.28 (31.86)
Contribution to CSR activities 2.03 0.45 1.65 0.36 23.05
Total Operating and Other Expenses 76.15 17.00 55.57 12.23 37.03
Revenue 448.06 100.00 454.36 100.00 226.89

Finance cost includes bank charges and fee for issuance of bank guarantees. It is Rs 0.39 crore against Rs 0.77 crore in the previous financial year.

The Company has setup Nucleus Software Foundation, a trust for the purpose of undertaking CSR activities of the company. During the year, the Company contributed Rs 2.03 crore towards CSR activities of the Foundation. The details of CSR initiatives undertaken by the Foundation has been provided in a separate section in the Annual Report.

Operating Profit (EBITDA)

Operating Profit is Rs 36.02 crore, 8.04% of revenue against Rs 121.32 crore, 26.70% of revenue in the previous year.

Depreciation

Depreciation on fixed assets is Rs 13.23 crore, 2.95% of revenue for the year against Rs 11.43 crore, 2.52% of revenue in the previous year. Other Income

Other Income represents income received in the form of dividends from investments, interest on fixed deposits and bonds and capital gains on the sale of investment, MTM gain or (loss) on investment and Net Gain / (Loss) on foreign currency

(Rs in crore)

For the Year Ended March 31, 2022 2021
Dividend on investment in Mutual 1.38 0.26
Interest income on financial assets- carried at amortised cost 9.74 13.59
Net Gain / (Loss) on foreign currency 1.33 0.65
Profit on sale of assets/ investments 0.95 1.25
MTM gain or (loss) 18.83 19.34
Others 1.84 1.54
Total 34.07 36.63

Other income for the year is Rs 34.07 crore against Rs 36.63 crore for the previous year.

Foreign Exchange Gain/ (Loss)

Foreign Exchange Gain (Loss) includes gain (loss) from translation of current assets and liabilities at quarter end rates, those arising from realization/payments of receivables/payables. During the year, the Company had a foreign exchange gain of Rs 1.33 crore against Rs 0.65 crore for the previous year. We conduct major portion of our business transactions in currencies other than the Indian Rupee. Nearly Fifty Two percent of our revenue is denominated in foreign currency, predominantly the US Dollar, while majority of our expenses are in the Indian Rupee and therefore the Company is exposed to continuing risk of foreign exchange fluctuation. The exchange rate between the rupee and the U.S. dollar has changed substantially in recent years and may fluctuate substantially in the future. The exchange rate movement during the year is depicted in the below mentioned chart.

Taxation

Current tax represents the provision for Indian income tax on the profits of the Company as calculated in accordance with the provisions of the Income Tax Act 1961.

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods, accordance with accounting standards. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date.

(Rs in crore)

For the Year Ended March 31, 2022 2021
Current Tax Expense 12.86 28.01
Deferred Tax Credit (net) 1.90 6.47
Total 14.76 34.48

Total effective tax for the year is 3.29% of revenue, in comparison to 7.59% of revenue for the previous year.

Profit After Tax

Our profit after tax for the year is Rs 42.10 crore, 9.40% of revenue against Rs 112.04 crore, 24.66% of revenue, during the previous year.

Other Comprehensive Income (OCI)

Other comprehensive income represents

a) Equity instruments through OCI - this is primarily on account of fair valuation of investment for which the company has made an irrevocable option to present the same in the OCI. For the year it is Rs (2.71) crore, against Rs 1.55 crore in the previous year.

b) Remeasurements of the defined benefit plans - consist mainly of remeasurements gain/losses on our defined benefit plans. For the year it is Rs (11.06) crore net after Tax, against Rs (1.96) crore net after Tax in the previous year.

c) Effective portion of gain (loss) on hedging instruments of effective cash flow hedges, net - when a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of derivative is recognised in OCI. For the year it is Rs (0.19) crore net after Tax, against Rs 1.67 crore in the previous year.

Total other comprehensive income for the year is Rs (11.18) crore, against Rs 1.75 crore in the previous year.

Share Capital

Share Capital of the Company consists of Equity Share Capital. The paid-up share capital as on March 31, 2022 is 26,773,324 equity shares of Rs 10 each.

Retained Earnings

(Rs In crore)

Particulars 2022 2021
Opening balance 600.78 498.92
Add: Profit for the year 42.11 112.04
Less : Appropriations
Interim dividend / Final dividend paid (17.42) (8.71)
Buyback of Equity shares 2021 (151.11) -
Transaction tax on Buyback of Equity shares 2021 (32.40) -
Remeasurement of the defined benefit plans, net (8.27) (1.47)
Closing balance 433.67 600.78

Reserves and Surplus

Movement in the components of reserves and surplus is as below:

(Rs In crore)

Particulars Closing Balance as on March 31, 2022 Additions/ (Deletions) during the year Opening Balance as on April 1, 2021
Capital Reserve 0.89 - 0.89
Securities Premium - (1.00) 1.00
Retained Earnings 433.67 (167.11) 600.78
General reserve - (6.61) 6.61
Capital redemption reserve 5.61 2.27 3.34
Other Comprehensive Income
Hedging Reserve 0.08 (0.19) 0.27
Equity instrument through other comprehensive income 2.30 (2.71) 5.01
Total 442.55 (175.35) 617.90

Property, plant and equipment and Intangible assets

As at March 31, 2022, Net carrying Amount of Property, Plant and Equipment and Intangible assets is Rs 37.53 crore against Rs 24.20 crore as on March 31, 2021.

(Rs In crore)

As at March 31, 2022 2021
Gross Carrying Amount
Freehold land 0.34 0.34
Plant and equipment 5.14 4.43
Building 16.58 16.58
Office and other equipment 1.53 1.52
Computers 37.88 24.00
Vehicles 3.21 3.43
Furniture and fixtures 2.09 1.97
Software 19.81 10.89
Total 86.58 63.16
Less; accumulated depreciation 49.05 38.96
Net Carrying Amount 37.53 24.20

Transition to Ind AS 116

(Rs In crore)

Particulars As at 31 March 2022 As at 31 March 2021
Building Lease hold land Total Building Lease hold land Total
Opening balance 3.08 5.21 8.29 5.58 5.28 10.86
Additions - - - - - -
Amortisation 2.37 0.08 2.45 2.50 0.07 2.57
Closing balance 0.71 5.13 5.84 3.08 5.21 8.29

The following is the movement in lease liabilities during the year ended 31 March 2022

(Rs In crore)

Particulars As at 31 March 2022 As at 31 March 2021
Opening balance 3.26 5.49
Additions - -
Finance cost accrued during the period 0.20 0.41
Payment of lease liabilities (2.53) (2.58)
Rent concession on lease liability (0.16) (0.06)
Closing balance 0.77 3.26

The Company has applied expedient to one of its lease contracts and accordingly an amount of Rs 0.16 crore ( previous year ended 31 March 2021 Rs 0.06 crore) for rent concession has been recorded in the Interim Standalone Statement of profit and loss.

Investments

Investments of the Company can be categorized as per the following:

i) Non-current investments totaling Rs 208.48 crore as on March 31, 2022 against Rs 191.44 crore as on March 31, 2021.

a. Investment In subsidiaries -The investment of the Company in the Equity Share capital of its subsidiaries stood at Rs 14.85 crore.

(Rs In crore)

2022 2021
Nucleus Software Solutions Pte. Ltd., Singapore 1.63 1.63
Nucleus Software Inc., USA 1.63 1.63
Less: Provision for diminution in value of investment in Nucleus Software Inc., USA (1.63) (1.63)
Nucleus Software Japan Kabushiki Kaisha, Japan 0.41 0.41
Nucleus Software Netherlands B.V., Netherlands 4.89 4.89
Less: Provision for diminution in value of investment in Nucleus Software Netherlands B.V., Netherlands (4.89) (4.89)
Nucleus Software Limited, India 11.94 11.94
Nucleus Software Australia Pty. Ltd., Australia 0.55 0.55
Nucleus Software South Africa (Pty.) Limited, South Africa 0.32 0.32
14.85 14.85

b. Investment in equity shares of a listed company at FVOCI - Rs 2.55 crore.

c. Investment in Preference Shares (quoted)- NIL.

d. Investment in Preference Shares (unquoted)- NIL.

e. Investment in bonds (quoted)- Rs 61.41 crore.

f. Investment in mutual funds (quoted)) - NIL

g. Investment in mutual funds (unquoted)) - Rs 129.68 crore.

ii) Current Investments and Bank Balances

Current Investments of Rs 285.22 crore as on 31st March 2022, as per below table.

(Rs In crore)

Name Value of units as on March 31, 2022
Investment in Mutual Funds (Unquoted)
Mutual funds at Fair value through profit or loss (FVTPL)
Aditya Birla Sunlife Arbitrage Fund -Direct Plan - Growth 6.61
Aditya Birla Sun Life Money Manager Fund - Direct Plan - Growth 30.50
Axis Liquid Fund- Direct Plan- Growth 1.93
Axis Overnight Fund- Direct Plan- Growth 15.03
DSP Liquidity Fund - Direct Plan - Growth 1.25
DSP Low Duration Fund - Direct Plan - Growth 34.26
HDFC Money Market Fund - Direct Plan - Growth 22.48
HDFC Ultra Short term Fund - Direct Plan - Growth 16.64
ICICI Prudential Money Market Fund - Direct Plan - Growth 34.18
Kotak Overnight Fund - Direct Plan - Growth 31.27
Name Value of units as on March 31, 2022
Nippon India Arbitrage Fund - Direct Plan - Growth 13.52
Tata Treasury Advantage Fund - Direct Plan - Growth 6.18
Tata Arbitrage Fund- Direct Plan - Growth 3.22
UTI Money Market Fund - Direct Plan - Growth 14.80
UTI Arbitrage Fund - Direct Plan - Growth 18.62
UTI Liquid Cash Plan - Direct Plan - Growth 14.42
264.91
Investment in bonds (quoted)
Bonds securities at Amortised cost
7.18% Indian Railway Finance Corporation Limited Tax Free Bonds 2023 10.18
7.21% Power Finance Corporation Tax Free Bonds 2022 5.13
15.31
Investment in Preference Shares (quoted)
7.50% Tata Capital Ltd. (Preference Shares - 2024) 5.00
5.00
Aggregate amount of investment 285.22

As of March 31, 2022 Bank Balances stood at Rs 35.34 crore as against Rs 23.58 crore as on March 31, 2021.

(Rs In crore)

As at March 31, 2022 2021
Balances with Bank
Balances with scheduled banks 6.88 9.75
Balance with non scheduled banks in current accounts 0.29 0.53
Balances with scheduled banks in deposit accounts with original maturity of less than 3 months 7.96 0.72
Balances with scheduled banks in earmarked accounts 0.34 0.36
Balances with scheduled banks in deposit accounts 19.87 12.22
Total 35.34 23.58

Operating Cash Flow

Our net cash flow from operating activities before working capital changes is Rs 42.73 crore for the financial year, against Rs 124.72 crore in the previous year. After considering working capital changes, operating cash flow is Rs 56.40 crore against Rs 105.86 crore in the previous year. To summarize the Companys liquidity position, given below are a few ratios:

As at March 31, 2022 2021
Operating cash flow as % of revenue 13% 23%
Cash and Equivalents as % of assets 46% 57%
Cash and Equivalents as % of revenue 72% 106%
Current investments as % of assets 41% 54%
Current investments as % of revenue 64% 101%

Trade Receivables

Our trade receivables (net of provision) as on March 31, 2022 are Rs 74.07 crore against Rs 77.41 crore on March 31, 2021. The age profile of the debtors (net of provision) is given below:

As at March 31, 2022 2021
Less than six months 90.18% 89.57%
Between 6 months and 1 Year 9.05% 5.65%
More than 1 Year 0.77% 4.78%

Loans and Other Financial Assets

Loans and Other Financial assets have been classified into Non Current and Current based on their period of realization.

(Rs In crore)

As at March 31, 2022 2021
Non - Current
Staff Loans 0.19 0.02
Loan to subsidiary credit impaired 3.82 1.65
Security deposits 0.74 2.44
Long-term bank deposits 10.20 18.22
Total 14.95 22.33
Current
Staff Loans 0.18 0.11
Security deposits 1.95 0.02
Mark-to-market gain on forward contracts 0.11 0.37
Other recoverable from subsidiaries 0.02 0.79
Unbilled revenue 1.84 3.51
Total 4.10 4.80
Total Loans and Other Financial Assets 19.05 27.13

Security Deposits, utilised primarily for hiring of office premises and staff accommodation, amounts to Rs 0.74 crore as on March 31, 2022 against Rs 2.44 crore as on March 31, 2021. Long term bank deposits amounting to Rs 10.20 crore as on March 31, 2022 include deposits held with bank for maturity more than 12 months from balance sheet date under lien with banks and are restricted from being settled for more than 12 months from the balance sheet date.

Other Assets

Other Assets represents income tax asset, Employee advances, Service income accrued but not due, Balances with Government authorities, Supplier and capital advances, prepaid and deferred expenses. Other assets have been classified into Non Current and Current based on their period of realization.

Other Assets

(Rs In crore)

As at March 31, 2022 2021
Non - Current
Capital advances 0.04 0.04
Employee advances 0.37 0.37
Prepaid expenses 0.22 0.05
Advance payment to gratuity trust -

-

Total 0.63 0.46
Current
Service income accrued but not due 10.02 11.19
Employee Advances 0.04 0.14
Prepaid Expenses 4.64 3.40
Contract Cost 0.19 0.03
Balances with Government authorities 0.33 0.43
Supplier advances 4.46 4.38
Deferred Expenses 0.04 0.01
Total 19.72 19.58
Total Other Assets 20.38 20.04

Current Liabilities

(Rs In crore)

As at March 31, 2022 2021
Financial liabilities
Lease Labilities 0.77 2.49
Trade Payables 11.43 13.86
Unpaid dividends 0.34 0.36
Payable for purchase of fixed assets 0.21 0.19
Employee payable 37.67 32.80
Other current liabilities
Advances from customers/Advance Billing 57.44 57.67
Deferred Revenue 82.56 69.36
Statutory dues 12.57 8.64
Short term provisions
Compensated absences 3.90 2.24
Provision for Tax 0.03 3.86
Total 206.92 191.47

Current liabilities represent trade payables, short-term provisions, other financial liabilities and other current liabilities. As on March 31, 2022 the Current liabilities are Rs 206.92 crore ( Rs 191.47 crore as on March 31, 2021).

Trade payables represent the amount payable for providing goods and services and are Rs 11.43 crore as on March 31, 2022 against Rs 13.86 crore as on March 31, 2021.

Statutory dues are the amounts accrued for taxes deducted at source by the Company, staff provident fund, employee state insurance liabilities, GST, etc. As on March 31, 2022 it is Rs 12.57 crore against Rs 8.64 crore as on March 31, 2021.

Short term provisions for leave encashment and taxes are those for which liability is expected to arise in near future. A sum total of all these short-term provisions as on March 31, 2022 are Rs 3.93 crore against Rs 6.10 crore as on March 31, 2021.

Non-Current Liabilities

Non-Current Liabilities as on March 31, 2022 were Rs 23.78 crore against Rs 12.03 crore as on March 31, 2021. The break-up of non-current liabilities at the year-end is given below:

(Rs In crore)

As at March 31, 2022 2021
Financial liabilities
Lease Liabilities - 0.77
Non-Current Provisions 23.40 9.93
Deferred tax liabilities 0.38 1.33
Total 23.78 12.03

A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provision for Leave encashment represents provisions made by the Company based on actuarial valuation.