nucleus software exports ltd Directors report

Dear Members,

We are pleased to present your Companys Thirty -Fourth Annual Report, together with the Audited Statement of Accounts, for the year ended March 31, 2023.

1. RESULTS OF OPERATIONS AND STATE OF AFFAIRS FINANCIAL RESULTS

The Company has adopted the Indian Accounting Standards (Ind-AS) with effect from April 1, 2017 (transition date being April 1, 2016) pursuant to the notification issued by the Ministry of Corporate Affairs dated February 16, 2015, regarding the Companies (Indian Accounting Standards) Rules, 2015. The consolidated financial statements have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015, notified under section 133 of the Act and other relevant provisions of the Act. The 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. The Management takes into cognisance all new as well as revised accounting standards on an ongoing basis.

The Company has seven subsidiary companies, all of which are wholly owned subsidiaries. The Company discloses stand-alone 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.

a) Consolidated Operations

Revenue from consolidated operations for the year was Rs 634.46 crore, as compared to Rs 497.19 crore in the previous year, an increase of 27.61%. The Company continued its focus on strategic initiatives for new products, focused sales and the market development to help drive transformation. The overall Operational Expense for the year was Rs 478.71 crore, against Rs 460.97 crore in the previous year. The Operating Profit (EBITDA) was significantly higher at Rs 155.75 crore, 24.55% of revenue, against Rs 36.22 crore, 7.28% of revenue in the previous year. Profit after Tax for the year was at Rs 127.79 crore, 20.14% of revenue, against Rs 40.91 crore, 8.23%, of revenue in the previous year.

Consolidated financial results are as below:

(Rs in crore)

For the Year Ended March 31,	2023	% of Revenue	2022	% of Revenue	Growth (%)
Revenue From Operations	634.46	100.00	497.19	100.00	27.61
Expenses
a) Employee benefit expense	393.99	62.10	394.09	79.26	(0.02)
b) Operating and other expenses	83.70	13.19	66.07	13.29	26.68
c) Finance costs (Bank charges)	1.02	0.16	0.81	0.16	25.80
Total Expenses	478.71	75.45	460.97	92.71	3.84
Operating Profit (EBITDA)	155.75	24.55	36.22	7.28	329.98
Depreciation	18.73	2.95	15.38	3.09	21.79
Operating Profit after Interest and Depreciation	137.02	21.60	20.84	4.19	557.27
Other Income	34.06	5.36	34.66	6.97	(1.72)
Profit Before Tax	171.08	26.96	55.50	11.16	208.24
Taxation	43.29	6.82	14.59	2.93	196.62
Profit After Tax	127.79	20.14	40.91	8.23	212.38
Other Comprehensive Income	8.01	1.26	(10.79)	(2.17)	(174.14)
Total Comprehensive Income for the Year	135.80	21.40	30.12	6.05	350.84

b) Standalone Operations

Revenue from the standalone operations for the year was Rs 584.73 crore against Rs 448.06 crore in the previous year, an increase of 30.50%. Total Operational Expense for the year was Rs 428.44 crore against Rs 412.04 crore in the previous year, an increase of 3.98%. The Operating Profit (EBITDA) for the year was significantly higher at Rs 156.29 crore, 26.73% of revenue, against Rs 36.02 crore, 8.04% of revenue, in the previous year. Profit after Tax for the year was at Rs 130.37 crore, 22.29% of revenue, against Rs 42.10 crore, 9.40% of revenue in the previous year.

Standalone financial results are as below:

(Rs in crore)

For the Year Ended Mar 31,	2023	% of Revenue	2022	% of Revenue	Growth (%)
Revenue from Operations	584.73	100.00	448.06	100.00	30.50
Expenses
a) Employee benefit expense	338.37	57.87	335.88	74.96	0.74
b) Operating and other expenses	89.30	15.27	75.77	16.91	17.86
c) Finance costs	0.77	0.13	0.39	0.09	97.44
Total Expenses	428.44	73.27	412.04	91.96	3.98
Operating Profit (EBITDA)	156.29	26.73	36.02	8.04	333.90
Depreciation	17.06	2.92	13.23	2.95	28.95
Operating Profit after Interest and Depreciation	139.23	23.81	22.79	5.09	510.93
Other Income	34.16	5.84	34.07	7.60	0.26
Profit Before Tax	173.39	29.65	56.86	12.69	204.94
Taxation	43.02	7.36	14.76	3.29	191.46
Profit After Tax	130.37	22.29	42.10	9.40	209.67
Other Comprehensive Income	6.94	1.19	(11.18)	(2.50)	162.07
Total Comprehensive Income for the Year	137.31	23.48	30.92	6.90	344.08

A detailed analysis on the Companys performance, both consolidated and standalone, is included in "Managements Discussion and Analysis" Report, which forms part of this Annual Report.

2. TRANSFER TO RESERVES

To augment resources, your Directors do not propose to transfer any amount to reserves. Appropriation to retained earnings for the financial year ended March 31, 2023, as per financial statements are as under:

(Rs in crore)

Particulars	2023	2022
Opening balance	433.67	600.78
Add: Profit for the year	130.37	42.10
Less: Appropriations	_	_
Final dividend paid	(18.74)	(17.42)
Buyback of Equity shares	-	(151.12)
Transaction tax on
	-	(32.40)
Buyback of Equity shares
Remeasurement of the defined benefit plans, net	3.04	(8.27)
Closing balance	548.34	433.67

3. SHARE CAPITAL

Issued and Paid-up Share Capital

During the year under review, there has been no change in the Paid-Up Share capital of the Company. As on March 31, 2023, the Paid-Up Share Capital of the Company is 26,773,324 equity shares of Rs 10 each.

The Company has not issued shares with differential voting rights or sweat equity shares during FY23.

Shares under Compulsory Dematerialization

The shares of the Company are under compulsory dematerialization ("Demat") category and are available for trading on both the depositories in India viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Of the entire paid-up shares, 26,721,954 shares (99.81%) are in dematerialized form as of March 31, 2023. The International Securities Identification Number (ISIN) allotted to the Companys shares is INE096B01018.

4. LISTING

Your Company is listed at National Stock Exchange of India Ltd. and BSE Ltd.

Stock Exchange where	Scrip Symbol / Code
Nucleus shares are listed
National Stock Exchange of India Ltd. (NSE) w.e.f. December 19, 2002	NUCLEUS
BSE Ltd. (BSE) w.e.f. November 6, 1995	531209

5. LIQUIDITY AND CASH EQUIVALENTS

Your Company continues to retain its debt-free status and maintains sufficient cash and cash equivalents to meet the future strategic initiatives. The Company has been conservative in its investment policy over the years, maintaining a reasonably high level of cash and cash equivalents which enable the Company to completely eliminate short and medium-term liquidity risks, and at the same time also help scale up operations at a short notice. The goal of cash management at your Company is to: a. Use cash to provide sufficient working capital to manage business operations of the Company to be able to add value to all our stakeholders and continuously enhance the same. b. Maintain sufficient cash as reserves that will aid the Company in capturing meaningful business opportunities. c. Invest surplus funds in low-risk bank deposits, debt schemes of mutual funds and tax-free secured bonds of Public Sector Enterprises. Cash and cash equivalents along with other bank balances including current investments at a consolidated level of Rs 277.43 crore, constitute 45% of the shareholders funds at the year end, against Rs 341.93 crore, 69% of the shareholders funds at the close of the previous year. The Company has a well-defined Forex policy, based on which its currency exposure is closely monitored to hedge the forward risk in a more structured and timely manner.

6. DIVIDEND

The Board of Directors of the Company at their meeting held on May 26, 2023, has recommended a Final Dividend for its shareholders. The Proposed Final Dividend is 100% (Rs 10.00 per equity share of Rs 10 each), for FY 2022-23. This Dividend is subject to the approval of shareholders at the forthcoming Annual General Meeting. If approved, the total dividend pay-out for FY 2022-23 will be Rs 26.77 crore.

The Register of Members and Share Transfer Books of the Company will be closed on July 8, 2023, to July 14, 2023 (both days inclusive) for annual closing and determining the entitlement of the shareholders to the final dividend for FY 2022-23, if approved by the members at the forthcoming Annual General Meeting.

7. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to applicable provisions of the Companies Act 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules 2016 (‘the Rules) all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after completion of seven years. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the members for seven consecutive years or more shall also be transferred to the Demat account created by IEPF Authority. Accordingly, the Company has transferred all unclaimed or unpaid dividends and shares to IEPF as per applicable regulations.

8. DEPOSITS FROM PUBLIC

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 and, as such, no amount of principal or interest was outstanding on the date of the Balance Sheet.

9. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Company policy for determining ‘Material Subsidiaries and on ‘Related Party Transactions, as approved by the Board can be accessed on the Company website link: https://investor. nucleussoftware.com/files/Nucleus_Policy_on_ material_subsidiaries.zip and https://investor. nucleussoftware.com/files/Policy_on_Related_ Party_Transactions.zip respectively.

Particulars of contracts or arrangements with related parties in the prescribed Form AOC-2, are provided as Annexure B to this Directors Report.

10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in the notes to the Financial Statements.

11. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF FINANCIAL YEAR 2023 AND DATE OF THIS REPORT

No material changes and commitments have occurred after the close of the year till the date of this Directors Report, which affect the financial position of the Company.

12. CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company.

13. MANAGEMENT DISCUSSION & ANALYSIS

As per requirements of Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosures) Regulations 2015, the Managements Discussion and Analysis of the financial condition and results of both standalone and consolidated operations have been provided separately in the Annual Report.

14. REVIEW OF BUSINESS & OUTLOOK

The banking industry has undergone significant disruption and transformation in the recent years, fuelled by a series of global challenges that have had far-reaching implications. From geopolitical tensions, such as Russias invasion of Ukraine, to supply chain disruptions, inflationary pressures, and the tightening of monetary policies, have collectively impacted the overall banking system in a significant manner.

Your Company understands the multifaceted nature of these challenges and is committed to supporting clients in navigating the emerging complex environment. The digital revolution continues to reshape the banking sector, driving the need for innovative solutions that enhance customer experiences, streamline operations, and ensure regulatory compliance. Your Company has been at the forefront of this transformation, providing cutting-edge software solutions that empower financial institutions to stay ahead in the digital era. Regulatory compliance remains a critical area for financial institutions, and your Company recognises the importance of providing solutions that help our clients navigate the complex and ever-changing regulatory landscape. Your Companys commitment to staying abreast of regulatory changes and continuously enhancing our software offerings positions us as a trusted partner in ensuring compliance while not affecting operational efficiency.

Looking ahead, your Company will continue to invest in research and development to stay ahead of market trends and maintain our competitive edge. Your Company aims to be a preferred partner to financial institutions worldwide by providing them with innovative services, pioneering products, and digital solutions that meet their ever-evolving business needs. With your Companys growth across geographies, we are confident in our ability to deliver optimum value to our customers as they embark on their digital transformation journeys.

In addition to several new orders, many of our customers choose to upgrade our installed products to our latest GA versions. This strengthens our product philosophy to serve our customers with latest technology and functional capabilities with each release. The next decade will continue to witness growth in technology spend; primarily driven by the rise of technology natives and digital reinventors, new tech-enabled business models like ecosystems, direct-to-stakeholder channels and a rise in demand for Industry 5.0. Your Company, with its talent focussed on innovation, is aptly poised to seize opportunities that come up in the future.

15. NEW PRODUCT LAUNCHES

During the year, your Company continued to enhance the solutions to take advantage of market trends, most significant being the increasing digitization of financial services. Your Company has leveraged digital capabilities like Virtual Assistants, messaging applications, augmented channel-based acquisition capability and Geo tracking to offer end to end digitization of the loan lifecycle. The FinnOne Neo™ suite is an end-to-end solution for Lending Businesses, Your Company released FinnOne Neo 6.0 in July 2021 and FinnOne Neo 6.5 in January 2022. In the increasingly digitised world, integrability and compatibility of a software solution with other software providers become more and more critical. Nucleus FinnOne Neo™ has been a leader on this front and by carrying a large number of APIs: 463 in its API stack that facilitate robust, secure, quick and agile integration.

The FinnAxia^TM suite offers an enterprise solution for the Transaction Banking operations of corporate banks. The last release -_ FinnAxia 8.5 in FY 21-22 enabled corporate to make informed decisions on their cash positions and banks to seamlessly provide integrated one stop secured solution to their corporate. Supporting the increasing need for real-time operations, FinnAxia 8.5 enabled cash forecasting capabilities for banks corporate clients and provides enriched MIS. Global payments solution enabled bank to leverage API to serve corporate with single stop solution platform, comply with central bank regulations on LEI (legal entity identifier) to regulate high value payments. Global receivables solution enabled bank to help corporate collect FCY inward payments, comply with NPCI DDI PGP encryption guidelines. The centralized control using virtual accounts enriched with faster reconciliation and provides an enhanced view of cash positions, hence eliminating trapped liquidity. There has been no product release post FinnAxia 8.5, and your Company is working to deliver immediate needs of the customer only.

Our financial inclusion product, PaySe™, which digitizes last-mile users on the ground, has been granted multiple patents for its unique offline and online payment processing capabilities. These capabilities aim to achieve real financial inclusion at the grassroots level. PaySe™ currently addresses the needs of the SHG (Self Help Group) ecosystem by enabling them with an easy and convenient way to conduct digital transactions. Additionally, it addresses challenges faced by people in rural areas, including financial illiteracy, limited internet connectivity, lack of access to smartphones, and the need to travel to banks.

16. NOTABLE ACCOLADES RECEIVED DURING THE YEAR

Annual Report for the Year ended March 31, 2022, won the Platinum Award for Excellence within the Technology- Software industry and Technical Achievement Award from League of American Communication Professionals (LACP). The Annual Report was also ranked 49^th amongst the Worlds Top 100 Annual Reports within the Technology-Software industry by LACP.

Nucleus Software received IBSi Global Fintech Innovation Awards 2023 for Most Effective Digitization/Paperless Initiative – Best Project Implementation for Mirae Asset Financial Services

Nucleus Software earned the IBSi Global Fintech Innovation Awards 2023 under category Best Transaction Banking implementation for BRAC Bank Ltd

17. SUBSIDIARY COMPANIES

Your Company has seven subsidiaries across the globe. There are no associate companies or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").

The following table provides a list of all these subsidiaries as on March 31, 2023:

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

There has been no material change in the nature of the business of the subsidiaries. The Board of Directors reviews the affairs of these subsidiaries periodically. These subsidiaries help the Company in providing front end support to customers and explore new opportunities. A statement containing the salient features of the financial statement of our subsidiaries in the prescribed form AOC 1 is provided as Annexure A to this Directors Report. The statement also provides the details of performance, financial position of each of the subsidiaries.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

a) Nucleus Software Solutions Pte. Ltd.

Nucleus Software Solutions Pte. Ltd. (NSS) is based in Singapore. It was incorporated in 1994 to expand the Companys business in Southeast Asia. Currently, it is the central entity for Asia-Pacific excluding Japan and Australia with responsibility for business development, sales and software development services for customers in the region.

b) Nucleus Software Inc.

Nucleus Software Inc. (NSI) is based in New Jersey, USA. It was incorporated in 1997 for providing business presence in the Americas. NSI operates as a business development and sales hub for the region.

c) Nucleus Software Japan Kabushiki Kaisha

Nucleus Software Japan Kabushiki Kaisha (NSJKK) is based in Tokyo, Japan. It was incorporated in 2001 to expand business in the country. NSJKK operates as a business development and sales hub for Japan. Additionally, the subsidiary provides software development services, to the local customers in Japan.

d) Nucleus Software Netherlands BV

Nucleus Software Netherlands BV (NSBV) is based in Amsterdam, The Netherlands. It was incorporated in 2006 for enlarging business presence in the European market. NSBV is a business development and sales hub for Nucleus in Europe.

e) Nucleus Software Ltd.

Nucleus Software Ltd. (NSL) has operations in Jaipur with registered office in New Delhi. It was incorporated in 2008 for facilitating delivery to larger clients through operations in a Special Economic Zone. NSL acquired 17.41 acre of land in the Mahindra World Special Economic Zone, Jaipur and has co-developed a 250-seater facility.

f) Nucleus Software Australia Pty. Ltd.

Nucleus Software Australia Pty. Ltd. (NSA) is based in Sydney, Australia. It was incorporated in 2014 for tapping the growing business opportunities in ANZ region. NSA operates as a business development and sales hub for the region. Additionally, the subsidiary provides software development services, to the local customers in Australia.

g) Nucleus Software South Africa Pty. Ltd.

Nucleus Software South Africa Pty. Ltd. (NSSA) is based in Johannesburg, South Africa. It was incorporated in 2015 for tapping the growing business opportunities in South African region. NSSA operates as a business development and sales hub for the region.

18. INFRASTRUCTURE

Your Company, along with its subsidiaries, has offices at several locations across the globe. The office space and seating capacity of these offices as on March 31, 2023, is detailed below:

Office Location	Area in sq. ft.	Seating Capacity
_ _		No. of Persons
Noida	208,122	1,677
Jaipur	22,312	250
Pune	9,573	114
India
Chennai	12,286	134
New Delhi	4,200	40
Mumbai	3,250	31
Singapore	4,807	61
Dubai, UAE	1,290	17
Tokyo, Japan	735	15
Manila, Philippines	102	3
Overseas
Jakarta, Indonesia	97	3
London, UK	38.39	1
Sydney, Australia	130	2
New Jersey, USA	146	4
_ Total _	267,089	2,352

The premises at Noida, New Delhi and Jaipur are owned by the Company or its subsidiaries.

.

19. QUALITY PROCESSES

Your Company is committed to ensure the highest level of quality for its products and services. Nucleus Quality Management System (NQMS) continues to enable outstanding value and experience to its external and internal customers. One of the key focus areas for this year was to continue to improve delivery quality through various analytical dashboards at all levels, process improvement initiatives and enabling project teams and business groups plan and perform causal analysis along with preventive and corrective actions.

Quality Processes and Frameworks were further aligned and institutionalised as per the PMBoK Knowledge Areas. Transformation program for Project Management Development across organization was initiated along with global market leader with broader yet focused approach. Learning sessions on Program and Project Management got conducted and 110+ associates got trained

. A dedicated Quality Assurance team handles the process change management, implementation, anditsadherenceacrosstheorganization.Thisteam monitors quality and productivity improvements through regular facilitations, trainings, audits and reviews.

20. BRAND VISIBILITY

Throughout FY 2022-23, your Company experienced consistent growth and actively bolstered its brand and market presence through a variety of marketing channels. By leveraging our thought leadership and emphasizing our product excellence, your Company successfully generated brand visibility across a diverse range of industry platforms. Additionally, your Company is engaged with global media outlets, including television, print, wires, and online portals, while also capitalizing on unique media opportunities in geographies such as Australia and our home country, India. Our product brands have established a strong reputation for delivering exceptional quality and customer service, resulting in high-quality leads from our target segments worldwide. Moving forward, your Company remains committed to maintaining this focus and continuing our efforts to expand brand visibility in the upcoming year.

Industry Interactions

Communicating the business benefits of our solutions, our decades of industry expertise and focus, is of vital importance. With this in mind, our teams demonstrated our expertise and showcased our product offerings at key industry events, roundtables, and briefings throughout the year. Your Company effectively highlighted our unique selling points (USPs) and capabilities, both virtually and physically, in various regions worldwide, including the Middle East, India, Southeast Asia, and ANZ.

Some of the key industry connects during FY 2022-23 are furnished below: Was Platinum Sponsor to the Middle East Banking Innovation Summit (MEBIS) in Dubai. This event brought together 400+ senior bankers from across the Middle East & North African regions, all under one roof, to explore advances in banking and technology, network with industry peers, and engage in forward-looking business conversations.

Presented How technology can play a vital role for financial inclusion in emerging economies and laid emphasis on the importance of reinventing the understanding of the financial ecosystem to make BNPL (Buy Now Pay Later) profitable as the Silver Sponsor at the Fintech Festival India held in Delhi, India. This event brought together experts and thought leaders to discuss the emergence of innovations in the financial services industry and the Fintech ecosystems preparation for streamlined growth.

Participated as the Gold Sponsor to the World Financial Innovation Series event held in Philippines. This event brought together over 400+ in-person and 200+ virtual pre-qualified Technology & Business Heads from leading Banks, Insurance & Micro-finance Institutions spread across Philippines. Presented on "How Digital Lending can contribute in economic upshift of Southeast Asia" and received numerous inquiries regarding our digital lending technology.

Engaged in the 2022 Australian Finance Industry Association (AFIA) Conference that brought together industry peers, influential thought leaders, policymakers, and regulators across the Finance Industry to share ideas and learnings, and to reflect on how the finance community can learn from the successes and mistakes of the past and be prepared to achieve change differently.

Supported and participated as the Gold Sponsor to the Singapore Fintech Festival 2022, presented the topic "Do financial institutions really understand the needs of SMEs?". The event brought together the global Fintech community to engage, connect, and collaborate on issues relating to the development of financial services, public policy, and technology. As the worlds largest Fintech festival, last years edition brought together over 60,000 participants from 160 countries.

Joined as the Gold Sponsor to the Future of Financial Services Summit in Australia; the event brought together C-suite executives, business leaders, and decision-makers from the financial industry to discuss the emerging trends and topics in the disciplines of technology, innovation, digitalization, and strategy. Shared insights on the topic "Digital transformation in lending domain" and received an overwhelming response.

Attended FIBAC 2022, the annual banking conference jointly organized by Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks Association (IBA), where the theme was ‘Helping India step change its growth: How tech enabled banking can contribute to realization of $5tn economy goal.

Participated in Gartner IT Symposium 2022

Conference which explored innovative and transformational opportunities with a global community of experts and peers in IT. CIOs and IT leaders came together in Kochi, India, to explore technology, insights, and trends shaping the future of IT and business, including innovative ideas on accelerating digital business, the future of work, data, analytics and artificial intelligence, cybersecurity, executive leadership and more.

While virtual and physical events are significant methods to exhibit the contributions to banks and financial institutions, your company employ other channels to communicate the competencies. Companys expertise is disseminated through blogs, whitepapers, and articles in distinguished publications worldwide and engage in regular exchanges with industry analysts and consultants to maintain the leadership position.

None of the above would have been achieved without the Nucleite familys unending support and we look forward to surging ahead together.

21. HUMAN RESOURCE MANAGEMENT

The rapidly evolving landscape of the IT industry calls for continuous adaptation, and your Company is committed to keeping pace with the technological advancements and evolving employee needs. With flexible work models extended to our people, backed by business needs and employee preferences, your Companys employee-centric focus continues to cater to the growing demand for work-life balance in the post-pandemic era.

As part of the broader efforts to address the high rate of attrition in the industrys great resignation wave, your Company made significant strides in providing a secure and satisfying work environment for its customers and employees alike. Over 500+ new hires joined our global employee strength of 1,782 with campus hiring through the Nucleus School of Banking Technology (NSBT) specifically targeting tier 2/3 cities and top institutes, creating a diverse talent pool. Initiated in 2010, NSBT remains a flagship program for developing professionals in banking technology, with over 2,500 young minds nurtured to perform at their best.

Learning and Development

Your Company lays high emphasis on continuous learning and growth for every individual. Your Company offers a comprehensive package of learning and development opportunities in technology, processes, functional domain, our products, and leadership training. Nucleus Employee Assistance Policy provides financial support and encourages employees to take up industry certification programs in technology, domain, project management, soft skills and related areas. Leadership Programs from global premier institutes are offered to our senior leaders.

Our online learning platform iLearn, powered by Skillsoft, has 10,000+ courses to help people hone their_ business skills, technology, and leadership skills. The courses are continuously updated with the latest trends and technologies. The "Career Aspire" journeys and key industry certifications help the employees for their career growth and development. The leadership courses in the platform are curated by MIT Sloan Management Review. This platform provides various topics ranging from Leading Organizational Vision and Leading a culture of execution to think strategically. Focus on leadership development for young leaders and mid-level managers continue through our flagship programs – LEAD (Leadership Engagement Action & Development) and YLP (Young Leaders Program). These programs are based on our Core Values and have contributed immensely towards building the organizational culture, individual effectiveness, and leadership competencies. For strengthening the 3 Ps: Project, Program, and Portfolio Management capabilities, there have been focused development sessions for Program and Project Managers during the year. This is done in association with QAI Global and Project Management consultants, which come with 35+ years of Thought Leadership in Project Management areas globally.

22. CORPORATE GOVERNANCE

Your Company believes that good and effective Corporate Governance is critical to achieve corporate vision and mission of the organization on a sustainable basis; it is more of an organizational culture than a mere adherence to rules and regulations. Your Company has established and maintained a strong ethical environment, overseen by a committed and competent Board of Directors. The Companys practices and policies reflect the true spirit of Corporate Governance initiatives. The required disclosures of Schedule V part II are mentioned in "Corporate Governance Report" which forms part of the Annual Report.

Your Company is complying with all mandatory requirements of Corporate Governance as stipulated as per Securities and Exchange Board of India (Listing Obligations and Disclosure) Regulations 2015. The compliance status is provided in the Corporate Governance section of the Annual Report. A certificate issued by the Statutory Auditors of the Company under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure) Regulations 2015, confirming compliance of the conditions of Corporate Governance, is provided as Annexure C to this Directors Report. The auditors certificate for fiscal 2023 does not contain any qualifications, reservations or adverse remark.

23. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

Mr. S. M. Acharya, Mr. Prithvi Haldea, Prof. Trilochan Sastry, Mrs. Elaine Mathias and Mrs. Yasmin Javeri Krishan are Independent Directors as per the Companies Act, 2013, not liable to retire by rotation, to hold office for five consecutive years. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year. The date of appointment of the Directors are given below: Mr. Prithvi Haldea and Prof. Trilochan Sastry had been reappointed as Independent Directors w.e.f. July 26, 2019, for a term of 5 years. Mrs. Elaine Mathias had been reappointed as an Independent Director w.e.f. September 20, 2019, for a term of 5 years.

Mrs. Yasmin Javeri Krishan had been appointed as Independent Director w.e.f. July 30, 2020, for a term of 5 years.

Mr. S. M. Acharya had been reappointed as an Independent Director w.e.f March 19, 2021, for a term of 5 years.

Mr. Ravi Pratap Singh had been reappointed as a Whole-Time Director w.e.f. July 26, 2019, for a term of 5 years.

Mr. Parag Bhise had been appointed as a Whole-Time Director w.e.f July 31, 2020, for a term of 5 years.

Dr. Ritika Dusad had been appointed as a Whole- Time Director w.e.f. August 7, 2020, for a period of 5 years.

Mr. Anurag Mantri had been appointed as a Whole-Time Director w.e.f December 19, 2020, for a period of 5 years. Mr. Vishnu R. Dusad had been reappointed as the Managing Director w.e.f. January 1, 2022, for a period of 5 years.

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission, and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

Pursuant to provisions of Section 203 of the Companies Act, 2013, Mr. Vishnu R. Dusad, Managing Director, Mr. Parag Bhise, CEO, Mr. Anurag Mantri, Chief Financial Officer and Mrs. Poonam Bhasin, Company Secretary are the Key Managerial Personnel of the Company as on date of the report.

In accordance with the provisions of Companies Act 2013 and the Article of Association of the Company, Mr. Vishnu R Dusad, Executive Director and Mr. R P Singh, Executive Director, whose office are liable to retire, shall retire at the ensuing AGM and being eligible, these Directors seek reappointment.

24. BOARD EVALUATION

The Board of Directors carried out an annual evaluation of its own performance and performance of the Chairman, Board committees and individual Directors pursuant to the provisions of the Companies Act 2013 and the Corporate Governance requirements under Regulation 25 (4) of Securities and Exchange Board of India (Listing Obligations and Disclosure) Regulations 2015. The Board, along with the Nomination and Remuneration/Compensation Committee (NRC), developed and adopted the criteria and framework for the evaluation of each of the Directors and of the Board and its Committees.

The evaluation was then conducted as per the approved process (explained in detail in the Report on Corporate Governance of the Annual report.) The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of criteria such as the composition of Committees, effectiveness of Committee meetings, etc. The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. The Chairman of the Committee also had interactions with each of the Directors and sought their feed-back and suggestions on the overall Board Effectiveness and Directors performance. The feedback received from the Directors was discussed and reviewed by the Independent Directors at their separate meeting, and also shared with the NRC/Board. In addition, pursuant to the provisions of Schedule IV to the Companies Act, 2013 the Independent Directors reviewed the performance of the Non-

Independent Directors and of the Board as a whole, performance of the Chairman of the Board taking into account the views of all the Directors, and the quality, quantity and timeliness of flow of information between the Company management and the Board and its sufficiency for the Board to effectively perform its duties. https://investor. nucleussoftware.com/files/CODE-OF-CONDUCT-FOR-DIRECTORS-SENIOR-MGT.zip The Chairman placed the Evaluation Summary before the Committee members. The same was discussed in detail, and the members recorded their satisfaction.

25. COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The primary responsibility of the Nomination and Remuneration/Compensation Committee (NRC) is to identify and nominate suitable candidates for Board membership. The Committee also formulate policies relating to the remuneration of Directors, Key Managerial Personnel and other senior employees of the Company. The Committee, while evaluating potential candidates for Board membership, considers a variety of personal attributes, including experience, intellect, foresight, judgment and transparency, and match these with the requirements set out by the Board. The basic responsibilities of NRC with regard to Directors appointment are as follows:

Recommending desirable changes in Board size, composition, Committee structure and processes, and other aspects of the Boards functioning.

Formulating criteria for determining qualifications, positive attributes and Independence of a Director.

Conducting search and recommending new Board members in light of resignation of current members or a planned expansion of the Board.

Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board their appointment and removal. The policy of the Company for "Policy for Appointment of Board and Senior Management" is provided as Annexure D and "Policy of Remuneration for Directors, Key Managerial Personnel and other Employees" is provided as Annexure E to this Directors Report. These Policies are also available on the Company website link: https://investor.nucleussoftware.com/ files/Nucleus_Remuneration_Policy_for_Board_ Members.zip and https://investor.nucleussoftware. com/files/CODE-OF-CONDUCT-FOR-DIRECTORS-SENIOR-MGT.zip

26. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of Securities and Exchange Board of India (Listing Obligations and Disclosure) Regulations 2015.

27. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters can be accessed on the Company website link: https://investor.nucleussoftware.com/ files/NUCLEUS_FAMILIARISATION_PROGRAMME_ FOR_INDEPENDENT_DIRECTORS.zip

28. MEETINGS OF THE BOARD OF DIRECTORS

The Board met 9 times during the year. The details are provided in the Report on Corporate Governance, a part of the Annual Report.

29. COMMITTEES OF THE BOARD

There are six Committees of the Board as on March 31, 2023, as follows:

Audit Committee

Nomination and Remuneration/Compensation Committee

Stakeholder Relationship Committee

Corporate Social Responsibility Committee

Culture Committee

Risk Management Committee

Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the Report on Corporate Governance, a part of the Annual Report.

The Composition of Board Committees as on March 31, 2023, is as follows:

Name of Member	Audit Committee	Nomination & Remuneration / Compensation Committee	Stakeholder Relationship Committee	Corporate Social Responsibility Committee	Risk Management Committee	Culture Committee
Mr. S M Acharya	v	v		v	v	v
Mr. Vishnu R Dusad			v		v	v
Mr. Prithvi Haldea	v		v		v
Mrs. Elaine Mathias	v	v			v
Prof. Trilochan Sastry		v		v	v
Mrs. Yasmin Javeri Krishan	v			v	v
Mr. R P Singh			v		v	v
Dr. Ritika Dusad				v	v
Mr. Parag Bhise				v	v	v
Mr. Anurag Mantri					v

30. VIGIL MECHANISM

The Company has a well-established whistle blower policy as part of vigil mechanism for observing the conduct of Directors and employees and report concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of conduct or ethics policy. This mechanism also provides for adequate safeguards against victimization of Director(s)/employee(s) who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.

31. SIGNIFICANT AND MATERIAL ORDERS

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

32. REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the Statutory Auditors nor the Secretarial Auditors has reported to the Audit Committee, under Sec 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees.

33. RISK MANAGEMENT POLICY

The Company has developed and implemented a ‘Risk Management Policy that includes identification of elements of risk, which in the opinion of the Board may threaten the existence of the Company. Risk Management Report forms a part of the Annual Report.

34. ADDITIONAL INFORMATION TO SHAREHOLDERS

Detailed information to the shareholders is provided in the Shareholders Referencer, a part of the Annual Report.

35. AUDITORS

Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the rules framed thereafter, M/s ASA & Associates LLP, (Firm Registration Number- 009571N/N500006) Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the Annual General Meeting (AGM) of the Company held on July 8, 2022 until the conclusion of Annual General Meeting of the Company to be held in Calendar year 2027. The requirement to place the matter relating to appointment of the statutory auditors for ratification by the Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of Statutory Auditors at the ensuing AGM and a note in respect of same has been included in the Notice for this AGM.

Secretarial Auditor

As per the Companies Act 2013, Secretarial Audit by a practicing Company Secretary has become mandatory for prescribed companies, and they are required to annex the Secretarial Audit report with their Board Report in the Annual Report.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board appointed, M/S PI and Associates, Practising Company Secretaries to undertake the Secretarial Audit of the Company. Secretarial Audit Report in the prescribed Form MR 3 is provided as Annexure F to this Directors

Report. The Secretarial Auditors Report does not contain any qualification, reservation or adverse remark.

The Company voluntarily adheres to the various Secretarial Standards issued by the Institute of Company Secretaries of India.

36. INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial controls with reference to the financial statements.

Your Company has appointed M/s Varma & Varma Chartered Accountants, an external professional firm as Internal Auditors. The Internal Audit of the Company is regularly carried out to review the internal control systems and processes. The Internal Audit Reports along with implementation and recommendations contained therein are periodically reviewed by Audit Committee of the Board.

M/s ASA & Associates, LLP, the statutory auditors of the Company, has audited the financial statements included in the annual report and has issued an attestation report on our internal control over financial reporting (as defined in Section 143 of Companies Act 2013).

37. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Inclusive growth and sustainable development are strong pillars of your Companys responsible corporate citizenship and are a part of the core values and driving force for many of its initiatives. Your Company believes that responsible investments in this regard will generate long term value for all the stakeholders. In accordance with requirements of the Companies Act 2013, the Company has a Corporate Social Responsibility Committee comprising of a majority of Independent Directors and chaired by an Independent Director- Mrs. Yasmin Javeri Krishan. Prof. Trilochan Sastry, Mr. S M Acharya, Mr. Parag Bhise and Dr. Ritika Dusad are the other members. The CSR Policy may be accessed on the Company website link: https://investor.nucleussoftware.com/ files/CSRPolicyNucleus.zip. The Company had set up Nucleus Software Foundation (NSF), a Trust for the purposes of undertaking CSR activities of the Company, in 2014 as a Section 25 Company with the mission: "Empowering underprivileged with essence of education and thereby better livelihood and better life".

This year Companys CSR arm continued with the interventions in our focus areas of education and livelihood. Since situation had become normal so most interventions were in the field in a hands-on way. Online support methods were used for trainings and assessments.

The focus remained Education i.e., recovery of learning losses in early childhood education due to closure of schools due to Covid.

The students returned to normal schools after a long break and being from underprivileged backgrounds they suffered heavy learning losses as online support to them was limited. Our interventions were aimed at recouping the learning losses and mainstreaming these students. At Noida while waiting for the government permissions to work at government schools, we started our work at Barola slums in Noida and organised summer camp for the kids of the area and did remediation work in Maths, Hindi, and English with them. Once we received the government permissions, we started our self- designed remediation program at 14 government schools of Noida in Maths and English and supported the government teachers in their Hindi remedial activities. We worked with around 750 students at these schools. We were able to motivate and retain them at schools and make them ready for grade level studies over a period of time.

NSF continued the support to an NGO school "Samriddhi" managed by Sandeepon music and educational trust (located in Ghaziabad Vaishali area of Uttar Pradesh). Their learning centre was operational, and they prepared their students like a mainstream school in all the required subjects. They support their elder students by enrolling them at a Centre for Open school Board exams. We also organised sports day for these students. During this sports day we included autistic kids with support from an association of parents with autistic kids. It was a great sensitization for all the volunteers of the foundation.

At Dehradun, the implementing partner Mountains children foundation worked in an intensive manner to bring back kids to schools and assist in recovery of learning loss through the NSF remedial program. We worked at 27 learning centres in two different geographies close to Dehradun, Vikasnagar block and Bandalghati area in Raipur block of Dehradun. Our team also assisted people during time of natural disaster at Sarkhet of Bandalghati area.

At Chennai, NSF partner continued with their women empowerment program of training for tailoring and embroidery. The team trained around 100 plus women in these courses and moved them towards a path of financial independence. This program has a lot of engagement with employees of Nucleus Chennai office. NSF also assisted 25 families of a tribal village by giving them boats and nets which enabled them to do fishing and move on to a path of long-term financial independence. We assisted them in opening recurring deposits at a bank and promoted regular savings.

The team also assisted in the running of 3 learning centres at 3 different villages in Chennai suburbs to assist students of the area in English speaking and computer studies.

The remedial program of Maths and English was continued in a very focussed manner at tribal dominated areas of the chosen five Districts of MP, Dewas, Khandwa, Betul, Chhindwara and Mandla, with the support of the implementing organisation Parivaar. We catered to 300 Learning centers (Commonly known as Seva Kutirs in the area). The Kutirs cater to the tribal students of pre-primary to middle school, in those remote areas.

NSF trainers trained the Kutir (Learning Centre) teachers and their coordinators, through on ground trainings and online trainings. NSF distributed Maths workbooks and English workbooks required for our remediation program to each student of these Kutirs. We reached out to around 20,000 students at the Kutirs and also measured the progress of these students. We aim to reach out to students at a few more districts soon.

The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year is also set out in Annexure G of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

38. EMPLOYEE STOCK OPTION PLAN (ESOP)

Currently, there is only one ESOP scheme prevalent in the Company; ESOP scheme - 2015 (instituted in 2015). As per ESOP scheme 2015, equity shares would be transferred to eligible employees on exercise of options through Nucleus Software Employee Welfare Trust, which is established to carry out activities for the benefit and welfare of its Employees by launching various Schemes in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. Details of ESOP as per the provisions of Companies Act, 2013 and Rules made there under are as follows:

Particulars	2015 Plan
(a) Total number of options under the Plan	500,000
(b) Pricing formula	100% of the
	Fair Market
	Price as on date of grant
(c) Options granted during the year.	–
(d) Options vested as of March 31, 2023	–
(e) (i) Options exercised during the year.	–
(ii) Total number of shares arising as a result of exercise of above options during the year	–
(f) Options forfeited during the year.	–
(g) Option lapsed during the year.	–
(h) Variation of terms of options during the year	–
(i) Amount realized by exercise of options during the year.	–
(j) Total number of options in force as on March 31, 2023	–

During the year, no stock options were granted to any employee under the above-mentioned ESOP plan and therefore no calculations are required to be made or reported regarding difference between intrinsic value and fair market value of ESOPs granted.

39. PARTICULARS OF EMPLOYEES

The details 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 provided in a separate annexure forming part in Annexure H of this report. Further, the report and the accounts are being sent to the Members. In terms of Section 136 of the Act, the information on employee remuneration required under Rule 5(2) & (3) of Act is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.

40. DIRECTORS RESPONSIBILITY STATEMENT

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

(a) in the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures.

(b) the Directors had 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) the Directors had taken proper and sufficient care for 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) the Directors had prepared the annual accounts on a going concern basis.

(e) the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and (f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors, including audit of internal financial controls over financial reporting by the statutory auditors, and the reviews performed by the management, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2022-23

41. EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is available on https://investor.nucleussoftware.com/ AGM_EGM.aspx

42. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is provided as Annexure I to this Directors Report.

43. COST RECORDS AND COST AUDIT

Maintenance of cost records and requirements of cost audit as prescribed under the provisions of section 148 (1) of the Companies Act 2013 are not applicable for the business activities carried out by the Company.

44. DISCLOSURE REQUIREMENTS

As per SEBI Listing Regulations, the Corporate Governance Report with the Auditors Certificate thereon, and the integrated Management Discussion and Analysis are attached, which forms part of this report.

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

45. INTERNAL COMPLAINTS COMMITTEE UNDER THE_ SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013_

Your Company values the dignity of individuals and strives to provide a safe and respectable work environment to all its employees. The Company has put in place a ‘Policy against Sexual Harassment, compliant with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Sexual Harassment Act"). The Internal Committee at all the locations of the Company across India has been constituted, to consider and resolve all sexual harassment complaints as reported under the policy. The Committee also includes external member from NGOs or with relevant experience. We affirm that adequate access was provided to any complainant who wished to register a complaint under the policy. The essence of the policy is communicated to all Company employees at regular intervals through assimilation and awareness programs.

During the FY23, the Company has not received any complaint on sexual harassment under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

46. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

The Listing Regulations mandate the inclusion of the Business Responsibility & Sustainability Report (BRSR) as part of the Annual Report for the top 1,000 listed entities based on market capitalization. In compliance with the Listing Regulations, we have integrated BRSR disclosures into our Annual Report.

47. ACKNOWLEDGEMENTS

Your directors would like to place on record their gratitude for the co-operation received from the Government of India, State Governments of Delhi, Uttar Pradesh and Rajasthan, Customs and Excise Departments, Department of Scientific and Industrial Research (Ministry of Science and Technology), Software Technology Park-Noida, Software Technology Park-Chennai, Software Technology Park-Pune, Special Economic Zone authorities and other government agencies. Your directors would also like to thank the Companys customers, bankers, vendors, partners and shareholders for their continued support to the Company. In specific, the Board would like to put on record its sincere appreciation of the commitment and contribution made by all employees of the Company.

For and on behalf of the Board of Directors

	Sd/-
Date: May 26, 2023	S M Acharya
Place: Noida	Chairperson