sonata software ltd share price Directors report

Dear Members,

Your Directors have pleasure in presenting the Twenty-Eight (28th) Annual Report of your Company together with the Audited Standalone and Consolidated Financial Statements for the Financial Year ended 31st March, 2023.

The consolidated performance of the Company and its subsidiaries has been referred to wherever required.


Your Companys financial performance (standalone and consolidated) for the year ended 31st March, 2023 is summarized below:

Rs in lakhs



Description Financial Year ended 31.03.2023 Financial Year ended 31.03.2022 Financial Year ended 31.03.2023 Financial Year ended 31.03.2022
Total Income 108,054 92,238 751,994 565,535
Total Expenditure 79,090 61,582 684,499 508,962
EBITDA 28,964 30,656 67,495 56,573
Depreciation and Amortization Expense 1,851 1,755 5,913 4,732
Finance Cost 696 878 1,854 1,805
Profit before Tax & Exceptional Items 26,417 28,023 59,728 50,036
Provision for Tax (Net) 4,380 4,504 14,538 12,393
PAT before non-controlling interest 22,037 23,519 45,190 37,643
Non-controlling interest - - - -
PAT after non-controlling interest 22,037 23,519 45,190 37,643
Basic Earnings Per Share (in 15.89 16.97 32.58 27.17


Total Income has shown a growth of 17%. The Earnings before Interest, taxes, Depreciation and Amortization (EBITDA) stood at 27% of total income and Net Profit at 20% of total income with Earnings per share at Rs 15.89.


Total income has shown a growth of 33%. The Earnings before Interest, taxes, Depreciation and Amortization (EBITDA) stood at 9% of total income and Net Profit at 6% of total income with Earnings per share at Rs 32.58.

Analyzing your Companys consolidated results by the two segments it operates in, International IT services contributed 26% of total revenues and 69% of PAT while Domestic products and services contributed to 74% of the total revenues and 31% of PAT.

International IT Services total revenue is Rs 192,035 lakhs, growth of 29% Y-o-Y and $ 240.94 million in US $ terms with a growth of 31% in revenues. Your Company has managed to declare good results consistently because of its focus on serving and growing its existing customers, addition of 59 new customers throughout the Financial Year, and maintaining resource utilization at 86.4% over the Financial Year under review.

Your Company during the Financial Year had a stronger consolidated Balance Sheet and has approximately Rs 74,754 Lakhs of cash and cash equivalents, showing Return on Capital employed (ROCE) of its 35% and Earnings per share at Rs 32.58.

The audited Standalone and Consolidated Financial Statements of your Company, which form a part of this Annual Report, have been prepared in accordance with Indian Accounting Standards ("Ind AS") prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.


In the aftermath of COVID and the subsequent return to normalcy, our operations continued to operate smoothly inspite of majority of the workforce working from home in line with industry trends and employee expectations. However, as part of the return-to-work program, senior management and key functions started operating in a hybrid mode while continuing to focus on employee well-being and overall engagement. Regular connect sessions by the HR team, communication townhalls with CEO and leadership team ensured that employee engagement improves. Similarly, key events such as Annual Awards, Tech Fest, Sonata Spark, festival celebrations, team outings and sports events were conducted in person while maintaining necessary safety protocols in line with the changing context. This also gave employees an opportunity to experience camaraderie which they missed during the pandemic. Your Company has now put in place a robust return-to-work plan through a hybrid work arrangement aimed at strengthening belongingness, collaboration, and productivity. Wellbeing of our people continues to be a key priority. Towards that end, Sonata Wellness week and periodic webinars/sessions on related topics were conducted.


FY23 was a year of transformation for your Company. We sowed the seeds of Modernization driven hypergrowth. We began our journey to achieve revenue of US$ 1.5 B (US$ 0.5B from International Services Business and US$ 1B from Domestic IT Products) by the end of FY26 and be known as a specialist firm in Modernization Engineering, leveraging its unique Platformation framework and set of Lightening Tools.

Your Company redefined focus across Verticals and Markets to drive Modernization. We verticalized our US region towards our key industry verticals - Telecom, Media, and Technology (TMT); Retail & Manufacturing; Banking, Financial Services, and Insurance (BFSI); and Healthcare and Life Sciences (HLS). For geographies outside of the USA, we continued with the GEO structure but have a defined focus on our key industry verticals across the UK, Europe, APAC, and ANZ. In Europe, we expanded our business in the Nordic region.

We continued to grow our matured Harvest Verticals - TMT and Retail & Manufacturing - and invested in building strong sales and delivery capabilities in Invest Verticals- BFSI and HLS, where we see strong growth opportunities over the next 3-5 years.

Your Company invested in key GTMs - Cloud, Data, Dynamics, Managed Services, and Contact Centre - all focused-on Modernization and Automation in the key Markets. We increased our investments in Generative AI as we scaled our AI capabilities, including MS partnership with OpenAI and we won our first engagement on Generative AI in Q3.

Your Company made tremendous progress towards the strategic goals of M&A and Large Deals:

• Acquired Quant Systems Inc., a Texas (USA) based IT Solutions and Software company. The M&A aligned with our strategy to focus and invest in BFSI and HLS verticals. Quant delivered $37M revenue and mid 30s EBITDA in CY 22. Quant added two clients to Sonatas top 5 clients. In addition, the acquisition provided access to a rich talent pool of Salesforce experts, data privacy specialists, and engineering professionals in the US. Furthermore, it augmented our nearshore capabilities in Mexico and Costa Rica.

• Won 2 large deals in Q2 and 4 in Q3 and were delighted to win 3 large deals in Q4, including our historic largest DEAL, from a US-based consumer retail company, with a total contract value (TCV) of $160 million. The client, a net-new Sonata logo, made a direct entry in our Top 5 Clients list.

We started our endeavor to build trusted partnerships with leading hyper-scalers and other key Industry partners who can strengthen our Modernization play. Once again, we received the Microsoft Business Applications 2022/2023 Inner Circle award, and we are now Microsoft Cloud Solution Partner and have completed 13 more Advanced Specializations. We also put in motion the efforts to enhance our partnership status with AWS from current Advanced to a higher level.

We continued to grow and strengthen our India business, focusing on gaining market share in e2e annuity contracts in Cloud-Data modernization opportunities. We endeavor to move up the value chain and make Sonata a preferred partner for everything cloud and data in India.

Towards our commitment to ESG goals, we were proud to receive a score of B (Management Category) by CDP 2022 (Carbon Disclosure Project) for all our actions and efforts towards sustainable practices in business and transparent and open reporting. This recognition places us amongst 27% of companies in the IT sector and above average in the APAC region.

At Sonata, honesty, integrity, and transparency are core values, and good corporate governance translates those values into day-to-day practices and processes. We are delighted that Sonata bagged the Golden Peacock Award for Excellence in Corporate Governance 2022, the second time in a row.

People success remains one of your Companys core tenets as we build the organization to scale and grow. We continued to invest in capability building with upskilling, cross-training, and certifications. We launched Sonata Career Academy for Learning Excellence (SCALE) to offer access to vast content and opportunities for Sonatians to learn using the latest technologies and remain relevant. We are being future-ready on talent by doubling down on building nearshore delivery centers in Europe and the Americas.

To continue to build Sonata as a global firm - Diversity and Inclusiveness will be a high focus area for us as we grow. We set up a Global D&I Council to drive Sonatas Diversity & Inclusion agenda globally. As part of our women empowerment initiative, we associated with the Womens Premier League - a womens Twenty20 cricket franchise. The association helped Sonata gain Brand salience internally and externally in India and some of our key markets.

We launched the Play Big theme campaign to energize the organization and motivate Sonatians to go all-out to achieve the goal we have set for ourselves. Your Company is now the Play Big Sonata.

Your Company witnessed a steady reduction in attrition over the quarters. We will continue to take steps to mitigate attrition risks through increased focus on proactive retention, employee engagement, talent management, and a strong talent fulfillment engine. The CEO succession transition process was completed from Mr. P. Srikar Reddy to Mr. Samir Dhir as Managing Director & CEO during the year. Your Company further strengthened its senior leadership with rich talent, and details of which are covered in Management Discussion and Analysis, which forms part of the Annual Report. This diverse Global Leadership Team is aligned for growth.

Coming to Financial performance, despite an uncertain macroeconomic environment due to geopolitical instability and high inflation, we reported strong revenue growth in both the International IT Services and Domestic IT Products segments. The International IT Services business witnessed a 29% Y-o-Y basis growth to T 1,920 crores, and the Domestic IT Products business grew by 36% Y-o-Y basis to T 5,540 crore. A detailed analysis of the Companys business performance forms part of the Management Discussion and Analysis, a separate section of this Annual Report.

In summary: Your Company remains optimistic about its long-term growth prospects.


Your Company continued to invest in talent, capacity and culture to support its growth strategy. In line with this, leadership talent- from within and outside-across levels, functions and geographies has been inducted;and so has the intake of entry-level talent increased significantly. A new organization structure with business and geographical verticals led jointly by Delivery and Sales leaders, supported by enabling functions, has been put in place in line with the business strategy. This has resulted in role enhancement and career growth for leadership talent from within who have taken up these roles. Most importantly, significant efforts have been invested in deploying initiatives aimed at cementing the culture required for the business to scale and grow and for Sonata to be a preferred employer. We are confident that these measures will further strengthen our capabilities to execute with speed and agility while focusing on people success. Further details are provided elsewhere in this Annual Report.


Training sessions are conducted to create awareness. Cyber security training material (PDFs, Presentations, video lessons etc.) are made available on the internal portal of the Company and Information security quiz is conducted online.


Your Company has implemented security policies in line with ISO 27001:2013 standard to ensure confidentiality integrity and availability of information. Additionally, your Company has highest level of data security and data protection mechanism, and has a secured method of sharing data with Board members and external stakeholders. Further, Company is certified to a standard ISO 9001:2015. Sonata has Implemented SIEM and SASE tool to ensure computing and access is secured.

Your Company being ISO 27001 certified has zero tolerance to the fraud, most of our processes are foolproof and a well-defined Incident Management process is in place, which is subjected to the audit of ISO and has regular standards for sharing data for outsiders such as project data and customer delivery.

A detailed analysis of Companys operations in terms of performance in markets, business outlook, risks and concerns and senior leadership forms part of the Management Discussion and Analysis, a separate section of this Annual Report.


Management Discussion and Analysis Report as required under Regulation 34 and Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, amended from time to time, is disclosed separately in this Annual Report.


In line with the practice of rewarding members, based on your Companys performance and future outlook, your Directors are pleased to recommend a final dividend of * 8.75/- per equity share at 875% on par value of Rs 1/- each, subject to the approval of the shareholders at the ensuing Annual General Meeting ("AGM") and shall be subject to deduction of income tax at source.

The final dividend is in addition to the interim dividend. The interim dividend of * 7/- per equity share, was declared by the Board of Directors on 18th October, 2022.

The total dividend for FY 2023 amounts to Rs 15.75/- per equity share and would involve a total cash outflow of Rs 22,083 lakhs.

If approved by the Members at the ensuing AGM, the final dividend will be paid on or after 8th August, 2023 to all those equity shareholders whose names appear on the Register of Members of your Company on 21st July, 2023, and to those whose names appear as beneficial owners in the records of the National Security Depository Limited and Central Depository Services (India) Limited on the said date.

Your Company has not transferred any amounts to reserve for the Financial Year ended 31st March, 2023.

The dividend paid and recommended is in accordance with your Companys Dividend Distribution Policy.


As required under Listing Regulations, your Company has established Dividend Distribution Policy. The Dividend Distribution Policy is available on the website of your Company investor-relations/corporate-governance


During the year under review, the Issued, Subscribed and Paid-up Equity Share Capital of your Company was increased from ^105,159,306/- (Rupees One Hundred Five Million, One Hundred Fifty-Nine Thousand,

Three Hundred and Six only) divided into 105,159,306 (One Hundred Five Million, One Hundred Fifty-Nine Thousand, Three Hundred & Six only) Equity Shares of face value of T 1/- (Rupees One only) to T 140,212,408/- (Rupees One Hundred Forty Million, Two Hundred Twelve Thousand, Four Hundred & Eight only) divided into 140,212,408 (One Hundred Forty Million, Two Hundred Twelve Thousand, Four Hundred & Eight only) Equity Shares of face value of T 1/- (Rupees One only) each due to allotment of 35,053,102 (Thirty-Five Million, Fifty- Three Thousand, One Hundred and Two) Bonus Equity Shares of face value of T 1/- (Rupees One only) each.

The Board of Directors at their meeting held on 25th July, 2022 recommended issue of bonus equity shares, in the proportion of 1:3, i.e., 01 (One) new fully paid-up equity share for every 03 (Three) existing fully paid-up equity shares. The said bonus issue was approved by the Members of your Company vide resolution dated 2nd September, 2022 passed through postal ballot, subsequent to which 35,053,102 bonus shares were allotted to the Members on 12th September, 2022, to those names that appeared on the register of members as on 10th September, 2022, being the record date fixed for this purpose.

As part of the aforesaid allotment 38,058 (rounded-off) bonus equity shares representing fractional entitlements of eligible Members were consolidated and allotted to the trustee appointed by the Board and such fractional shares were sold at prevailing market price and the net sale proceeds were distributed among the eligible members in proportion to their respective fractional entitlements.


During the year under review, the Board of Directors met six (6) times. The meetings were held on 7th April,

2022, 29th April, 2022, 25th July, 2022, 18th October, 2022, 24th January, 2023 and 9th March, 2023. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Companies Act, 2013.


Mr. Viren Raheja (DIN: 00037592) Director, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting (AGM). Brief profile of Mr. Viren Raheja is provided in the notes to the Notice of the ensuing AGM. The Board of Directors, pursuant to the recommendation of the Nomination and Remuneration Committee, has recommended his re-appointment by the members at the ensuing AGM.

As a part of the Boards succession plan, pursuant to the recommendation of the Nomination and Remuneration Committee, the Board of Directors at their meeting held on 24th January, 2023, approved the appointment of Mr. Samir Dhir (DIN: 03021413), (earlier appointed as the Whole-Time Director and Chief Executive Officer) as the Managing Director & CEO of your Company w.e.f. 14th February, 2023 and also approved the appointment of Mr. P Srikar Reddy (DIN: 00001401), (earlier appointed as Managing Director) as Executive Vice Chairman and Whole-Time Director of your Company w.e.f. 14th February, 2023. The said appointments were approved by the members of your Company through postal ballot on 21st April, 2023.

The Company has devised, inter alia, the following: a) Terms and conditions for appointment of Independent Directors; and b) Nomination and Remuneration Policy. The same are available on the Companys website at


The Companys policy on appointment and remuneration of directors is available on the Companys website at qualifications, positive attributes, and skills are covered in the Corporate Governance Report which is a part of this Report.


Your Company has laid down and followed procedures for familiarizing the Independent Directors with your Company, regarding their roles, rights, responsibilities in your Company and to impart the required information and training to enable them to contribute significantly to your Company.

As required under Section 149(7) of the Act, all the Independent Directors on the Board of your Company have given their respective declarations that they fulfill and meet the criteria of independence as laid down in Section 149(6) of the Act, read with Regulation 16(1)(b) and Regulation 25(8) of Listing Regulations. There has been no change in the circumstances during the year under review affecting their status as Independent Directors of your Company. The list of key skills, expertise, and core competencies of the Board, including the Independent Directors, is provided elsewhere in this Annual Report.

The Independent Directors have confirmed that they have complied with your Companys Code of Conduct during the year under review. They have also further confirmed that they have registered their names in the Independent Directors Databank.


As stipulated under the provisions contained in Section 134(3)(c) read with 134(5) of the Act, the Directors, based upon the information and explanations obtained by them as also documents made available to them and to the best of their knowledge and belief, hereby confirm that:

a) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the Financial Year and of the profit and loss of your Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the Annual Accounts on a going concern basis;

e) the Directors have laid down Internal Financial Controls to be followed by your Company and that such Internal Financial Controls are adequate and were operating effectively; and

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


There has been no material change and commitment affecting financial position of your Company between the end of the Financial Year under review and date of this Report.


Pursuant to the provisions of Section 177 of the Act and Regulation 18 of Listing Regulations, the Audit Committee of the Board as at 31st March, 2023 comprised of Mr. Pradip P Shah, Chairman, Mr. S B Ghia,

Ms. Radhika Rajan and Mr. Sanjay Asher as its Members. The Committee met five (5) times during the year under review and recommendations made by the Audit Committee, during the Financial Year have been accepted by the Board Committees of the Board.


Pursuant to the provisions of Section 178 of the Act and Regulation 19 of Listing Regulations, the Nomination and Remuneration Committee of the Board as at 31st March, 2023 comprised of Mr. Sanjay Asher, Chairman,

Mr. Viren Raheja and Mr. Pradip P Shah as its members. The Committee has laid down a policy for remuneration of Directors, KMP and other Employees. A copy of the Policy is available on the website of your Company

The composition of the Nomination and Remuneration Committee comprises of independent and non-executive directors. The Committee met five (5) times during the year under review.

Pursuant to the provisions of Section 178 of the Act and Regulation 20 of Listing Regulations, the Stakeholders Relationship Committee of the Board as at 31st March, 2023 comprised of Mr. S B Ghia, Chairman,

Mr. P Srikar Reddy, Ms. Radhika Rajan and Mr. Samir Dhir (appointed w.e.f. 14th February, 2023) as its members. The Committee met four (4) times during the year under review.


The Corporate Social Responsibility Committee as at 31st March, 2023 comprised of Ms. Radhika Rajan, Chairperson, Mr. P Srikar Reddy, Mr. S B Ghia and Mr. Samir Dhir (appointed w.e.f. 14th February, 2023) as its members. The Committee met four (4) times during the year under review. The brief outline of the Corporate Social Responsibility (CSR) policy of your Company and the initiatives undertaken by your Company on CSR activities during the year are set out in Annexure III of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended.


The Risk Management Committee as at 31st March, 2023 comprised of Mr. Pradip P Shah, Chairman, Mr. Viren Raheja, Mr. P Srikar Reddy and Mr. Samir Dhir (appointed w.e.f. 25th July, 2022) as its members. The Committee met two (2) times during the year under review. The terms of reference are set out in the Corporate Governance Report forming part of the Boards Report.


Your Companys Risk Management framework, strategies & practice seeks to sustain the long-term vision and mission of your Company. Your Company continuously evaluates the various risks surrounding the business and seeks to review and upgrade its risk management strategies and process to mitigate the risks.

To further endeavour, your Board constantly formulates strategies directed at mitigating these risks which get implemented at the Executive Management level and a regular update is provided to the Board.

Further, details on the Risks and Concerns are covered in Management Discussion and Analysis, which forms part of the Annual Report.


Your Company has adopted a process as a channel for receiving and redressing complaints from employees and directors, as per the provisions of Section 177(9) and (10) of the Companies Act, 2013, Regulation 22 of the Listing Regulations and Regulation 9A of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

Your Company has established Vigil Mechanism which also provides for direct access to the Chairman of the Audit Committee in cases that require reporting about the unethical behaviour, actual or suspected fraud or violation of code of conduct laid down by your Company. This mechanism is governed by Vigil Mechanism Policy which covers unethical behaviour, actual or suspected fraud, theft, bribery, misappropriation of Companys funds, financial reporting violations, misuse of intellectual property, mismanagement, significant environmental, safety or product quality issues, discrimination or harassment including sexual harassment, Insider Trading, actual or potential conflicts of interest, violation of Companys rules, Companys Policies or violation of Code of Conduct of your Company.

Further, your Company has prohibited discrimination, retaliation, or harassment of any kind against any employee who reports under the Vigil Mechanism or participates in the investigation. There were no complaints received during the year under review under this Policy. The Audit Committee periodically reviews the functioning of this mechanism. No personnel of your Company were denied access to the Audit Committee.

The vigil mechanism policy can be accessed through financial-reports/2019-09/Sonata Vigil Mechanism.pdf


As on 31st March, 2023 your Company had 26 subsidiaries (including IBIS Inc., the merged entity and Sonata Software FZ-LLC, the liquidated entity). The statement pursuant to the Section 129(3) of the Companies Act, 2013, containing salient features of the Financial Statements of your Companys Subsidiaries in Form AOC-1 is given in ANNEXURE I. Audited financial statements together with related information and other reports of each of the subsidiary companies have also been placed on the website of your Company at

The Consolidated Financial Statements of your Company and its Subsidiaries viz., Sonata Information Technology Limited, India, Sonata Software Solutions Limited, India, Encore I.T. Services Solutions Private Limited, India, Sonata Software North America Inc., USA, Sonata Software Intercontinental Limited, Ireland, Sonata Software GmbH, Germany, Sonata Europe Limited, UK, Sonata Software FZ LLC, Dubai, Sonata Software (Qatar) LLC, Qatar, Sonata Australia Pty Ltd. (formerly known as Scalable Data Systems Pty Ltd.), Australia, Sopris Systems LLC., USA, Encore Software Services Inc., USA, Sonata Software Canada Limited, Canada, Sonata Latin America S. de R.L. de C.V, Mexico, GAPbuster Limited., UK, GAPbuster Europe Limited, UK, GAPbuster Inc.,

USA, GAPbuster Worldwide Pty Limited, Australia, Kabushiki Kaisha GAPbuster Japan, Japan, GAPbuster China Co. Limited, China, GAPbuster Worldwide Malaysia Sdn Bhd, Malaysia, Quant Systems Inc., USA, Quant Cloud Solutions Private Limited, India and Quant Systems CRC Inc SRL, Costa Rica, Woodshed LLC, USA duly audited/ unaudited/reviewed are presented as part of this Report in accordance with the Companies Act, 2013, Ind AS 110 and the Listing Regulations, wherever applicable.

During the Year under review, your Company incorporated a step-down subsidiary in Mexico named Sonata Latin America, S. DE R.L. DE C.V. Your Company completed the acquisition of Quant Systems Inc., a US registered Company along with its subsidiaries, through Sonata Software North America Inc., (SSNA) a wholly owned Subsidiary of your Company and completed the merger of Interactive Business Information Systems Inc. (IBIS, Inc.) with SSNA.

The branch office of your Company was opened in New Jersey, USA and became operational during the year. Further, Sonata Software FZ LLC., Dubai (Wholly owned subsidiary of your Company) was liquidated.

In terms of your Companys Policy on determining "material subsidiary", during the financial year ended

31st March, 2023 Sonata Information Technology Limited, Sonata Software Solutions Limited and Sonata Software North America Inc., are considered as material subsidiaries pursuant to SEBI Listing regulations as, material subsidiaries whose income exceeds 10% of the consolidated income of your Company in the immediately preceding financial year. Further details on the subsidiary monitoring framework have been provided as part of the Corporate Governance report.

Your Company has a "Policy for determining Material Subsidiaries", so that your Company could identify such Subsidiaries and set out a governance framework for them. The Policy is put up on the website at https://www.


Your Company has an Employee Stock Option Plan, 2013 (Plan) in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The principal objectives of this Plan are to:

• Attract, retain and motivate talented and critical Employees;

• Encourage Employees to align individual performance with the Groups objectives;

• Reward Employee performance with ownership in proportion to their contribution; and

• Align Employee interest with those of the Group.

Pursuant to the requirements of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, a certificate has been issued by the Secretarial Auditor of your Company confirming that the Plan has been implemented in accordance with the said Regulations and in accordance with the resolution of your Company in the General Meeting.

As required under the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the applicable disclosures regarding the details of options granted, number of shares arising as a result of exercise of options, etc., as on 31st March, 2023 are uploaded on the website of your Company

During the year under review, your Company has issued options under Employee Stock Option Plan of 2013, pursuant to issuance of Bonus Equity Shares of the Company.


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 had appointed Mr. Parameshwar G Hegde, Practicing Company Secretary as the Secretarial Auditor for the Financial Year 2022-23 to conduct Secretarial Audit of your Company. The Secretarial Audit Report in Form MR-3 for the Financial Year ended 31st March, 2023 is annexed to this Report as ANNEXURE II. The report does not contain any qualifications, reservations or adverse remarks.


The provisions of Companies (Cost Records and Audit) Rules, 2014 are not applicable to your Company.


B S R & Co. LLP, Chartered Accountants, Bengaluru, (Firm Registration No. 101248W/W-100022) were appointed as Statutory Auditors of your Company from the conclusion of Twenty Seventh (27th) Annual General Meeting (AGM) till conclusion of Thirty Second (32nd) AGM, as required under Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014.

For the year under review, the statutory auditors have confirmed that they satisfy the independence criteria required under the Companies Act, 2013.

The Auditors Report contains Unmodified Opinion on the financial statements (standalone and consolidated) of your Company, for the year ended 31st March, 2023 and there are no qualifications reservations or adverse remarks in their report.


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


During the year, your Company has complied with all the applicable provisions of the Secretarial Standard 1 on Meetings of the Board of Directors & Secretarial Standard 2 on General Meetings issued by the Institute of Company Secretaries of India.


Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, your Company has placed a copy of the annual return as at 31st March, 2023 on its website at relations/corporate-governance under heading Shareholders information.


Pursuant to the provisions of Section 124 (5) of the Companies Act, 2013 and IEPF rules, during the year under review, your Company has transferred the unclaimed and un-encashed dividends of Rs 48,11,867. Pursuant to the provisions of Section 124 (6) of the Companies Act, 2013 and IEPF rules, 22,442 corresponding equity shares of Rs 1/- each on which dividends were unclaimed for seven consecutive years were transferred as per the requirements of the IEPF Rules. The details of the resultant benefits arising out of said shares already transferred to the IEPF, year-wise amounts of unclaimed / un-encashed dividends lying in the unpaid dividend account up to the year, and the corresponding equity shares, which are liable to be transferred, are provided in the Shareholder information section of the Corporate Governance report and are also available on our website, at

The Company has appointed a Nodal Officer under the provisions of IEPF, the details of which are available on the website of your Company at


During the year under review, your Company was felicitated with the following key awards and recognitions:

• Winner of the prestigious Golden Peacock Award for Excellence in Corporate Governance for 2022 in National category under IT Sector by the Institute of Director (IOD), second year in a row.

• Member of the prestigious Inner Circle for Microsoft Business Applications, for 2022/2023.


(A) Conservation of energy

The provisions relating to conservation of energy, technology absorption, are not applicable to the Company. However, your Company is committed towards conservation of energy which is reaffirmed in its Sustainability Policy and is relentlessly working towards making the world a better place by empowering local communities. Being in the Services sector, Company doesnt have large energy-intensive processes, but has always looked for methods to operate more efficiently and conserve energy including by utilising newer technology and innovation to increase productivity and improve the quality of goods and services. Every effort has been taken to improve energy efficiency, prevent waste, and conserve energy. Your Company continued to implement the following energy-saving initiatives as part of a continuing process for energy conservation:

• Renewable energy is used for the electricity requirement of Sonata Global Village offices in Bengaluru. This move is a testament to Companys commitment to reducing the carbon footprint and promoting eco-friendliness.

• 42% of total energy requirement of sonata is fulfilled by renewable energy.

• After regular business hours, maintaining constant surveillance of the floor and turning off the lights.

• Switching off the air conditioning units during off-peak hours and on weekends.

• Performing routine maintenance on UPS and AC plants to ensure optimal functioning of the equipment.

• Ensure complete removal of dead loads during weekends, including turning off or unplugging heating elements of vending machines, switching off lighting circuits, and cutting off all manually operated loads.

• The washroom water management system named HUIDA helps to reduce the water consumption significantly as compare to normal Commode flush.

• Used sustainable building materials for its newly started Tower F building in Global Village, Bengaluru. This has helped your Company to achieve IGBC Platinum Certification for the said building.

The IGBC Green Building certificate signifies that a building has been constructed or retrofitted using sustainable and environment-friendly practices, leading to reduced carbon footprint, energy savings, and improved occupant health and wellbeing

These initiatives will achieve 10-15% reduction in utility cost.

(B) Technology absorption

During the Fiscal under review, your Company focused its efforts and built competencies in areas of new technologies around Modernization aligned to Platformation. We further strengthened our capabilities in AI, Machine learning, Automation, expanded Dynamics to include Contact centre, Power platform. This also included our core themes around large deal constructs, multi cloud capability, modernizing data estates, infrastructure & cloud security. Your Company has also invested directionally on new capabilities like SalesForce, Chat GPT, and considerably enhanced capabilities on AWS stack. Your Company continued to invest in differentiated IP and platforms across industry verticals of Retail, Distribution and Manufacturing, Technology and invested in new verticals BFSI, Healthcare, with particular focus on AI being embedded on all our service offerings. This highlights your Companys ability to invent with impact, and explore futuristic ideas with the wider academic ecosystem.

The best of your Companys innovation capabilities, and practices were brought to customers through experiential initiatives. Your Company constantly connects with customers to all organizational capabilities in innovation, technology and industry expertise, and hosted several events and workshops showcasing its strengths.

(C) Foreign exchange earnings and Outgo

During the Fiscal under review, 83% of the revenue came from exports of developed software and related services to clients mainly in USA, UK, Australia, Germany, UAE, Japan, Singapore, Denmark and Europe.

Foreign Exchange outgo on account of travelling, professional and legal charges, subsistence/living costs, overseas salaries, capital goods, etc. was Rs 10,403 Lakhs and Foreign Exchange inflow on account of export of software services (net), goods and other operating revenues was Rs 75,987 Lakhs.


Your Company has not accepted any deposits from the public under Chapter V of the Companies Act, 2013, during the year under review.


Your Company is committed to provide a healthy environment to all employees that enables them to work without the fear of prejudice and gender bias. Your Company has in place a gender neutral Prevention of Sexual Harassment (POSH) Policy and framework in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Your Company through this Policy has constituted an Internal committee and has established a grievance procedure for protection against victimization.

Following are some of the programs and initiatives in place to train Employees and the Internal Committee (IC) for POSH during the year.

1. Each Employee is required to undergo a mandatory e-learning module on Prevention of Sexual Harassment at Workplace.

2. All new joiners are trained in person on Prevention of Sexual Harassment during their induction program.

3. Special workshops have been conducted for the Senior Management Team and for women employees.

4. The IC Members are provided relevant training by an external agency during quarterly meetings of the IC.

5. The Prevention of Sexual Harassment policy is available on the intranet portal for the employees to access as and when required.

6. Penal consequences of sexual harassment and the constitution of the IC are displayed at conspicuous places. Annual Report has been filed with the relevant authorities as required under the Act.

No complaints were received under this Policy during the Financial Year 2022-23.


Internal Financial Controls are an integrated part of the risk management process, addressing financial and financial reporting risks. The controls are commensurate with the size and nature of Companys operations. The internal financial controls have been embedded in the respective business processes.

Assurance on the effectiveness of internal financial controls is done through management reviews and review by internal auditors and statutory auditors during the course of their audits. The internal financial controls provide reasonable assurance that they are designed effectively with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with Companys policies. The Audit Committee reviews the reports submitted by internal auditors, suggestions for improvement are considered and the corrective action are undertaken.

Sonatas Management assessed the effectiveness of the Companys internal control over financial reporting as of 31st March, 2023, B S R & Co. LLP, the Statutory Auditors have audited the financial statements included in this Annual Report and have issued an attestation report on the Companys Internal Control over financial reporting.

The Audit Committee also meets statutory and internal auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the Board of Directors informed of its major observations periodically. Based on its evaluation, the Audit Committee has concluded that, as of 31st March, 2023, the Companys internal financial controls were adequate and operating effectively.


During the year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its future operations.


During the Financial Year under review, your Company had given Inter Corporate Deposits at prevailing bank lending rate to its Wholly Owned Subsidiaries, Sonata Information Technology Limited, and Sonata Software Solutions Limited for meeting its working capital requirements. The balance outstanding as on 31st March, 2023 is nil. The maximum amount outstanding at any point of time during the Financial Year has been T 4,510 Lakhs.

Also, your Company has given Corporate Guarantees on behalf of Subsidiaries for facilitating its business needs. The outstanding amount as on 31st March, 2023 is as below:

Name of the Subsidiary Amount in Rs Lakhs
Sonata Software North America Inc., USA 6,163
Sonata Information Technology Limited, India 33,368


The CSR policy is formulated by the Corporate Social Responsibility Committee and approved by the Board of Directors of the Company. The policy can be accessed at

During this Financial Year, your Company has spent T 463.2 lakhs (as against its obligation of T 416 lakhs) towards CSR activities. Your Company has a CSR policy in place and as part of its implementation program(s), it has identified and participated in the following initiatives:

Sonata Software has supported Agastya International Foundation for their project - "Lab on Tab" which helped Rural students to get access to Science and Mathematics experiments at their doorstep in Rural schools. Sonata has provided the technical support for enhancing the portal and Application functionality and knowledge repository of an existing android app-based learning platform- Lab on Tab.

Sonata Software is supporting Industree Crafts Foundation for developing an Online Repository for Artisans to store Designs and Products for Artisans. The Co Create app is developed that will feature a centralized Master Bank which stores information about Artisans and their artworks throughout India. Additionally, this app aims to assist Artisans from all over the nation in enrolling themselves and showcasing their handicrafts.

Sonata has collaborated with MAP Foundation to promote inclusivity, education, and accessibility to art and

culture for diverse audiences. As part of its Corporate Social Responsibility initiative, Sonata has developed a Museum Management System to manage a broad range of events.

Sonata Software has supported INTACH (Indian National Trust for Art and Cultural Heritage) for developing a Digital Platform for Someshwara Temple in Ulsoor, Bengaluru, to enhance its accessibility and enable visitors to learn about its history and significance. This includes development of an interactive website that offers a 360-degree virtual tour, visual map, and up-to-date information on the latest developments at Someshwara Temple in Bangalore. This website will benefit not only tourists but also historians and those interested in heritage education.

Sonata Software is helping ISDM (Indian School of Development Management) to provide technical assistance for revamping the existing ISDM website into a new website that will be acting as a digital reflection of ISDM as an institution, encompassing all the different facets, from the post-graduate program to strategic capacity building to research and building the body of knowledge on development management to the centers of excellence. ISDM recognizes the need to professionalize the Leading and Managing of Social Purpose Organizations (SPOS).

Sonata Software has provided relief to Orissa flood victims through

Sweetheart Foundation.

Sonata Software has provided the grant fund to Hyderabad Public School for Promotion of Science and Technology among young students. The engagement included the Indian Science Festival organized by Hyderabad Public School and sponsored by Sonata which had featured fireside chats, panel discussions, immersive workshops, interactive demos, film screenings, and exhibits, covering a range of scientific topics and panel discussion between speakers from prestigious institutions.

Sonata Software is working with Farmers for Forest (Efficient Ecosystem Protection Association) for empowering the marginalized farmers by improving their income along with reducing the carbon emissions to environment by planting 6,000 trees over 15 acres of unused and degraded land.

Sonata Software is collaborating with Centum Foundation for promotion of education and enhancement of employment of underprivileged diversified youth in IT sector. Under this engagement, Full Stack Development course will be provided to 500 beneficiaries which includes 300 women, 100 specially abled, 100 rest of under need students, along with placement assistance.

The Report on CSR in the prescribed format is enclosed to this Report as ANNEXURE III.


Pursuant to Regulation 34(2)(f) of the Listing Regulations, your Companys Business Responsibility and Sustainability Report ("BRSR") forms part of the Annual Report. The BRSR includes details on performance against the nine principles of the National Guidelines on Responsible Business Conduct and a report under each principle, which is divided into essential and leadership indicators. The said report comprehensively covers your Companys philosophy and describes the initiatives taken by the Company from an environmental, social and governance perspective on corporate social responsibility, its sustainability activities pertaining to efforts on conservation of environment, conducting green awareness events, its commitment towards society, enhancing primary education, initiatives and activities taken up as part of this philosophy for the year 2022-23.

Environmental, Social and Governance (ESG): Your Company has launched ESG initiatives. The CSR Committee discharges oversight responsibility on matters related to organization wide ESG initiatives, priorities, and leading ESG practices. The quarterly review and progress made on ESG are reported to the Board of Directors every quarter, the details on ESG are given elsewhere in the Annual Report.


The policy on related party transactions is available on your Companys website at https://www.sonata-software. com/about-us/investor-relations/corporate-governance.

All related party transactions are placed on a quarterly basis before the Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee and the Board is obtained for the transactions which are foreseeable and of a repetitive nature. Particulars of the contracts or arrangements with related parties referred to in Section 188(1) in the format specified as Form AOC- 2 forms part of this Report as ANNEXURE - IV.

Pursuant to Regulation 23(9) of the Listing Regulations, your Company has filed the disclosures on related party transactions in prescribed format with the Stock Exchanges.


All the Related Party Transactions entered into by your Company with the Related Parties including rendering of services, sharing of expenses, providing of inter-corporate loans and guarantees to its subsidiaries are in the ordinary course of business and are carried out at arms length pricing.


During the Year under review, as mandated by the Companies Act, 2013, and SEBI Listing Regulations, Annual Evaluation was conducted by the Board of its own performance and that of its committees and individual Directors and the Independent Directors. As part of the evaluation process, individual criteria for each of the exercise was formulated. The said criteria specified certain parameters like attendance, acquaintance with business, communication inter se between board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmarks established by global peers etc., which is in compliance with applicable laws, regulations and guidelines. From these, formal questionnaire listing various parameters on which each of the categories were required to be evaluated was shared with each member of the Board / Committee / Director. They were then required to rate individually on each of the parameters and also provide feedback based on ratings.

In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.

The outcome of the Board Evaluation for the financial year 2022-23 was discussed by the Independent Directors/Board/Committee. The Board of Directors of the Company noted the actions taken in improving Board effectiveness based on feedback given in the previous year. Further, the Board also noted areas requiring more focus in the future, which include Board diversity, Strategy discussion on succession planning, and Risk management.


The policy on remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and is also available on the Companys website at

Details / Disclosures of ratio of Remuneration to each Director to the median employees remuneration and details of remuneration paid to Employees is given as ANNEXURE - V.

A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms an integral part of this Report. However, the same is not being sent along with this Annual Report to the Members of your Company in line with the provision of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to and these documents will be made available for inspection electronically from the date of circulation of this Annual Report up to the date of AGM i.e. 31st July, 2023.


Your Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set out by the Securities and Exchange Board of India ("SEBI"). Your Company has also implemented several best governance practices. The report on Corporate Governance as stipulated under the Listing Regulations forms part of the Annual Report.

A Certificate from Mr. Parameshwar G Hegde, Practicing Company Secretary, confirming the compliance with the conditions of Corporate Governance as stipulated under the said Listing Regulations is attached to this report.

Other Disclosures

a) Your Company confirms that it has paid the Annual Listing Fees for the year 2022-23 to NSE and BSE where your Companys shares are listed.

b) Your Company has not issued shares with differential voting rights and sweat equity shares during the year under review.

c) There are no proceedings initiated/pending against your Company under the Insolvency and Bankruptcy Code, 2016 which materially impact the business of the Company.

d) There were no instances where your Company required the valuation for one time settlement or while taking the loan from the Banks or Financial institution.


Your Directors take this opportunity and place on record their gratitude for all the guidance and co-operation received from all its clients, investors, vendors, bankers, financial institutions, business associates, advisors, regulatory and government authorities. Your Directors also take this opportunity to thank all its Shareholders and Stakeholders for their continued support, and look forward to their continued support in the future and all the Sonatians for their valuable contribution and dedicated service. The consistent growth was made possible by their hard work, solidarity, co-operation and support.

Place: Mumbai PRADIP P SHAH
Date: 13th May, 2023 Chairman