FOR THE FINANCIAL YEAR 2016-17
Your Directors present the Twenty Fourth Annual Report (the "Report") of theCompany along with the Audited Financial Statements for the year ended March 31 2017.
a) Performance of the Company
The Management is pleased to inform the shareholders that after a period of 5 yearsthe Company has posted a Net
Profit after Tax (called Total Comprehensive Income under the Indian AccountingStandards notified by the Ministry of Corporate Affairs) of Rs.95.09 crores for thefinancial year 2016-17. On the operational front the Company made significant effortsduring the year towards improving operational performance across its core businesses andis fully geared to progress on its growth aspirations. The thrust in the coming yearsstarting from FY 2017-18 is not only to strengthen the CompanyRs.s position in chosenareas but also to pick up momentum and grow.
b) Update on Debt Realignment Scheme (DRS)
As of the date of this Report the Company has allotted equity shares to 64% of itsLenders. The allotment in respect of the remaining Lenders is expected to be completedshortly. The Company has also successfully implemented the restructuring of its ForeignCurrency Convertible Bonds (FCCBs) during the year.
The Company has been servicing its Lenders and FCCB holders on a regular basis sinceApril 1 2016.
We are further pleased to announce that on June 28 2017 the Company pre-paid a partof the principal outstanding debt due to the DRS Lenders amounting to Rs.38.5 crores. Thisamount represents 6 monthly instalments of the Principal Amount which were due forrepayment from April 30 2018 as per the terms of the DRS approved by its Lenders.
c) Financial Performance of the Company on Standalone and Consolidated basis
Rs. in crores
| ||Standalone ||Consolidated |
|Particulars ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Total Revenue (I) ||344.87 ||429.38 ||1055.91 ||1132.68 |
|Total Expenses (II) ||253.78 ||654.92 ||953.33 ||1402.41 |
|Profit/(loss) before exceptional items and tax (I-II) ||91.09 ||(225.54) ||102.58 ||(269.73) |
|Exceptional items ||- ||222.46 ||- ||168.87 |
|Profit/(loss) before tax ||91.09 ||(448.00) ||102.58 ||(438.60) |
|Tax expense || || || || |
|Current tax ||- ||- ||5.84 ||5.96 |
|Deferred Tax Expense ||(1.49) ||85.88 ||0.27 ||81.53 |
|Adjustment of tax relating to earlier periods ||0.32 ||5.82 ||2.40 ||25.66 |
|Profit/(Loss) for the year ||92.26 ||(539.70) ||94.07 ||(551.75) |
|OTHER COMPREHENSIVE INCOME || || || || |
|A. Other Comprehensive income not to be reclassified || || || || |
|to profit and loss in subsequent year: || || || || |
|Remeasurement of gains (losses) on defined benefit plans ||4.32 ||(0.97) ||7.01 ||(1.79) |
|Income tax effect ||(1.49) ||0.34 ||(0.43) ||0.02 |
|B. Other Comprehensive income to be reclassified to profit and loss in subsequent periods: ||- ||- ||- ||- |
|Other Comprehensive income for the year net of tax ||2.83 ||(0.63) ||6.58 ||(1.77) |
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET OF TAX ||95.09 ||(540.33) ||100.65 ||(553.52) |
|Total comprehensive income for the year net of tax attributable to: || || || || |
|Profit for the year attributable to: || || || || |
|Equity holders of the parent ||- ||- ||94.73 ||(548.96) |
|Non-controlling interests ||- ||- ||(0.66) ||(2.79) |
|Other comprehensive income for the year attributable to: || || || || |
|Equity holders of the parent ||- ||- ||6.58 ||(1.77) |
|Non-controlling interests ||- ||- ||- ||- |
|Total comprehensive income for the year attributable to: || || || || |
|Equity holders of the parent ||- ||- ||101.31 ||(550.73) |
|Non-controlling interests ||- ||- ||(0.66) ||(2.79) |
|Earnings per share for profit attributable to equity shareholders || || || || |
|Basic EPS ||0.75 ||(8.67) ||0.77 ||(8.85) |
|Diluted EPS ||0.75 ||(8.67) ||0.77 ||(8.85) |
During the year under review standalone sales and other income stood at Rs.344.87crores. After meeting all the expenditures the Company made a total comprehensive incomeof Rs. 95.09 crores on standalone basis. Further during the year under reviewconsolidated sales and other income stood at Rs.1055.91 crores. After meeting allexpenditures the Company made a comprehensive income of Rs.100.65 crores on aconsolidated basis.
TRANSFER TO RESERVES
There is no amount proposed to be transferred to general reserve this year.
During the year the Company has issued Class B Preference Shares of Rs.5/- each tosome of the Lenders as per the terms of Debt Realignment Scheme (DRS). An amount ofRs.3466352 was paid as preference dividend to Class B Preference Shareholders onpreference shares issued upto March 31 2017. The payment of the abovementioned dividendwas made as part of the contractual obligations of the Company with respect to the issueof these preference shares.
The Company has also paid a dividend of Rs.330343 as preference dividend to Class APreference Shareholders for the period from April 1 2012 to April 30 2017 as per theterms of issue of Class A Preference Shares.
After payment of preference dividend the profits available for distribution to equityshareholders work out to be Rs.92.26 crores. As the Members are aware the Company had notdeclared dividend on equity shares in the last few years in view of losses incurred by theCompany. Though the Company has earned net profits during the financial year ended March31 2017 as per the terms of the Master Restructuring Agreement (MRA) dated March 302012 entered into by the Company with IDBI Bank Limited the Monitoring Institution andthe CDR Lenders the Company is prohibited from declaring or paying any dividend on itsequity shares without prior approval of Lenders/ CDR Empowered Group. In view of thisfact your Directors regret to state their inability to recommend any dividend on equityshares for the year ended March 31 2017.
Your Company has a comprehensive set of IP based software solutions (20+) coupled witha wide range of IT Services to address the dynamic requirements of a variety of industryverticals including Banking Insurance Capital Markets Asset & WealthManagement (BFSI). The Company also provides solutions for other verticals such asGovernment Manufacturing Distribution Telecom and Healthcare.
The business activities of the Company are broadly divided into two categories viz. ITSolutions and Transaction Services. IT Solutions business comprises of software productsand IT enabled services while the transaction services comprise of BPO and KPO services.The Company has a good product portfolio and has dominant presence in fast growingemerging economies.The Product Business of the Company has a wide base with more than 1000active customers who are satisfactorily using the Company's products.
The contribution of IT Solutions to the revenue for the year was 95% and that ofTransaction Services was 5%. Your Company has presence in 50 countries across sixoperational geographies viz. South Asia Asia Pacific (APAC) Middle East and Africa(MEA) Kingdom of Saudi Arabia (KSA) Western Europe (WE) and North America (US). YourCompany has marketing network around the world including US WE MEA and APAC. Thebusiness of your Company is largely divided into Emerging Markets and Developed Markets.The share of the Emerging Markets to total revenue of the Company is about 67% while thatof Developed Markets is about 33%. For detailed operations and business performance andanalysis kindly refer the Management Discussion & Analysis which forms a part of thisReport.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
During the year under review the Company has neither raised its stake on its own orthrough its subsidiaries in any of the companies nor divested its stake in any of itssubsidiaries. As on March 31 2017 the number of subsidiaries is 23 (twenty three).
As per the first proviso to Section 129(3) of the Companies Act 2013 (the"Act") read with Rule 5 of Companies (Accounts) Rules 2014 the statementcontaining salient features of the financial joint ventures in the prescribed Form AOC-1is enclosed with the consolidated financial statements. Pursuant to the provisions ofSection 136 of the Act the financial statements of the Company consolidated financialstatements along with relevant documents and separate audited accounts in respect ofsubsidiaries are available on the website of the Company.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
Particulars of loans guarantees or investments granted/made during the year are givenunder the notes to standalone financial statements forming part of the Annual Report.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review all the contracts or arrangements or transactions enteredinto by the Company with related parties referred to in Section 188 of the Companies Act2013 were in the ordinary course of business and on an arm's length basis. During theyear the Company has not entered into any contract/arrangement/ transaction with relatedparties which could be considered material in accordance with the policy of the Company onrelated party transactions.
Since all related party transactions entered into by the Company were in the ordinarycourse of business and were on an arm's length basis form AOC-2 is not applicable to theCompany.
The Company has in place a Policy on Materiality of Related Party Transactions and ondealing with Related Party
Transactions. The said policy can be viewed on the Company's website in the Investors'section by accessing the following link: http://www.3i-infotech.com/content/investors/-2/under "Corporate Governance".
Details regarding related party disclosure are given under the notes to standalonefinancial statements which form part of the Annual Report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
During the year the Shareholders approved the following Resolutions through PostalBallot concluded on May 13 2016:
1. Increase in Authorised Share Capital of the Company to the extent of 20 crore equityshares of Rs.10 each and consequent amendment to the Memorandum of Association of theCompany;
2. Amendment to the Articles of Association of the Company;
3. (i) Issue as part of the proposed restructuring of the outstanding USD 1253560005% convertible bonds due 2017 (the "5% Bonds") and USD 2435000 4.75%convertible bonds due 2017 (the "4.75% Bonds" and together with the 5% Bondsthe "Existing Bonds") new foreign currency convertible bonds to the holders ofthe Existing Bonds in exchange for the Existing Bonds and
(ii) amend the terms of the outstanding Existing Bonds (to the extent not exchanged)including extension of the maturity and reduction of the rate of interest; and
4. Issue of equity shares against conversion of a portion of the outstanding amountsdue to the Lenders.
The details of results of this Postal Ballot conducted during the year are given inAnnexure I in the Corporate Governance Report.
Except as stated above there have been no material changes and commitments if anyaffecting the financial position of the Company which have occurred between the end of thefinancial year to which financial statements relate and as on the date of the Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and Company'soperation in future.
REPORT ON CORPORATE GOVERNANCE
The Corporate Governance Report along with auditors' certificate thereon in terms ofRegulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015("SEBI LODR") read with Schedule V of said regulations is appended herewith as AnnexureI to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of provisions of Regulation 34 of SEBI LODR the Management Discussion andAnalysis Report is given under a separate section forming part of this Annual Report.
EXTRACT OF ANNUAL RETURN
In terms of the requirements of Section 92 (3) of the Act read with Rule 12 of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return inthe prescribed form MGT- 9 is appended herewith as Annexure II and forms part ofthis Report.
a) Preference Share Capital
During the year under review as per the terms of DRS the Company had allotted 0.10%Cumulative Non- Convertible Redeemable Preference Shares (Class B Preference Shares) offace value of Rs.5/- each at par to its Lenders.
Details of the allotments are as follows:
|Date of Allotment ||No. of Class B Preference Shares allotted |
|September 29 2016 ||434431627 |
|January 2 2017 ||189505860 |
|March 22 2017 ||21476000 |
|March 31 2017 ||47857000 |
|TOTAL ||693270487 |
Existing preference shares of the Company before the above allotments were designatedas Class A Preference Shares. After taking into account the above allotments thepreference share capital of the Company as on March 31 2017 was Rs.4116352435consisting of 130000000 Class A Preference Shares of Rs.5/- each and 693270487 ClassB Preference Shares of Rs.5/- each.
b) Increase in Authorised Capital
In order to issue additional share capital as required under DRS it was felt necessaryto increase the authorised share capital of the Company. Pursuant to approval of theMembers obtained through Postal Ballot results of which were declared on May 13 2016the authorised share capital of the Company was increased to Rs.3155 Crores (Rupees ThreeThousand One Hundred Fifty Five Crores only) divided into 220 Crore (Two Hundred TwentyCrore) equity shares of Rs.10/- each 20 Crore (Twenty Crore) preference shares of Rs.5/-each (called Class A Preference Shares) 150 Crore (One Hundred Fifty Crore) preferenceshares of Rs.5/- each (called Class B Preference Shares) and 105 Crore (One Hundred FiveCrore) preference shares of Rs.1/- each (called Class C Preference Shares).
c) Paid-up Equity Share Capital
1) ESOS allotments:
The Company has not allotted any shares under the Employees Stock Option Schemes (ESOS)during the year.
2) Allotments against conversion of Foreign Currency Convertible Bonds (FCCBs):
During the year the Company had received one conversion notice from an FCCB holderagainst which 637193 Equity Shares were allotted by the Company at a premium ofRs.6.50/- per share on July 26 2016. During the year the Company had proposed anexchange offer to its FCCB holders under the Debt Realignment Scheme (DRS) Package of theCompany. FCCB holders opting for the exchange offer were given new FCCBs in exchange fortheir existing FCCBs. Terms of FCCBs of the remaining FCCB holders were amended as perresolutions passed at the meetings of the FCCB holders. As per terms of new FCCBs and theamended FCCBs a portion of the FCCBs underwent automatic conversion into equity sharesagainst which the following allotments were made to the FCCB holders on December 12 2016:
a) 190356 Equity Shares of face value of Rs.10/- each were allotted at a premium ofRs.155.935/- per share to the holders of existing FCCBs held under ISIN XS0308551166;
b) 15165824 Equity Shares of face value of Rs.10/- each were allotted at a premiumof Rs.6.50/- per share to the holders of existing FCCBs held under ISIN XS0769181982 and
c) 133209406 Equity Shares of face value of Rs.10/- each were allotted at par to theholders of new FCCBs held under ISIN XS1423751418.
The conversion price of the amended FCCBs was as per the original terms of therespective issue of FCCBs (as adjusted for bonus where applicable). The initial automaticconversion price of the new FCCBs was Rs.10/- per share. In case of any subsequentconversions of the new FCCBs at the option of the FCCB holders the conversion price wouldbe Rs.12.50/- per share.
3) Allotment of Equity Shares under the Debt Realignment Scheme (DRS) Package:
During the year under review the Company has allotted 393644696 Equity Shares tosome of the Lenders of the Company including the lenders of the Company's subsidiaries andlenders of facilities guaranteed by the Company and lessors of the Company ("DRSLenders") as per the terms of DRS package the details of which are as follows:
|Date of allotment ||No. of shares allotted |
|September 29 2016 ||257440351 |
|January 2 2017 ||108289063 |
|March 31 2017 ||27915282 |
|TOTAL ||393644696 |
Further 148565586 Equity Shares of face value of Rs.10/- each were allotted to FCCBholders on December 12 2016 against automatic conversion of a portion of the existing andnew FCCBs as per the terms of DRS. Details of these allotments are mentioned under pointno. 2 above.
As a result of the aforesaid allotments the paid-up equity share capital of theCompany stands at Rs.11836514030 and the issued equity share capital of the Companystands at Rs.12236726040 as on March 31 2017.
The difference between Issued and Paid-up Equity Share Capital is on account of40021201 equity shares of Rs.10/- each held in abeyance at the request of an FCCBholder which were subsequently alloted on June 8 2017.
The Company has neither issued equity shares with differential rights as to dividendvoting or otherwise nor any shares (including sweat equity shares) to the employees of theCompany under any Scheme.
EMPLOYEES STOCK OPTION SCHEMES
As per SEBI Circular (CIR/CFD/POLICY CELL/2/2015) dated June 16 2015 relating torequirements specifiedunder the SEBI (Share Based Employee Benefits) Regulations 2014details of the Employee Stock Option Schemes (ESOS) of the Company are given in AnnexureIII to this Report.
During the year the Company has not invited/accepted any deposit under Section 73 ofthe Act.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
During the year under review Mr. Padmanabhan Iyer (DIN-05282942) was appointed as anExecutive Director for a period of 3 years with effect from May 18 2016. Later on June7 2016 Mr. Madhivanan Balakrishnan (DIN-01426902) resigned as the Managing Director& Global CEO of the Company. Pursuant to resignation of Mr. Madhivanan BalakrishnanMr. Padmanabhan Iyer was elevated to the position of the acting Chief ExecutiveOfficer of the Company. Thereafter Mr. Padmanabhan Iyer was appointed as ManagingDirector & Global CEO for a period of 5 years effective August 11 2016. At the 23rdAnnual General Meeting of the Members of the Company the Members approved the appointmentof Mr. Padmanabhan Iyer as Managing Director and Global CEO for a period of 5 yearsand remuneration payable to him for a period of 3 years by way of special resolution.
On January 23 2017 Mr. Shanti Lal Jain (DIN-07692739) was appointed as NomineeDirector representing Allahabad Bank on the Board of Directors of the Company.
Further Mr. Rajeev Limaye was appointed as Company Secretary and Compliance Officer
The Directors place on record their sincere appreciation towards services rendered byMr. Madhivanan Balakrishnan during his tenure as Managing Director of the Company.
In accordance with Section 152 (6) and other applicable provisions of Companies Act2013 Ms. Sarojini Dikhale (DIN-02755309) being a Non-Executive Director isliable to retire by rotation at the ensuing Annual General Meeting (AGM) of the Companyand being eligible has offered herself for re-appointment. The Board recommends herre-appointment at the ensuing AGM for your approval. As stipulated under the Regulation 36of SEBI LODR a brief resume of the Director proposed to be re-appointed is given in theNotice convening the ensuing AGM which is included in the Annual Report 2016-17.
As on the date of this Report the Board of the Company consists of 6 Directors out ofwhich two are Independent Directors two are Nominee Directors one is a Non-ExecutiveDirector and one is an Executive Director.
None of the Independent Directors have had any pecuniary relationship or transactionwith the Company during financial year 2016-17 except to the extent of theirdirectorship. None of the Directors or KMP of the Company is related inter-se.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from each independent director as per provisionsof SEBI LODR and Section 149 (7) of Companies Act 2013 that he/she meets thecriteria of independence laid down in Section 149 (6) of
Companies Act 2013.
NUMBER OF MEETINGS OF THE BOARD
Nine meetings of the Board of Directors were held during the year. The details of thesame are given in Corporate Governance Report section that forms part of the AnnualReport. The intervening gap between two consecutive Board Meetings did not exceed 120days.
POLICIES AS PER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS2015
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBILODR") mandated all listed companies to formulate certain policies. The Company hasin place all such policies the list of which is given below:
Whistle Blower Policy;
Policy relating to Remuneration of Directors Key Managerial Personnel and otherKey Employees;
Corporate Social Responsibility Policy;
Policy for determining Material Subsidiaries;
Policy on Materiality of Related Party Transactions and dealing with RelatedParty Transactions;
Policy for Board Diversity and
Policy for Preservation of Documents.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In terms of the provisions of the Act and SEBI LODR your Company has laid downcriteria for performance evaluation of Directors and Chairman of the Board and also theevaluation process for the same. Schedule IV of the Act states that the performanceevaluation of Independent Directors shall be done by the entire Board of Directorsexcluding the Director being evaluated. The Company's policy relating to appointment andremuneration of Directors KMPs and other employees including criteria for determiningqualifications positive attributes and independence of a director are covered under theCorporate Governance Report which forms a part of this Report.
It is a practice of the Board of Directors to annually evaluate its own performance andthat of its committees and individual directors. Accordingly the performances of themembers of the Board as a whole and of individual Directors were evaluated at the meetingof the Committee of the Independent Directors and the Board of Directors held on April 302017.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
As per provisions of SEBI LODR and the Act the Company has formulated FamiliarizationProgramme for Independent Directors. At the time of appointment of an IndependentDirector the Company issues a formal letter of appointment to an Independent Directoroutlining his/her role function duties responsibilities etc. The terms and conditionsfor appointment of Independent Directors are also available on the website of the Company.
The Board members are provided with necessary documents/brochures reports and internalpolicies to enable familiarizing them with the Company's procedures and practices.Periodic presentations are made at the Board Meetings on business performance updates ofthe Company global business environment business strategy and risk involved.
As on the date of this Report the Board has four committees:
i. Audit Committee
ii. Nomination and Remuneration Committee
iii. Stakeholders' Relationship Committee
iv. Corporate Social Responsibility Committee
In line with the provisions of the Act and SEBI LODR the Company has devised andimplemented a vigil mechanism in the form of "Whistle Blower Policy". As per thePolicy the Company has an internal committee comprising of the Head-HR and the ComplianceOfficer of the Company to address the functioning of the vigil mechanism as mandated bythe Act and assist the Audit Committee thereunder.
The detailed information regarding the committees of the Board including compositionof the Audit Committee has been given in the Corporate Governance Report which forms anintegral part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The audited Consolidated Financial Statements presented by the Company include thefinancial results of its subsidiary companies associates and joint ventures and form partof the Annual Report. The audited Consolidated Financial Statements have been prepared inaccordance with relevant Accounting Standards issued by the Institute of CharteredAccountants of India and the Act.
INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY
Your Company has implemented adequate procedures and internal controls which providereasonable assurance regarding reliability of financial reporting and preparation offinancial statements. Your Company also ensures that internal controls are operatingeffectively.
M/s. Lodha & Co. Chartered Accountants and M/s. GMJ &Co. CharteredAccountants were appointed as the Joint Statutory Auditors of the Company at the AGM heldon December 7 2016 till the conclusion of the Twenty Fourth AGM of the Company to be heldin the year 2017. As per the provisions of Section 139 of the Act M/s. Lodha & Co.will retire at the ensuing AGM. The Audit Committee and the Board recommend ratificationofappointment of M/s. GMJ & Co. Chartered Accountants as Statutory Auditors of theCompany till the conclusion of the Twenty Fifth AGM of the Company. The Company hasreceived a letter from statutory auditors that their re-appointment if made would bewithin limits as prescribed under Section 141 (3)(g) of the Act and they are notdisqualified for re-appointment.
The Auditors' Report does not contain any qualifications. However there is an emphasisof matter in the Auditors' Report on standalone financial statements for the year endedMarch 31 2017 with respect to remuneration paid to the Managing Director & Global CEOof the Company during financialyear 2016-17. Your Directors would like to inform that theCompany has made an application to Central Government for waiver of excess remunerationpaid to Mr. Padmanabhan Iyer Managing Director & Global CEO of the Company for thefinancial year 2016-17. Since the appointment of Mr.Padmanabhan Iyer as Managing Directorand Global CEO for a period of 5 years and remuneration payable to him for a period of 3years has been approved by Shareholders by way of a special resolution at the AGM held onDecember 7 2016 the Company could not seek prior approval of the Central Government forpayment of remuneration in excess of limit prescribed in Schedule V of the Act due topaucity of time.
CONSERVATION OF ENERGY
Although the operations of the Company are not energy intensive the management ishighly conscious of the criticality of the conservation of energy at all operationallevels. The requirement of disclosure of particulars with respect to conservation ofenergy as prescribed in Section 134(3)(m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 is not applicable to the Company and hence are not provided.
TECHNOLOGY ABSORPTION ADOPTION AND INNOVATION
The Company continues to use the latest technologies for improving the productivity andquality of its services and products. During the year your Company has taken thefollowing technology initiatives:
Information Security Awareness programmes;
Strengthened its IPRs through technology innovation and appropriate securitycontrols;
Improved utilization and delivery productivity by use of LEAN IT techniques forproject delivery and
Partnerships with major technology providers and publishers for win-winrelationships and go-to-market strategies.
RESEARCH AND DEVELOPMENT (R & D)
The solutions offered by the Company for various market segments are continuouslydeveloped and upgraded through the Global Development Centres (GDCs).
The GDCs function as the product research and development arm of the Company and focuson developing and expanding the Company's products and IPRs. Besides this the Company isalso in the process of upgrading its varied product lines to standard and latesttechnological platforms.
With a focus to further enhance the Company's software products i.e. its IntellectualProperty based on market needs the GDCs work in line with the Company's strategyfor growth.
Expenditure on R & D
Rs. in crores
|Particulars ||2016-17 ||2015-16 |
|Revenue Expenditure ||9.87 ||2.28 |
|Capital Expenditure ||- ||- |
|Total ||9.87 ||2.28 |
|Total R&D expenditure as a percentage of total standalone revenue ||3.54% ||0.61% |
The Company is committed to provide innovative and high quality products and servicesthat meet or exceed customer expectations.
Maintaining a quality focus on continuous improvement to our Products Processand Services and
Process adherence and governance ensuring lower defect and On Time delivery.
The Company's Quality Management System (QMS) addresses process required for entireSoftware Development Life Cycle (SDLC) and Project Management Life Cycle (PMLC) supportedwith industry standard templates and guidelines to ensure disciplined project executionthereby transforming business from taking corrective and preventive measures to the stateof predicting outcomes. This framework is designed based on the CMMi Process framework toenhance productivity and to reduce inefficiencies.
The Company is in the process of getting CMMi Level 3 certificationby September 2017 tomeet the Company's commitment towards quality and business process with further plans toextend the certification to CMMi Level 5 andTMMi Level 5.
FOREIGN EXCHANGE EARNINGS AND OUTGO a) Activities relating to exportsinitiatives taken to increase exports development of new export markets for products andservices and export plans
More than 17.25% of the revenue of the Company is derived from exports.
b) Foreign export earnings and expenditure
During the year 2016-17 the expenditure in foreign currencies amounted to Rs.8.25crores on account of professional charges cost of outsourced services and bought outitems travelling and other expenses and interest (excluding expenditure incurred by DubaiBranch). During the same period the Company earned an amount equivalent to Rs.48.13crores in foreign currencies as income from its operations abroad (excluding income fromDubai Branch).
The Company has continued to improve the quality of Human Resources. The key facet hasbeen better levels of productivity as compared to earlier years which has contributed inoperating financial parameters showing a strong uplift. Regular interactions and careerenhancements by way of bigger roles to talented employees have helped in strengthening theconfidence of the employees in the tough financial scenario of the Company. The talentpipeline is looking healthy though attrition and retention remains a challenge for theindustry and more so for the Company.
Your Company will continue to focus and build the human potential which would help inimproving operating parameters in the coming year.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules is provided in a separate annexure formingpart of this Report. Having regard to the provisions of the first proviso to Section136(1) of the Act the Annual Report excluding the aforesaid information is being sent tothe Members of the Company. In terms of Section 136 the said annexure is open forinspection at the Registered Officeof the Company. Any Shareholder interested in obtaininga copy of the same may write to the Company Secretary.
Disclosures pertaining to the remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the Annual Report as AnnexureIV.
Prevention of Sexual Harassment at Workplace
The Company has in place a policy aiming at prevention of sexual harassment at allworkplaces of the Company in line with the requirements of The Sexual Harassment of Womenat the Workplace (Prevention Prohibition and Redressal) Act 2013 and the rulesthereunder. All employees (permanent contractual temporary trainees) are covered underthis Policy. An Internal Complaint Committee has been set up in the Company toconsider and redress complaints received with respect to sexual harassment. During theyear under review the Complaint Committee has not received any grievances or complaintsof the nature covered under the said Act.
CORPORATE SOCIAL RESPOSIBILITY ("CSR")
In compliance with Section 135 of the Act read with the Companies (Corporate SocialResponsibility Policy) Rules 2014 ("CSR Rules") the Company has constitutedCorporate Social Responsibility (CSR) Committee. A brief outline of the CSR policy of theCompany and the statutory disclosures with respect to the CSR Committee and an AnnualReport on CSR for
FY 2016-17 as required under Rule 8(1) of the CSR Rules are set out in Annexure Vof this Report. The CSR Policy as recommended by CSR Committee and as approved by theBoard is available on the website of the Company.
SECRETARIAL AUDITOR'S REPORT
Pursuant to the provisions of Section 204 of the Act and Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company had appointed M/s. BNP& Associates Practicing Company Secretaries to undertake the Secretarial Audit ofthe Company for the financial year 2016-17. The Secretarial Audit report is appended asAnnexureVI to this Report. The Secretarial Audit Report does not contain any qualificationsreservations or adverse remarks
Disclosures required under Regulations of SEBI LODR are shown under the CorporateGovernance Report (CGR). The CGR along with auditor's certificate thereon and theManagement Discussion and Analysis form part of this Report.
The Company will continue to technologically upgrade its products and concentrate onthe Software Products IT Services and IT enabled Services for its growth. The businessoutlook and the initiatives proposed by the management to address its financial risks havebeen discussed in detail in the Management Discussion and Analysis which forms a part ofthis Report.
FORWARD LOOKING STATEMENTS
This Report along with its annexures and Management Discussion and Analysis containsforward-looking statements that involve risks and uncertainties. When used in this Reportthe words anticipate' believe' estimate' expect'intend' will' and other similar expressions as they relate to the Companyand/or its businesses are intended to identify such forward looking statements. TheCompany undertakes no obligation to publicly update or revise any forward-lookingstatements whether as a result of new information future events or otherwise. Actualresults performances or achievements could differ materially from those expressed orimplied in such forward-looking statements. Readers are cautioned not to place unduereliance on these forward-looking statements that speak only as of their dates. ThisReport should be read in conjunction with the financial statements included herein and thenotes thereto.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Act your Directors hereby confirm that:
a) in preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and of the loss ofthe Company for the financial year ended on that date;
c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively and f)they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and are operating effectively.
Based on the reviews of internal statutory and secretarial auditors externalconsultants the management and respective committees of the Board the Board is of theopinion that the Company's system of internal financial controls was adequate and theoperating effectiveness of such controls was satisfactory during the financial year2016-17.
The Directors are thankful to the Members for their confidence and continued support.The Directors are grateful to the Central and State Government Stock ExchangesSecurities and Exchange Board of India Reserve Bank of India Customs and othergovernment authorities Lenders CDR Cell CDR Empowered Group FCCB holders and last butnot the least its trusted clients for their continued support.
The Directors would like to express their gratitude for the unstinted support andguidance received from alliance partners and vendors.
The Directors would also like to express their sincere thanks and appreciation to allthe employees for their commendable team work and professionalism.
| ||For and on behalf of the Board || |
| ||Sd/- ||Sd/- |
| ||Ashok Shah ||Padmanabhan Iyer |
|July 22 2017 at Navi Mumbai ||Chairman ||Managing Director & Global CEO |