THE MEMBERS OF ACCEL FRONTLINE LIMITED
Your Directors have pleasure in presenting the 20th Annual Report of ACCELFRONTLINE LIMITED (the Company) Standalone and Consolidated financial statement along withthe audited financial statements for the financial year ended 31st March 2015.
1. FINANCIAL RESULTS
Rs. in lakhs
|Particulars || |
| ||2015 ||2014 ||2015 ||2014 |
|Sales services & other income ||48734 ||42825 ||34209 ||30089 |
|Earnings before interest tax depreciation and amortization (EBITDA) ||5067 ||4242 ||3577 ||3770 |
|Finance costs ||2255 ||2616 ||2128 ||2503 |
|Depreciation and amortization expense ||1203 ||1107 ||1050 ||972 |
|Operating Profit before Tax & Prior Period expenses ||1609 ||519 ||399 ||295 |
|Prior Period Expenses / Income net ||1505 ||- ||1505 ||- |
|Provision for tax (Net) ||(216) ||70 ||(361) ||50 |
|Profit after tax ||320 ||449 ||(745) ||245 |
|Minority Interest ||414 ||112 ||- ||- |
|Profit after Minority Interest ||(94) ||337 ||(745) ||245 |
|Balance brought forward from previous year ||1514 ||1177 ||1574 ||1329 |
|Amount available for appropriation ||1420 ||1514 ||829 ||1574 |
|Transfer to Depreciation Reserve ||205 ||- ||117 ||- |
|Balance carried to Balance Sheet ||1215 ||1514 ||712 ||1574 |
The Directors have not recommended dividend for the year ended 31st March2015 to conserve resources and to augment the long term working capital for future growth.
3. OPERATING RESULTS AND BUSINESS OPERATIONS
For the Financial Year 2014-15 your Company has achieved a revenue of Rs.48734 lakhson a consolidated basis and Rs.34209 lakhs on a standalone basis. This represents amoderate growth of about 14% on a year to year basis. The EBIDTA on a consolidated basisRs.5067 lakhs and on a standalone basis stood at Rs.577 lakhs. The Company had toprovide a sum of Rs.1433 lakhs on a consolidated basis and Rs.1433 lakhs on astand-alone basis on account of the new revenue recognition policy adopted during theyear. This resulted in a net loss of Rs.94 lakhs on a consolidated basis and Rs.745 lakhson a standalone basis.
4. HUMAN RESOURCES DEVELOPMENT
The Company has continuously adopted structures that help attract best external talentand promote internal talent to higher roles and responsibilities. Accel people centricfocus providing an open work environment fostering continuous improvement and developmenthelped several employees realize their career aspirations during the year. Employeeswhose collective efforts have enabled Accel to achieve its organisational goals and setthe base right for the next phase of growth.
Accel has restructured its workforce into various businesses to ensure that everybusiness is operated and supported equally. The human resource policies have evolved tostay relevant to the changing economic and business environment and enhance organizationalagility.
The Company has a matured talent management process and environment where performanceis rewarded and opportunities are provided for career growth and development. Focusedinitiatives towards work life balance and safety of employees have helped the Company ingaining confidence level of the employees and bring down the attrition levels.
5. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti-Sexual Harassment policy in line with the requirementsof The Sexual Harassment of Women at the workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.
The following is a summary of Sexual harassment complaints received and disposed offduring the year 2014-15.
No of complaints:- Nil.
No of Complaints disposed off- Nil.
6. BUSINESS EXCELLENCE AND QUALITY INITIATIVES
Accel believes in sustained efforts to maintain highest levels of quality to enhancecustomer satisfaction. During the year the company continued to invest in technologiesinfrastructure and processes in order to keep our quality management systems updated.
The Company has certifications for:
ISO 9001:2008 (Quality Management)
ISO 27001:2005 (Security Management)
CMMI Level 3
These quality driven processes help in supporting Accel's global delivery model.
In order to achieve highest levels of quality and robust information securitypractices the Company will endeavour to achieve enterprise-wide CMMI Level 5 (forDevelopment) in the near future.
An employee portal exists for knowledge management and sharing useful informationwithin the Company. Regular knowledge and skill up gradation training programs areconducted by internal as well as external knowledge management experts.
7. DOCUMENTS PLACED ON THE WEBSITE
The following documents have been placed on the Company's website in compliance withthe Companies Act:
a. Financial Statements of the Company and Consolidated Financial Statements.
b. Separate audited accounts in respect of subsidiaries as per fourth proviso toSection 136(1).
c. Details of Vigil Mechanism for directors and employees to report genuine concerns asper proviso to Section 177(10).
d. The Terms and Conditions of appointment of independent directors.
e. Details of unpaid dividend as per Section 124(2).
8. SUBSIDIARY COMPANIES
The Company has subsidiaries operating in Singapore UAE Japan North America andUnited Kingdom which are not listed in India or abroad as of date. The Company also has awholly owned unlisted Indian Subsidiary.
The Statutory Audit Report of the Subsidiary Companies for the financial year areplaced before the Audit Committee and reviewed by them.
Shareholders interested in obtaining a copy of the audited annual accounts of thesubsidiary Companies may write to the Company Secretary.
In terms of proviso to sub section (3) of Section 129 of the Act the salient featuresof the financial Statement of the subsidiaries is set out in the prescribed Form AOC-1which forms part of the Annual Report.
9. CORPORATE GOVERNANCE REPORT REQUIRED UNDER THE CompANIES ACT 2013 AND LISTINGAGREEMENT
As per Clause 49 of the Listing Agreement entered into with the stock exchangesCorporate Governance Report with Auditors' Certificate on Compliance with the conditionsof Corporate Governance are attached and form part of this report.
10. MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion and Analysis and various initiatives and future prospects ofthe Company are enclosed separately as Annexure-II to this report.
11. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134(5) of the Act and based on therepresentations received from the management the directors hereby confirm that:
i. in the preparation of the annual accounts for the financial year 2014-15 theapplicable accounting standards have been followed and there are no material departures;
ii. 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 fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for the financial year;
iii. they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act. They confirm that there are adequate systems and controls forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and operating properly; and
vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
12. AUDITORS AND SECRETARIAL AUDITORS REPORT
The Secretarial Auditor has qualified in his report stating that the office of theChief Financial Officer was left vacant for a period of more than 6 months from the dateof previous vacancy during the year. However the Company has subsequently appointed aChief Financial officer on 09.06.2015.
Regarding the opinion expressed by the Statutory Auditors on inventory valuation theManagement is taking steps to work on the software to reflect the exact value ofinventory.
Regarding the opinion expressed by the Statutory Auditors on revenue recognition theCompany has been following the policy of recognizing the revenue on account of sale ofgoods when materials are dispatched from the premises and /or handover the materials tothe transporter against the lorry receipt/such other document and pay VAT on such sale. Asthe Company been following this practice for earlier financial years it continued thesame practice for the current financial year also as the practice meets all the 3 criteriaa) prudence b) substance over form and c) materiality. The management will ensure thatthe Company will change over to the new revenue recognition policy in the subsequentfinancial years.
13. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND Foreign ExCHANGE Earnings ANDOuTGO
The particulars as prescribed under Rule 8(3) of the Companies (Accounts) Rules 2014are set out in an Annexure-III to this Report.
14. SEpARATE MEETING Of INDEpENDENT DIRECTORS
The Independent Directors met on 5th May 2015 and evaluated the performanceof Non-Independent Directors the Board as a whole and the Chairman of the Companyconsidering the views of other Directors. Further details are available in the CorporateGovernance Report.
15. EVALuATION OF The BOARD'S pERFORMANCE
The Board has carried out an evaluation of its own performance also that of itsDirectors individually and its Committees. The manner in which the evaluation has beencarried out is explained in the Corporate Governance report.
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunderM/s. Walker Chandiok & Co LLP Chartered Accountants Chennai bearing (ICAIRegistration No.001076N ) were appointed as Statutory Auditors for a period of five yearstill the conclusion of the 24th Annual General Meeting ( AGM) which wassubject to ratification at every AGM be and is hereby ratified to hold the office fromthe conclusion of this AGM till the conclusion of the 21st AGM of the Companyto be held in the year 2016.
17. PARTICULARS OF EMPLOYEES
The information required under section 197 of the Act and rules made there-under inrespect of employees of the Company is not required to be provided since there are noemployees covered under the provision.
18. FIXED DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public were outstanding as on the date of thebalance sheet.
The Directors wish to convey their appreciation to business associates for theirsupport and contribution during the year. The Directors would also like to thank theemployees shareholders customers suppliers alliance partners and bankers for thecontinued support given by them to the Company and their confidence reposed in themanagement.
| ||For and on behalf of the Board |
|Place : Chennai ||N.R. panicker |
|Date : 04th August 2015 ||Executive Chairman |
ANNEXURE - I TO THE DIRECTOR'S REPORT
1. EXTRACT OF ANNUAL RETURN
The Extract of Annual Return as provided under Sub-Section
(3) of Section 92 of the Companies Act 2013 ( the "Act") is enclosed at Annexure-iVin the prescribed form MGT-9 and forms part of this Report.
2. NUMBER OF MEETINGS OF THE BOARD
8 meetings of the Board of Directors of the Company were held during the year. Fordetails of the meetings please refer the Corporate Governance Report which forms part ofthis Report.
3. INDEPENDENT DIRECTORS' DECLARATION
Mr. R.Ramaraj Mr. Raj Khalid and Ms. Ruchi Naithani who are Independent Directorshave submitted a declaration that each of them meet the criteria of independence asprovided in Sub-Section (6) of Section 149 of the Act and revised Clause 49 of the ListingAgreements. Further there have been no change in the circumstances which may affect theirstatus as independent director during the year.
4. POLICY OF DIRECTORS' APPOINTMENT AND REMUNERATION
Company's policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under section 178(3) of the Act are covered in Corporate GovernanceReport which forms part of this Report. Further information about elements ofremuneration package of individual directors is provided in the extract of Annual Returnas provided under Section 92(3) of the Act is enclosed at Annexure-iV in theprescribed form MGT-9 and forms part of this Report.
5. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT
As provided under Clause 49 of the listing agreement with the stock exchanges allBoard members & Senior Management Personnel have affirmed compliance with AccelFrontline Limited's Code of Conduct for the year ended 31st March 2015.
6. RELATIONSHIP BETWEEN DIRECTORS INTER-SE
a) Disclosure on materially significant related party transactions i.e the Company'stransactions that are of material nature with its promoters directors and themanagement their relatives or subsidiaries among others that may have potential conflictwith the Company's interest at large that may have potential conflict with the interestsof the Company at large.
None of the transactions with any of the related parties were in conflict with theCompany's interest. Attention of members is drawn to the disclosure of transactions withrelated parties set out in 31(b) of Summary of significant accounting policies and otherexplanatory information of standalone financial Statements forming part of the Annualreport.
The Company's major related party transactions are generally with its subsidiaries andassociates. The related party transactions are entered into based on consideration ofvarious business exigencies such as synergy in operations sectorial specialization andthe Company's long term strategy for sectoral investment's optimization of market shareprofitability legal requirements liquidity and capital resources of subsidiaries andassociates.
All related party transactions are negotiated on arm's length basis and are intendedto further the Company's interests.
The particulars of transactions between the Company and its related parties as per theAccounting Standard 18 "Related Party Disclosures" referred under Section 188 ofthe Companies Act 2013 are set out in the notes to Accounts for the Annual Report. Therehave been no materially significant related party transactions which may have potentialconflicts with the interest of the company.
7. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Long term loans and advances as at 31st March 2015 include security depositsand deposits with Statutory/Government authorities. Short term loans and advances as at 31stMarch 2015 include rent and other deposits advance to associate companies and other loansand advances.
8. TRANSACTIONS WITH RELATED PARTIES
The Company has entered into contract / arrangements with the related parties in theordinary course of business and on arm's length basis. Thus provisions of Section 188(1)of the Act are not applicable.
9. INTERNAL CONTROL
The Company has adequate internal control procedures commensurate with the size andnature of its operations. The internal control systems were further strengthened byinternal audit carried by an independent firm of Chartered Accountants and a periodicalreview by the management. The Audit Committee of the board addresses issues raised byinternal auditors and the statutory auditors.
The financial objective of the Company is to bring in efficiencies of operations at alllevels so as to maximize return on capital employed and to generate sufficient cashprofits to fund on-going expansions and to meet the growth objectives.
The Audit Committee and the Board periodically review performance parameters related tofinancial performance of the Company to ensure smooth implementation of the internalcontrol systems and efficient management of the various resources. The Audit Committeeconducts periodic reviews with the management internal auditor and the statutory auditor.There is an on-going cost monitoring program to control various expenses and the Boardreviews the variance analysis.
10. RISK MANAGEMENT
The Risk Management is overseen by the Audit Committee of the Company on a continuousbasis. The Committee oversees Company's process and policies for determining risktolerance and review management's measurement and comparison of overall risk tolerance toestablished levels. Major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuous basis. For detailsplease refer to the Management Discussion and Analysis report which form part of the BoardReport.
11. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS (Weblink: www.accelfrontline.in)
The Company has practice of conducting familiarization program of the independentdirectors as detailed in the Corporate Governance Report which forms part of the AnnualReport.
12. VIGIL MECHANISM
The Company has established a vigil mechanism for Directors and employees to reporttheir genuine concerns. For details please refer to the Corporate Governance Reportattached to this Report.
13. PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES
Subsidiaries of the Company are engaged in the business of providing ITES services orbusiness solutions or consulting including business process outsourcing services. Therehas been no material change in the nature of the business of the subsidiaries. TheCompany's wholly owned subsidiary consists of:
1. Accel Systems & Technologies PTE Limited Singapore
2. Accel Frontline JLT Dubai
3. Accel North America INC
4. Accel IT Resources Ltd
5. Network Programs USA INC
6. Networks Programs (Japan) Inc USA
7. Accel Japan KK Japan and
8. Accel Technologies Limited U.K earned revenue of Rs.14525 lakhs during theFinancial Year 2014-15 compared to Rs.12736 lakhs during Financial Year 2013-14registering a growth of 14.26% over the previous financial year. The Net Profits of thesesubsidiaries grew by 89% on consolidated basis and increased to Rs.1146 lakhs duringFinancial Year 2014-15 compared to Rs.204 lakhs during Financial Year 2013-14.
Financial position of each of the subsidiaries is provided in a separate statementAOC-1 attached to the Financial Statement pursuant to first proviso to Section 129(3) ofthe Act.
14. PARTICULARS OF REMUNERATION
The information required under Section 197 of the Act and the Rules made there-underin respect of employees of the Company is follows:-
(a) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year;
|Name of the Non - Executive Director ||Ratio to median remuneration ||Remuneration paid (Rs. in lakhs) |
|R.Ramaraj ||35.0 ||5.40 |
|Raj Khalid ||3.9 ||0.60 |
|Ruchi Naithani ||25.9 ||4.00 |
|Steve Ting Tuan Toon ||4.5 ||0.70 |
|Sam Santhosh ||3.9 ||0.60 |
|Alok sharma ||7.8 ||1.20 |
|A.P. Parigi ||2.6 ||0.40 |
|Executive Director || || |
|Malcolm F Mehta ||1485.35 ||229.14 |
|N.R. Panicker ||972.32 ||150.00 |
(b) The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary or Manager if any in the financial year;
|Name of the person ||% Increase in Remuneration |
|N.R.Panicker ||109.1 |
|Malcolm F Mehta ||NIL |
|K.R.Chandrsekaran* ||-75 |
|Sweena Nair ||NIL |
|*Mr K.R.Chandarsekaran CFO retired on 30th June 2014 as per retirement age policy for the employees of the Company. Hence remuneration has been considered till that date during the Financial Year 2014-15. || |
(c) The percentage increase in the median remuneration of employees in the financialyear;
(d) The number of permanent employees on the rolls of Company;
There are 2404 permanent employees on the rolls of Company.
(e) The explanation on the relationship between average increase in remuneration andCompany performance;
On an average employees received an increase of 10.74 %. The increase in remunerationis in line with the market trends. In order to ensure that remuneration reflects Companyperformance the performance pay is linked to organization performance.
(f) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the company;
|Particulars || |
Rs. in lakhs
|Remuneration of Key Managerial Personnel (KMP) during Financial Year 2014-15 (aggregated) || |
|Revenue from operations ||34017 |
|Remuneration (as % of revenue) ||1.84 |
|Profit before tax (PBT) ||-1106 |
|Remuneration (as % of PBT) ||-0.17 |
(g) Variations in the market capitalisation of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer in case of listedcompanies and in case of unlisted companies the variations in the net worth of theCompany as at the close of the current financial year and previous financial year;
|Particulars ||Unit ||As at 31st March 2015 ||As at 31st March 2014 ||Variation % |
|Closing rate of share at BSE || ||66.7 ||42.9 ||55.48 |
|Closing rate of share at NSE || ||65.7 ||42.6 ||54.23 |
|EPS( consolidated) || ||(2.50) ||0.96 ||-102.51 |
|Market capitalization ||Rs./lakhs || || || |
|BSE || ||19851.17 ||12767.84 ||55.48 |
|NSE || ||19553.55 ||12678.56 ||54.23 |
|Price Earnings Ratio ||Ratio || || || |
|BSE || ||-26.57 ||44.69 ||-159.47 |
|NSE || ||-26.18 ||44.38 ||-158.99 |
(h) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration;
The average increase in salaries of employees other than managerial personnel in2014-15 was 8.18 %. Percentage increase in the managerial remuneration for the year was109.10 %.
(i) Comparison of each remuneration of the Key Managerial Personnel against theperformance of the Company;
|Particulars ||Executive Chairman ||Executive Director ||Company Secretary |
| ||Rs. in lakhs ||Rs. in lakhs ||Rs. in lakhs |
|Remuneration ||150 ||229 ||7.26 |
|Revenue from operation ||34017 ||34017 ||34017 |
|Remuneration ( as % of revenue) ||0.44 ||0.67 ||0.02 |
|Profits before tax (PBT) ||-1106 ||-1106 ||-1106 |
|Remuneration (as % of PBT) ||-13.55 ||-20.69 ||-0.66 |
(j) The key parameters for any variable component of remuneration availed by thedirectors;
Members at the AGM of the Company held on 22/09/2010 approved payment of commission tothe Non-Executive Directors within the ceiling of 1% of the net profits of the Company ascomputed under the applicable provisions of the Companies Act 1956. The said commissionis decided each year by the Board of Directors and distributed amongst the Non-ExecutiveDirectors based on performance evaluation which is based on attendance and contribution atthe Board and certain committee meetings as well as the time spent on operational mattersother than at meetings.
(k) The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year;
(l) Affirmation that the remuneration is as per the remuneration policy of the Company;
The Company's remuneration policy is driven by the success and performance of theindividual employees and the Company. Through its compensation package the Companyendeavours to attract retain develop and motivate a high performance staff. The Companyfollows a compensation mix of fixed pay benefits and performance based variable pay.
Individual performance pay is determined by business performance and the performance ofthe individuals measured through the annual appraisal process. The Company affirmsremuneration is as per the remuneration policy of the Company.
PECUNIARY RELATIONSHIP OR TRANSACTIONS OF NONEXECUTIVE DIRECTORS
During the year the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company.
| ||For and on behalf of the Board |
|Place : Chennai ||N.R. panicker |
|Date : 4th August 2015 ||Executive Chairman |