The Directors take pleasure in presenting to you the 18th Annual Report of the companycovering the financial year ended 31st March 2017.
|FINANCIAL HIGHLIGHTS || || |
(Rs. In Lakhs)
| ||STANDALONE || |
| ||YEAR ENDED || |
| ||31-Mar-17 ||31-Mar-16 ||F/(A) ||31-Mar-17 ||31-Mar-16 ||F/(A) |
|INCOME FROM SERVICES ||11621 ||10836 ||7% ||32280 ||23338 ||38% |
|TOTAL COSTS ||9698 ||9563 ||(1%) ||26046 ||19949 ||(31%) |
|OPERATING MARGIN ||1923 ||1273 ||51% ||6234 ||3389 ||84% |
|OTHER INCOME ||417 ||252 ||65% ||565 ||803 ||(30%) |
|EBIDTA ||2340 ||1525 ||53% ||6799 ||4192 ||62% |
|EBIDTA (%) ||20% ||14% || ||21% ||18% || |
|DEPRECIATION ||336 ||503 ||33% ||554 ||755 ||27% |
|INTEREST EXP / (INCOME) ||(183) ||(223) ||(18%) ||(56) ||(16) ||25% |
|PROFIT/(LOSS) BEFORE TAX ||2187 ||1245 ||76% ||6301 ||3453 ||82% |
|PROFIT/(LOSS) AFTER TAX ||2404 ||948 ||154% ||6145 ||3094 ||99% |
|CASH PROFIT ||2523 ||1451 ||74% ||6482 ||3849 ||68% |
HR Operations division continues the strong momentum from previous years and is poisedto grow well in the coming years as well. During the year the HRO division has moved froma predominantly payroll outsourcing services to a division providing wider range ofservices in the HR Operations space. This has helped in deepening relationships withexisting clients as well as in addition of newer clients. Further the division hasexpanded its geographical coverage by providing services to customers in more than 8countries. We believe HRO business will continue to be a significant revenue generator foryour Company in the next few years.
Domestic Support Business has remained at similar levels as previous year. Your Companyhas during the year focused on improving profitability with existing clients and have alsobeen very selective in customer acquisition to ensure that the operations are profitable.The plan is to keep looking for strategic contracts where we can negotiate better ratesand improve margins.
Exports revenue has shown modest growth during the year. The division continues to havechallenges on account of the global environment. However we are actively pursuing targetsboth by increasing the sales force as well as increase marketing efforts by doing moretargeted marketing.
Overall financial performance of your Company has improved substantially during thisyear. Profit before Interest Depreciation and Tax (EBIDTA) has increased from INR 1525lakhs last year to INR 2340 Lakhs (53%). Your company has reported Net profit after taxfor the current year at INR 2404 lakhs as compared to Net profit after tax of INR 948lakhs for the previous year. Detailed analysis of the Standalone results forms part of theManagement Discussion and Analysis (MDNA) report provided separately as part of the AnnualReport.
Consolidated results of your Company have shown growth due to improved performance ofall the entities during the year. Consolidated Revenues has increased to INR 32280 lakhsfrom INR 23338 lakhs in the previous year. Consolidated Profit before InterestDepreciation and Tax (EBIDTA) increased to INR 6799 lakhs from INR 4192 in the previousyear. Net profit after tax has increased to INR 6145 lakhs from INR 3094 lakhs in theprevious year.
The company is continuing to pursue growth through the Organic route and see very goodtraction for growth in all the entities. The company has delivery centers in IndiaPhilippines and in US for the international segment and has Domestic delivery centers inthree major cities in India.
The Board of Directors of your Company does not recommend any dividend for theFinancial Year 2016-17 in view of the accumulated losses.
Your company has not accepted any deposit from the public during the period underreview and did not have any outstanding deposits.
Mr. Krishnakumar Srinivasan a Director on the Board of the Company has resigned on11th February 2017. The Board wishes to place on record its sincere appreciation for thevaluable services rendered by him.
Mr.A.Saravanan Director retires at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.
Key Managerial personnel
The Key Managerial Personnel of Allsec Technologies Limited is mentioned below:
1) Mr. R. Jagadish - Chief Executive Director
2) Mr. A. Mohan Kumar Company Secretary
3) Mr. P.Raghunath Chief Financial Officer
Mr.P.Raghunath has joined as Vice President Finance of the Company effective 17thOctober 2016. He is a Chartered Accountant and a Cost Accountant having more than 18years of Professional experience.
The Information relating to Employees to be given under Section 197(12) of theCompanies Act 2013 is given as Annexure-H.
Your Company is fully compliant with the requirements under SEBI (LODR) Regulations2015. The report on Corporate Governance is given in Annexure-A.
Certificate from Auditors confirming the compliance of conditions of CorporateGovernance is included in Annexure-B. CEO/CFO certification is attached in Annexure-I.
In terms of regulation 34 of Securities and Exchange Board of India (Listingobligations and disclosure requirements) regulations 2015 the Management Discussion andAnalysis report is given in Annexure-C.
The Company has three subsidiaries as at year end namely Allsectech Inc USA AllsectechManila Inc. Philippines and Retreat Capital Management Inc USA.
The Consolidated Financial statements of the company and its subsidiaries prepared inaccordance with Accounting Standards AS 21 forms part of this Annual Report and accounts.
The Annual Accounts of the said subsidiaries and the related detailed information willbe made available to the investors of the Company seeking such information at any point oftime. The copies of the Annual accounts of the subsidiaries will also be kept forinspection by any investor at the corporate office of the Company. Performance andfinancial position of subsidiaries included in consolidated financial statements of thecompany is provided in Annexure-F.
The Company monitors performance of subsidiary companies (list of subsidiary companieshas been provided in the financial statements) inter-alia by the following means:
a) The Company does not have any material unlisted Indian subsidiary and hence is notrequired to nominate an Independent Director of the Company on the Board of anysubsidiary.
b) The Audit Committee reviews the financial statements of the subsidiaries on aquarterly basis.
c) Your Company has formulated a Policy on Material Subsidiary as required underRegulation SEBI (LODR) and the policy is hosted on the website of the Company under theweb link https://www.allsectech. com/investor-information.
Compliance under Companies Act 2013
Pursuant to Section 134 of the Companies Act 2013 read with the Companies (Accounts)Rules 2014 your Company complied with the compliance requirements and the details ofcompliances under Companies Act 2013 are enumerated below:
Extract of Annual Return
An Extract of the Annual Return as of 31st March 2017 pursuant to the sub section (3)of Section 92 of the Companies Act 2013 and forming part of the report is attached inAnnexure-D.
Board Meetings held during the year
During the year 5 meetings of the Board of Directors were held. The details of themeetings are furnished in the Corporate Governance Report which is attached as Annexure-Ato this Report.
Directors' responsibility Statement
The Board of Directors acknowledges the responsibility of ensuring compliance with theprovisions of Section 134(3)(c) of the Companies Act 2013. To the best of their knowledgeand belief and according to the information and explanations obtained by them yourDirectors make the following statements:
Your Directors confirm the following that:
i) In preparation of the annual accounts the applicable accounting standards had beenfollowed along with proper explanation relating to material departures;
ii) The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit or loss of the company for that period;
iii) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
iv) The Directors had prepared the annual accounts on a going concern basis.
v) Proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.
vi) Proper systems were in place so as to ensure compliance with the provisions of allapplicable laws and were adequate and operating effectively.
Independent Directors and Board Evaluation
The Independent Directors of the Company have declared that they meet the criteria ofIndependence in terms of Section 149(6) of the Companies Act 2013.
Independent Directors considered/evaluated the performance of the non-independentDirectors at a meeting without anyone from the non-independent Directors and Management.
The Board members subsequently evaluated performance of the Board the Committees andIndependent Directors as per the criteria and questionnaire developed for the purpose asmandated by section 134(3) of the Companies Act 2013 & Rule (8) of the companiesAccounts Rules 2014.
Your company follows an orientation and familiarization programme through variousreports/codes/internal policies for all the Directors with a view to update them on thecompany's policies and procedures on a regular basis. Periodic presentations are made atthe Board Meetings on business and performance long term strategy initiatives and risksinvolved. The detail about the familiarization programme have been posted in the websiteof the Company under the web link https:// www.allsectech.com/investor-information.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Company's policy on appointment and remuneration including criteria fordetermining qualifications positive attributes and independence are provided in theCorporate Governance Report forming part as an Annexure-A to this Report.
Related Party Transactions
The Company has formulated a policy on Related Party Transactions as approved by theBoard and the same is uploaded on the Company's website https://www.allsectech.com/investor-information.
All the Related Party Transactions that were entered into by the Company during thefinancial year 2016-17 were on an arm's length basis and were in the ordinary course ofbusiness. All Related Party Transactions are placed before the Audit Committee and arewithin the limits obtained by a prior approval in accordance with the requirements of theSEBI (LODR) Regulation 2015. The transactions entered into pursuant to such approval areplaced periodically before the Audit Committee.
There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel which may have a potential conflict withthe interest of the Company at large. None of the Directors has any pecuniaryrelationships or transactions vis--vis the Company otherwise than disclosed in theCorporate Governance Report forming part of this report.
Details of the transaction are provided in Form AOC-2 which is attached as Annexure-Gto this Report.
Vigil Mechanism / Whistle Blower Policy
In accordance with the requirements of the Companies Act 2013 your Company hasestablished a Vigil Mechanism/ Whistle Blower Policy for Directors and Employees to reportgenuine concerns. The said Policy meets the requirement of the Vigil Mechanism frameworkunder the Companies Act 2013 and the members can view the details of the policy onhttps://www.allsectech. com/investor-information. No member has been denied access toVigil Mechanism and no complaints have been received during the year.
Corporate Social Responsibility
The Board of Directors of your Company has constituted the CSR Committee to help theCompany to frame monitor and execute the CSR activities.
As per Sec. 135 of the Companies Act 2013 the Board of every company referred to insub-section (1) shall ensure that the company spends in every financial year at least2% of the average net profits of the company made during the three immediately precedingfinancial years.
As per Computations made under Section 198 of the Companies Act 2013 the Company mustcontribute a minimum of Rs 13 lakhs as CSR Contribution. During the financial year2016-17 the Company has spent an amount of Rs.5 lacs towards CSR.
Particulars of loans guarantees or investments under Section 186 of the Companies Act2013
Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Notes to the financial statements.
Internal Financial Control and Adequacy:
The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to Company's policies safeguarding of itsassets prevention and detection of frauds and errors the accuracy and completeness ofthe accounting records and the timely preparation of reliable financial disclosures.
M/s. Walker Chandiok & Co LLP the Statutory Auditors of the Company were appointedat the previous Annual General meeting held on 11th August 2016 for a period of 5 years.The appointment of statutory Auditors is required to be ratified every year in the AnnualGeneral Meeting. The company has received necessary certificates under Sections 139 and141 of the 2013 Act to the effect that they satisfy the conditions under the CompaniesAct 2013 and the rules made thereunder for the above appointment. As required under theSEBI (LODR) Regulations 2015 the Statutory Auditors have also confirmed that they hold avalid certificate issued by the Peer Review Board of the Institute of CharteredAccountants of India. The Directors recommend their re-appointment.
Comments on Auditors' report
There are no qualifications reservations or adverse remarks or disclaimers made by theStatutory Auditors and Company Secretary in Practice in their reports respectively. TheStatutory Auditors have not reported any incident of fraud to the Audit Committee of theCompany in the year under review.
Material changes and commitments affecting the financial position of the Company whichhave occurred between March 31 2017 and May 15 2017 (date of the Report)
There were no material changes and commitments affecting the financial position of theCompany between the end of financial year (March 31 2017) and the date of the Report (May15 2017).
Pursuant to the provisions of Section 204 of the Companies Act 2013 Act and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Mr. P. Sriram a Company Secretary in Practice to undertake the SecretarialAudit of the Company. The Report of the Secretarial Audit Report is given as an Annexure-Eand forms part of this Report.
Names of Companies which have ceased/ become Subsidiaries/ Joint Ventures / Associates
During the year there is no change in the status of any subsidiary.
Quality & Information Security
The vision of Quality and Information security at Allsec is to institutionalizeexcellence in quality of services and security of data of Clients customers andOrganization by developing and deploying simple efficient and effective processes usingthe latest Quality models in accordance with ISO 9001:2008 (Quality Management System)interlined with data security controls prescribed by International standards such as ISO27001:2013 (Information security Management System). ISO 9001 and ISO 27001 certificationshave been renewed at Chennai location and ISO 27001:2013 has been renewed for the Manilalocation. PCI DSS compliance certifications are renewed at Chennai and Manila locationsduring the year. We have also got our ISO 27001:2013 renewed at the Dallas Location.Further existing ISAE 3402 which is a graduated version of SAS 70 Type II certificationfor the HRO business has been renewed. We established a process for TechnicalWriting & documentation' to create user guides and documentation for key proprietaryapplications and processes for HR BPO this year. We continued publishing Organization wideweekly education bulletins on various topics in Quality Management Systems (QMS) andInformation Security Management Systems (ISMS) during this year also to enhance awarenessand skill level of employees.
We have begun transitioning of existing Quality Management system policies proceduresand practices in accordance with ISO 9001:2015 a new and upgraded version ofISO:9001:2008 and will complete transition including certification by Jan 2018.
Disclosure as per Securities and Exchange Board of India (Employees Stock option Schemeand Employee Stock Purchase Scheme) Guidelines 2011
The options granted under the scheme have lapsed.
Conservation of energy technology absorption foreign exchange earnings and outgo
Since your Company is in the Information Technology Enabled Services (ITES) businessthe provisions relating to conservation of energy and technology absorptions are notapplicable.
The details of the earnings and expenditure in foreign currency are given below:
|Particulars ||INR in Lakhs |
|Earnings in Foreign Currency ||3897 |
|Expenditure in Foreign Currency ||246 |
|Interest received ||76 |
|Dividend received ||37 |
Your company will constantly endeavor to give the best possible services to theinvestors. Towards this end the following are some of the initiatives taken by theCompany:
The investor Information section of the Website of the Company (www.allsectech.com)furnishes important financial details and other data of frequent reference by theinvestors. The Company also has a Stakeholders/ Relationship Committee to addressStakeholders grievances if any and resolve them as & when they are reported. TheCompany has provided an exclusive email id: email@example.com for theinvestors to facilitate the redressal of the queries and complaints of the investors.
The Company has appointed M/s Karvy Computershare Pvt Ltd as Registrars & ShareTransfer Agents for attending to issues relating to Physical shares and routine servicesrequests.
Shareholders can also address any unresolved issues or information requests by postalmail to - Company Secretary Allsec Technologies Ltd 46B Velachery Main Road Chennai600042.
Shareholders are requested to update their email addresses with their respectivedepository participants so that the Company can provide better services at all times.
Your Directors wish to place on record their appreciation for the excellent support andco-operation given by customers shareholders service providers and Government Agencies.
Your Directors also record their appreciation and gratitude to Financial Institutionsand Bankers for their continued support and timely assistance in meeting the Company'sresource requirements. Your Directors acknowledge the dedicated services rendered by allthe employees of the company.
| ||For and on behalf of the Board of Directors || |
|Chennai ||A. Saravanan ||R. Jagadish |
|15th May 2017 ||Director ||Director |