THE MEMBERS OF APTECH LIMITED
Your Directors are pleased to present their Seventeenth Annual Report on the businessand operations of your Company and the Audited Financial Results for the year ended March31 2017.
STATE OF AFFAIRS SNAPSHOT OF FINANCIAL RESULTS
The financial results of the Company for the Accounting year ended March 31 2017 arepresented below:
(Rs. In lacs)
|Particulars ||Standalone ||Consolidated |
| ||Year ended March 31 2017 ||Year ended March 31 2016 ||Year ended March 31 2017 ||Year ended March 31 2016 |
|Operating Revenue ||11708.70 ||9085.08 ||21333.01 ||16332.68 |
|Dividend & Other Income ||400.73 ||335.54 ||320.47 ||350.94 |
|Total Revenue ||12109.43 ||9420.62 ||21653.48 ||16683.62 |
|Total Expenditure ||10953.98 ||8124.59 ||19455.49 ||15386.78 |
|Net Profit ||1155.45 ||1296.03 ||2197.99 ||1296.84 |
|Profit / (Loss) After Tax ||908.45 ||1019.03 ||1871.20 ||1019.32 |
|Profit/(Loss) After Tax & Share of Associates ||908.45 ||1019.03 ||1871.20 ||1016.88 |
The Company was able to revive business growth in FY2016-17 in both its reportingsegments. Retail segment grew by 12.1% whereas Institutional segment revenue more thandoubled from Rs. 3223 lacs to Rs. 6726 lacs. With the inherent operating leverage builtinto the business models of each segment the segment EBIT for Retail went up by 21.3% andthat for Institutional business was more than seven times the EBIT in FY2015-16. In theRetail segment both domestic and international businesses grew by 12.3% and 11.9%respectively.
Animation & Multimedia which is the largest segment for the Company showed astrong demand growth in the domestic market. The Company made a concerted effort to expandthe demographic profile of its target segment from the existing 18 23 years at boththe ends by launching new courses and new products. With its focus on a mission to fightUnemployability' the Company successfully launched a digital campaign to providejob oriented courses across all its brands to unemployed graduates. It also launchedAptech Montana International Pre-school & Day Care product in collaboration with anexisting single city pre-school chain. The Company signed up franchise for 23 new centresof the pre-school in the first year. In addition to increased pace of network expansionfor the new products including Lakme Academy the Company was able to sign-up more newcentres in existing brands and hence the new centre sign-up revenue in the domesticmarket went up by 90.1%. One of the key network strategies implemented by the Company indomestic market is consolidation of its existing five products using the Aptech motherbrand under a single brand Aptech Learning' to improve sales effectiveness increasefranchise returns and reduce risk. An Aptech Learning centre would offer all or acombination of products from IT (both Software Development and Hardware & Networkingprograms) Aviation & Hospitality Banking and English Learning under the same roof.In addition to signing new centres under this format the Company was successful inconverting many existing centres to this one-stop-shop format by signing them up foradditional products.
The international business grew on account of improved performance in Vietnam andgrowth in other major markets in South Asia Africa and Middle East. The Company signed upcentres in new countries such as Ethiopia and Singapore. It also launched a Centre ofExcellence in IT under the tender award from Government of India in Costa Rica andCommonwealth of Dominica. The Company continued its track record of successfully adaptingbusiness models to the needs of each market by pursuing a Certification model for theLatin American & Caribbean market and getting its first success with sign up of anAuthorized Training & Testing Partner in Trinidad & Tobago. Overall it signed up24 new locations across its major brands in the international market. The Company alsosigned Master Franchise agreements for Aptech Computer Education brand in ECOWAS Africaand for three brands in Nepal. It has also made determined efforts in the current fiscalto expand its target markets from developing countries to advanced countries.
The surge in Institutional business revenue and profits was primarily on account ofsales growth in the Assessment division. The Company added many new customers during thefiscal who contributed a little more than one third of division's annual revenues. TheCompany expanded significantly in the Government and PSU recruitment test segment whichcontinues to see growing adoption of Computer Aided assessments vs. Paper & Pencilexams. The remaining growth was on account of additional business from existing clients.The Company also added a Digital Evaluation offering to its service portfolio in theAssessment space and has already established a reasonable market presence for theoffering. In the Training Solutions division there was lower traction from existingclients and hence the revenues continue to remain range bound. The Company opened two newoffices within India and significantly added to its sales and operations team strengthfor the Institutional business.
Overall financial results for the FY2016-17 reflect this business success with thetotal operating revenue increasing from Rs. 16333 lacs in previous fiscal to Rs. 21333lacs a growth of 30.6%. Operating EBITDA margins jumped from 12.3% to 13.8% on account ofrevenue growth and would have been 16.6% but for the impact of Rs. 581 lacs on accountof an ESOP scheme. Profit Before Tax (PBT) after exceptional items was Rs. 2198 lacs inFY2016-17 an increase of 69.5% from the FY2015-16 level of Rs. 1297 lacs. SimilarlyProfit After Tax and Share of Loss of Associate improved to Rs. 1871 lacs in FY2016-17with Basic EPS as Rs. 4.69 per share. The Company continued to have zero debt and has cashand liquid investments of Rs. 4843 lacs as on 31st March 2017.
Digitization has been a consistent focus for the Company in the last few years and thiscontinued to show improvement in contribution with increasing number of enrolments comingfrom leads sourced through digital marketing and constantly growing contribution to Retailrevenue from sale of course books after adoption of Onlinevarsity as the only medium ofcourseware delivery. The Company has established a new function called Industry Connectand Placements (ICAP) to be able to implement its mission of fightingUnemployability'. This function has strengthened the dialog with the industry tohave a better insight into the skill demand and adapt our courses as per the constantlyshifting demand. They have had multiple successes during the year in providing qualityplacement opportunities for our students. This function is going to be the fulcrum of ourstrategy in driving growth in our domestic Retail business. The Company has alsoimplemented many employee friendly policies such as Life Insurance cover of Rs. 1 croreminimum for each employee in addition to declaring an ESOP scheme with wide coverage.
In FY2016-17 Aptech was honored as India's Most Trusted Brand Award 2016 under theTraining and Education category in the Consumer Survey Report MRG 2016. The Company forthe 14th year in a row won the ICT Gold Medal for Highest Turnover (Category:Training) and Top ICT Training Cup from HCM Computer Association Vietnam (2003 2016). It was also awarded as a "Pioneer in Skilling Africa" by ASSOCHAM at theIndia Africa Champion-on-Biz Awards 2016. Aptech Kazakhstan center was awarded asthe best training center in computer technology for the year 2016.
An Interim Dividend of Rs. 3.00 per equity share was paid to the shareholders asapproved by the Board of Directors at its meeting held on 24th May 2017. TheDirectors have considered it financially prudent to re-invest profits into the business ofthe Company and therefore do not intend to recommend final dividend.
During the year 2016-17 the Directors met five times on 6th May 2016 21stJuly 2016 19th August 2016 19th October 2016 and 24thJanuary 2017 Mr. Ninad Karpe was appointed as an Additional Director with effect from 3rdNovember 2016 who holds office upto the ensuing Annual General Meeting and beingeligible offers himself for appointment.
Mr. Yash Mahajan resigned as an Independent Director on 16th January 2017due to his unavoidable compulsions. The Board of Directors is on the lookout for asuitable candidate who can join the Board as an Independent Director to fill the vacancy.
Mr. Utpal Sheth Non Executive Director retires by rotation at the ensuing AnnualGeneral Meeting and is eligible for re-appointment.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down in Section 149(6) of the Companies Act 2013.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations& Disclosure Requirements) Regulation 2015 during the year under review the Boardcarried out the annual evaluation of its own performance. A structured questionnairecovering various aspects of functioning of the Board Committees and Directors such asadequacy of the composition of the Board and its Committees Board culture execution andperformance of specific duties obligation and governance was distributed to each memberof the Board and inputs were received.
EMPLOYEE STOCK OPTIONS
The Members of the Company at its Annual General Meeting held on 27thSeptember 2016 approved the Aptech Employee Stock Option Scheme 2016 ("theScheme") to create offer and grant upto 4432620 Employee Stock Options to alleligible employees directors (excluding Promoters of the Company Independent Directorsand Directors holding directly or indirectly more than 10 % of the outstanding EquityShares) of the Company and employees of its subsidiaries with a view to attract and retainkey talents working with the Company and its Subsidiary Company (ies) by way of rewardingtheir performance and motivate them to contribute to the overall corporate growth andprofitability. All the plans are administered by the Nomination & RemunerationCommittee of the Board. Disclosures as required under the SEBI (Share Based EmployeeBenefits) Regulations 2014 are available on Company's Website on the link:https://www.aptech-worldwide.com/downloads/news-and-notification/DISCLOSUREASREQUIREDUNDERSEBIESOP.pdf
PARTICULARS OF LOAN GUARANTEE OR INVESTMENTS
Loan guarantees and investments covered under section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In line with the requirements of the Companies Act 2013 and the SEBI (LODR) 2015 theCompany has formulated a Policy on Related Party Transactions and the same is uploaded onthe Company'swebsite:http://www.aptech-worldwide.com/downloads/aptech-policy/Policy-Aptech-RPT. pdfDetails of Related Party Transactions are given in AOC-2 as Annexure-V.
SUBSIDIARIES ASSOCIATE AND JOINT VENTURE COMPANIES
As on 31st March 2017 the Company had 8 Subsidiaries. During the year under reviewname of Aptech Global Investment Limited was changed to Star International Training &Consultancy Pvt. Ltd. effective from 23rd December 2016 . Pursuant to Rule 5(1) of the Companies (Accounts) Rules 2014 the performance and financial position of theSubsidiaries is included for the financial year ended 31st March 2017 as per FormAOC-1 attached to the financial statements of the Company.
NOMINATION AND REMUNERATION POLICY
The Company has formulated and adopted the Nomination and Remuneration Policy inaccordance with the provisions of Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations.
The Nomination and Remuneration Policy can be accessed on the website of the Companyhttps://www.aptech-worldwide.com/downloads/aptech-policy/Remuneration-Policy.pdf
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted Corporate Social Responsibility Committee in compliancewith the provisions of Section 135 of the Act read with the Companies (Corporate SocialResponsibility Policy) Rules 2014. The Corporate Social Responsibility Committee hasformulated a Corporate Social Responsibility Policy (CSR Policy) indicating the activitiesto be undertaken by the Company and the same has been uploaded on the website of theCompany https://www.aptech-worldwide.com/downloads/policy-on-csr.pdf The Disclosure withrespect to CSR activities forming part of this report is given in Annexure-II
The Company does not accept any deposits from public.
The Company has taken insurance cover for its assets to the extent required.
MANAGEMENT DISCUSSION AND ANALYSIS
A separate report on the Management Discussion and Analysis is attached as a part ofthe Annual Report.
Effective corporate governance is necessary to retain the trust of stakeholders and toachieve business success. Corporate governance is about commitment to values and ethicalbusiness conduct. It is about how an organisation is managed. It includes its corporateand other structures its culture policies and the manner in which it deals with variousstakeholders. As shareholders across the globe evince keen interest in the practices andperformance of companies corporate governance has emerged at the centre stage of the waythe corporate world functions. Corporate governance is vital to enable companies tocompete globally in a sustained manner and let them flourish and grow.
A separate Report on Corporate Governance is attached and forms part of the AnnualReport. The Auditors' Certificate regarding compliance of the conditions of CorporateGovernance is also annexed.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement:
(i) That in the presentation of the annual accounts for the year ended March 31 2017applicable accounting standards have been followed and that there are no materialdepartures;
(ii) That they have in the selection of the accounting policies consulted thestatutory auditors and have applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company for the year ended March 31 2017 and of the profit of the Company for theyear ended on that date;
(iii) That they have taken proper and sufficient care to the best of their knowledgeand ability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
(iv) That the annual accounts have been prepared on a going concern basis.
(v) That internal financial controls followed by the Company are adequate and wereoperating effectively
(vi) That the system to ensure compliance with the provisions of all applicable lawswere adequate and operating effectively
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT AND FOREIGNEXCHANGE EARNINGS AND OUTGO
Conservation of Energy
Adequate measures are taken to conserve energy although the Company's operations arelow energy intensive.
Your Company continues to use the latest technologies for improving the productivityand quality of its services.
Research & Development
Technological obsolescence is certain. We encourage continuous innovation and researchand development for measuring future challenges and opportunities.
Foreign Exchange Earnings and Outgo
The details of Foreign Exchange Earnings and Outgo are given in the Notes to Accounts(Reference point No. B5 & B6 of Note 16).
PARTICULARS OF EMPLOYEES
Particulars of employees as required to be disclosed in terms of Section 134 of theCompanies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 a statement containing details of employees is givenbelow.
|Sr No ||Name ||Age ||Date of Joining ||Remuneration paid ( in lacs) ||Designation ||Educational Qualification ||Experience ||Previous Employement |
|1 ||Anil Pant * ||49 ||1st July 2016 ||130.25 ||Managing Director & CEO ||B.E ||27 ||Tata Consultancy Services |
|2 ||Ninad Karpe* ||56 ||1st Feb 2009 (Resigned effective 3rd November 2016) ||169.35 ||Erstwhile Managing Director & CEO ||BCom ICAI ||32 ||CA India |
*Employed for the part of the financial year
As per the provisions of Section 139 of the Companies Act 2013 the term of office ofM/s. Khimji Kunverji & Co. Chartered Accountants as Statutory Auditors of theCompany will conclude from the close of the forthcoming Annual General Meeting of theCompany. The Board of Directors places on record its appreciation for the servicesrendered by M/s. Khimji Kunverji & Co. Chartered Accountants as the StatutoryAuditors of the Company. Subject to the approval of the Members the Board of Directors ofthe Company has recommended the appointment of M/s Bansi S. Mehta & Co (ICAI FirmRegistration No. 100991W) as the Statutory Auditors of the Company pursuant to Section 139of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rulesframed thereunder the Company has appointed M/s. SG and Associates Practicing CompanySecretaries to undertake its Secretarial Audit. There are no qualifications reservationsor adverse remarks in their Audit Report. The Secretarial Audit Report is annexed to theBoard Report as Annexure-III
COMPLIANCE WITH THE PROVISIONS OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company is committed to uphold and maintain the dignity of women employees and ithas in place a policy which provides for protection against sexual harassment of women atwork place and for prevention and redressal of such complaints. During the financial yearno such complaints were received.
Your Directors wish to acknowledge all their stakeholders and are grateful for theexcellent support received from the shareholders Bankers Financial InstitutionsGovernment authorities esteemed corporate clients customers and other businessassociates. Your Directors recognise and appreciate the hard work and efforts put in byall the employees of the Company and their contribution to the growth of the Company in avery challenging environment.
| ||For and on behalf of the Board of Directors |
|Place: Mumbai ||C. Y. Pal ||Anil Pant |
|Date: 30th June 2017 ||Vice Chairman ||Managing Director & CEO |
Annexure to Directors Report
1. Extract of Annual Return in Form MGT-9 is given in Annexure-I
2. Report on CSR is given in Annexure- II
3. Secretarial Audit Report is given in Annexure III
4. Details of remuneration is given in Annexure - IV
5. Details of related party transaction is given in Annexure V