To the Members
We are pleased to present the 25th Annual Report together with the Audited Accounts ofyour Company for the year ended 31st March 2017
|1. Financial Results || ||(Rs. In lakhs) |
| ||2016-2017 ||2015-2016 |
|Income from Software services and Products ||7396.79 ||10147.95 |
|Other operating income ||30.27 ||21.47 |
|Employee cost ||4527.91 ||6580.93 |
|Other expenditure ||1710.06 ||2900.31 |
|Operating Profit before Interest ||1189.09 ||688.18 |
|Depreciation & Tax (EBIDTA) || || |
|Depreciation ||152.41 ||151.47 |
|Interest ||115.02 ||500.54 |
|Other income ||69.94 ||221.48 |
|Profit/(Loss) before exceptional item ||991.60 ||257.65 |
|Exceptional item ||- ||1818.60 |
|Profit/(Loss) before Tax (EBT) ||991.60 ||2076.25 |
|Current Tax ||346.74 ||707.35 |
|Deferred Tax Income/Expense ||(23.23) ||16.79 |
|Net Profit /(Loss) (PAT) ||668.09 ||1352.11 |
|Profit & Loss bal brought forward ||3740.65 ||2857.94 |
|Amount available for appropriation ||4408.74 ||4210.04 |
|Interim Dividend ||125.00 ||90.00 |
|Proposed Final Dividend ||125.00 ||- |
|Dividend Tax ||52.25 ||79.39 |
|Depreciation adjustment ||- ||- |
|Transfer to General Reserve ||- ||- |
|Balance in Profit & Loss A/c ||4106.48 ||3740.65 |
2. Results of Operation
ASM along with its subsidiaries provide world class consulting and product developmentservices in the areas of Engineering Services and Product R&D Services with successfulOffshore Development and Support Centers in India and Overseas for its global clientele.
On the standalone front your company registered a total revenue of Rs. 7396.79 lakhsfor the year ended 31st March 2017. Domestic sales was Rs. 334.88 lakhs while Export saleswas Rs. 7061.91 lakhs. EBIDTA was at Rs. 1189.09 lakhs and Net profit after tax was Rs.668.09 lakhs.
The Consolidated total revenue for the year ended 31st March 2017 was Rs. 8119.75lakhs. EBIDTA was at Rs. 627.25 lakhs and Net Profit after tax at Rs. 116.25 lakhs.
During the year 2016-17 the company declared an Interim dividend of Rs. 2.50/- on 19thOctober 2016. In keeping with the Dividend policy the Directors have recommended forapproval of the members a final dividend of Rs. 2.50 /- per equity share of Rs 10/-eachfor the financial year 2016-2017. The dividend amount paid out if approved by members willbe Rs.125.00 lakhs interim paid Rs. 125 lakhs while Rs. 52.25 lakhs will be paid by thecompany towards total dividend tax and surcharge thereon.
The dividend payout for the year under review has been formulated in accordance withthe Company`s policy to pay sustainable dividend linked to long term growth objectives ofthe company to be met by internal cash accruals and the shareholders` aspirations.
4. Subsidiary Companies
The consolidated Accounts of your Company and its subsidiaries viz. Advanced SynergicPte Ltd Singapore and Pinnacle Talent Inc USA duly audited are presented as part ofthis Report in accordance with Accounting Standard 21 and the Listing Regulations with theStock Exchange wherever applicable. The statement pursuant to the provisions to Section129(3) of the Companies Act 2013 containing salient features of the financial statementof the Company`s Subsidiaries in FormAOC1 is given in Annexure -I1.
Your Company has formulated and adopted a "Policy for determining MaterialSubsidiaries" so that your company could identify such subsidiaries and formulategovernance framework for them. Copy of the Policy form part of this Report in Annexure-III
5. Future Outlook
With the maturity of "Globalization of Engineering" and "Digital &Mobile Technology" over the last few years there is an intense race to rapidlycreate new products across the world causing a "New Product Revolution". Thethrust areas are in the Semiconductor Equipment Medical Devices Hi Tech ConsumerElectronics Automotive & Aerospace and Telecom industries.
This "New Product Revolution" has opened opportunities for companies likeASM in the space of Engineering Services.
The IoT (Internet of Things) offers quality space for new product development and ASMis working on creating its own products as well as Co-Creation for customer's products.The next couple of years will be exciting in this space.
Cashing in on this opportunity ASM through the initiative of ARISE (ASM Research andInnovation Step for Excellence) has seen remarkable success in the "Co-Creation of IPled Product Innovation" and Platform Services for its clients. As a System DesignHouse ASM is fully equipped to handle complex Electronics Mechanical and Embeddedsoftware design and development to complete the product under one roof. Further workingprototype and manufacturing results in the entire product realization for the client.
The future looks exciting and upbeat in the R&D Products and Engineering ServicesOutsourcing (ESO) space. There are lot of drivers for the clients like Reducing ProductDevelopment Life Cycles Global Competition and getting a first mover advantage byring-fencing the IP. The clients are equally excited to collaborate with the EngineeringService providers like ASM to leverage their capability for global regional andadjacent markets thereby optimize the R&D Operations.
6. Management Discussion and Analysis Report
Management Discussion and Analysis Report as required under Regulation 34 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is disclosedseparately in the Annual Report.
7. Board Meetings
During the year under review the Board of Directors held 6 meetings on 11.05.201622.06.2016 23.07.2016 19.10.2016 30.01.2017 and 31.03.2017. The maximum intervalbetween two meetings did not exceed 120 days.
8. Directors and Key Managerial Personnel
As per the provisions of Companies Act 2013 M Lakshminarayan Director retires byrotation and being eligible offers himself for re-appointment at the ensuing AnnualGeneral Meeting. The Board recommends is re- appointment.
The term of office of Rabindra Srikantan Managing Director is to expire on 7.11.2017.The Board of Directors at the meeting held on 06.05.2017 as per the recommendations madeby the Nomination and Remuneration Committee have re-appointed Rabindra Srikantan as theManaging Director of the Company not liable to retire by rotation for a period of threeyears with effect from 8.11.2017 in accordance with provisions of Sections 196197203and any other provisions of the Companies Act 2013 and the rules made there under(including any statutory modifications or enactments thereof for the time being in force)read with Part II section II (A)(ii) of Schedule V to the Companies Act 2013 and suchother approvals as may be necessary subject to the approval of the members at theensuing AGM by a special resolution.
9. Independent Directors
The company has received the necessary declaration from the Independent Directors underSection 149(7) of the Companies Act 2013 and they have met the criteria of Independence aslaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
10. Director`s Responsibility Statement
Pursuant to the provisions of Section 134 (5)of the Companies Act 2013 the Directorshereby confirm that:
a) in the preparation of the annual financial statements for the year ended 31st March2017 the applicable accounting standards has been followed along with proper explanationrelating to material departures:
b) the Directors have 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;
c) the Directors 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) the Directors have prepared annual accounts of the company on a going concern basis.
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
11. Significant and material orders passed by the regulators or courts and MaterialChanges and commitments affecting the financial position of the company .
There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the company and its future operations. There are nomaterial changes and commitments if any affecting the financial position of the companywhich occurred between the end the financial year of the company to which the financialstatements relate and the date of this report.
12. Audit Committee
The Audit committee comprises of M.R.Vikram Chairman Prof. B.S.Sonde MLakshminarayan Shekar Viswanathan and Rabindra Srikantan as members. The committee metfour times during the Financial year under review and all its recommendations wereaccepted by the Board.
Your Company has established the Vigil Mechanism an Ombuds process which is a channelfor receiving and redressing of employees complaints. This mechanism covers questionablefinancial or accounting matters and reporting fraudulent financial information to theshareholders the government or any other legal authority. This meets the requirementunder Section 177(9) and(10) of the Companies Act 2013 and Regulation 22 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
13. Nomination and Remuneration Committee and Stakeholders Relationship and ShareTransfer Committee.
The present composition of the Nomination and Remuneration Committee includes ShekarViswanathan Chairman Prof. B.S.Sonde M Lakshminarayan and M.R. Vikram as its members.The Nomination and Remuneration Committee has framed a policy for selection andappointment of Directors including determining qualifications of Independent Director KeyManagerial Personnel Senior Management Personnel and their remuneration as part of itscharter and other matters provided under Section 178(3) of the Companies Act 2013. A copyof the policy forms part of this report vide Annexure- I. The Nomination and RemunerationCommittee of a company has been obligated under Section 178 of the Act to formulate apolicy for recommending to the Board of directors of the company for setting the criteriabased on which the performance of every Director including the performance of the Board asa whole shall be assessed by the Board of Directors of the Company.
The Stakeholders Relationship and Share Transfer Committee comprises of Prof. B.S.Sonde Chairman and Rabindra Srikantan as its members.
14. Familiarisation Programme -
The Company has put in place an induction and familiarisation programme for all itsDirectors including the Independent Directors. The familiarisation programme forIndependent Directors in terms of provisions of Regulation 46(2)(i) of ListingRegulations is uploaded on the website of the Company.- http://bit.ly/asmfam
15. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed BMP & Co. LLP Company Secretaries to undertake the Secretarial Audit ofthe Company. The Report of the Secretarial Audit in Form MR3 for the financial year endedMarch 31 2017 is annexed as Annexure - IV to the Report. There are no qualificationsreservations or adverse marks made by Secretarial Auditor in the Report.
16. Auditor`s Report
There are no qualifications reservations or adverse remarks made by Sudhakar PaiAssociates Statutory Auditors in their report for the financial Year ended 31st March2017. The Statutory Auditors have not reported any incident of fraud to the AuditCommittee of the company in the year under review.
17. Extract of Annual Return
As required pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Report inform MGT 9 is annexed as Annexure- V to this Report.
18. Conservation of energy technology absorption and Foreign Exchange Outgo:
The company's operations involve low energy consumption. However the efforts toconserve and optimize the use of energy through improved operational method and othermeans will continue.
The company has not imported any technology .
Foreign exchange earnings and outgo
During the financial year under review 95.47 % of the revenue came from export ofsoftware services resulting in a foreign exchange inflow of Rs. 7061.91 lakhs and theforeign exchange outgo on account of overseas salaries traveling etc was Rs. 754.94 lakhs
19. Public Deposits
Your Company has not accepted any deposits from the public during the financial yearunder review.
20. Disclosures as required under Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
Your Company has in place a Prevention of Sexual Harassment (POSH) Policy in line withthe requirements of Sexual harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. Your Company has through the Policy constituted a committee and hasestablished a grievance procedure for protection against victimization. Your Company iscommitted to provide a healthy environment to all employees conducive to work without thefear of prejudice and gender bias. During the year under review there were no casesfiled pursuant to the said Act.
21. Details of Adequacy of Internal Financial Controls
Your Company has deployed adequate Internal Control Systems in place to ensure a smoothfunctioning of its business. The processes and systems are reviewed constantly andimproved upon to meet the changing business environment. The Control Systems provide areasonable assurance of recording the transactions of its operations in all materialaspects and of providing protection against misuse or loss of Company`s assets. TheInternal auditors periodically review the internal control systems policies andprocedures for their adequacy effectiveness and continuous operation for addressing riskmanagement and mitigation strategies
22. Particulars of Loans guarantees or investments
Your company has not granted loans or corporate guarantees in the year under review.Investment during the year consists of investment in Mutual Fund (current investment) -Rs. 1469.88 lakhs.
23. Risk Management Policy
The Risk management Policy of your company continuously evaluates the various riskssurrounding business and seeks to review and upgrade its risk management process. Tofurther the endeavour your Board constantly formulates strategies directed at mitigatingthese risks which get implemented at the Executive Management level and a regular updateis provided to the Board.
24. Corporate Social Responsibility Policy (CSR)
Your company has in pursuance to the provisions of Section 135 and Schedule VII of theCompanies Act 2013 constituted a CSR Committee of the Board to (a) formulate andrecommend a CSR policy (b) recommend the amount of expenditure to be incurred on the CSRactivities and (c) monitor implementation of the CSR policy from time to time. The termsof reference of the CSR committee are in accordance with Section 135 of the Companies Act2013. The Committee comprises of Prof. B.S. Sonde Chairman M.R.Vikram ShekarViswanathan Rabindra Srikantan and Preeti Rabindra The Annual Report on CSR in theprescribed format is enclosed to this Report as Annexure-VI
25. Related Party Transactions
The company has in place formulated a Policy on materiality of Related Partytransactions for dealing with such transactions in line with the requirements of theListing Regulations with the Stock Exchange. A copy of the Policy forms part of thisReport as Annexure- VII
Particulars of contracts or Arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the format specified as Form AOC2 forms part of thisReport as Annexure- VIII
26. Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard is required to monitor and review the Board evaluation framework. In line with theCorporate Governance Guidelines Annual Performance Evaluation is conducted for all BoardMembers as well as the working of the Board and its Committees. The Board works with theNomination and Remuneration committee to lay down the evaluation criteria for theperformance of executive/nonexecutive/independent directors through a peer evaluationexcluding the director being evaluated through a Board effectiveness survey. Thequestionnaire of the survey forms an integral part of reviewing the functioning andeffectiveness of the Board and for identifying possible paths for improvement. Each Boardmember is required to evaluate the effectiveness of the Board and its committees onvarious parameters and feed back on each Director is part of the survey. The outcome ofthe Board evaluation for the financial year 2016-17 was discussed by the Board at theirmeeting held in March 2017.
27. Remuneration to Director and Employees
Details/Disclosures of ratio of remuneration to each Director to median employee`sremuneration as required pursuant to Section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 and details of remuneration paid to Employees vide Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is given as Annexure-IX
28 Corporate Governance Report
Your Company has taken adequate steps to adhere to all the stipulations as laid down inPursuant to Schedule V (C) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. As required a Report on Corporate Governance is provided elsewhere inthis Annual Report along with Auditor`s Certificate on compliance thereof.
At the Annual General Meeting of the company held on 14th August 2015 Sudhakar PaiAssociates Chartered Accountants was appointed as statutory Auditors the Company to holdoffice till the conclusion of the AGM to be held in the year 2017. With the conclusion oftheir three year period as per Section 139(2) of the Companies Act 2013 the Board ofDirectors have at their meeting held on the 6th of May 2017 based on the proposal madeby the Nomination & Remuneration committee recommended the appointment of B KRamadhyani & Co LLP Chartered Accountants Bangalore bearing RegistrationNo.002878S/S00021 with the Institute of Chartered Accountants of India as StatutoryAuditors of the Company from conclusion of the 30th Annual Meeting of the Company foraudit of financial statements subject to ratification by the shareholders annually at aremuneration to be decided by the Audit Committee of the Board of Directors inconsultation with the Auditors plus applicable service tax and reimbursement of travelingand out of pocket expenses incurred by them for the purpose of audit.
Your Directors take this opportunity to express their gratitude to -
Our esteemed customers shareholders vendors business partners advisors andconsultants for their unstinted support.
The contribution made by our employees at all levels. Our consistent growth was madepossible by their solidarity cooperation and support.
State Bank of India Overseas Branch Bangalore and Axis Bank Bangalore and IndianBank Singapore for their support and guidance
Central & State Governments Software Technology Park (STPI) and NASSCOM for theircontinued support.
| ||For and on behalf of the Board || |
| ||ASM Technologies Ltd. || |
|Place : Bangalore ||M. R. Vikram ||Rabindra Srikantan |
|Date : 06.05.2017 ||Chairman ||Managing Director |