The Board of Directors hereby submits the report of the business and operations of yourCompany along with the audited financial statements for the financial year ended March31 2016. The consolidated performance of the Company and its subsidiaries has beenreferred to wherever required.
The performance during the period ended March 31 2016 has been as under:
| || || || ||(Rs In Lakhs) |
|Particulars || |
| ||Consolidated ||Standalone ||Consolidated ||Standalone |
|Total Income ||59824.85 ||20590.98 ||38043.32 ||11582.44 |
|Total Expenditure ||51421.68 ||16246.09 ||34918.76 ||11013.94 |
|Profit Before Tax ||8403.17 ||4344.89 ||3124.56 ||568.50 |
|Provision for Tax ||3435.57 ||1148.46 ||554.43 ||174.52 |
|Profit after Tax ||4967.60 ||3196.43 ||2570.13 ||393.98 |
|Transfer to General Reserves ||- ||- ||- ||- |
|Profit available for appropriation ||4967.60 ||3196.43 ||2535.07 ||358.92 |
|Balance Carried to Balance Sheet ||4967.60 ||3196.43 ||2535.07 ||358.92 |
REVIEW OF OPERATIONS
The total revenue of the Company for the financial year under review on consolidatedbasis was Rs 59824.85 Lakhs as against Rs 38043.32 Lakhs for the previous financialyear. The net profit was Rs 4967.60 Lakhs for the financial year 2015-16 as against thenet profit of Rs 2535.07 Lakhs for the previous year.
On Standalone basis the total revenue of the Company for the financial year 2015-16was Rs 20590.98 Lakhs as against Rs 11582.44 Lakhs for the previous financial year. Thenet profit was Rs 3196.43 Lakhs for the financial year 2015-16 as against the net profitof Rs 358.92 Lakhs for the previous year.
The Board of Directors are driven by the vision to maximize the shareholders returns inthe long run by proposing inorganic acquisitions globally and by placing the Company inNo.1 position in the world. Hence the Directors decided not to declare the dividend.
During the year your Company has allotted 760000 equity shares of Rs 10/- each toemployees under Cigniti ESOP scheme. Consequently the paid up share capital of the Companyhas increased to Rs 254992190/- divided into 25499219 equity shares of Rs 10/- each.
INFORMATION ABOUT THE FINANCIAL PERFORMANCE /FINANCIAL POSITION OF THE SUBSIDIARIES/BRANCHES/ASSOCIATES/JOINT VENTURES
Your Company has two Indian wholly owned subsidiary companies (WOS) and seven whollyowned foreign subsidiary companies (WOS).
Gallop Solutions Private Limited (Indian WOS)
Cigniti Software Services Private Limited (Indian WOS)
Cigniti Inc. USA (Foreign WOS)
Gallop Solution Inc. USA (Foreign WOS)
Cigniti Technologies (Canada) Inc. (Foreign WOS)
Cigniti Technologies (UK) Limited UK (Foreign WOS)
Cigniti Technologies Inc. USA (Foreign WOS)
Cigniti Technologies (Australia) Pty. Limited Australia (Foreign WOS)
Cigniti Technologies (New Zealand) Limited New Zealand (Foreign WOS)
Cigniti Technologies Limited USA (Foreign Branch)
Cigniti Technologies Limited South Africa (Foreign Branch)
In accordance with the provisions of Section 134 of the Act and Regulation 17 of theListing Regulations the Board has carried out evaluation of its own performance theperformance of committees of the Board namely Audit Committee Risk ManagementCommittee Stakeholders Relationship Committee and Nomination and Remuneration Committeeand also the directors individually. The manner in which the evaluation was carried outand the process adopted has been mentioned in the Corporate Governance Report.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
On their appointment Independent Directors are familiarized about the Company'soperations and businesses. Interaction with the Business heads and key executives of theCompany is also facilitated. Detailed presentations on important policies of the Companyis also made to the directors. Direct meetings with the Chairman is further facilitated tofamiliarize the incumbent Director about the Company/its businesses and the grouppractices.
The details of the familiarization programme as above are also disclosed on theCompany's website at https:// www.cigniti.com/familiarization-programme.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of the provisions of Regulation 34 of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 theManagement's discussion and analysis is set out in this Annual Report.
Corporate governance is about maximizing shareholder value legally ethically andsustainably. At Cigniti we believe a sound corporate governance is critical to enhanceand retain investor trust. The goal of corporate governance is to ensure fairnessinformation about the Company for every stakeholder. Our disclosures seek to attain thebest practices in international Corporate Governance. A separate section on CorporateGovernance for fiscal 2016 forms part of this Annual Report.
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 annual return in MGT9 as a part of this Annual Report.
During the year 2015-16 seven Board meetings were held the details of which are givenin the Corporate Governance Report.
DIRECTORS AND KEY MANANGERIAL PERSONNEL
During the year Mrs. K. Krishna Priya was appointed as Additional Director in thecategory of Independent Director w.e.f 06.11.2015 to hold office up to the ensuing AnnualGeneral meeting of the Company. The Board of Directors of the Company has decided to adoptthe provisions with respect to appointment and tenure of Independent Directors which isconsistent with the Companies Act 2013. In line with the requirements of the CompaniesAct 2013 it is therefore proposed to appoint existing additional director as IndependentDirector on the Board of the Company for a term up to five consecutive years. A briefprofile of proposed Independent Director including nature of her expertise is mentionedbelow.
Notice has been received from a Member proposing candidature of the Director namelyMrs. K. Krishna Priya for the office of Independent Director of the Company. In theopinion of the Board she fulfills the conditions specified in the Companies Act 2013 andthe Rules made there under for appointment as Independent Director of the Company.
Mr. C. Srikanth will retire by rotation at the ensuing Annual General Meeting in termsof Section 152 and any other applicable provisions of the Companies act 2013 and beingeligible offers himself for re-appointment.
Details of appointment/re-appointment of the director:
|Name of the Director ||Mrs. K. Krishna Priya ||Mr. C. Srikanth |
|Date of Appointment ||06/11/2015 ||16/09/2013 |
|Qualifications ||B.Tech ||MS in computer science |
|No. of Shares held in the Company ||Nil ||2500000 |
|Directorships held in other companies (excluding foreign companies) ||Bhavitha Techsolutions Private Limited ||1.Gallop Solutions Private Limited |
| || ||2. Aasaanpay Solutions India Private Limited |
| || ||3. Tvarita Capital Private Limited |
|Positions held in mandatory committees of other companies ||Nil ||Nil |
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
CODE OF CONDUCT FOR THE PREVENTION OF INSIDER TRADING
The Board of Directors has adopted the Insider Trading Policy in accordance with therequirements of the SEBI (Prohibition of Insider Trading) Regulation 2015. The InsiderTrading Policy of the Company lays down guidelines and procedures to be followed anddisclosures to be made while dealing with shares of the Company as well as theconsequences of violation. The policy has been formulated to regulate monitor and ensurereporting of deals by employees and to maintain the highest ethical standards of dealingin Company securities.
The Insider Trading Policy of the Company covering code of practices and procedures forfair disclosure of unpublished price sensitive information and code of conduct for theprevention of insider trading is available on our website(https://www.cigniti.com/investors/ insider-trading-policy.pdf).
The Securities and Exchange Board of India (SEBI) on September 2 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effectiveDecember 1 2015. Accordingly all listed entities were required to enter into the ListingAgreement within six months from the effective date. The Company entered into ListingAgreement with BSE Limited and the National Stock Exchange of India Limited.
DIRECTOR'S RESPONSIBILITY STATEMENT
In pursuance of section 134 (5) of the Companies Act 2013 the Directors herebyconfirm that:
(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) 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 and loss of the company for that period;
(c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
(d) The Directors had prepared the annual accounts on a going concern basis; and
(e) The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
At the Annual General Meeting held on September 19 2014 M/s. P. Murali & CoChartered Accountants were appointed as statutory auditors of the Company to hold officetill the conclusion of the Annual General Meeting to be held in the calendar year 2017. Interms of the first proviso to Section 139 of the Companies Act 2013 the appointment ofthe auditors shall be placed for ratification at every Annual General Meeting.Accordingly the appointment of M/s. P. Murali & Co Chartered Accountants asstatutory auditors of the Company is placed for ratification by the shareholders.
The Company has adequate internal controls consistent with the nature of business andsize of the operations to effectively provide for safety of its assets reliability offinancial transactions with adequate checks and balances adherence to applicable statuesaccounting policies approval procedures and to ensure optimum use of available resources.These systems are reviewed and improved on a regular basis. It has a comprehensivebudgetary control system to monitor revenue and expenditure against approved budget on anongoing basis.
The Company has its own corporate internal audit function to monitor and assess theadequacy and effectiveness of the internal controls and system across all key processescovering various locations. Deviations are reviewed periodically and due complianceensured. Summary of Significant Audit Observations along with recommendations and itsimplementations are reviewed by the Audit Committee and concerns if any are reported toBoard.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of managerial personnel) Rules 2014 the Board had appointedMr. S. Sarveswar Reddy Practicing Company Secretary to undertake the secretarial audit ofthe Company for the year 2015-16. The report of the Secretarial Auditor is enclosed asAnnexure and forms part of this report.
(a) Statutory Auditors Report
The Board has duly reviewed the Statutory Auditor's Report on the Accounts for the yearended March 31 2016 and has noted that the same does not have any reservationqualification or adverse remarks. However the Board decided to further strengthen theexisting system and procedures to meet all kinds of challenges that may occur in theindustry.
(b) Secretarial Audit Report
The Board has duly reviewed the Secretarial Audit Report on the Compliances accordingto the provisions of section 204 of the Companies Act 2013 and there are no qualificationsin the report.
The company is in compliance with Secretarial Standards issued by The Institute ofCompany Secretaries of India on Meetings of the Board of Directors and General Meeting.
DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO:
A. Conservation of Energy
Your Company's operations are not energy intensive. Adequate measures have been takento conserve energy wherever possible by using energy efficient computers and purchase ofenergy efficient equipment.
B. Technology Absorption
Your Company has not undertaken any research and development activity for anymanufacturing activity nor was any specific technology obtained from any external sourceswhich needs to be absorbed or adapted.
C. Foreign Exchange Earnings and Outgo
Foreign Exchange Earnings: Rs 1087123808/-
Foreign Exchange Outgo: Rs 401251052/-
Attention of the members is drawn to Note No. 30 & 31 of Notes on financialstatements.
Your Company has not accepted any deposits falling within the meaning of Sec.73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 during thefinancial year under review.
The properties and assets of your Company are adequately insured.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not given any loans guarantees or security in connection with loans ormade any investments falling within the ambit of Section 186 of the Companies Act 2013.
There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
RISK MANAGEMENT POLICY
Your Company follows a comprehensive system of Risk Management. Your Company hasadopted a procedure for assessment and minimization of probable risks. It ensures that allthe risks are timely defined and mitigated in accordance with the well-structured riskmanagement process.
CORPORATE SOCIAL RESPONSIBILITY
With the mission to discover once again the social responsibility of developingeconomic social and environmental capital towards sustainability Cigniti crafted CSRprojects in achieving the mission. Your Company believes and strives hard in sustainabledevelopment of society in which the enterprise draws economic and natural resources byenriching its capacity in contributing to the significant positive change in the economy.The CSR committee has been formed to achieve the mission and implement the CSR objectives.
The Company has adopted the CSR policy and a budget outlay of Rs 3100000/- Lakhs hasbeen approved by the Board of Directors. As per the programme the Company has startedimplementation of CSR activities. However during the year it was practical to spend Rs3103780/-.
The details on CSR corpus and amount spent projects for which funds are utilized havebeen disclosed as part of Corporate Governance Report.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of business. There were no materiallysignificant related party transactions made by the Company with the promoters directorskey managerial personnel or other designated persons which may have a potential conflictwith the interest of the Company at large.
Your Directors draw attention of the members to Note 29 to the financial statementwhich sets out related party disclosures and Annexure A to this report.
DISCLOSURE ABOUT COST AUDIT
Cost Audit is not applicable to your Company.
PARTICULARS OF EMPLOYEES
A table containing the particulars in accordance with the provisions of section 197(12)of the act read with rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is appended as Annexure B to this report.
A statement containing the name of every employee employed throughout the financialyear and in receipt of remuneration of Rs 1.02 crore or more or employed for part of theyear and in receipt of Rs 8.5 Lakh or more a month under Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed asAnnexure C to this report.
DISCLOSURE UNDER THE 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 workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaint Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees are covered under this policy.
The following is the summary of sexual harassment complaints received and disposedduring the calendar year.
| No. of complaints received: ||Nil |
| No. of complaints disposed off: ||Nil |
EMPLOYEES STOCK OPTION SCHEME
The Company has various stock option scheme for the benefit of the employees and theirare no material changes in the schemes during the year under review. The schemes are inthe compliance with the SEBI regulations and the disclosures required to be made areenclosed as an Annexure D to this report.
We thank our customers vendors investors and bankers for their continued supportduring the year. We place on record our appreciation of the contribution made by ouremployees at all levels. Our consistent growth was made possible by their hard worksolidarity cooperation and support.
We thank the governments of various countries where we have our operations. We alsothank the Government of India particularly the Ministry of Communication and InformationTechnology the Ministry of Commerce the Ministry of Finance the Ministry of CorporateAffairs the Customs and Excise Departments the Income Tax Department the Reserve Bankof India the State Governments and other government agencies for their support and lookforward to their continued support in the future.
Your Directors also wish to place on record their appreciation of business constituentslike SEBI BSE NSE NSDL CDSL etc. for their continued support for the growth of theCompany.
| ||For and on behalf of the Board |
| ||Cigniti Technologies Limited |
|Place: Hyderabad ||C. V. Subramanyam |
|Date: September 03 2016 ||Chairman & Managing |
| ||Director |
| ||DIN:00071378 |