Your Directors have pleasure in presenting the 22nd Annual Report on the business andoperations of your Company together with the Audited Financial Statements and theAuditors' Report for the Financial Year ended March 31 2017.
The financial performance of your Company for the year ended March 31 2017 issummarized below:-
| || || |
( Rs. in Millions)
|Particulars ||Standalone ||Consolidated |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Gross Revenue ||659.12 ||480.29 ||982.08 ||771.82 |
|Profit before Interest & Depreciation ||187.96 ||90.63 ||199.30 ||90.30 |
|Finance costs ||10.42 ||8.36 ||10.42 ||8.36 |
|Depreciation ||41.86 ||32.86 ||43.17 ||35.98 |
|Profit before tax ||135.68 ||49.41 ||145.71 ||45.96 |
|Tax Expense ||32.29 ||22.47 ||32.29 ||22.47 |
|Income Tax adjustments from earlier years ||1.19 ||0.19 ||1.19 ||0.19 |
|Profit after tax ||102.20 ||26.75 ||112.23 ||23.30 |
|Accumulated profit brought forward from previous year ||299.07 ||304.67 ||154.90 ||163.94 |
|Provision for Dividend (including dividend tax) ||0.21 ||32.34 ||0.21 ||32.34 |
|Balance to be carried forward ||401.06 ||299.07 ||266.92 ||154.90 |
FINANCIAL PERFORMANCE OVERVIEW
A) CyberTech Consolidated Financial Performance:
The Company registered total income of Rs. 982.1 million for the year ended March 312017 as compared to Rs. 771.8 million for the year ended March 31 2016 reflecting agrowth of 27%.
Operating revenue for the year under review was` 875.7 million as compared toRs. 729.1 million in the previous year reflecting an increase of 20%.
The Company earned net profit of Rs. 112.2 million for the year ended March 312017 as against a profit of Rs. 23.3 million for the year ended March 31 2016 witnessinga significant growth of 382% on year-on-year basis.
B) CyberTech Standalone Financial Performance:
The Company reported total revenue of Rs. 659.1 million for the year ended March31 2017 as compared to Rs. 480.3 million for the year ended March 31 2016 reflecting agrowth of 37%.
Operating revenue for the year under review was` 558.7 million as compared toRs. 443.2 million in the previous year reflecting an increase of 26%. Operating revenueincludes both software support and development activities.
Other Income for the year under review was at Rs. 100.4 million as against Rs.37.1 million in the previous year reflecting a growth of 171%. The growth was seen partlyby increase in revenue from operations and partly due to increase in rental income andreceipt of interest on Income Tax Refund.
The Profit after Tax for the year under review was Rs. 102.2 million as againstRs. 26.74 million in the previous year reflecting a massive growth of 282%. The growthwas driven partly by increase in revenue from operations and partly due to increase inrental income and receipt of interest on Income Tax Refund.
DIVIDEND AND RESERVES
Your Directors are pleased to recommend a dividend @10% (`1/- per Equity Share of Rs.10/- each) for the Financial Year 2016-17 subject to the approval of shareholders at theensuing Annual General Meeting. If approved the total dividend payout for the year underreview will be 10% amounting to Rs. 2.73 Crores.
No amount was transferred to Reserves for the year under review.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company including its wholly owned USsubsidiary are prepared in accordance with Accounting Standard 21 (Consolidation ofAccounts) as prescribed by the Institute of Chartered Accountants of India and incompliance with the terms of SEBI (LODR) Regulations 2015. Together these comprise partof the Annual Report and Accounts. The summarized consolidated results are given alongsidethe financial results of your Company.
WHOLLY OWNED SUBSIDIARY IN USA
The Company owns 100% interest in CyberTech Systems and Software Inc. USA (CSSI)which was incorporated on June 12 2003 in the State of Delaware in the United States ofAmerica the results of CSSI are consolidated herein.
CSSI joined the SAP PartnerEdge program as a Build Partner'. The BuildPartner engagement model is designed to provide new levels of engagement for partnersthat design develop and support applications software and integrated solutions onmarket leading platforms from SAP.
It provides a broad range of supporting services from a technical and commercial pointof view which also includes an option to go to market using SAP digital properties.As a leader in Spatial Analytics and a long term partner of SAPR the PartnerEdgeRBuild engagement' will enable CyberTech to participate in co-innovation with SAPin the areas of geo-enabling business processes and development of industry solutions thatleverage SAP's Geographical Enablement Framework and HANA platform CSSI will haveaccess to a broader range of software tools and services to build impactful solutions forits clients. SAP PartnerEdge Built Partner program offers tools and resources thatprovide a strong foundation of support and collaboration that fosters unmatched value andmutual business success for customers partners and SAP
The Statement in Form AOC-1 containing salient features of the financial statements ofCompany's Subsidiary is attached as Annexure I to the financial statements of theCompany.
BUSINESS OPERATIONS OVERVIEW
CyberTech continued its focus to become leader into Spatial Analytics. The Company'ssolutions GeoCivic addressing Municipal Budgets in India and GeoShield-Intelligence LedPolicing and CyberServe-Population Health in the United States continued to gainsignificant traction in the market place. In terms of strategic partnership and alliancesCyberTech partnered with Cisco for Smart City and Digitization Solutions and continued towork with its existing partners - Microsoft ESRI and SAP.
IT industry is in a transformation phase wherein a demand for Cloud-based andopen-interoperable solutions has led to a major shift in the business models of theindustry.
The Company continues focus on the Public sector and Enterprise SAP and GIS customtechnology applications.
During the year Mr. Wim Elfrink a pioneer in IoT Smart Cities and Digitization ofSociety joined the Company as the Chairman of Advisory Board of the Subsidiary Company.Considering his contributions as an Advisor to CSSI the Company's Subsidiary Mr. WimElfrink has been inducted as a Director on the Board of the Company. In coming years Wimwill help to drive CyberTech's transition from Success to Leadership in the areas ofAdvanced Spatial Analytics and Digital Transformation as well as driving the ChannelModel.
In terms of strategic alliances and partnership CyberTech entered into a partnershipwith Cisco for Smart City and Digitization Solutions. It continues to work with existingalliances such as SAP Microsoft IBM and ESRI. It is expected that with the help ofthese alliances and partnerships Company will continue to lead business and revenuegrowth and increasing profitability with a continued focus on offshore revenue. TheCompany continues its focus aligning its sales and delivery structure to an Indian Model.Management is confident to see good growth momentum going forward driven by itsGeoShield' and GeoCivic' products both in US and India.
During the year under review the Company has: a) Issued and allotted 207000 EquityShares under Employee Stock Option Scheme (ESOP) to the employees of the Company and itssubsidiary Company. As a result of the above allotment the paid-up Sharecapital of the Company increased from Rs. 268713430/- comprising of 26871343 EquityShares of Rs. 10/- each as on March 31 2016 to Rs. 270783430/- comprising of27078343 Equity Shares of Rs. 10/- each as on March 31 2017; and b) Issued andallotted One Million (1000000) Optionally Fully Convertible Warrants(OFCWs/Warrants/Securities) to Mr. Wim Elfrink Strategic Investor with each warrantconvertible into one equity share at a conversion Price of Rs. 67/- per Equity Sharepursuant to members' approval through postal ballot on September 20 2016. The saidwarrants shall be converted into equity shares at the option of the allottee within 18months from the date of allotment as per the terms and conditions stated in resolutionpassed through postal ballot. If converted his shareholding would be 3.6% approx. in thepaid up share capital of the company.
During the year under review no deposits were accepted by the Company within themeaning of Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
All transactions entered into with the Related Parties in terms of Section 2(76) andSection 188 of the Companies Act 2013 Rules issued thereunder read with Regulation 2(zc)and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 during the Financial Year were in the nature exempted being transactionsbetween the Company and its 100% Subsidiary or in accordance with the approval obtainedfrom the Members of the Company as the case may be. During the Financial Year 2016-17the Company did not enter into materially significant transactions with Promoters KeyManagerial Personnel or other related parties. The details of the related partytransactions as required under AS-18 are set out in Note No. 26 to the consolidatedfinancial statements forming part of this
Annual Report and disclosed vide form AOC-2 has been appended as Annexure IIpursuant to Section 134 (3)(h) of the Companies Act 2013 and rules made thereunder.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website www.cybertech.com and can be accessed athttp://www.cybertech.com/investors/corporate policies.aspx
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEE GIVEN AND SECURITIES PROVIDEDUNDER SECTION 186 OF THE COMPANIES ACT 2013
The Company has not granted any loan guarantee and investment to any person otherthan its wholly owned subsidiary. The details of which are given in the Notes to FinancialStatements.
Your Company recognizes that risk is an integral part of any business and is committedto manage the risk in a proactive and e_cient manner. Your Company has Risk ManagementPolicy in place. The Policy provides for a risk management framework to identify andassess all kinds of risks such as operational strategic resources security industryregulatory & compliance and other risks and put in place an adequate risk managementinfrastructure capable of addressing these risks. The Board periodically reviews therisks if any and ensures to take steps for their mitigation.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134 (3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 are given in Annexure IIIforming part of this Report.
MANAGERIAL REMUNERATION & PARTICULARS OF EMPLOYEES
In accordance with Section 178 and other applicable provisions of the Companies Act2013 read with the Rule 6 of the Companies (Meeting of Board and its Powers) Rules 2014issued thereunder the Board of Directors at their meeting held on September 30 2014formulated the Nomination and Remuneration Policy of your Company on the recommendationsof the Nomination and Remuneration Committee and further aligned with the Regulation 19 ofthe SEBI (LODR) Regulations 2015. The salient aspects covered in the Nomination andRemuneration Policy with respect to the appointment and remuneration of Directors KeyManagerial Personnel Senior Management and other matters have been outlined in theCorporate Governance Report which forms part of this Report. The information requiredunder Section 197 of the Companies Act 2013 read with the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 in respect of Directors/employees ofyour Company is set out in MGT 9 which also forms part of this Report and is alsoavailable on the website of your Company www.cybertech.com.
DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013
Your Company is committed to creating and maintaining a secure work environment whereits employees agents vendors and partners can work and pursue business together in anatmosphere free of harassment exploitation and intimidation. To empower women and protectwomen against sexual harassment a policy for prevention of sexual harassment has beenrolled out and an Internal Complaints Committee (ICC) as per legal guidelines has been setup. All employees (permanent contractual temporary trainees) are covered under thispolicy. This policy allows employees to report sexual harassment if any at the workplaceand the Company conducts regular awareness programs in this regard. The Internal Committeeis empowered to look into all complaints of sexual harassment and facilitate free and fairenquiry process with clear timelines.
During the year 2016-17 no complaints were received regarding Sexual harassment.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the financial year under review asstipulated under Regulation 34 of SEBI (LODR) Regulations 2015 is presented in a separatesection forming part of the Annual Report.
In terms of Regulation 34 of the SEBI (LODR) Regulations 2015 a separate report onCorporate Governance is provided together with a Certificate from the Statutory Auditorsof the Company regarding compliance of conditions of Corporate Governance. A Certificateof the CFO of the Company in terms of SEBI (LODR) Regulations 2015 inter aliaconfirming the correctness of the financial statements and cash flow statements adequacyof the internal control measures and reporting of matters to the Audit Committee is alsoannexed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Vish Tadimety Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting pursuant to the provisions of the Companies Act 2013 read with theCompanies (Appointment and Qualification of Directors) Rules 2014 and the Articles ofAssociation of the Company and being eligible has offered himself for re-appointment. Thebrief resume of Mr. Vish Tadimety and other information under Regulation 36 of the SEBI(LODR) 2015 with respect to the Director seeking re-appointment has been provided in theNotice convening 22nd AGM. Your Directors recommend his re-appointment.
The Board of Directors of the Company appointed Mr. Wim Elfrink as an AdditionalDirector with effect from February 21 2017. Prior to this Mr. Wim Elfrink was appointedas the Chairman of the Advisory Board of the Company considering his contributions andcommitments towards the business of the Company and the wholly owned subsidiary. As theChairman of the Advisory Board Mr. Elfrink plays a key role in helping CyberTech'stransition from Success to Leadership in the areas of Advanced Mapping Analytics andDigital Transformation.
Pursuant to the provisions of Section 149 of the Act Mr. A.V. Rajwade Mr. M.P.Bharucha Mr. Sudhir Joshi Mr. N L Sarda and Mr. Shreepad
Karmalkar the Independent Directors have submitted a declaration that each of themmeets with the criteria of independence as provided in Section 149(6) of the Act and therehas been no change in the circumstances which may affect their status to continue as anindependent director on the Board of Directors of the Company. Considering the expandingbusiness activities of the Company Mr. Ramasubramanian S. Whole-time Director and ChiefFinancial Officer (CFO) will continue only as Whole-time Director of the Companyattending the day to day affairs under supervision guidance and control of the Board ofDirectors of the Company. The Board appointed Mr. Praveen Agarwal as the CFO of theCompany to take over from Mr. Ramasubramanian S. with effect from May 10 2017.Mr. Praveen Agarwal is a Fellow member of the Institute of Chartered Accountants of Indiahaving over 25 years of progressive experience with multinational companies with keyresponsibilities in the field of directing implementing and monitoring critical financefunctions and strategic initiatives.
Presently Mr. Ramasubramanian Sankaran Whole-time Director Mr. Praveen Agarwal ChiefFinancial Officer and Ms. Sarita Leelaramani Company Secretary are the Key ManagerialPersonnel of your Company in accordance with the provisions of sections 2(51) and 203 ofthe Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.
NUMBER OF MEETINGS OF THE BOARD
During the year under review five (05) Board Meetings were held viz. May 19 2016;August 02 2016; August 18 2016; October 27 2016; and January 31 2017. The details ofthe meetings of the Board and its committees are set out in the Corporate GovernanceReport which forms part of this Report. In terms of requirements of Schedule IV of theCompanies Act 2013 a separate meeting of Independent
Directors was also held on March 30 2017 to review the performance of Non-independentDirectors (including the Chairman) the entire Board and quality quantity and timelinesof the flow of information between the Management and the Board.
PERFORMANCE EVALUATION OF DIRECTORS
In terms of the provisions of the Companies Act 2013 read with Rules issued thereunderand the SEBI (LODR) Regulations 2015 the Board of Directors has carried out the annualperformance evaluation of the entire Board Committees and all the Directors based on thecriteria laid down by the Nomination and Remuneration Committee. The criterion forevaluation of the Board performance has been mentioned in the Corporate Governance Report.
The Audit Committee of the Board of Directors of the Company is duly constituted inaccordance with the provisions of Section 177 (8) of the Companies Act 2013 read withRule 6 and 7 of the Companies (Meetings of the Board and its Powers) Rules 2014 andRegulation 18 of SEBI (LODR) Regulations 2015 which consists of the following Members:
|S. No. ||Name ||Designation |
|1 ||Mr. Sudhir Joshi ||Chairman Independent Director |
|2 ||Mr. A. V. Rajwade ||Member Independent Director |
|3 ||Dr. Shreepad Karmalkar ||Member Independent Director |
|4 ||Dr. N.L. Sarda ||Member Independent Director |
All the recommendations of the Audit Committee during the year were accepted by theBoard of Directors of the Company. For further details please refer the CorporateGovernance Report forming part of the Annual Report.
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors has formulated a Whistle Blower Policy incompliance with the provisions of Section 177 (9) and (10) of the Companies Act 2013 andRegulation 22 of the SEBI (LODR) Regulations 2015.
The policy provides for a framework and process whereby concerns can be raised by itsEmployees/ Directors or any other person against any kind of discrimination harassmentvictimization or any other unfair practice being adopted against them. More details on thevigil mechanism and the Whistle Blower Policy of your Company have been outlined in theCorporate Governance Report which forms part of this report. The Whistle Blower Policy ofthe Company is placed on Company's website www.cybertech.com
COMPANY'S POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS
The Company has been following a policy with respect to appointment and remuneration ofDirectors Key Managerial Personnel (KMP) and Senior Management Personnel.
The appointment of Directors on the Board is subject to the recommendation of theNomination and Remuneration Committee (NRC).
Based on the recommendation of the NRC the remuneration of Executive Directorcomprises of Basic Salary Perquisites Allowances and Commission and is in accordancewith the provisions of the Companies Act 2013.
The remuneration of Non-Executive Directors comprises of sitting fees and commission inaccordance with the provisions of Companies Act 2013.
A brief extract of the Remuneration Policy with respect to appointment and remunerationto Directors KMP and Senior Management is provided in the Corporate Governance Report andis also placed on Company's website www.cybertech.com
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134(3)(c) AND SECTION134(5) OF THE COMPANIES ACT 2013
In terms of Section 134(3)(c) of the Companies Act 2013 to the best of theirknowledge and belief and according to the information and explanations obtained by themyour Directors state and confirm that:
i) in the preparation of the annual financial statements for the year ended March 312017 the applicable accounting standards read with the requirements set out underSchedule III to the Act have been followed along with proper explanation relating tomaterial departures if any;
ii) such accounting policies as mentioned in the notes to the Financial Statements forthe year ended March 31 2017 have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and of the profit of theCompany for the year ended on that date;
iii) proper and sufficient care has been taken 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 annual financial statements for the year ended March 31 2017 have beenprepared on a going concern basis;
v) proper internal financial controls are followed by the Company and that suchfinancial controls are adequate and are operating effectively; and vi) proper systems toensure compliance with the provisions of all applicable laws are in place and such systemsare adequate and operating effectively.
M/s. Lodha & Co. Chartered Accountants Mumbai Statutory Auditors (ICAI FirmRegistration No. 301051E) hold office till the conclusion of the 22nd Annual GeneralMeeting of the Company in terms of proviso to sub-section (2) of Section 139 of the Actand the Rules made thereunder. The Board has recommended the appointment of M/s. Bagaria& Co. LLP Chartered Accountants (ICAI Firm Registration No.:113447W/W-100019) as theStatutory Auditors of the Company in their place for a First term of five consecutiveyears from the conclusion of the 22nd Annual General Meeting of the Company scheduled tobe held in the year 2017 till the conclusion of the 27th Annual General Meeting to be heldin the year 2022 for approval of shareholders of the Company based on the recommendationof the Audit Committee.
The Auditors' Reports on Standalone (SFS) and Consolidated Financial Statements (CFS)for the financial year 2016-17 do not contain any qualification reservation or adverseremark.
Pursuant to the provisions of Section 138 of the Companies Act 2013 read with Rule 13of Companies (Accounts) Rules 2014 the Board of Directors had appointed M/s. DesaiAssociates Chartered Accountants (ICAI Firm Registration No. 102286W) as InternalAuditors of the Company and their reports were reviewed by the Audit Committee and theBoard on periodical basis.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board ofDirectors had appointed M/s. S. Anantha & Co. Company Secretaries Mumbai as
Secretarial Auditors to conduct the Secretarial Audit of the Company for financialyear 2016-17. The Secretarial Audit Report is annexed herewith as Annexure IV tothis Report.
The Secretarial Audit Report does not contain any qualification reservationdisclaimer or adverse remark.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to the requirement of Regulation 25(7) of the SEBI (LODR) Regulations 2015the Company needs to formally arrange Familiarization Programme for Independent Directorsto familiarize them with their role rights and responsibility as Directors the workingof the Company nature of the industry in which the Company operates business model etc.The details are mentioned in the Report on Corporate Governance which forms part of thisannual report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT- 9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as Annexure V tothis Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company continues to believe in operating and conducting its business in a sociallyresponsible way. This belief forms the core of the CSR policy of the Company to focus onholistic development of its host community and immediate social and environmentalsurroundings qualitatively. Hence in accordance with the requirements of Section 135 ofthe Companies Act 2013 your Company has constituted a Corporate Social ResponsibilityCommittee (CSR Committee). The composition and terms of reference of the CSRCommittee are provided in Corporate Governance Report. The Company has framed its CSRpolicy which is available at www.cybertech.com. Annual Report on CSR activities asrequired under the Companies (Corporate Social Responsibility Policy) Rules 2014 has beenappended as Annexure VI to this report. The composition of the CSRCommittee is also provided in Annexure VI. During the year under review theCompany has spent Rs. 12.09 Lakhs towards Corporate Social Responsibility.
INTERNAL FINANCIAL CONTROLS WITH RESPECT TO THE FINANCIAL STATEMENTS
The Company maintains adequate internal control system and procedures commensurate withits size and nature of operations. The internal control systems are designed to provide areasonable assurance over reliability in financial reporting ensure appropriateauthorization of transactions safeguarding the assets of the Company and prevent misuse/losses and legal compliances. The comprehensive Internal Financial Control policy alongwith the effective Internal Audit System helps the Company in achieving orderly ande_cient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information.
The internal control system includes a well defined delegation of authority and acomprehensive Management Information System coupled with quarterly reviews of operationaland financial performance a well structured budgeting process with regular monitoring ofexpenses and Internal audit.
The Internal Audit reports are periodically reviewed by the management and the AuditCommittee and necessary improvements are undertaken if required.
PARTICULARS OF EMPLOYEES
Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are also provided in Annexure VII of the Report.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended a statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in the said rules are provided in the Reportand forms part of this Report. However having regard to the provisions of the _rstproviso to Section 136(1) of the Act and as advised the Annual Report excluding theaforesaid information is being sent to the members of the Company as the said informationis available for inspection at the registered office of the Company during working hoursand any member interested in obtaining such information may write to the Company Secretaryand the same will be furnished on request.
SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS WHICHIMPACT THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
The Company had filed a Writ Petition with the judicature of Hon'ble Bombay High Court(Nagpur Bench) on April 20 2017 challenging the Order passed against the Company by theCommissioner of Amravati Municipal Corporation Maharashtra (AMC) cancelling the ongoingwork contract of the Company and the related issues thereof. The Hon'ble Bombay High Court(Nagpur Bench) admitted the writ petition filed by the Company and passed a stay order infavor of the Company against the impugned Order passed by the Amravati MunicipalCorporation.
Further the High Court has also directed the Company to approach the lower courts forappropriate claims. The Company is in process of taking further legal action(s) againstAMC.
EMPLOYEES STOCK OPTION PLAN (ESOP)
The position of ESOPs granted and exercised during the year is as under:
|Number of options granted: ||250000 |
|Pricing formula: ||As provided in policy |
|Options vested: ||A total of 322500 options vested during the year. |
|Options exercised and number of shares arising out of such exercise: ||A total of 207000 options exercised during the year. |
|Options lapsed: ||During the year NIL options lapsed out of options granted. |
|Variations in terms of options: ||There was no variation in the terms of options. |
|Total Number of options in force: ||1783000 options were in force as on 31.3.2017 |
Method of Accounting
The Company has elected to use the intrinsic value method to account for thecompensation cost of stock options to employees of the Company Intrinsic value is theamount by which the quoted market price of the underlying share as on the date of grantexceeds the exercise price of the option:
Summary of the options outstanding under the Employees Stock Option Plan (ESOP):
| ||As at March 31 2017 ||As at March 31 2016 |
| ||Options ||Weighted Average Exercise Price (Rs.) ||Options ||Weighted Average Exercise Price (Rs.) |
|Options outstanding at beginning of the year ||1740000 ||28.32 ||1025000 ||20.73 |
|Granted during the year ||250000 ||89.35 ||840000 ||38.05 |
|Exercised during the year ||207000 ||16.72 ||75000 ||13.46 |
|Forfeited/lapsed during the year ||NIL ||NIL ||50000 ||17.95 |
|Options outstanding at end of year ||1783000 ||38.22 ||1740000 ||28.32 |
|Vested options pending exercise ||678000 ||24.69 ||562500 ||18.79 |
The following summarizes information about stock options outstanding:
| || || ||A s at March 31 2017 |
|Range of Exercise Price ||Number of shares arising out of options ||Weighted average remaining life (Years) ||Weighted average Exercise Price (Rs.) |
|` 10 to Rs. 15 ||268000 ||5 ||11.34 |
|` 16 to Rs. 45 ||1265000 ||5 ||33.81 |
|` 46 to Rs. 90 ||250000 ||7 ||89.35 |
| || || ||As at March 31 2016 |
|Range of Exercise Price ||Number of shares arising out of options ||Weighted average remaining life (Years) ||Weighted average Exercise Price (Rs.) |
|` 10 to Rs. 15 ||300000 ||6 ||11.34 |
|` 16 to Rs. 45 ||1440000 ||6 ||31.85 |
Fair Value methodology for the option:
The fair value of options used to compute net income and earnings per equity share havebeen estimated on the dates of each grant within the range of Rs. 10/- to Rs. 90/- usingthe Black-Scholes pricing model. The Company estimated the volatility based on thehistorical share prices. The various assumptions considered in the pricing model for theoptions granted under ESOP are:
| ||March 31 2017 ||March 31 2016 |
|Dividend yield ||0-10% ||0-10% |
|Expected volatility ||10%-20% ||10%-20% |
|Risk-free interest rate ||6.46% - 6.65% ||6.46% - 6.65% |
|Expected life of option ||0 7 yrs ||0 7 yrs |
Impact of Fair value method on Net Profit and EPS
Had the compensation cost for the Company's Stock Option Plan outstanding beendetermined based on the fair value approach the Company's net profit income and earningsper share would have been as indicated below:
|Particulars ||For the year ended March 31 2017 ||For the year ended March 31 2016 |
| ||(Rs.) ||(Rs.) |
|Profit attributable to Equity Shareholders ||102201524 ||26743609 |
|Less: Stock-based compensation expense determined under fair value based method ||2614248 ||1942380 |
|Net Profit ||99587276 ||24801229 |
|Earnings per share || || |
|Basic : || || |
|As reported ||3.78 ||1.00 |
|Under fair value method ||3.69 ||0.80 |
|Diluted : || || |
|As reported ||3.67 ||0.98 |
|Under fair value method ||3.57 ||0.78 |
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year underreview or the said items are not applicable to the Company:
1. Cost Audit;
2. Issue of equity shares with differential rights as to dividend voting or otherwise;and
3. There are no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year 2016-17 and the dateof this report except the one mentioned above in connection with the Order passed by theAmravati Municipal Corporation.
ANNEXURES FORMING PART OF BOARD'S REPORT
The Annexures referred to in this Report and other information which are required to bedisclosed are annexed herewith and form part of this Report:
I AOC-1 Particulars of Subsidiary
III Statement showing conservation of energy technology absorption foreignexchange earnings and outgo
IV Secretarial Audit Report
V MGT 9 Extract of the Annual Return
VI Corporate Social Responsibility Report
VII Information required under the provisions of Section 197(12) of Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014
Statements in the Boards' Report and the Management Discussion & Analysis Reportdescribing the Company's objectives expectations or forecasts may be forward-lookingwithin the meaning of applicable securities laws and regulations. Actual results maydiffer materially from those expressed in the statement. Important factors that couldin_uence the Company's operations include global and domestic demand and supply conditionsof Information Technology related services changes in government regulations tax lawseconomic developments within the country and other factors such as litigation andindustrial relations.
Your Directors wish to place on record their appreciation and sincere gratitude to thevarious departments of the Central and State Government(s) Company's Bankers clientsmedia and business constituents for their valuable assistance and support. The Directorsalso acknowledge the continued support received from investors and shareholders and theconfidence reposed by them. The Directors also record their appreciation for the sincereand dedicated services rendered by all the employees of the Company.
For and on behalf of the Board of Directors
CyberTech Systems and Software Ltd.
Place: Trevose PA USA
Date : August 23 2017