The Directors are pleased to present their Twenty- third Annual Report on the businessand operations of Hexaware Technologies Limited (hereafter referred to as TheCompany) together with audited financial statements for the financial year endedDecember 31 2015.
| ||FY 2015 ||FY 2014 |
|Income from Operations ||485.47 ||422.40 |
|EBITDA before Employee stock option compensations cost ||86.59 ||78.09 |
|EBITDA after Employee stock option compensations cost ||83.32 ||78.09 |
|Profit from Operations * ||75.82 ||70.89 |
|Profit before Tax and exceptional item ||77.96 ||69.49 |
|Profit before Tax ||77.96 ||68.43 |
|Profit after Tax ||60.65 ||52.38 |
| ||FY 2015 ||FY 2014 |
|Income from Operations ||31235.23 ||25816.77 |
|EBITDA before Employee stock option compensations cost ||5569.31 ||4775.60 |
|EBITDA after Employee stock option compensations cost ||5358.21 ||4775.60 |
|Profit from Operations * ||4875.74 ||4335.88 |
|Add: Exchange Rate Gain / (Loss) (net) ||81.40 ||(307.84) |
|Less: Interest ||1.19 ||8.98 |
|Add: Other Income ||90.17 ||227.76 |
|Profit before Tax and exceptional items ||5046.12 ||4246.82 |
|Less: Exceptional items ||- ||65.63 |
|Profit before Tax ||5046.12 ||4181.19 |
|Less: Provision for Taxation ||1114.02 ||979.67 |
|Profit after Tax ||3932.10 ||3201.52 |
* excludes Exceptional items Exchange Rate Difference Interest Other Income andProvision for Taxation
|India Operations: ||FY 2015 ||FY 2014 |
|Income from Operations ||12935.97 ||11545.56 |
|EBITDA ||4312.32 ||3918.89 |
|Profit from Operations * ||3903.96 ||3527.20 |
|Less: Exchange Rate (Gain) / Loss (Net) ||(73.53) ||295.89 |
|Less: Interest ||0.29 ||8.35 |
|Add: Other Income ||103.36 ||594.80 |
|Profit before Tax ||4080.56 ||3817.76 |
|Less: Provision for Taxation ||750.85 ||633.80 |
|Profit after Tax ||3329.71 ||3183.96 |
|Add : Balance brought forward from previous year ||2862.59 ||2703.83 |
|Add: On merger of Caliber Point Business Solutions Limited ||- ||352.91 |
|Add: Transfer from Special Economic Zone Reinvestment Reserve ||124.62 ||118.93 |
|Balance available for appropriation ||6316.92 ||6359.63 |
|Appropriation || || |
|Interim Dividend ||2608.16 ||2840.97 |
|Tax on Dividends ||528.76 ||479.69 |
|Transfer to Special Economic Zone Reinvestment Reserve ||172.75 ||176.38 |
|Balance carried to Balance Sheet ||3007.25 ||2862.59 |
Results of Operations
a) Global operations:
Income from operations increased to Rs. 31235.23 million in 2015 from Rs. 25816.77million in 2014 growth of 21.0%. The growth in Dollar terms was 14.9% reaching USD485.47 million. Revenue in constant currency was USD 496.8 million growth of 17.6%.Growth was driven largely by volume increase aided by increased realized bill rates andonsite mix however there was an adverse impact of cross currency. Profit from Operations(profit before Exchange rate difference Interest Other income and Provision fortaxation) was at Rs. 4875.74 million in 2015 as against Rs. 4335.88 million in 2014growth of 12.5%. The growth in profit from operations without considering Employee stockoption compensations cost under long term incentive plan was 17.3%. During the year theProfit after tax stood at Rs. 3932.10 million in 2015 as compared to a profit of Rs.3201.52 million in 2014 growth of 22.8%. PAT margins in Rupee terms were at 12.6% in2015 compared to 12.4% in 2014.
Material changes from end of financial year till date of report
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report other than those disclosed inthe financial statements.
Companys major achievements in 2015
Over the last year the primary objective was to establish momentum in growth. TheCompany was able to beat the 12 to 14% growth Guidance of NASSCOM. The growth in revenuewas 21% in Rupee terms and 14.9% in USD terms compared to 2014.
The Company has also established good momentum for next year with new booking from newclients at $120 million TCV for the year and that would give us confidence about growthfor 2016 and beyond.
In USD terms EBITDA before ESOP cost grew by 10.9% after ESOP by 6.7% and PAT grew by15.8% surpassing revenue growth.
EPS after the ESOP dilution grew at little over 22%.
CLIENT CONTRIBUTION TO REVENUE
| ||ANNUAL GROWTH |
|Top 5 ||31.5% |
|Top 10 ||23.5% |
|Top 20 ||16.2% |
During the year 2015 37 new clients were added. We continued to improve on depth ofcustomer relationships. From Q4-2014 last year to Q4-2015 the top of the pyramid hasbulked up. The number of clients in the $30 million to $50 million bucket has gone fromone to three. Essentially clients have moved from the $20 million to $30 million bucketup at least two of them hopped into the $30 million to $50 million bucket.
b) India operations:
In the year 2015 the revenue of the standalone legal entity increased by 12% to Rs.12935.97 million in comparison with revenue of Rs. 11545.56 million in the previousyear. The net profit after tax was Rs. 3329.71 million as compared to Rs. 3183.96million in 2014.
The paid-up Share Capital of the Company as on December 31 2015 was Rs. 603.13 millioncomprising of 301562897 Equity Shares of Rs. 2/- each. During the year 639425 shareswere issued under different ESOP schemes. The market capitalization of the Company as onDecember 31 2015 was at Rs. 73400 million (USD 1110 million). The marketcapitalization is calculated on the basis of closing price of Rs. 243.40 on TheNational Stock Exchange and the closing exchange rate of 1 USD = Rs. 66.15 as of December31 2015.
The balance in the Statement of Profit and Loss after adjusting the appropriations forthe year is Rs. 3007.25 million.
Forex Mark-To-Market: The year-end Hedging Reserve stood at gain of Rs. 15.96 millionas compared to loss of Rs. 253.01 million in the previous year. This is in accordance withthe recognition and measurement principles of accounting of forward exchange contracts andderivative contracts of Accounting Standard (AS)-30.
The Company recorded Rs. 232.66 Mn in Employee stock options outstanding a reservebeing amortisation of compensation cost of RSUs granted.
There was no transfer to General reserve during the year.
In summary total reserves stood at Rs. 10496.39 million including Rs. 4772.37million of Securities Premium account.
During the year 2015 the Company paid four interim dividends on equity shares Q1 Rs. 2.00 (100%) Q2 Rs. 2.00 (100%) Q3 Rs. 2.25 (112.5%) and Q4 Rs. 2.40 (120%). This brings the interim dividends for the four quarters of 2015 toRs. 8.65 per share (432.5%).
The Board of Directors have not recommended payment of any final dividend and interimdividends as aforesaid be considered as final. The total cash outgo for dividend declaredin 2015 on account of interim dividend & tax thereon amounts to Rs. 3136.34 million.
The break-up of dividend is as under:
| ||Q1 ||Q2 ||Q3 ||Q4 ||Total |
|Dividend ||602.77 ||602.76 ||678.39 ||723.75 ||2607.67 |
|Tax ||120.52 ||122.71 ||138.10 ||147.34 ||528.67 |
|Total ||723.29 ||725.47 ||816.49 ||871.09 ||3136.34 |
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. Pleaserefer note no. 9 to12 and note no. 15 of Standalone Financial Statements.
Subsidiaries and Associates
During the year 2015 Company has formed two new subsidiary companies one in China andthe other in Russia. The total amount of initial investment in these two subsidiaries aregiven below:
|Sr. No. ||Name of Subsidiary ||Rs. Million |
|1 ||Guangzhou Hexaware Information Technologies Company Limited China ||1.66 |
|2 ||Hexaware Technologies LLC Russia ||80.01 |
During the year FocusFrame Europe BV Netherlands a step down subsidiary was closedw.e.f. March 31 2015
Further the Company has also granted additional loan aggregating Rs. 154.50 million towholly owned subsidiary Risk Technologies International Limited for the development of SEZat Hinjewadi Pune during the year.
In accordance with Section 129(3) of the Companies Act 2013 consolidated financialstatements of the Company and all its subsidiaries forms part of the Annual Report.Further a statement containing the salient features of the financial statement of oursubsidiaries in the prescribed format AOC - 1 is appended as Annexure 1 to theBoards report. The statement also provides the details of performance financialpositions of each of the subsidiaries.
In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited financial statements of each of its subsidiaries are available on ourwebsite www.hexaware.com. These documents will also be available for inspection duringbusiness hours at the registered office of the Company.
Hexawares overarching theme is of Shrink IT Grow Digital that allows clients tosignificantly shrink commodity IT spend while partnering with them for their digitaltransformation journey.
As per industry predictions most clients spend much more than they should oncommodity IT services. Hexaware has positioned itself as the go-to service provider tohelp clients reduce their commodity IT expenditure through the "Shrink IT"proposition with the focus on reduction of quantity through intelligence drivenautomation.
The Company has identified certain specific set of levers to enable reduction ofquantity by investing significantly in creating a platform centric approach to deliver ITOServices for both Application and Infrastructure Management services and embracingRobotic Process Automation.
Client decisions are increasingly being driven by the disruptive force of digitaltechnology. Hexaware is at the forefront in enabling clients to embrace digitization bychanging the way they interact with their end customers employees and supply chaintransforming consumer experiences and improving efficiency of business processes.
The Company intends to continue to invest in digital offering and provide value to itsclients by harnessing the power of data to derive real-time actionable insightsre-engineering business processes modernizing application and infrastructure landscapesand building systems of engagement.
A tangible signature of the Companys growth aspirations is its investment ininfrastructure. The Company invested Rs. 1366.69 million in 2015 for expanding itsphysical and technical (IT) infrastructure globally. Primarily the investment is in SEZdevelopment i.e. Phase 2 of facility in Siruseri Chennai and phase 1 of facility inHinjewadi Pune. The investments are made with an intent to serve the long term need andto provide quality support for its global delivery operations and global sales.
India based Global Delivery Centers
The Company has three Offshore Development Centers (ODCs) at Millennium Business Parkin Mahape Navi Mumbai. One of these is the registered office of the Company. There are1630 employees working from these centers having capacity of 1650 employees. TheCompanys BPS arm operates out of another building in the same complex with 877employees - providing BPS services to its global clients.
There are around 4295 employees working from the Companys 27 acre campus inChennai. This campus houses all employee-friendly amenities like recreation centerlibrary and gymnasium facilities offering plenty of avenues for relaxation andrejuvenation as well as knowledge enhancement through Hexavarsity theCompanys in- house Learning and Development University. The Companys Chennai"green campus" conforms to eco-friendly norms and regulations like optimal useof solar energy use of eco- friendly building materials and a judicious spread oflandscaped spaces around seating facilities across various levels. Currently seatingcapacity is expanded to 6000 seats in Phase.
The Company has started with construction for Phase 2 with approximately 3300 seats.
The BPS arm also operates out of another facility in Chennai with around 777 employeesworking from the facility.
In Pune the Company has 2 ODCs on lease in Hinjewadi Pune one being an SEZ inRajiv Gandhi InfoTech Park . On a combined basis 495 employees operate from theseODCs. The Company commenced construction of new facility SEZ developmentcentre through its wholly owned subsidiary Risk Technology International LimitedThe first phase with seating capacity of 1900 is expected to be completed in later halfof 2016.
The Company owns 20 acres of land in MIHAN SEZ Nagpur a tier II city. This facilityis currently operational with around 221 professionals and has seating capacity toaccommodate 900 professionals.
This facility is in the Indias IT capital of Bengaluru has capacity of 400 seats& the number of employees seated at office is around 302. This facility mainly housesthe delivery operations for a major global client and is now being staffed with seniormanagerial roles in line with our increasing focus in solving their business-criticalchallenges.
Hexaware BPS arm has a facility in Coimbatore with 272 employees working from thefacility.
Overseas Global Delivery Centers
New Jersey (USA):
The Company has an established Global Delivery Centre (GDC) at Secaucus New Jersey(USA) for a few years now to cater specifically to its American clients. While thisproximity centre offers benefits such as the same time zone direct communication andenables convenient management oversight it also further enables the clients to outsourcemission-critical tasks and share secure information that would have otherwise not beenshipped beyond the shores.
Alpharetta GA (USA):
The Company has Global Delivery Centre (GDC) at Alpharetta and Sandy Springs in thestate of Georgia USA with employees strength of around 280.
Herndon VA (USA):
The Company has Global Delivery Centre (GDC) at Herndon in the state of Virginia USAwith employees strength of around 100.
The Company has a strong presence in Mexico with a near-shore Delivery Centre atSaltillo with employees strength of around 308. While Mexico offers costcompetitiveness compared to the United States of America the country also providesimmense benefits in the form of same time zone enables immediate response and access to avast talent pool and an untapped emerging market.
The Company intends to leverage its near shore Delivery Centre to cater to severalglobal clients as an addition to the other existing options of continuing operations inthe USA or in the Companys locations in India.
The Company has center in Russia for its BPS operation which has 25 employees.
The cash generated from operations in 2015 was Rs. 3931.96 million. The Companyhas redeemed money from Mutual Fund amounting to Rs. 1441.63 million (net). The Companyhas invested Rs. 1366.69 million in fixed assets mainly for new development centre inChennai and Pune. During the year the Company paid dividend including dividend tax of Rs.3172.17 million. The Company has received Rs. 31.27 million from issue of shares. As ofDecember 31 the cash position of the Company was Rs. 4018.55 million equivalent in USD60.74 million. Including the Mutual Fund investments (cash equivalent) the total cash& bank balance was at Rs. 4427.88 million equivalent USD 66.93 million.
Human Resource Capital
The Company recognizes that "Human Capital" is the most valuable asset andits focus is to have more passionate employees. To ensure good human resources managementat Hexaware the Company focuses on all aspects of the employee lifecycle. The Company hasa robust and inclusive ecosystem in place which encourages meritocracy innovation andexcellence.
The Company continues to grow its footprints globally with diverse talent base of11375 employees. The net headcount has increased by adding 1359 new professionals as ofDecember 31 2015 the Company is focused towards attracting and retaining high caliberemployees through sound and resilient human resource management process. The Companyconsciously enhanced gender diversity with 28% of the employees being women.
Recognising the fact that the workforce lives your brand the HR team has embarked on amajor branding exercise to build an engaging organization. For Making Hexaware a GreatPlace to work the Company has launched Employee Assistance Program for employees theCompany has tied up with 1to1help.net counseling service provider to provide professionalcounseling services to the employees.
The Company is focusing on HR analytics for workforce analysis aiming towardsintroducing predictive analysis that will drive workforce planning talent management andretention.
The employee engagement platform is inclusive and empowering. It connects the employeeswith leaders and peers. Forums such as Open Houses Happy Hours and Grow More Round TableSeries provide interactive platforms for sharing information and feedback. Thisinitiative has not only helped to manage the diversified workforce around the globe buthas also kept the employees motivated.
The Company has embarked on a journey to create a passionate environment towards workand make Hexaware a great place to work. The Company worked with a leading agency toconduct a survey and intend to work closely with the delivery leaders to work onidentified areas which would go a long way to bring employee satisfaction and enhance workpassion.
Talent Management Asset Development
The Company believes that its employees are the heart of the organization; hence alarge part of the management focus is to care and support its employees. The Company isfuture focused and is fully aware about what it needs from its talent. A significantportion of senior management focus is invested in engaging with the employees. The Companystrengthens its talent pool by providing employees with growth and talent enhancementopportunities. The Internal Job Postings are getting published on our internal portalHexplore thereby providing the view of all the open positions in the Company. It believesthat performance needs to be quantified and hence the Performance Management System isrevamped to be more metrics driven. Also the deserving & capable employees needfaster career growth and to fulfil this Company has introduced Potential Appraisal as wellin the current Performance Management System. The Company also believes that employeesstick to the organisation to build career. Hexawares new Career Management frameworkwill help in defining career pillars tracks and bands for employees to identify theirrole and the expectation from the new CMS System. The new CMS system will also help todefine entrant criterias for a role and job description to help individuals performat their best. The New CMS system will also help individuals to make long term career planand the organisation would enable them to achieve their career objective by varioustraining program.
Hexaware is always looking forward to grow in an environment where technology changesare inevitable. The organization values knowledge & technology and is ready to adoptthe changes from time to time. Keeping this aspect in mind the organization is alwaysready to invest in enriching the knowledge and skills of its young & energeticconsultants. The organization is also interested in retaining strong technically qualifiedand result oriented consultants who can sustain the challenges in the fast growing globalmarket environment.
Hexaware is hence committed to invest in the future growth of its employees byproviding higher education to its employees through a learning platform to enhance theirskills knowledge and also provide an opportunity to "Learn while Earn". TheCompany has partnered with BITS Pilani to provide the M.Tech (Software Engineer) courseto its employees.
The Company is future focused and is fully aware about what it needs from its talent.It has a systematic structured approach of attracting identifying developingengaging/retaining and deploying of those individuals with high potential who are ofparticular value to an organization either in view of their high potential for the futureor because they are fulfilling business/ operation critical roles.
The Company has a pipelined approach of identifying future talent needed by theorganization also with the Planned Development Programs nurturing them for future toppositions. The HR/Learning and Development team provides clarity about expectations andthe differentiated capabilities required at different levels also helping them to work onthe identified skill gap with some prominent development programs at each level.
The Company continued its focus on employee motivation through revamping the Rewardsand recognition system incorporating more categories to encourage talent. Most importantlythis is devised along with delivery managers to make it relevant and appropriate. TheCompany focuses on talent management through interventions like smooth process (fromHiring to retention) managing the programs as per diversity of the work force andsupporting high performers with an effective talent management system.
Hexawares impressive suite of software solutions features several uniqueadvantages that ensure high quality expertise and cost efficiency. It gives holisticsolution for customer needs. It has expertise to help at all stages of IT initiatives-whether they are in small midsize or large global enterprise. It can create a tailoredroadmap complete end to end solution combining both technology and businessunderstanding. These include:
Hexaware has an enviable track record in building operating and delivering solutionsfor large offshore development centers (ODC). The Company offers proven business model forcustomers looking to exploit delivery capabilities across the globe. The models provide aframework for outsourcing large application and product management services and providethe customer with economies of scope and scale.
Leadership in niche areas
Hexaware has demonstrated leadership and expertise in focus areas.
The Company is pioneer in managing/ servicing asset management companies.
The Company is amongst the leading IT solution providers for the AirlinesIndustry.
The Company is also fast emerging among the top Indian IT services provider inGermany.
The enterprise class solution offerings combined with best-of- class enterpriseintegration skills are our key differentiators against competitors.
Focus versus generic strategy
In alignment with its focus on select areas the Companys investment and focus isdedicated on growing to attain leadership in each sector. This has helped the Company tocompete and win in these areas against much larger and more established vendors.
Another key differentiator is the emphasis on bringing in domain experts in focusedniche areas and has been continuously reinventing itself. Company has innovation lab thathouses well defined tools accelerators and innovations in new products. This helps inboosting the productivity and reducing project development time and cost.
Our size-the right size
Being a right-sized Company Hexaware has the ability to demonstrate adaptability andflexibility in its operations to suit the dynamic needs of its customers. The Company hasdemonstrated capability in meeting resource and infrastructure requirements for largeprojects at the same time remaining small enough for relationship comfort.
The Company has invested in building significant onsite delivery and consultingcapability to absorb the process overheads offshore by locating its businesspractice leaders account managers and top management team at onsite. This structureenables quicker decision-making and ease of access to customers.
Innovative & Flexible Contract Mechanism
As a mid-size vendor Hexaware provides a great deal of flexibility in both thecontractual and delivery models. This includes using innovative pricing and payment modelsthat meet the unique expectations of its clients as also optimizing its SEI CMMI Level 5processes to meet specific customer requirements. Working relationships stretch from fixedtime/ fixed fee to time and material.
Hexaware operates on a global platform working with 25+ Fortune 500 customers in NorthAmerica Europe and Asia Pacific. This gives a unique understanding and access to not onlythe business practices but also the cultural and work-ethics in different regions andindustry sectors.
Process and Methodologies
Hexaware has institutionalised a number of processes and innovative methodologieswhich has built in risk mitigation strategies and cost efficiencies. Its approachaddresses the key issues of transition management and operational efficiency improvement.
Adoption of International Standards
Hexaware has adopted and implemented the following international Standards andframeworks across its global development centers:
ISO 9001-2008 & Tick ITplus
ISO 27001:2013 333 ISO 20000-1:2011
CMMI DEV & SVC Version 1.3 Level 5
ISAE3402 and SSAE16 SOC-1 Type II
Hexawares information security management system preserves the confidentialityintegrity and availability of information. We perform risk management to identify manageand reduce a range of threats to which information is subjected. Stringent informationsecurity measures are in place in the Company to ensure business continuity and to reducebusiness damage by preventing and minimizing the impact of security incidents. Securitycontrols are regularly monitored and improved up on thereby giving confidence to ourcustomers to do business with us.
The Company has introduced and improved upon best-of-breed industry practices andstandards thus improving our delivery capability. The quality team is aligned to thebusiness verticals and takes accountability for optimizing the processes in that verticalwhich results in improving efficiency and effectiveness of delivery. We capture andaugment the knowledge about the customers business needs which helps in knowledgeretention and to develop a deep understanding of customer environment. This has resultedin high levels of customer delight and repeat business. We integrate various toolsdeveloped in-house seamlessly with our standardized delivery processes. The Company has aframework for crowd-sourcing of ideas which promotes innovation in the Company andprovides a direct business benefit to the customer.
Client Satisfation Survey
We believe that client satisfaction is a key driver and indicator of future revenue ofthe Company. According to a Company-commissioned study conducted by Feedback Consultingan Independent market research firm the Company achieved a composite client satisfactionscore on a scale of -100 to 100 of 66.4 in fiscal 2015 as compared to 53.0 in fiscal2014 and an industry average of 57-60 in fiscal 2015.
The customers / clients have benefited as a result of fewer defects reduction in cycletime and improved delivery capabilities. Hexaware has provided value-additions throughimprovement in the performance of the systems that have been outsourced a reduction inthe problems and failures and improved stability. This has resulted in high levels ofcustomer satisfaction and repeat business. Implementing the processes has trained theorganization and people to be methodical and process-driven. The Company has introducedand improved upon best-of-breed industry practices and standards and thereby improved ourdelivery capability. Focus on quality has led to lower costs and improved efficiencywithin the organization.
Company focused on Corporate Governance
The Company is committed to the high standards of transparency openness probity andaccountability. In working to ensure compliance with corporate governance lawsregulations and policies Company is focusing on building business processes andinfrastructures that not only ensure compliance but also increase companys capacityfor efficiency agility and responsive management. The push today is towards putting intoplace a combination of internal controls explicit business processes and systems forcorporate governance that can also build business value.
The Company firmly believes that it is only through good corporate governance practicescan we achieve sustainable growth of the organization and create long term shareholdervalue. Hence our endeavor has always been to go beyond the letter of the law and observecorporate governance practices in the true spirit of the law with high levels ofaccountability transparency and integrity.
The Company has two "Big 4" firms as auditors - Deloitte Haskins & SellsLLP as its Statutory Auditors and KPMG as its Internal Auditors. Ernst & Young are thetax advisors of the Company. The Companys Board of Directors comprises eminentprofessionals in their respective fields with rich experience in policy-making andstrategy formulation. All the major committees of the Board are headed by IndependentDirectors and the Company has followed Cadbury Committees recommendation of havingtwo different individuals as Chairman & CEO for several years. The Company was thewinner of the prestigious Golden Peacock Award for excellence in Corporate Governance forthe year 2011 and 2015 and won the Special Commendation in the year 2009 and 2013.
Awards & Recognition:
The Company won the following awards / recognition in 2015:
Hexaware has been declared as the Winner of Golden Peacock Award forExcellence in Corporate Governance for the year 2015 by the Golden Peacock AwardsSecretariat -Institute of Directors.
Hexaware was recognized as the "100 MOST TALENTED GLOBAL HR LEADERS "during World HRD Congress held by CHROASIA.
Hexaware received the NASSCOM Recognition for Innovative Application ofAnalytics for Business Solutions 2015.
Hexaware awarded the Yuva Gratitude Award 2015 for contribution towards CSRactivities.
Hexaware has been mentioned in different Gartner reports during 2015. Thesereports are titled:
1. "Market Trends: SAP Service Provider Opportunities in a Post modern ERPWorld"
2. "Market Guide for Midmarket SAP Service Providers"
3. "The Gartner CRM Vendor Guide 2015"
4. "Market Guide for Higher Education Student Information Systems"
5. "Market Share: IT Services 2014"
6. Market Trends: Digital Business Awakens Optimism as New Growth Opportunities Arisein Western European Application Service Market"
7. "IT Services Contracts Monthly Round up March 2015"
8. "Market Guide for Business Intelligence Service Providers Asia / Pacific andJapan"
9. "IT Services Contracts Monthly Round up April 2015"
10. "Hype Cycle for Application Services 2015" dated July 16 2015
11. "Hype Cycle for Business Process Services and Outsourcing 2015" datedJuly 29 2015
12. "Market Guide for BI and Analytics Service Providers" dated August 062015
13. "Innovation Insight for Digital Insurance Services in the P&C and LifeInsurance Market" dated August 27 2015
An advanced analytics solution from the Company has been recognized among Top 50Solutions in Analytics Excellence by NASSCOM (National Association of Software andServices Companies).
Hexaware has been mentioned as one of the notable application development dealsdue to expire in the next 6 months in the Ovum report titled "IT Services ContractsMonthly Roundup March 2015" dated May 05 2015 by analyst Mohammed Habeebuddin.
Hexaware has been mentioned as one of the Indias centric service providerof Digital Business in the Gartner report titled "Market Trends: Digital BusinessAwakens Optimism as New Growth Opportunities Arise in Western European Application ServiceMarket" dated May 06 2015 by analysts Susanne Matson Gilbert van der Heiden.
Hexaware has been mentioned as one of the India-based Business Intelligenceservice providers in the Gartner report titled "Market Guide for BusinessIntelligence Service Providers Asia/Pacific and Japan" dated May 27 2015 byanalysts Twiggy Lo and Daniel Yuen.
Hexaware has been mentioned in the Ovum report titled "India IT ServicesVendor Quarterly 2Q15" dated August 31 2015 by analyst Hansa Iyengar.
Hexaware has been mentioned as one of the major contenders in the Everest Reporttitled "Multi-Process Human Resource Outsourcing (MPHRO) ServiceProviders Assessment" by analysts Rajesh Ranjan Arkadev Basakand Harsh K.
Hexawares revenue has been mentioned to have recorded a 14% jumpYear-on-Year in the Ovum report titled "India IT Services Vendor Quarterly3Q15" dated December 08 2015 by analyst Hansa Iyengar.
Hexaware has been mentioned as one of the IT service providers having CriticalCapabilities for SAP Application Management Services Worldwide dated October 15 2015 byanalysts Gilbert van der Heiden Kris Doering Frances Karamouzis.
Hexaware has been mentioned as one of the IT service providers having CriticalCapabilities for Oracle Application Management Services Worldwide dated October 15 2015by analysts Gilbert van der Heiden Kris Doering Frances Karamouzis.
Hexaware has been mentioned as one of the threeApplication-management-service-centric providers of
Workday in the Gartner report titled "Market Guide for Workday ServiceProviders" dated November 19 2015 by analysts Susan Tan Frances Karamouz is andDean Blackmore.
The Company has well defined Enterprise-wide Risk Management (ERM) framework in place.The primary objective of ERM function is to implement a framework that augments riskresponse decisions and reduce surprises. ERM programme involves risk identificationassessment and risk mitigation planning for strategic operational financial andcompliance related risks across various levels of the organization.
The Board of Directors and Senior Management team recurrently assess the operations andoperating environment to identify potential risks and take necessary mitigation actions.The Banking Investments & Operations and Forex Committee oversees activitiesrelated to Foreign Exchange matters and the Banking Investments & Operationsrespectively.
Key elements of risks:
1. Global Economic Situation: The economic environment around the world is showing signof growth. For IT service Industry the demand momentum is looking positive. The ITspending is increasing however there are still pockets of global markets where there arestill uncertainties. The Company on its part is helping existing customers driveefficiencies demonstrate value addition.
2. Business Model Redundancy: The new technologies such as cloud big data mobilesmart devices and social media are impacting the behavior of the consumers. The Companycontinuously scan business environment for early detection of emerging trend.
3. Cost pressure: Increasing employee cost and operating expenses may create pressureon margin. The Company is focusing on improving productivity and put up framework for costmanagement.
4. Regulatory risks: Any change in regulations in any of the jurisdiction of itsoperations may hamper growth and cause decline in revenue.
5. Delivery and operational risk: The growth and success depends on its ability tohire attract motivate retain and train highly- skilled technology personnel. Failure tocomplete fixed price fixed time framed or transaction based pricing contracts withinbudget and on time may significantly affect our profitability.
The risk faced by the Company is discussed in detail in the Management Discussion andAnalysis section of this Annual Report.
The Company has sufficiently insured itself under various insurance policies tomitigate risks arising from third party or customer claims property/casualty etc.
Errors & Omissions / General Liability:
In a global services business customers insist on taking suitable Insurance coversincluding Errors & Omission (Professional Indemnity) and Commercial General Liability.The Company has taken appropriate insurance covers with reputed insurers & re-insurers to protect the Company from any third party liability claims that mayarise at any point of time.
Directors & Officers Liabilities (D&O) / Employment PracticesLiability Insurance (EPLI) / Crime:
D&O policy covers the Directors & Officers of the Company against the risk ofthird party actions arising out of their actions / decisions which may have resulted infinancial loss to any third party. The Company has appropriately insured itself tomitigate such risks coming from any third party.
EPLI Insurance protects the Company from claims from employees or third parties onaccount of any actual or alleged Employment Practice Violation.
Crime insurance protects the Company from loss of money securities or other financialloss arising from any fraudulent or criminal activity of employees or third parties.
Property / Casualty:
The Company has insured its various properties & facilities against the risk offire theft etc. so that financials are not impacted in the unfortunate event of suchevents. The employees of the Company are covered under various employee benefit insuranceagainst Hospitalization Accidental Disability and Death.
Internal Financial Control Systems
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Companys policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timey preparation of reliablefinancial disclosures.
In addition to this Company continues to engage KPMG as its Internal Auditor. Theirscope of work includes review of processes for safeguarding the assets of the Companyreview of operational efficiency adequacy and effectiveness of systems processes andinternal finance controls.
Internal Auditors findings are discussed with the process owners and suitablecorrective actions are taken as per the directions of Audit Committee on an ongoing basisto improve efficiency in operations. During the year the Company continued to implementsuggestions and recommendations of the Internal auditor and audit committee to improve thecontrol environment.
The further details regarding internal financial Control are included in the ManagementDiscussion and Analysis which form part of this report.
Hexawares Learning and Development Team
HexaVarsity Organizational Development (OD) Initiative
We launched the Organizational Development (OD) initiative Ignite in 2015. Thepurpose of this OD initiative was to equip our leaders to succeed in their roles. With theorganizational growth and realignment of the organization structure and process ourleaders needed to be equipped to succeed in their roles as well as exploit the potentialof employees.
The philosophy of the initiative is to Ignite the Genius Within! Theobjective of Ignite is to design and deliver a leadership development program that:
re-energizes and re-boots for action
polishes and sharpens competencies to boost performance in leadership roles
acts as a catalyst to ignite creativity
In 2015 our focus was to ensure that the initiative was perceived as trulydevelopmental with special focus on knowledge acquisition and retention. The Company hascovered 68% of our target audience by the end of 2015.
Mindset Analysis Workshops
Bootstraps - Hard skills for key roles
Leadership Excellence Achievement Program (LEAP) - Behavioral competencies forkey roles)
The programs are delivered across locations using a blend of methodologies such asInstructor-Led Training (ILT) virtual and e-learning.
Ignite is built around the key competencies of Accountability and Ownership StrategicThinking Planning Collaboration and Customer Focus.
CTaDel - Customer Centric Talent Development Program
HexaVarsity has launched the CTaDel initiative in January 2015 to address the accountspecific learning and development needs. Dedicated team members are assigned from bothHexaVarsity and the accounts to work together on this initiative.
In 2015 we chose the top 20 accounts of Hexaware to cater to their learning anddevelopment needs.
Link-N-Learn: This is a weekly connect program to share and learn with peer groupplaced across locations.
The objective of this initiative is to share and learn from best practicesexperiences solutions challenges and successes. Figure 1 provides an overview of theexpected outcomes of the initiative:-
The Fresher Training Program (FTP) is a Hexavarsity initiated program designed anddelivered exclusively for fresh graduate recruits management trainees (MT) and seniormanagement trainees (SMT). The program includes a series of technical and behaviouraltrainings and assessments for Engineering Management and B.Sc. / B.Com / B.A. graduatesto enable them to be work ready and deployable.
In 2015 a total of 702 fresh graduates completed the FTP and were successfullydeployed in their new roles. The program underwent a major overhaul in approach andassessment including introduction of gamification into the training andbehavioural assessments in addition to technical assessments. Furthermore all the labsessions (Foundation / Java / BI / Testing) are now conducted in a state-of-the art cloudenvironment.
Additional information and changes in the FTP can be found on the new and dynamic FTPportal.
Technical Competency Development Program (TCDP)
The Technical Competency Development Program (TCDP) is a HexaVarsity initiative aimedat developing the technical competencies of the Hexaware workforce. The competenciesmapped to each role are documented in the Technical Quotient (TQ) frameworks and areuniquely defined for each unit. The TCD Program has been completely restructured andrevamped in 2015 to align with the Competency Management System (CMS). Along with the TQframework for all units the course material and content including the Instructor LedTraining (ILT) self-learning course (eLearning) courses and Seminar on Demands (SODs) arebeing created afresh.
The revamped TCDP will go live shortly in 2016.
Professional Certification and Incentives
Currently 2130 employees have been certified in the system.
641 certifications added in 2015 by 551 unique employees.
12 in-house certification drives were organised in 2015 and 302 employeesparticipated from across locations.
650 hours have been spent on developing internal e-contents and hosting on theknowledge management portal.
A new initiative was launched in 2015 to migrate all the technical training programs tothe cloud which was called "VarsityCloud".
In 2015 the Company have successfully conducted technical programs for freshers andlaterals in the VarsityCloud.
The units have extended full support to move the software to VarsityCloud.
The training programs were conducted for the following units BI ES DA andADM.
The participants continued with the hands-on training even after the training hours.
Duration - 11000 hrs (approx.)
Man hours / person hours - 14000 hrs (approx.)
600 employees underwent the training using cloud across locations.
Once this initiative is introduced the Company could find the benefits such as lesstime for installation less troubleshooting etc.
The major stakeholders the units and unit Single Point of Contactsare able to schedule the trainings in a more efficient way by utilizing the images alreadyavailable and save time spent on the software installations / infrastructure relatedaspects.
The onsite employees have also benefited from the much needed access to the software.
The core enabling team the STG cloud team ensured that the programs were successfullycompleted without any software access issues in.
The Company expect to migrate the entire technical training to VarsityCloud in 2016 andalso expand the utilization of Virtual Desktops (VDs) in phase 2.
HexaVarsity has launched its LearnToGrow initiative a campaign to promotea learning culture and improve the learning quotient of the organization. The eLearningplatform HexaGuru+ has tremendously helped to increase the eLearning hours.
Having started the campaign in 2015 the Company have executed the campaign forawareness on the videos and e-books usage.
The following events were completed throughout the year:
1) Two HexaGuru+ marathon events on completing the e-learning courses with more numbersof hours.
2) Promotional mailers on capability of HexaGuru+ for e-learning courses videoebooks simulation test preparation and mentoring for offshore as well as onsiteconsultants.
3) Promotional mailers on capability of HexaGuru+ for eLearning courses videos andebooks for units such as M&C DA ATM GTT and Capital Markets.
4) Completed events such as 5@5 10@10 and 2@2 on short videos courses.
5) Separate mailers on Agile SharePoint Node JS Big Data and niche technologies.
VarsityPoint is the internal HexaVarsity portal for the employees that acts as a onestop shop for all of the L & D activities. Released in August 2015 VarsityPoint is anin-house portal created using SharePoint and is a hub for all HexaVarsity related portals.
Corporate Governance and Management Discussion and Analysis
The Company endeavors to maximize the wealth of the shareholders by managing theaffairs of the Company with a pre-eminent level of accountability transparency andintegrity. A report on Corporate Governance including Management Discussion and Analysisand the relevant Auditors Certificate regarding compliance with the conditions ofCorporate Governance as stipulated in Clause 49 of the erstwhile listing agreement andSchedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isannexed.
Employee Stock Option Plans (ESOP)
Pursuant to the approval of the shareholders the Company has instituted variousEmployee Stock Option Schemes for all eligible employees Directors (excluding promoterDirectors) of the Company and employees of its subsidiaries. All the plans areadministered by the Nomination & Remuneration Committee of the Board.
During the year 2015 the shareholders approved the Hexaware Technologies LimitedEmployee Stock Options Plan 2015 ("ESOP 2015"/ "Plan"). Maximum numberof Options/RSUs to be granted under ESOP 2015 in one or more tranches shall be10765025 exercisable into 10765025 shares in the Company of face value of Rs. 2/- eachfully paid-up.
During the year 2015 following were the exercises made by employees and grant made toemployees/Director under ESOPs: 639425 options were exercised and the Companyallotted 639425 equity shares of Rs. 2/- each to Director and employees on such exercise.These shares have been listed on the Bombay Stock Exchange Limited and National StockExchange of India Limited. 9192738 RSUs were granted under 2008 and 2015 schemes duringthe year 2015 as explained below:
On January 21 2015 231214 Restricted Stock Units (RSUs) were granted to Mr. RSrikrishna CEO & Executive Director at a price of Rs. 2/- under the Employee StockOption Scheme 2008 convertible into equal number of equity shares of the Company.
On May 8 2015 7944680 Restricted Stock Units (RSUs) were granted at a price of Rs.2/- to the employees of the Company / subsidiary Companies under the Employee Stock OptionPlan 2008 / 2015 convertible into equal number of equity shares of the Company.
On June 10 2015 281220 Restricted Stock Units (RSUs) were granted at a price of Rs.2/- to the employees under the Employee Stock Option Plan 2008 / 2015 convertible intoequal number of equity shares of the Company.
On July 29 2015 190024 Restricted Stock Units (RSUs) were granted to Mr. RSrikrishna CEO & Executive Director at a price of Rs. 2/- under the Employee StockOption Scheme 2015 convertible into equal number of equity shares of the Company.
On November 3 2015 545600 Restricted Stock Units (RSUs) were granted at a price ofRs. 2/- to the employees of the Company / subsidiary Companies under the Employee StockOption Plan 2015 convertible into equal number of equity shares of the Company.
On February 3 2016 295120 Restricted Stock Units (RSUs) were granted at a price ofRs. 2/- to the employees of the Company / subsidiary Companies under the Employee StockOption Plan 2015 convertible into equal number of equity shares of the Company.
Details of the shares issued under Employee Stock Option Plan (ESOP) and also thedisclosures in compliance with Rule 12 of Companies (Share Capital and Debentures) Rules2014 and Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 are set out in the Annexure 2 to this report and same is also availableon the website of the Company at http://hexaware.com/investors/ No employee was issuedStock Option during the year equal to or exceeding 1% of the issued capital of theCompany at the time of grant.
During the year under review the Company did not accept or invite any deposits fromthe public.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The information relating to Conservation of Energy Technology Absorption ForeignExchange Earnings and Outgo required under Section 134(3) (m) of the Companies Act 2013read with Companies (Accounts) Rules 2014 is annexed and forms part of the report.
Directors Responsibility Statement
Pursuant to Section 134 (3) (c) and (5) of the Companies Act 2013 the Directorsconfirm the following:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and there were no 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 and 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 Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
(d) the Directors have prepared the annual accounts on a going concern basis; and
(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 are adequate and operating effectively.
Directors and Key Managerial Personnel
Dr. Punita Kumar- Sinha Independent Director having DIN 05229262 was appointed as anAdditional Independent Director w.e.f March 26 2015 and resigned as a Director w.e.fJanuary 12 2016.
Mr. P R Chandrasekar having DIN 02251080 was reappointed as Non Executive Director ofthe Company for one year w.e.f January 1 2016 on the existing terms and conditionsincluding remuneration.
Mr. Jack Hennessy Director of the Company having DIN 06990208 vacated the office ofDirector w.e.f February 9 2016. Mrs. Meera Shanker having DIN 06374957was appointed asan Independent Director w.e.f April 11 2016 for a period of two years.
Mr. Basab Pradhan having DIN number 00892181 and Mr. Christian Oecking havingDIN 03090264 were reappointed for a period of three years w.e.f June 9 2016 and June 262016 respectively.
In accordance with the provisions of Companies Act 2013 Mr. Jimmy Mahtani andMr. Kosmas Kalliarekos Directors of the Company retire by rotation at this AnnualGeneral Meeting and being eligible; offers themselves for re-appointment at the AnnualGeneral Meeting.
The information of Directors seeking appointment / re- appointment at the AnnualGeneral Meeting to be given to the shareholders as per regulation 36 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is being provided separately onPage No. 86 & 87 of this Annual Report. Members are requested to refer the saidsection of the Corporate Governance Report.
Number of Meetings of the Board
Six Meetings of the Board were held during the year. For details of the meetings of theBoard you may refer to the corporate governance report which forms part of this Annualreport.
Declaration by Independent Directors
The Independent Directors have submitted a declaration that each of them meets thecriteria of independence as provided in Section 149(6) of the Companies Act 2013 andthere has been no change in the circumstances which may affect their status as IndependentDirector during the year.
The board of Directors has carried out an annual evaluation of its own performanceBoard committees and individual Directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed under the Listing Agreement/Regulations.
The performance of the Board was evaluated by the Board members after seeking inputsfrom all the Directors on the basis of the criteria such as the Board compositionand structure effectiveness of board processes information and functioning etc.
The performance of the committees was evaluated after seeking inputs from the committeemembers on the basis of the criteria such as the composition of committees effectivenessof committee meetings functioning of the committees etc.
The performance evaluation of Independent Directors has been done by the entire Boardof Directors excluding the Director being evaluated.
The Board / Nomination and Remuneration Committee ("NRC") reviewed theperformance of the individual Directors on the basis of the criteria approved by theBoard.
In a separate meeting of Independent Directors held on December 15 2015 performanceof Non-Independent Directors performance of the Board as a whole and performance of theChairman was evaluated.
Training of Independent Directors
To familiarize the Independent Directors with the strategy operations and functions ofthe Company the Executive Director and Senior Managerial Personnel make presentations atthe Board Meeting about Companys operations markets financial results humanresources and on other important aspects.
The terms and conditions of the appointment of every Independent Director is availableon the website of the Company at: http://hexaware.com/investors/
Details of the familiarization programme of the Independent Directors is available onwebsite of the Company at http:// hexaware.com/investors/
Committees of the Board
The Board of Directors have constituted the following Committees:
1. Audit Governance & Compliance Committee
2. Nomination & Remuneration Committee
3. Stakeholders Relationship Committee
4. Capital Issue Committee
5. Banking Investments Operations & Forex Committee
6. Corporate Social Responsibility Committee
7. Infrastructure Committee
The details of the composition of the committee and attendance of the members at theAudit Governance & Compliance Committee Nomination & Remuneration CommitteeStakeholders Relationship Committee and Corporate Social Responsibility Committee of theBoard are provided in the Corporate Governance report.
Policy on Directors and Key Mangerial Personnel appointment and remuneration and otherdetails
The Companys policy on Directors and Key Managerial Personnel appointment andremuneration and other matters as provided in Section 178(3) of the Act has been disclosedin the corporate governance report.
Whistle blower policy
The Company has established a vigil mechanism/framed a whistle blower policy. Thepolicy enables the employees and other stakeholders to report to the management instancesof unethical behaviour actual or suspected fraud or violation of the Companys codeof conduct or ethics policy. This policy is reviewed annually by the Audit Committee tocheck the effectiveness of the policy. No personnel has been denied access to the AuditCommittee. The provisions of this policy are in line with the provisions of Section 177(9) of Companies Act 2013. The policy is available on the website of the companyat : http://hexaware.com/investors/
M/s. Deloitte Haskins & Sells LLP retire at this Annual General Meeting and beingeligible offer themselves for re appointment. Pursuant to the recommendation of the AuditCommittee at its meeting held on February 3 2016 the Board of Directors have subject tothe approval of the shareholders at their meeting held on February 03 2016 approved there-appointment of Deloitte Haskins & Sells LLP as the Statutory Auditors of theCompany for the financial year 2016 and to hold office from the conclusion of theforthcoming Annual General Meeting till the conclusion of the next Annual General Meeting.In terms of provisions of section 139 of the Companies Act 2013 M/s. Deloitte Haskins& Sells LLP have furnished a certificate that their appointment if made will bewithin the limits prescribed under the said section of the Act. As required underRegulation 33 of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the Statutory Auditors have also confirmedthat they hold a valid certificate issued by the Peer Review Board of the Institute ofChartered Accountants of India.
There are no qualifications reservations or adverse remarks made by the statutoryauditors in their audit reports on the financial statements for the year ended December31 2015.
Internal Audit for the year ended December 31 2015 was done by KPMG and Internal Auditreport for every quarter was placed before the Audit Committee. The Board of Directors atits meeting held on February 3 2016 have re-appointed KPMG as Internal Auditor for theyear ended December 31 2016.
M/s. Makarand M Joshi & Co. Practising Company Secretary was appointed to conductthe Secretarial Audit of the Company for the year ended December 31 2015 as per theprovisions of Section 204 of the Companies Act 2013 read with rules made thereunder. TheSecretarial Audit report for the year ended December 31 2015 is annexed toBoards report as Annexure 3. There are no qualifications reservations or adverseremarks made by Secretarial Auditor in his report.
Related party transactions
All related party transactions that were entered into during the financial year were onan arms length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large. The details as required to be providedunder Section 134(3)(h) of the Companies Act 2013 are disclosed in Form AOC-2 as Annexure4 and forms part of this Annual Report.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Policy on dealing with related party transaction is available on the websiteof the Company. http://hexaware.com/investors/Policy on determining material subsidiariesof the Company is available on the website of the Company. http://hexaware.com/investors/Appointment of M/s. Karvy Computershare Private Limited as Registrar &Transfer agent of your Company
Securities and Exchange Board of India vide its Ex Parte - AD-InterimOrderNo.WTM/RKA/MIRSD2/41/2016dated March 22 2016 (Order) directed all the clients of Sharepro Services (India)Private Limited (Sharepro) to carry out/switchover their activities related to a Registrarto an Issue and Share Transfer Agent either in-house or through another Registrar to anIssue and Share Transfer Agent registered with SEBI and also directed to conduct athorough audit of the records and systems of Sharepro for the past ten years concerningdividend payments and transfer of securities to determine whether dividends have been paidto actual/beneficial holders and whether securities have been transferred as per theprovisions of law.
Accordingly the Company has terminated the services of Sharepro Services (India)Private Limited and have appointed Karvy Computershare Private Limited as Registrar andShare Transfer Agent of the Company.
Further the Company has also appointed Auditors for conducting the audit for past 10years concerning dividend payments and transfer of securities as per SEBI direction.
Extension of time for holding Annual General Meeting
To ensure the smooth transfer of data from Sharepro Services (India) Private Limited toKarvy Computershare Private Limited it was decided to extend the date of the AnnualGeneral Meeting of the members for the financial year ended December 31 2015 the duedate for which was June 30 2016. Accordingly approval from Registrar of Companies Mumbaivide approval letter dated June 1 2016 was received by the Company for extensionof time for holding Annual General Meeting for the financial year ended December 31 2015upto September 30 2016.
Significant/Material Orders Passed by the Regulators
There are no significant material orders passed by the Regulators or Courts orTribunals impacting the going concern status of your Company and its operations in future.
Corporate Social Responsibility
Pursuant to the provisions of section 135 of the Companies Act 2013 the Company spentRs. 25.34 Million towards CSR activities for the year ended December 31 2015. Thecomposition of the CSR committee and contents of the CSR policy and initiatives taken bythe Company on Corporate Social Responsibility during year ended on December 312015 as per the format prescribed in the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is attached as Annexure 5 to this Report and CSR policy of the Companyis available on our website at http://hexaware.com/investors/ The Composition of CSRCommittee is given in the Corporate Governance Report.
These CSR projects are currently at their initial stages of Implementation and Companywill be required to spent further funds in the days to come.
The Company being a foreign source every person who receives contribution shallhave separate bank Account for receipt for contribution (FCRA). While incurring CSRexpenditure the Company found many implementing agencies do not have the said FCRAbank account and hence there was a delay in incurring CSR expenditure for few of theimplementing agencies.
The company is also in process of further identifying impactful projects for CSRexpenditure which can have a qualitative longer term impact on societal issues.
Extract of annual return
As provided under Section 92(3) of the Act the extract of annual return in theprescribed Form MGT-9 forms part of this report as Annexure 6.
The Company has received an order from the Company Law Board under section 2 (41) ofthe Companies Act 2013 for continuing January to December as its financial year. Hencethe Company will maintain its financial year from January 1 to December 31.
Particulars of Directors and Employees
The table containing information as per rule 5 (i) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure 7 to the BoardReport.
The statement containing particulars of employees as required under Section 197(12) ofthe Act read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is provided in a separate annexure forming part of this report.Further the report and the accounts are being sent to the members excluding the aforesaidannexure. In terms of Section 136 of the Act the said annexure is open for inspection atthe Registered Office of the Company. Any shareholder interested in obtaining a copy ofthe same may write to the Company Secretary.
Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
The Company as an organization is committed to provide a healthy environment to all theemployees and thus does not tolerate any discrimination and/or harassment in any form. TheCompany has in place a Prevention of Sexual Harassment (POSH) policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. Frequent communication of this policy is done through variousprograms and at regular intervals to the employees.
The Company has setup an Internal Complaints Committee (ICC) both at the registeredoffice and at every location where it operates in India in accordance with the Act and hasrepresentation of men and women and is chaired by senior lady member and has an externalwomen representation.
Workshops and awareness programmes are organized for sensitising the employees with theprovisions of the Act and orientation programmes for the members of the InternalCommittee.
The following is the summary of the complaints received and disposed off during thefinancial year 2015:
a) No. of complaints received in the year: 03
b) No. of complaints disposed off: 03
c) No. of complaints pending : NIL
The Company started a sustainability initiative with the aim of going green andminimizing the impact on the environment. Like the previous years this year too theCompany is publishing only the statutory disclosures in the print version of the AnnualReport. Additional information is available on our website www.hexaware.com.
Electronic copies of the Annual Report 2015 and Notice of the 23rd AnnualGeneral Meeting are being sent to all members whose email addresses are registeredwith the Company / Depository Participant(s). For members who have not registered theiremail addresses physical copies of the Annual Report 2015 and the Notice of the 23rdAnnual General Meeting are being sent in the permitted mode. Membersrequiring physical copies can send a request to the Company.
The Company provides e-voting facility to all its members to enable them to casttheir votes electronically on all resolutions set forth in the Notice. This is pursuant tothe Section 108 of the Companies Act 2013 and Rule 20 of the Companies (Managementand Administration) Amendment Rules 2015.
The Directors place on record their sincere appreciation of the customers Governmentof India and of other countries vendors bankers and Technology Partners for the supportextended. The Directors are also deeply touched by the efforts sincerityand loyalty displayed by the employees without whom the growth of the Company isunattainable. The Directors wish to thank the investors and shareholders for placingimmense faith in them. The Directors seek and look forward to the same support during thefuture years of growth.
For and on behalf of the Board of Directors
Atul K. Nishar
Date: June 23 2016
ANNEXURE TO THE DIRECTORS' REPORT
INFORMATION RELATING TO CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH ANDDEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO FORMING PART OF DIRECTORS REPORT INTERMS OF SECTION 134 (3) (m) OF THE COMPANIES ACT 2013 AND RULES MADE THE REUNDER.
Conservation of Energy
The Company is entirely a services Company and thus essentially a non-energy intensiveorganization. Additionally the Companys facilities are set up at locations chosenfor adequate availability and supply of energy regardless of power shortages recentlywitnessed across many markets.
The Company acknowledges that power conservation is a necessity not only for futureavailability but also environmental safety. Thus the Company has in place adequatesafeguards against excessive consumption and wastage of energy in form of energy-friendlyapparatus as well as minimal usage policies. All the computer terminals air-conditioningsystems lighting and utilities are modern technology enabled so that optimum use ofenergy and power can be made. The state-of-the-art campus at Siruseri has been categorizedas a "Green Campus" because of its eco-friendly design.
The Company has installed 90KW Rooftop solar system in its Siruseri Campus in the year2014 with a capacity of producing 1.3 L units of power in a year. Power generated in 2015from this system is 130222 units. This results in avoiding of Green House Gas emission of77.5 tons of CO2.
"Aerators" are installed in wash basin taps at pantry food court and restrooms to minimize water usage. 30KL per day and 7920KL per annum (22working days/month) issaved in year 2015.
3lakh units power is saved in year 2015 by installing energy efficient LED & CFLlight fittings in garden area Timers for street lighting & Air Handling Units.
Wind energy to the tune of 50lakh units is availed in year 2015 through 3rd partyPrivate power agency.
STP water is treated and used for gardening @160KL per day (working day) in year 2015.42240KL STP treated water is recycled and reused.
The Company undertakes several green campaigns throughout its locations.
In an endeavor to stay abreast of most recent advancements across the technologyspectrum the Company has entered into partnerships alliances and tie-ups with majorglobal players in the I.T. Industry. This helps the Company to harness the latest and thebest of technologies in its field upgrade itself in line with the latest technologies inthe world and absorb technology wherever feasible relevant and appropriate. Throughexchange of ideas and leveraging competencies the Company has increased its marketpresence and delivered integrated best in breed offerings.
At the same time the Company has also attached tremendous significance to indigenousdevelopment and upgrade of technology through its own extensive research and development.The benefits derived from these processes are phenomenal and have improved the quality ofits world class services. It has also helped in diversifying the services portfolio whileincreasing cost efficiency. The Company has a significant percentage of its lateral talentdrawn from major global players with a good understanding of their internal technology andconsulting processes engineering practices and knowledge centers. The Company has maderepresentations in multiple industry seminars and conferences useful in absorbingcontemporary trends in technology and business processes from the industry.
Research & Development:
The Company has a state-of-the-art Research and Development wing carrying on Researchand Development activities to create Intellectual Property for the Company. This is inline with the Companys established philosophy of maintaining and sustainingleadership status and the belief that R&D will be a crucial differentiator betweencompanies in the not-so-distant future.
The Company perpetuates in-house thought leadership through establishment of structuredorganizational frameworks like the Innovation Council. This is supported by seniormanagement and performs a mentoring role to screen and select promising concepts fromamong various project teams and see them through implementation. This is an iterativeprocess conclusion of which results in a list of innovative tools accelerators andmethodologies that add value to current and future clients.
The Company has several innovation labs attached to individual practices and verticalsfor fostering innovation channeled to a particular area of interest. Under ample guidancefrom the Practice Head the Company has dedicated long-time resources as well asemployees by rotation on short stints working here to exchange ideas and produce thedesired results. The Companys list of Intellectual Property rollouts is impressiveand spans across almost all its focus verticals and practices as also emerging areas ofinterest. The dedicated Innovation Infrastructure InnovationCouncil and Innovation Labs framework co-ordinates closely with focuspractice groups to pilot and continuously test these incubated ideas.
Some tools accelerators and other IP produced by the innovative minds this year wouldinclude:
1. UMI The Company has built a unique model for quantifying the usability of anapplication by creating the Usability Measurement Index (UMI) that is generated using acrowdsourced usability test approach.
2. iD2E (Integrated Design to Execution) automation platform The Company hasbuilt a platform called iD2E which integrates the test design automation with Testexecution automation service virtualization for shifting testing left and a portal basedonline reporting dashboard which can bring in cost savings in end to end testing.
3. ALM BPT wrapper The company has built a custom wrapper over HP ALM whichallows users to implement the business component model (BPT) for creating test automationscripts using multiple test automation tools besides HP UFT also enabling the executionof these test scripts from HP ALM irrespective of the underlying test automation tool set.
Foreign Exchange Earnings and Outgo:
The details of Foreign Exchange Earnings and Outgo are mentioned in Note No. 31 to 34of the Notes forming part of the Standalone Accounts of the Company.
| ||For and on behalf of the Board of Directors |
|Date: June 23 2016 ||Atul K. Nishar |
|Place: Mumbai ||Chairman |
FORM - AOC 1
Statement Pursuant to Section 129 (3) of the Companies Act 2013 containing salientfeatures of the financial statement of subsidiaries/associate companies/joint ventures
(Rs. in Million)
|Sr. No. ||1 ||2 ||3 ||4 ||5 ||6 ||7 ||8 ||9 ||10 |
|Name of the Subsidiary ||Hexaware Technologies Inc- USA ||Hexaware Technologies UK Ltd ||Hexaware Technologies GMBH ||Hexaware Technologies Asia Pacific Pte Ltd ||Hexaware Technologies Ltd - Mexico Mexico S.De. R.L. De.C.V. ||Hexaware Technologies Canada Ltd ||Risk Technology International Ltd ||Hexaware Technologies DO Brazil Ltd Brazil ||Guangzhou Hexaware Information Technologies Company Limited-China ||Hexaware Technologies LLC - Russia |
|Reporting currency and exchange rate as on the date of the relevant financial year in case of foreign subsidiaries ||USD 66.1550 ||GBP 98.0650 ||Euro 72.1125 ||SGD 46.8250 ||MXN 3.8105 ||CAD 47.6650 || ||BRL 16.7088 ||CNY 10.1901 ||RUB 0.8995 |
|Share Capita ||531.33 ||212.51 ||13.05 ||23.41 ||30.82 ||1.11 ||95.00 ||0.03 ||1.62 ||72.24 |
|Reserve and Surplus ||1777.21 ||180.10 ||230.17 ||150.92 ||191.36 ||64.36 ||(18.04) ||1.15 ||(1.21) ||(5.10) |
|Total Assets ||8053.82 ||945.90 ||346.61 ||257.19 ||325.79 ||83.13 ||483.35 ||12.03 ||0.42 ||138.50 |
|Total Liabilities ||5745.27 ||553.29 ||103.40 ||82.86 ||103.61 ||17.65 ||406.38 ||10.85 ||- ||71.37 |
|Investments ||0.02 ||0.06 ||- ||- ||- ||- ||- ||- ||- ||- |
|Turnover ||21706.96 ||2436.93 ||986.58 ||526.18 ||872.77 ||121.10 ||- ||31.08 ||0.00 ||0.83 |
|Profit / (Loss) before taxation ||781.76 ||81.49 ||32.50 ||(18.06) ||104.84 ||10.10 ||(5.17) ||2.00 ||(1.21) ||(5.10) |
|Provision for taxation ||315.46 ||7.69 ||11.08 ||(0.76) ||33.61 ||2.68 ||0.12 ||0.48 ||- ||- |
|Profit / (Loss) after taxation ||466.30 ||73.80 ||21.42 ||(17.30) ||71.23 ||7.42 ||(5.29) ||1.52 ||(1.21) ||(5.10) |
|Proposed Dividend ||Nil ||Nil ||Nil ||Nil ||Nil ||Nil ||Nil ||Nil ||Nil ||Nil |
|% of shareholding ||100% ||100% ||100% ||100% ||100% ||100% ||100% ||100% ||100% ||100% |
There are no subsidiaries which are yet to commence operations
Focus Frame Europe BV (Subsidiary of Hexaware Technologies Inc.) closed w.e.f. March31 2015.
For and on behalf of the Board of Directors
Atul K. Nishar
Date: February 3 2016