Your Directors are pleased to present their Report on the business and operations ofyour Company along with the Audited Financial Statements (Standalone and Consolidated) forthe Financial Year ended March 31 2016.
(R in million* except per share data)
| || |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Operating Income ||13829 ||10704 ||33282 ||28076 |
|Other Income ||245 ||278 ||194 ||245 |
|Total Income ||14074 ||10982 ||33476 ||28321 |
|Operating Expenses ||11403 ||8609 ||30152 ||24949 |
|Depreciation and Amortization ||819 ||606 ||1364 ||1052 |
|Financial Expenses ||149 ||158 ||401 ||386 |
|Profit Beforetax ||1703 ||1609 ||1559 ||1934 |
|Provision for Tax (incl. deferred tax) ||520 ||484 ||549 ||284 |
|Profitafter tax ||1183 ||1125 ||1010 ||1650 |
|Add: Balance brought forward from Previous year ||2528 ||2020 ||1267 ||4410 |
|Profit Available for Appropriation ||3711 ||3145 ||2277 ||6060 |
|Dividend || || || || |
|- Adjustment on account of Depreciation ||- ||161 ||- ||162 |
|- Interim Dividend ||285 ||310 ||285 ||310 |
|- Final (Proposed) ||26 ||104 ||26 ||104 |
|- Dividend Tax ||36 ||42 ||63 ||80 |
|Adjustment on Amalgamation ||- ||- ||- ||4136 |
|transferred to Capital Redemption Reserve ||- ||- ||- ||1 |
|Balance Carried Forward ||3364 ||2528 ||1903 ||1267 |
|Earnings per share (R) || || || || |
|- Basic ||57.06 ||54.49 ||48.73 ||79.88 |
|- Diluted ||56.98 ||54.21 ||48.66 ||79.46 |
|*(R 1 million = Rs 10 lakhs) || || || || |
On a Consolidated basis Operating Income for FY16 was Rs 33282 million comparedto Rs 28076 million of FY15. This growth was led by existing and new client winsespecially in Healthcare and Consumer Product verticals revenue from recently acquiredcompanies like HGS Colibrium Inc. and India CRM (Customer Relationship Management)portfolio and turnaround in Canadian operations. EBITDA (Earnings Before Interest TaxesDepreciation and Amortization) for FY16 was RS 3130 million against RS 3172million of FY15 a marginal decline of 1.3%. Profit After Tax (PAT) for FY16was RS 1010 million as against RS 1650 million for FY15 a decreaseof 38.8%. The profitability was impacted due to lower operating profit and unfavorableforeign exchange variations. However the numbers are not strictly comparable asFY15 also had a tax benefit of R 248 million arising out of recognition ofsome deferred tax assets.
On a Standalone basis Operating Income for FY16 was RS 13829 millioncompared to RS 10704 million for FY15 an increase of 29.2%. The Philippinesbranch of your Company continues to be a major contributor to the growth. EBITDA increasedby 15.8% from RS 2095 million in FY15 to RS 2426 million inFY16. PAT increased by 5.1% from RS 1125 million in FY15 to RS 1183million in FY16.
Review of Financial and Operational Performance of the Company and its key subsidiarieshas been given in the Management Discussion and Analysis Report which forms part ofthis Report as Annexure E.
Business highlights - FY 2016:
Client wins: HGS added 20 new clients.
Active Clients: 190 core BPM clients and 600 HRO and F&A clients.
Delivery Infrastructure: Currently have 67 global delivery centers across 11 countries.Opened six new centers: Jamaica (1) Philippines (1) and India (4 - Bangalore Hyderabadand two in Mumbai) and acquired seven centers across 6 cities in India (two in Bangaloreand one each in Noida Pune Mangalore Raipur and Indore).
Employee Headcount at year end: FY16 - 39834 (FY15 - 28435)
Acquisitions: Acquisition of India domestic CRM business from Mphasis Limited andMsourceE India Private Limited was completed in September 2015.
Your Directors are pleased to recommend a Final Dividend of Rs 1.25 per equity share(12.5% on face value of Rs 10/- each) for the Financial Year ended March 31 2016 subjectto your approval. This is in addition to the three Interim Dividends aggregating to RS13.75 per share for the Financial Year 2015-16 declared by the Board of Directors onAugust 12 2015 November 6 2015 and February 9 2016 respectively and were duly paid.The total dividend for the Financial Year ended March 31 2016 would be Rs 15 per equityshare (150% on face value of Rs 10/- each) if approved/ confirmed by the Members.
The business environment across the globe is undergoing a transformation in everyaspect of its operations which resulted in increased use of analytics digitaltechnologies and automation in the Business Process Management (BPM) industry. Over thecoming years the industry will be dominated by digital technologies.
Globally the BPM spend experienced a moderate growth of 3% compared to 2014 to reachUS$186 billion. The growth was primarily driven by increasing demand for analyticsservices. The customers in general are gradually starting to expect analytics as part ofthe bundled BPM services.
The Indian BPM industry has grown over 1.7 times in the past five years to reach US$28billion in FY2016. Around
86% of the total BPM market is estimated to have come from exports and the remaining14% from the domestic business. The growth momentum is expected to reach US$41 billion byFY2020.
Further information pertaining to Business Review has been provided in the ManagementDiscussion and Analysis Report which forms part of this Report.
HGS International Mauritius a wholly-owned subsidiary of your Company isprimarily engaged in investment activity. HGS International owns 100% of the share capitalof Hinduja Global Solutions Inc. USA; C-Cubed N.V. Curacao; Hinduja Global SolutionsEurope Ltd. UK; HGS St. Lucia Ltd. Saint Lucia and HGS MENA FZ-LLC Dubai. The holdingof HGS International in HGS Colibrium Inc. was recently increased from 89.8% to 95.2%.
Revenue for FY16 was US$ 3.9 million as against US$ 4.7 million for FY15.
hinduja Global Solutions Inc. USa (hGS Inc.) a wholly-owned subsidiary of HGSInternational Mauritius specializes in marketing and provision of both voice andnon-voice related Customer Contact and Business Process Outsourcing services to itsclientele. The Company engages in several programme expansions of clients. Its keysubsidiaries are HGS (USA) LLC; HGS Canada Inc. Canada; HGS EBOS LLC and HGS HealthcareLLC (formerly known as RMT LLC USA).
In FY16 HGS Inc. reported consolidated revenues of US$ 369.4 million as comparedto US$ 348.9 million in FY15.
HGS (USA) LLC USA a wholly-owned subsidiary of HGS Inc. USA operates in sixcities in USA and Canada. It partners with Fortune 1000 companies and Government agenciesto provide comprehensive Customer Relationship Management programs. For FY16 HGS(USA) LLC recorded total revenue of US$ 287.2 million as compared to US$ 252.8 million inFY15. HGS (USA) LLC and its US subsidiaries namely
HGS Healthcare LLC and AffinaCompany Canada are engaged in providing customer servicesfulfillment services sales marketing and account management.
hGS Canada Inc. Canada a wholly-owned step down subsidiary of HGS Inc. USA is aCanadian contact center service provider servicing marquee customers across verticals suchas media telecom technology and Banking and Financial Services (BFS). The Company offerstechnical support inbound and outbound sales customer care and customer retention inEnglish and French languages. For FY16 the Company recorded revenue of CAD 84.5million as compared to CAD 97.2 million in FY15.
hinduja Global Solutions europe Ltd. UK a wholly owned subsidiary of HGSInternational Mauritius focuses on consulting services for BPM call center services andmarkets off shoring services to UK based clients. Its wholly owned subsidiaries includeHinduja Global Solutions UK Ltd. UK HGS France SARL France and HGS Italy SRL. ForFY16 the Company recorded standalone revenue of GBP 1.2 million as compared to GBP1.3 million in FY15.
hinduja Global Solutions UK Ltd. UK a wholly owned subsidiary of Hinduja GlobalSolutions Europe Limited UK is a leading contact center company in LondonPreston and Selkirk (Scotland). It offers a range of services for inbound and outboundinteractions to around 20 marquee customers across verticals such as Government FMCGFinancial Services Automobiles and Retail. It has branches in Rotterdam (Netherlands) andHamburg (Germany). For FY16 the Company reported revenue of GBP 34.9 million ascompared to GBP 29.6 million in FY15.
HGS St. Lucia Ltd. Saint Lucia is the holding company of Team HGS Ltd.Jamaica.
team hGS Ltd. Jamaica commenced green field operations in FY13 and has grownrapidly. Revenue for FY16 was Jamaican Dollars 806 million compared to JamaicanDollars 368 million in FY15.
hGS mena FZ-LLC Dubai a wholly-owned subsidiary of HGS International Mauritiushas a marketing office established in the Dubai Internet City with the objective to buildsales pipeline. Demand trend from MENA (Middle East and North Africa) region isencouraging and has started adding new clients. Effective November 25 2015 ExtensyaInvestment Holdings Limited HGS Extensya Cayman Limited and HGS Extensya Holdings Limitedbecame wholly owned subsidiaries of HGS MENA FZ- LLC. In FY16 it recorded revenueof AED 5.1 million as compared to AED 2.1 million in FY15.
hGS Colibrium Inc. USa: As on March 31 2016 holding of HGS InternationalMauritius was 89.8% which was increased to 95.2% in June 2016 on acquisition of sharesfrom one of the founder members. The remaining stake is held by the other founder member.In its first year of operations (FY16) the Company recorded revenue of US$ 14.7million.
hGS International Services Pvt. Ltd. (hGSISPL) is the wholly owned Indiansubsidiary of the Company. The Company achieved turnover of RS 2542.9 million inFY16 as against RS 1729.2 million of FY15 a substantial growth of47.1%. The SEZ division of HGSISPL continues to operate in four units namely a) GlobalVillage SEZ Bangalore; b) DLF Towers SEZ Hyderabad; c) Pritech Park SEZ Bangalore; andd) DLF Cybercity SEZ Hyderabad while the Human Resource Outsourcing (HRO) businessdivision of HGSISPL continues to successfully service marquee customers in BankingFinancial Services Insurance and other industry verticals in India and abroad.
Particulars of loans guarantees or investments
Loans guarantees and investments as per Section 186 of the Companies Act 2013 formpart of the Notes to the financial statements provided in this Annual Report.
Communications and Public Relations
In the last year your Company has continued to tell success stories of digitaltransformation to potential customers industry analysts other influencers and advisorsto evolve the reputation and global perception of HGS.
HGS has enhanced its website by making it educational and engaging with visual andvideo content which is relevant for both - the industry veteran and the casual observer.Our new content is targeted to challenge status quo thinking and offertransformative solution alternatives. This is given extra life with an ongoing socialmedia effort (e.g. LinkedIn Twitter Blog) that reaches a targeted audience across theglobe.
In FY16 HGS was named a "Top 100 Global Outsourcer" by theInternational Association of Outsourcing Professionals (IAOP) and also brought home aGold Stevie Award for Best Use of Technology in Customer Service and a Bronze Stevie Awardfor Sales Consulting Practice of the Year. Your Company was able to then turn thesedistinctions into news that was used to reach potential customers and importantlypotential employees.
By creating more frequent and more compelling content your Company is earningconsistent coverage in industry and general new publications reaching both domestic andinternational audiences. In an independent report published by Apollo Research in April2016 HGS overall global ranking for calendar year 2015 for share of voice in themedia across the US UK and Canada was number 2 of 28 companies that were benchmarked. HGSranked well ahead of the industry for stories pertaining to customer satisfaction. Thisprestigious top 2 ranking is a jump from 11th place in 2014 showing a verypositive trend of HGS being recognized by the media as a public thought leader to bequoted and published. In India HGS continues to be perceived as a key industry player andis represented in all important industry and opinion articles.
Your company also signed Indias No.1 Golfer Anirban
Lahiri as its brand ambassador. As the first BPM company to have a brand ambassador inthe international market HGS relationship with Lahiri will build the brandfacilitate business growth increase brand recall with potential and existing customersand continue to create new opportunities tied to the worlds golf calendar.
In our endeavor to propagate an inclusive and transparent culture your Companyleveraged different formats and channels such as e-mailers newsletters blogs andarticles to share views and news with its employees around the world.
The Company developed a new intranet called "HGS Connect" an integratedinternal two-way communication platform which serves as a one-stop solution for allcommunication across the globe. This internal portal serves as a time-out for employeesoffering various fun elements and also enables them to interact with each other on acommon channel. This year your Company launched a world-wide campaign "GQ SPICE -Living the HGS Values" - a simple and easy to remember acronym of our seven values toreiterate what we stand for as an organization. Employees across the globe connectedthrough different forms of engagement displaying values being the fundamental buildingblocks of the company. Your Company has also initiated consistent and colorful brandingacross all locations that will drive pride in the workplace and association with thebusiness and initiatives in the organization.
HGS will sustain its focus on communications engagement. In the year ahead yourCompany will continue to relay its best stories to all its important stakeholdersincluding launches of new service offerings and industry-specific applications in themarket.
new Corporate office
The Corporate Office of the Company has been shifted from HGS House No. 614 VajpayeeNagar Bommanahalli Hosur Road Bangalore - 560 068 to 1st Floor Gold Hill SquareSoftware Park No. 690 Bommanahalli Hosur Road Bangalore - 560 068 with effect fromJune 27 2016.
Change in Registrar and Share transfer agent
In view of the SEBI Order No. WTM/RKA/MIRSD2/41/2016 dated March 22 2016 the Companydid not renew the agreement with Sharepro Services (India) Pvt. Ltd. (erstwhile Registrarand Share Transfer Agent) which expired on March 31 2016. The Company has appointed M/s.Karvy Computershare Private Limited (Karvy) having its Registered Officeat "KarvyHouse" 46 Avenue
4 Street No. 1 Banjara Hills Hyderabad - 500 034 as its Registrar and ShareTransfer Agent with effect from May 16 2016. The Agreement with Karvy has been formalizedeffective June 1 2016.
Corporate Social Responsibility (CSR)
Pursuant to Section 135 of the Companies Act 2013 ("the Act") the CorporateSocial Responsibility Committee ("CSR Committee") was constituted and consistsof following Members:
Mr. Anil Harish (Independent Director) - Chairman Mr. Ramkrishan P. Hinduja(Non-Executive Non-Independent Director) Mr. Rajendra P. Chitale (Independent Director)Mr. Rangan Mohan (Independent Director) and Ms. Vinoo S. Hinduja (Non-ExecutiveNon-Independent Director).
During the Financial Year 2015-16 two Meetings of CSR Committee were held as follows:February 8 2016 and March 30 2016.
Corporate Social Responsibility Policy ("CSR Policy") was formulated by theCSR Committee and recommended to and approved by the Board of Directors ("theBoard"). Such policy inter-alia covers the CSR activities to be undertaken asspecified in Schedule VII to the Act.
In terms of the CSR Policy Management has set up a CSR Forum whose role and functionsinvolve: identification and evaluation of CSR projects/ initiatives for recommendation tothe CSR Committee reviewing and monitoring the approved CSR projects and providingperiodical status updates to the CSR Committee. The CSR Committee reviews the CSRprojects/ initiatives as recommended by the CSR Forum and the expenditure to be incurredthereon as per the provisions of the Act and the Rules made thereunder. Also the CSRCommittee reviews and monitors reports submitted by CSR Forum relating to implementationof the project(s) and its financial/ operational monitoring. The Board reviews andapproves CSR projects/ initiatives as recommended by the CSR Committee and evaluatesreports relating to implementation of the approved CSR projects.
The Report on CSR activities in the format as required under Companies (CorporateSocial Responsibility) Rules 2014 is set out in Annexure G formingpart this Report. The CSR Policy is available on the website of the Company.
Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Directors based upon theinformation and documents made available to them and to the best of their knowledgeconfirm that:
In preparation of the Annual Accounts for the Financial Year ended March 31 2016 theapplicable accounting standards have been followed and there have been no materialdepartures in the adoption and application thereof;
They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the Financial Year and of the
Profit of the Company for that period;
They have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
They have prepared the Annual Accounts on a going concern basis;
They have laid down adequate internal financial controls to be followed by the Companyand they are operating effectively;
They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and are operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the Statutory Internal and
Secretarial Auditors including audit of internal controls over financial reporting bythe Statutory Auditors and the reviews performed by Management the Board is of theopinion that the Companys internal financial controls were adequate and effectiveduring FY 2015-16.
Number of meetings of the Board
Nine meetings of the Board were held during the year. The time gap between any twomeetings did not exceed one hundred and twenty days. Further details in this regard aregiven in the Corporate Governance Report which forms part of this Report.
Declaration by Independent Directors
As required under Section 149(7) of the Companies Act 2013 the Company has receivedthe declaration from each of the Independent Directors of the Company confirming that theymeet the criteria of independence laid down in Section 149(6) of the Companies Act 2013and Regulation 16(1) (b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Pursuant to Sections 134 178 of the Companies Act 2013 and Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 ["SEBI (LODR)Regulations"] the performance evaluation of the individual Directors (IndependentNon-Independent Directors and the Chairman) the Board as a whole and its Committees forthe Financial Year 2015-16 was carried out.
The Nomination and Remuneration Committee (NRC) and the Board carried out theperformance evaluation of individual directors including the Chairman on the basis ofcriteria such as exercise of independent judgment contribution to the deliberations andproviding inputs and guidance at the meetings commitment to role and fiduciaryresponsibilities non-partisan appraisal of issues expertise and domain knowledge etc.
The Board also carried out annual evaluation of its own performance and its committeesbased upon the inputs received from the directors and criteria such as Board/ Committeecomposition and structure deliberations ensued thereat on critical matters effectivenessof the Board/ Committee processes etc.
As required under Schedule IV of the Companies Act 2013 and Regulation 25 of the SEBI(LODR) Regulations a separate meeting of the Independent Directors was held during theyear. At the said meeting the performance evaluation of the Non-Independent Directorsincluding the Chairman was carried out on the basis of criteria such as commitment inputsand guidance provided expertise and knowledge initiatives taken in bringing forth thecritical issues and resolutions thereof etc. At the said meeting the performanceevaluation of the Board as a whole was carried out on the basis of depth and quality ofdiscussions at the meetings advice and guidance provided to the Management on criticalissues relating to business and operations of the Company etc. Also assessment of thequality quantity and timeliness of the flow of information between the CompanysManagement and the Board was carried out.
Mr. Anil Harish (DIN 00001685) who was appointed as an Independent Director at the 19thAnnual General Meeting ("AGM") of the Company held on July 3 2014 resigned assuch with effect from May 19 2015. Proposal for appointment of Mr. Anil Harish as anIndependent Director of the Company was put up before the Members at the last AGM held onSeptember 29 2015 for approval based upon the Notice received from a Member proposinghis candidature. Since Mr. Anil
Harish fulfilled the criteria of independence and also in the opinion ofthe Board he is a person of integrity and possesses relevant expertise and experiencethe Board recommended his appointment. His appointment as an Independent Director of theCompany was approved by the Members at the 20th AGM of the Company held on
September 29 2015 for a term of five years effective from the said date.
Ms. Shanu S. P. Hinduja Director (DIN 06512872) and Co-Chairperson of your Company isliable to retire by rotation at the ensuing Annual General Meeting and being eligibleoffers herself for re-appointment. A brief profile of Ms. Shanu S. P. Hinduja is annexedto the
Notice of the 21st Annual General Meeting to be held on September 21 2016.
Mr. B. L. Taparia (DIN 00016551) who was appointed as an Independent Directoreffective August 12 2015 in the casual vacancy caused by the resignation of Mr. AnilHarish resigned as a Member of the Board with effect from August 31 2015. The Boardplaced on record its appreciation for the guidance and advice provided by Mr. Taparia.
The Board has constituted an Audit Committee pursuant to the provisions of Section 177of the Companies Act 2013. The Committee comprises of the following Members: Mr. AnilHarish (Independent Director) Chairman Mr. Ramkrishan P. Hinduja (Non-ExecutiveNon-Independent Director) Mr. Rajendra P. Chitale (Independent Director) and Mr. RanganMohan (Independent Director).
Further details pertaining to the Audit Committee are included in the CorporateGovernance Report which forms part of this Report.
Key managerial Personnel
Pursuant to Section 203 of the Companies Act 2013 the Company has recognized/ notedMr. Partha DeSarkar Manager (designated as Chief Executive Officer);
Mr. Srinivas Palakodeti Chief Financial Officer and
Mr. Makarand D. Dewal Company Secretary as Key Managerial Personnel of the Company.
Chief executive officer Certification
The Chief Executive Officers declaration affirming compliance with the Code ofConduct by the Board and Senior Management is furnished in Annexure A tothis Report.
Conservation of Energy technology absorption and Foreign exchange earnings and outgo
The prescribed particulars as required under Section 134(3)(m) of the Companies Act2013 relating to Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo are furnished in Annexure B to this Report.
As required under Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ["SEBI (LODR) Regulations"] a detailed reporton Corporate Governance is furnished as Annexure C to this Report.
The Statutory Auditors of the Company have examined the compliance of conditions ofCorporate Governance as stipulated in Schedule V (C) of the SEBI (LODR)
Regulations and have certified compliance thereof. The certificate is attached asAnnexureD to this Report.
Mnagement Discussion and analysis Report
A separate report on Management Discussion and Analysis is annexed as AnnexureE to this Report.
The two ESOP Schemes viz. "Hinduja Global Solutions Limited Employees StockOption Plan 2008" and "Hinduja Global Solutions Limited Employees Stock OptionPlan 2011" were in operation during the Financial Year 2015-16. These ESOP Schemesare in compliance with the provisions of SEBI (Share Based Employee
Benefits) Regulations 2014.
ESOP Schemes are available on the Companys website at http://www.teamhgs.com/investors/other-reports.There were no material changes made to the aforesaid ESOP Schemes during the FinancialYear 2015-16.
Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act 2013 an extract of Annual Returnas on Financial Year ended March 31 2016 in the prescribed format is furnished in annexureF to this Report.
Related Party transactions
Transactions entered into with related parties during the Financial Year 2015-16 are inthe ordinary course of business and at arms length basis and therefore outside thepurview of Section 188(1) of the Companies Act 2013. Information on related partytransactions pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2)of the Companies (Accounts) Rules 2014 is given in the prescribed format in AnnexureH forming part of this Report.
Merial changes and commitments affecting the financial position of the Company betweenthe end of the Financial Year and date of the Report
There were no material changes and commitments affecting the financial position of theCompany between the end of the Financial Year and date of the Report.
Policy on Directors appointment and Remuneration
Policy on Directors Appointment and Remuneration and other matters provided inSection 178(3) of the Companies Act 2013 have been disclosed in the Corporate GovernanceReport which forms part of this Report.
Wistle Blower Policy
The Company has a Whistle Blower Policy and Vigil Mechanism to report and redressgenuine concerns and grievances. The Policy is available on the Companys website at http://www.teamhgs.com/investors/corporate-policies.This matter is covered in the Corporate Governance Report which forms part of this Report.
Under the Whistle Blower Policy and Vigil Mechanism no complaints were received duringthe Financial Year 2015-16.
Risk management Policy
Your Companys Risk Management Policy inter alia identifiesrisks takinginto consideration the business and operations of the Company and adoption of mitigationmeasures.
Its robust Enterprise Risk Management (ERM) framework comprises of practices related toidentification assessment monitoring and mitigation of risks to its business. Thedetails of the Policy/Framework are given in the Management Discussion and Analysis Reportattached to this Report.
Fixed Deposits from Public
The Company has not accepted any fixed deposits from the public and as such no amountof principal or interest was outstanding as on the Balance Sheet date.
At the 20th Annual General Meeting of the Company held on September 292015 M/s. Price Waterhouse Chartered Accountants (Registration No. 301112E) wereappointed as Statutory Auditors of your Company till the conclusion of the next AnnualGeneral Meeting. The said Auditors have submitted requisite declarations as to theireligibility to act as Auditors of the Company if appointed. Accordingly it is proposedto re-appoint
M/s. Price Waterhouse Chartered Accountants as Statutory Auditors of the Company fromthe conclusion of the ensuing Annual General Meeting till the conclusion of the nextAnnual General Meeting. The Board recommends the re-appointment of the Auditors.
The Auditors Report (for Standalone and Consolidated statements) for theFinancial Year ended March financial 31 2016 is unmodified/ unqualified.
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors had appointed Ms. Rupal D. Jhaveri Practicing Company Secretary (FCS No. 5441;CP No. 4225) as the Secretarial Auditor to carry out the Secretarial Audit for theFinancial Year 2015-16.
The Secretarial Audit Report in the prescribed format for the Financial Year 2015-16forms part of this Report as Annexure I. The Report does not containany qualifications reservations or adverse remarks.
Pursuant to Section 197 (12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 it isnecessary to disclose the ratio of remuneration of each director to the medianemployees remuneration. At present the Directors are paid fees for attending themeetings of the Board of Directors and of the Committees of which they are members. Thisremuneration by way of fees is not related to the performance or profit of the Company(like payment of commission is related to the profits of the Company). In view of thisthe ratio of remuneration of each director to the median employees remuneration isnot computed. At the last Annual General Meeting the Members had approved the proposalfor payment of commission for a period of five years commencing from April 1 2015 up to alimit as per the provisions of the Companies Act 2013. The Board of Directors have notrecommended/ approved payment of commission to Directors for the Financial Year 2015-16.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended from time to time a statement showing the names andother particulars of the employees drawing remuneration in excess of the limits set out inthe said Rules are provided in the Annexure forming part of the Annual Report. Disclosurespertaining to remuneration and other details as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annexure forming part of the AnnualReport.
Having regard to the firstproviso to Section 136(1) of the
Companies Act 2013 the Annual Report excluding the aforesaid information is beingsent to the Members of the Company. The said information is available for inspection atthe Registered Office of the Company between 11:00 a.m. to 1:00 p.m. on any working daytill the date of the Annual General Meeting and any Member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished free ofcost.
In accordance with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended from time to time details of foreign employeesexcluding directors and their relatives have not been included in the Annexure. Membersinterested in obtaining the said information may write to the Company Secretary at theRegisteredOfficeof the Company and the requested information shall be furnished to suchMember free of cost.
Significant andmaterial orders
There are no significant and the Regulators or Courts or Tribunals that would impactthe going concern status and your Companys operations in the future.
Internal Financial Controls
Internal Financial Controls (including Internal Financial Controls over FinancialReporting) and their adequacy are included under the heading InternalControls in the Management Discussion and Analysis which forms part of thisReport as Annexure E.
Your Directors thank the Government of India State Governments Government of variouscountries and regulatory authorities and agencies for their co-operation and support andlook forward to their continued encouragement. Your Directors are grateful to thecustomers vendors collaborators business partners investors financial institutionsbankers and the society at large for their continued support. The Directors place onrecord their appreciation of the commitment and contribution of the employees at alllevels for achieving the growth of the Company in this challenging environment.
|For and on behalf of the Board of Directors || |
|Place : Mumbai ||Ramkrishan P. hinduja |
|Date : August 11 2016 ||Chairman |
TO THE DIRECTORS REPORT
Particulars pursuant to Companies (Accounts) Rules 2014.
a. Conservation of energy:
Given our focus on being an environmentally friendly organization and the nature of thebusiness your Company (HGS) constantly endeavors to make its carbon footprint smallerwith each passing year. Thepart of Mphasis Groups Company has been able to makesustained efforts to reduce and optimise the use of energy consumption at its deliverylocations by installing hi-tech energy monitoring and conservation systems to monitorusage minimize wastage and increase overall efficiency at every stage of powerconsumption. Over the years HGS has implemented many technological as well asprocess-related measures to save costs as well as minimize environmental footprint.
The Company continues to reduce power-consumption by air conditioning with segmentedcooling mechanisms in the new delivery centers. HGS has also initiated deployment of thinclients modular UPS and TFT monitors to lower power consumption. The impact of thesemeasures has resulted in optimisation of energy consumption savings in energy cost andenvironment protection.
b. Technology absorption:
With robust project processes in place the right resources and a determinedleadership HGS is launching new service lines and implementing new systems to supportthese services. Always eager to be an early adopter of the latest innovation we are usingtechnology as the foundation for transformation.
The increasingly dynamic global environment in which we work in demands real-timeaction. Your Company is leveraging new technologies in analytics and business intelligenceto help improve efficiency and reliability across geographies. The Company is constantlyexploring and implementing data-center related interventions such as virtualizationthrough cloud adoption and consolidation through merger or resizing. As part of thisinitiative we have migrated a large number of business users to Office 365 platform. HGShas also transitioned the residual point-to-point link to MPLS for connectivity to ourcustomer data center.
Other tools and platforms that HGS has implemented include Robotics Process Automationwith Automation
Anywhere Epiance (enhances training/transition and operational efficiency)Procurement automation with
Ariba Business planning & Governance/ Risks & Compliance with SAP andPerformance management with Qlik. Your Company is also increasingly adopting digitalplatforms to deliver services and enhanced customer experience for its clients.
HGS acquired a significant
BPM business in India in September 2015 and since then your Company has transitionedall IT infrastructure (including computing telecom and telephony) users and clientnetworks to the HGS network.
Powered by these investments in tools and platforms HGS is now in a position torealize economies of scale.
c. Foreign exchange earnings and outgo:
The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows is as under:
The share of export in the operating income/ total income is as given under:-
|For the Year ||2015-16 ||2014-15 |
|Export as a: || || |
|% of Operating Income ||34.13% ||39.67% |
|% of Total Income ||33.54% ||38.66% |
Foreign Exchange Earnings and Outgo (Rs in million)
|For the Year ||2015-16 ||2014-15 |
|Total Foreign || || |
| ||4720.1 ||4246.2 |
|Exchange Earned || || |
|Total Foreign || || |
| ||15.4 ||20.2 |
|Exchange Outgo || || |
|For and on behalf of the Board of Directors || |
|Place Mumbai ||Ramkrishan P. hinduja |
|Date August 11 2016 ||Chairman |