To the Members
The Directors hereby present the Twenty-Sixth Annual Report of your Company along withthe audited financial statements for the financial year ended March 31 2017. Theconsolidated performance of the Company and its subsidiaries has been referred to whereverrequired.
1. FINANCIAL RESULTS
(in Rs. Million)
| || |
| ||Year ended March 31 2017 ||Year ended March 31 2016 ||Year ended March 31 2017 ||Year ended March 31 2016 |
|Revenue from operations ||836.38 ||866.46 ||3416.56 ||3116.30 |
|Other income ||22.02 ||22.13 ||22.49 ||22.41 |
|Employee benefits expense ||556.74 ||512.74 ||2219.03 ||1984.94 |
|Cost of technical sub-contractors ||15.71 ||16.94 ||696.53 ||570.02 |
|Other expenses ||189.55 ||207.59 ||350.83 ||354.51 |
|Profit before finance cost depreciation taxes and amortization ||96.41 ||151.33 ||172.68 ||229.24 |
|Finance cost ||0.70 ||0.50 ||3.74 ||3.24 |
|Depreciation and Amortization expense ||14.00 ||15.62 ||17.00 ||18.18 |
|Profit Before Tax ||81.71 ||135.21 ||151.93 ||207.82 |
|Tax expense ||27.37 ||53.19 ||27.69 ||(51.46) |
|Profit After Tax ||54.33 ||82.02 ||124.24 ||259.27 |
|Paid-up Equity Share Capital ||253.84 ||251.73 ||249.68 ||247.57 |
|Earnings Per Share (EPS) ||2.19 ||3.27 ||5.00 ||10.50 |
2. COMPANY AFFAIRS Standalone
On a standalone basis your Company recorded revenue of Rs. 836.38 million as againstRs. 866.46 million in the previous year. Mindteck's net profit stood at Rs. 54.33 millionas against Rs. 82.02 million in the corresponding previous year. At an operating marginlevel Mindteck recorded EBITDA of Rs. 96.41 million (11.53%) this year as against Rs.151.33 million (17.46%) last year.
During the year under review your Company recorded consolidated revenue of Rs. 3416.56million as against Rs. 3116.30 million in the previous year. Of the consolidated revenuethat was recorded 71% is attributed to the US and the balance pertains to rest of theworld.
Mindteck's Consolidated Net Profit for the year stood at Rs. 124.24 million as againstRs. 259.27 million in the corresponding previous year.
At an operating margin level Mindteck recorded EBITDA of Rs. 172.68 million (5.05%)this year as against Rs. 229.24 million (7.36%) last year.
There were 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 relates and the date of the report.
The Board has recommended a dividend of 10% (Re.1 per Equity Share of Rs. 10 each) forthe year ended March 31
2017. This translates into a total outlay of Rs. 30551459 including DividendDstribution Taxes.
4. BUSINESS FOCUS AND HIGHLIGHTS
Mindteck provides product engineering and information technology services to Fortune1000 clients start-ups leading universities and government entities around the globe.The Company is devoted to delivering knowledge that is critical to help our clientscompete innovate and propel forward. Mindteck's legacy expertise in embedded systems andenterprise applications is complemented by its more recently recognized successes inloT-based solutions such as those for developing smart cities. It also has a strongtrack record in storage life sciences healthcare and medical devices. Mindteck is amonga select group of global companies appraised at Maturity Level 5 Version 1.3 of the CMMIInstitute's Capability Maturity Model Integration (CMMI). The Company is also one of theFounding Members of The Atlas online a visualization tool for research developed by TheCenter for International Development (CID) at Harvard University. Global alliances includethe Intel IoT Solution GE Digital Thread Group IoT Global Network and ZigBee.
Storage and Semiconductor
Mindteck's experience in storage spans over two decades. The Company's engagements haveincluded storage software development testing hardware and firmware design productizedsolutions consultancy and implementation services. It has a readily available talent poolin the areas of system development quality assurance and automation and data centeradministration. The Company's top storage clients have continuously provided the Companyexcellent customer satisfaction ratings for its consistent support in executing theirbusiness critical projects.
Mindteck is also a technology partner for the Storage Networking Industry Association(SNIA) a not-for-profit global organization comprised of member companies spanning theglobal storage market. The mission of this organization is to lead the storage industryworldwide in developing and promoting standards technologies and educational services toempower organizations in the management of information. During the year a key storageexpert from Mindteck was elected to the SNIA-India Board.
For over a decade Mindteck has been serving the semiconductor equipment manufacturingindustry. The Company's expertise is comprised of a wide spectrum of IT servicesincluding Semiconductor (SEMI) standards implementation DeviceNet implementationproprietary protocol development Mechanical Engineering Services (MES) Enterprise DeviceMonitoring Electronic Design Services (EDS) simulator development automation Changemanagement and end-to-end testing services. Mindteck's ready-to-deploy solutionaccelerators such as a device simulator automated equipment software testing frameworkand Semiconductor Equipment Communications Standard (SECS)/Generic Equipment Model(GEM)-based Factory Automation (FA) test harness helps lower project risk and cost. Keyhighlights executed in FY2016-17 include:
Expanded storage certification capabilities and added it as a new offering.Currently Mindteck provides certification services on Citrix VMware Windows VSAN andRedHat; it is also building expertise in Microsoft Azure certification.
Following the boom in all-flash storage devices Mindteck has developedexpertise in flash technology and is now providing services to many new players in thistechnology area.
Won two new projects for software development and mechanical engineering with anatomic layer deposition group of a semiconductor equipment company in the US.
New order with a semiconductor foundry for a wireless notification device inAPAC.
Received an award for setting up product automation testing teams within astorage company.
Electronic Design Services
Mindteck's expertise in hardware design and embedded software development has helped itbecome a trusted partner to many of the world's leading semiconductor automotiveindustrial flow metering and energy management companies.
Mindteck's Electronic Design Services (EDS) group provides core embedded technologysolutions and services in a wide variety of sectors including industrial control systemsgas control and monitors computer modules electric vehicle chargers instrumentationstorage smart energy and IoT. The Company's integrated product design capabilities spanhardware/firmware design mechanical design software development connectivity solutionsand value engineering. With a sound ecosystem of established partnerships Mindteck'scomprehensive approach to product development consistently results in the reduction oftime-to-market for the end-customer. Highlights of recent work include:
Successfully delivered a medical communication gateway board for multiple ECGdevices.
Completed a car audio player upgrade project for an existing Original EquipmentManufacturer (OEM) customer enabling them to migrate to a new hardware platform.
Engaged with an existing customer in the area of analytical instruments todevelop hardware and firmware for their next generations Gas Chromatography (GC) systembased on new sensor technology.
Executed the design and development of two light therapy products for a UK-basedcustomer.
Launched a wearable device for production floor automation to improveproductivity in semiconductor fabrication.
Completed a complex wireless flow meter design for a Swiss customer; alsosupporting large scale production of the flow meter.
Won multiple design projects in the automotive area from an industry pioneer.
Smart Energy and Wireless
Mindteck is one of the earliest adopters of the ZigBee standards and possess its ownZigBee and 6LowPan wireless stacks. Having developed ZigBee stacks for major siliconproviders Mindteck's work is demonstrated through their solution accelerators:
Wireless short-range and long-range communication modules
Sensor modules for monitoring solar power generation/ efficiency
Connectivity with WiFi ZigBee LoRa LTE
The Company has been consistently focusing on wireless communication and wirelesssensor networks for design and development of wireless monitoring and load controlsolutions in the automation space. Mindteck has been a ZigBee Alliance contributor membersince 2004. It has developed ZigBee Stack and Application profiles for leadingsemiconductor companies and conceptualized and developed ZigBee-based products for OEMs.Mindteck is also investing in proactive development of LoRa stacks. The Company hassolution IPs that are market- ready and in line with smart city initiatives. It has alsoventured into Wi-Fi based solutions including wearables.
The visibility and acceptance of Mindteck's smart energy offerings increased with theintroduction of its Internet of Things (IoT) solutionsparking building automationsmart grid street lighting health care and sustainable energy efficient solutions.
Enterprise IT Solutions
Mindteck has a strong track record of providing enterprise business solutions for largeand medium enterprises in all streams of technologies. In the current year Mindteckaugmented its expertise in mobility solutions by delivering standalone solutions alongwith its Smart City solution offerings. The development approach has progressively movedto an Agile/Scrum methodology for most projects executed at Mindteck.
The range of Mindteck's service offerings in this area include:
Enterprise Business Application development using Microsoft Java and LAMPtechnologies
Enterprise Mobility solutions on iOS Android and Windows platforms
Application Maintenance/upgrade/migration across technologies
Data Analytics and Visualization
Independent Verification and Validation of IT solutions
Some of the major projects executed by Mindteck during the current year include:
SharePoint portal for one of the leading banks in India.
SharePoint-based internal tool for one of the largest global IT enterprises.
Performance Management Systems for one of the leading banks in India.
Independent verification and validation in the area of medical compliance.
Mobility application on iOS and Android for a world leader in car entertainmentsystems.
Application Support Services and BPM
Mindteck provides application support services based on customer requirements. For oneof the largest global IT enterprises worldwide the Company has been providing support forinternal business tools for several years. Mindteck's services have been rated very highon customer satisfaction consistently - in part due to a combination of the right ITskills along with a strong understanding of the business processes of the customer.
Mindteck has also been providing services in Business Process Management for areas suchas insurance. For underwriting services Mindteck's servicing for the niche catastrophicinsurance sector has been much appreciated by the client.
Cloud Computing and Big Data
Mindteck provides end-to-end cloud-based IT Consulting Services across multiple cloudvariants (private public and hybrid cloud enablement). We have in-depth expertise invarious cloud platforms including Amazon Web Services (AWS) Azure Eucalyptus OpenStackand VMware backed with SMEs and technical architects with strong enterprise backgroundand application management data center and IT infrastructure expertise.
Mindteck's cloud enterprise solutions expertise includes cloud- based monitoring andanalytics and big data solutions. The Company has built a solution hosted on Amazon EC2that leverages cloud infrastructure to provide the best analytical solutions with regardto the dashboard custom reports and data mining capabilities. Its holistic analytics andbusiness intelligence service offerings help clients act instantly on their data.
Mindteck's Mind-CDMI brings niche expertise in cloud- based storage interoperability inthe form of a Cloud Data Management Interface.
Mindteck's MegaMind is a big data platform that enables automated extraction of carlicense plate information. A high volume of multi-media content (multiple images) streamedfrom IP cameras located in a city is processed and the car number plate is extracted withgreater than a 70% success rate. This solution is targeted for security system providersand law enforcement.
Healthcare and Medical Devices
Mindteck's Kolkata and Bengaluru Development Centers were recertified for ISO 13485 -the world's most acclaimed medical device standards by many global organizations.
Mindteck's medical device expertise focuses on medical imaging remote monitoring andpatient monitoring devices. The company integrates its experience in Life Sciences andHealthcare to provide scientific software solutions and product engineering relatedservices in this niche domain. During the year Mindteck enriched its capabilities in theareas of predictive analytics for pharma manufacturers. Other new offerings include RA/QAservices pharmacovigilance and scientific data management of pharma researchlaboratories.
In the UK Mindteck expanded its business with a key medical device client. It is alsopursuing a major technology partnership with a leading medical device company in the areaof smart healthcare.
Mindteck provides niche engineering services to many major players of the life sciencesindustry. Starting from test and measurement companies Mindteck works across multipleindustry segments within analytical and bio-analytical instruments such as controlsystems and physical and chemical testing instruments which are extensively used innanotechnology and materials science. The Company's offerings include software andhardware development across many emerging areas such as mobility big data and analytics.The service capabilities of Mindteck broadly cover the complete product engineering needsof device manufacturers.
For over ten years Mindteck has been a leading software and hardware solutionsprovider for the life sciences instrument segment. With its blend of engineering expertiseand IT experience Mindteck is uniquely positioned to deliver against the exacting andoften demanding needs of the industry. Mindteck has longstanding relationships with manymajor players of the industry and the company's services have consistently exceeded clientexpectations.
During the financial year:
Mindteck initiated a new offering in platform testing of laboratory softwareand is developing a Lab Intelligence tool for a Southeast Asian company that willultimately be an enterprise lab analytics tool.
Started an engagement with a property casualty insurance company and anoffshore engagement with an analytical instrument company.
Research and Development
Mindteck's R&D team has developed a Smart Solutions portfolio to stay ahead in theglobal market and to help our clients derive more value. It includes: Smart ParkingEnergy Monitoring and Management Smart Lighting Smart Healthcare and SmartCollaboration Solutions. Key pilot projects executed by R&D during the year 2016-17include:
Implementation of a Smart Parking Solution for a leading Indian Urban Local Body (ULB):This innovative car occupancy detection solution uses both Wi-Fi camera withedge-based video analytics and battery-operated wireless sensors to capture car parkingoccupancy details along with the date and time stamp. The sensors which have multi-yearbattery life were tested for extreme weather conditions at the client location.
The aggregated real-time parking availability information effortlessly integrates withany government-run and third-party parking aggregator service via the ApplicationProgramming Interfaces (APIs). Service providers can also run analytics on real-timeparking data for detecting any revenue leakages and implementing dynamic pricing models.The solution includes a Smart Parking Mobile App that enables motorists to navigate andzero in on the nearest parking in real-time resulting in reduced fuel consumption andcarbon footprint.
Big Data POC deal with an Indian global telecommunications services company: Fortelcos it is mandatory to store the call detail records (CDRs) of every incoming andoutgoing call on their network for a period of seven years. Since the data volume of theseCDRs is huge data older than three months is stored on low-cost LTO-4 tapes. Telcos arealso mandated to respond to specific CDR pull requests from government investigativeagencies in a timely manner which requires restoring the tape and searching for specificCDRs. The current process is manually cumbersomein addition to being costprohibitive when the data has to be stored.
To ease the whole process Mindteck is now partnering with a multinational storage anddata management company to replace the Tivoli-based tape storage system for CDRs bydeveloping a Hadoop-based big data solution which archives the CDR data to theirStorageGRID Webscalea low-cost object storage product that can scale in petabytes ofstorage and provides software-defined storage. This enables the CDR data to be availableonline for pull requests and analytics.
Mindteck's R&D team is also focusing on creating new innovative smart solutionsproducts and processes and further assimilating them with existing IoT solutions toenhance the company's smart city offerings. Over the past year it has conducted proof ofconcepts (POCs) with clients for select projects and collaborated on initiatives withmarquee clients.
Government and Smart Cities
Mindteck has been working with state and local governments since 1999. The company hassuccessfully executed numerous projects in health and human services educationconstituent services and public safety in the US including in Pennsylvania TexasMichigan Massachusetts Oregon District of Columbia Wisconsin California WestVirginia New York New Hampshire and Florida. Mindteck has a strong history of deliveringprojects comprising application development program and project management businessanalysis testing strategic consulting and professional services. During the yearMindteck initiated a new business engagement with an established software services companythat provides a myriad of business and technical solutions to the commercial and federalgovernment market.
Within the smart city space Mindteck further accelerated momentum by implementingsmart capabilities for cities. Mindteck's notable highlights in this area include:
Deployment of smart meters along with software back-end integration for thefirst smart grid project a large electricity supply company in South India.
Implemented the first smart parking solution for a large municipal corporationin India.
Won a smart home pilot automation/grid project.
CENTERS OF EXCELLENCE
Mindteck's Storage Center of Excellence (CoE) has a longterm vision for the storageproduct line with a well-structured implementation plan. The company has the capacity andcapability to offer a diverse range of storage engineering services. Leading storagesolution vendors have benefited from our comprehensive quality assurance.
Mindteck' Storage Testing CoE is primarily aimed at providing the skills peopleprocesses and infrastructure to enable our customers to build and enhance product qualityin the storage space. For over a decade Mindteck has built comprehensive expertise instorage functional testing automation performance testing system testing andcertification testing - especially in the SAN NAS and unified storage space in tandemwith multiple storage product vendors.
Wireless and Smart Energy
Mindteck continues to focus on providing monitor and control solutions by designingblocks required for wireless connectivity for IoT. The company's current focus is oncontrol nodes gateways with multi-technology connectivity and webserver/applications forsupport over the cloud for building automation and energy-efficient solutions acrossvarious industry sectors. Mindteck won a new project with an existing client in the SolarPV business for integrating a new module and also secured extensions for their applicationsupport.
Mindteck Kolkata's CoE has made further in-roads into value development. It hasdeveloped expertise in medical data exchange protocols such as HL7 and DICOM medicaldata security aspects involving FIPS140-2 and HIPPA and FDA- recommended developmentguidelines. Mindteck has worked with a wide set of medical vital parameters and gatheredsignificant expertise in using medical data simulators.
With two state-of-the-art in-house analytical instrument laboratories Mindteck iscapable of delivering software and hardware solutions executing R&D assignments andconducting analytical testing on a variety of instruments for customers.
Change in Nature of Business
There were no changes in the Nature of Business of the Company during the year.
At Mindteck we believe "Quality is the result of a carefully constructed culturalenvironment. It has to be fabric of the organization not part of the fabric". -Phill C
Mindteck's Quality Management System (QMS) is a collection of business processesfocused on consistently meeting customer requirements and enhancing their satisfaction.Mindteck continues to adhere to ISO certifications 9001:2008 ISO 13485:2003 ISO27001:2013 and CMMI-DEV Version 1.3 Maturity Level 5.
Mindteck's appraisal at CMMI-DEV Version 1.3 Maturity Level 5 is a testament to itscorporate commitment and attention to quality providing significant benefits to clientsand employees. Mindteck leveraged CMMI-DEV Version 1.3 Maturity Level 5 to achieveimproved customer satisfaction and ultimately further profitability and growth.
ISO certifications demonstrate Mindteck's ongoing commitment to delivering a consistentlevel of quality to customers through its well-defined process and procedures. Mindteck isenterprisewide certified against ISO 9001:2015 (Quality Management) and continues to holddomain-specific quality certification ISO 13485:2003 (for Medical Devices). This assuresthe company's commitment to providing value to clients through process- driven innovationprinciples at every stage of medical device development and design.
Mindteck understands that the confidentiality integrity and availability ofinformation are vital to business operations and success. Mindteck uses a multi-layeredapproach to protect key information by constantly monitoring and improving itsapplications systems and processes to meet the growing demands and challenges of dynamicsecurity threats. Last year again Mindteck successfully maintained CMMI Level 5 forsoftware and hardware development projects in its Bengaluru and Kolkata locations.Additionally the Capability Maturity Model Integration (CMMI) Institute accepted Mindteckas a partner. In its role as Partner the Company is now certified to provide officialCMMI Institute services in Capability Maturity Model Integration (CMMI) and DataManagement Maturity (DMM).
Mindteck has offices in the US UK Singapore Malaysia Philippines BahrainNetherlands Germany and India. There are also four development centers equipped withR&D laboratories across the globe. The infrastructure includes space for workstationsconference rooms meeting rooms labs and a world-class communication system. Theinnovative 'best shore delivery model' has provided our customers with a mix of onsiteoffshore near shore offshore-onsite and other hybrid delivery options acrossgeographies for faster and more efficient delivery of quality services.
On March 31 2017 Mindteck had six wholly-owned subsidiaries: Mindteck Inc. (US)Mindteck Middle East Limited S.P.C. (Bahrain) Mindteck Software Malaysia SDN. BHD.(Malaysia) Mindteck Singapore Pte. Ltd. (Singapore) Mindteck (UK) Limited (UK) andChendle Holdings Limited (British Virgin Islands). Mindteck (UK) Limited has twosubsidiaries - Mindteck
Germany GmbH (Germany) and Mindteck Netherlands B.V. (Netherlands). Mindteck SingaporePte. Ltd. has one subsidiary - Mindteck Solutions Philippines Inc. (Philippines).
The Consolidated Financials have been audited and form part of this Annual Report. Thefinancials of the subsidiaries have also been audited by the respective statutoryauditors. The Consolidated Financials have been prepared and audited in strict compliancewith applicable Accounting Standards and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as prescribed by SEBI. All information including (a)capital (b) reserves (c) total assets (d) total liabilities (e) details of investment(except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation(h) provision for taxation
(i) profit after taxation and (j) proposed dividend as directed by the Ministry ofCorporate Affairs has been disclosed in the Consolidated Balance Sheet. FinancialHighlights with the Indian rupee equivalent of the figures given in the foreign currencyalong with exchange rate as on closing day of the financial year and the statementpursuant to Section 129(3) in Form AOC-1 forms part of this Annual Report as Annexure-1.
Further the Company undertakes that the annual accounts of the subsidiary companiesand the related detailed information will be made available to any investor seeking suchinformation at any point of time. The annual accounts of the subsidiary companies andrelated detailed information will also be kept for inspection by any investor atMindteck's Registered Office and that of the respective subsidiary companies. We shallfurnish a hard copy of the accounts of subsidiaries to any shareholder on demand and asoft copy of accounts is available on the Investors section of Company's websitewww.mindteck.com. The Holding as well as Subsidiary companies regularly files theapplicable data to various regulators and government authorities as and when required.
None of the Subsidiaries Joint ventures or Associate companies ceased during the year.
8. RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered during the financial year were on anarm's length basis and in the ordinary course of business. There were no materialsignificant Related Party Transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons and their relatives except with itswholly-owned subsidiaries. The particulars of such contracts or arrangements with relatedparty are attached in Annexure-2.
9. AWARDS AND RECOGNITION
Mindteck is among the select group of global companies appraised at CMMI-DEV Version1.3 Maturity Level 5 from CMMI Institute. It is enterprise-wide certified against ISO9001:2015 Quality Management and continues to hold domain-specific qualitycertification ISO 13485:2003 for Medical Devices. In recognition of its security effortsMindteck was certified for ISO 27001:2013-Information Security Management System.Additionally this year Mindteck was certified to provide official CMMI Institute servicesin Capability Maturity Model Integration (CMMI) and Data Management Maturity (DMM).
No material litigation is outstanding as on March 31 2017 except one recovery suitfiled in connection with advance payment made for the proposed office premises which wasnot occupied by the Company.
11. CHANGES TO SHARE CAPITAL
The Board of Directors of the Company allotted 21366 Equity Shares on May 20 201640666 Equity Shares on August 10 2016 78996 Equity Shares on November 11 2016 and69766 Equity Shares on February 10 2017 pursuant to allotment of shares under theEmployee Stock Option Schemes. Consequently the outstanding issued subscribed and paidup Equity Shares increased from 25173101 to 25383895 as on March 312017.
12. BOARD COMMITTEES
The details of various Committees of the Board are provided in the Corporate GovernanceReport.
13. FIXED DEPOSITS
The Company has not accepted any fixed deposits and as such no amount of principal orinterest was outstanding as on the Balance Sheet date.
14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans Guarantees or Investments covered under Section 186 of the Companies Act 2013forms part of the notes to the Financial Statements provided in the Annual Report.
15. TRANSFER TO RESERVES
During the year the Company transferred Rs. 54334201 to its reserves.
As per Article 112 of the Articles of Association of the Company Mr. Meenaz Dhananiretires by rotation as Director in the ensuing Annual General Meeting and being eligibleoffers himself for reappointment. A brief resume of Mr. Meenaz Dhanani is included in thenotice for the Annual General Meeting. Mr. Meenaz Dhanani was re-appointed as an ExecutiveDirector of the Company for a period of three years effective from October 04 2016.
Mr. Sanjeev Kathpalia was appointed as an Additional Director effective from February10 2017 and subsequently he was elevated to the position of Managing Director and ChiefExecutive Officer with effect from March 01 2017 for a period of three (3) years. TheResolution seeking the approval of Members for appointment of Mr. Sanjeev Kathpalia asManaging Director and Chief Executive Officer forms part of the notice for the 26th AnnualGeneral Meeting. A brief resume of Mr. Sanjeev Kathpalia is included in the notice for theAnnual General Meeting.
Declarations by Independent Directors
All Independent Directors have given declarations to the effect that they meet thecriteria of independence as laid down under Regulation 16(1)(b) & 25 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and Sub-Section 6& 7 of Section 149 of the Companies Act 2013.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has carried out an annualperformance evaluation of its Board's performance the Directors individually as well asthe evaluation of the working of its Committees and Chairperson.
The Company places great emphasis on the principle of diversity including genderdiversity. Diversity throughout the organization makes great business sense. The Companymaintains that appointments to the Board should be based on merit as well as complementingand expanding the skills knowledge and experience of the Board as a whole.
Policy on Directors' appointment and remuneration
Mindteck has an appropriate mix of Executive and Independent Directors to maintain theindependence of the Board and separate its functions of governance and management. As ondate the Board consists of Eight Directors two of whom are Executive or Whole-timeDirectors one is Non-Executive and five are Independent Directors including one womanDirector. The Board periodically evaluates the need for change in its composition andsize. The policy of the Company on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a Directorand other matters provided under Sub-section 3 of Section 178 of the Companies Act 2013adopted by the Board is attached as Annexure-3 to the Board's report. We affirmthat the remuneration paid to the Directors is as per the terms.
Number of meetings of the Board
The Board met four times during the Financial Year the details of which are given inthe Corporate Governance report that forms part of this Annual Report. The intervening gapbetween any two meetings was within the limit prescribed by the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Vigil Mechanism/Whistleblower Policy
The Company has established a Whistleblower Policy for Directors and employees toreport their genuine concern and the said policy is attached as per Annexure-4.
17. KEY MANAGERIAL PERSONNEL
Mr. Sanjeev Kathpalia was appointed as Managing Director and Chief Executive Officerwith effect from March 01 2017 for a period of three (3) years. The term of Mr. YusufLanewala as Managing Director and Chief Executive Officer completed on March 31 2017 andhe continues to be a Non-Executive Chairman of the Company with effect from April 012017.
Mindteck's statutory auditor M/s. B S R & Company Chartered AccountantsBengaluru holds office as Auditor until the conclusion of the ensuing Annual GeneralMeeting and by virtue of compulsory rotation of Auditor the Board recommends theappointment of S.R. Batliboi & Associates LLP Chartered Accountants (FirmRegistration No. 101049W/E300004) to the shareholders in the ensuing Annual GeneralMeeting who has confirmed its eligibility and willingness to accept the office ofAuditor if appointed for a period of five (5) years i.e. up to the AGM of FY 2021-22 asper the Companies Act 2013.
CS S Kannan a Practicing Company Secretary was appointed to conduct the SecretarialAudit of the Company for the FY 2016-17 as required under Section 204 of the CompaniesAct 2013 and Rules thereunder. The Secretarial Audit Report for the FY 2016-17 forms partof the Annual Report as Annexure-5 to the Board's Report.
The Board noted the reports given by Statutory Auditor & Secretarial Auditor andconfirmed that there are no qualifications reservations or adverse remarks ordisclaimers.
19. EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return in the prescribed format is attached as Annexure-6 to the Board'sReport.
20. SIGNIFICANT AND MATERIAL ORDERS
There were no significant and material orders passed by the Regulators or the Courts orTribunals impacting the going concern status and Company's operation in the future. Thedetails of Tax Matters are disclosed in Annexure to Auditor's Report in the StandaloneFinancial Statements.
21. INTERNAL FINANCIAL CONTROL
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its Business including adherence to the Company's policiessafeguarding its assets prevention and detection of frauds and errors accuracy andcompleteness of the accounting records and timely preparation of the reliable financialdisclosures.
22. INDEPENDENT DIRECTORS FAMILIARISATION PROGRAMME
Mindteck has an established a familiarisation programme for its Independent Directors.The business heads Executive
Directors and Company Secretary make presentations on business models nature ofindustry and its dynamism the roles responsibilities and liabilities of IndependentDirectors etc. Further updates on business statutory law and industry are made availableto Independent Directors especially to the Audit Committee members on an ongoing basis byinternal teams and Statutory and Internal Auditors on a quarterly basis.
23. PARTICULARS OF EMPLOYEES
The table containing the names and other particulars of employees in accordance withthe provisions of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is attachedas Annexure-7 to the Board's report.
The list of top 10 employees and other employees employed throughout the financial yearand are in receipt of remuneration of Rs. 102 lakhs or more or employed for part of theyear and in receipt of Rs. 8.50 lakhs or more in a month under Rule 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is as under:
Top 10 Employees of the Company based upon the remuneration drawn during the FY 2016-17
|Employee Name ||Designation ||Remunera tion Received ||Nature of Employment ||Qualification ||Experience (in years) ||Date of Commencement of Employment ||Age ||Last Employment ||Percentage of Equity shares held by the employee in the Company ||Any such employee is a relative of any Director or manager of the Company and if so name of such Director or manager |
|Yusuf Lanewala ||CMD ||6999996 ||Contractual ||B.Com MBA ||38 ||11-Jun-13 ||63 ||Information Technical Consultant ||0.20% ||NO |
|Anand Balakrishnan ||CFO ||4980323 ||Employee ||CA ||19 ||04-Sep-14 ||44 ||JLT ||NIL ||NO |
|Sumit Goswami * ||EVP - Managed Services (US) ||4976068 ||Employee ||B.E (Computer Technology) PGDBM ||23 ||16-May-16 ||50 ||Wipro Limited ||NIL ||NO |
|Surjit Lahiri ||VP Technology ||4495183 ||Employee ||B. Tech ||25 ||29-Mar-05 ||47 ||Novellus India Pvt Ltd ||0.04% ||NO |
|Arup Banerjee ||Sr. VP- Managed Services (ROW) ||3384814 ||Employee ||B. Tech ||28 ||08-Jul-11 ||51 ||HCL Technologies Ltd ||0.002% ||NO |
|Girish Chandrasekhar Pachuveetil ||AVP-Delivery ||3374456 ||Employee ||MS ||22 ||09-Apr-15 ||49 ||CGI Information Systems and Management Consultants Pvt. Ltd. ||NIL ||NO |
|Satheesh Kumar Sreedharan ||VP- Delivery ||3311893 ||Employee ||M. Tech ||30 ||14-Jun-11 ||57 ||GE Healthcare ||0.04% ||NO |
|Shivarama Adiga S. ||VP - Legal and Company Secretary ||3261321 ||Employee ||M.Com LLB and CS ||39 ||18-Mar-13 ||59 ||Diligent Media Corporation Limited ||0.06% ||NO |
|Dr. Krishnan K V ||VP -TSA ||3172077 ||Employee ||M.Sc. Ph.D. ||35 ||03-May-07 ||66 ||ISRO - Govt of India ||NIL ||NO |
|Harish Nair ||Regional VP-IMEA ||2948156 ||Employee ||MBA ||20 ||11-Sep-13 ||43 ||EDC Creattive Technology Solutions ||0.04% ||NO |
Employees employed throughout the financial year and are in receipt of remuneration ofRs. 102 Lakhs or more or employed for part of the financial year and are in receipt ofRs. 8.50 Lakhs or more a month.
|Employee Name ||Designation ||Remunera- tion Received ||Nature of Employment ||Qualification ||Experience (in years) ||Date of Commence- ment of Employment ||Age ||Last Employment ||Percentage of Equity shares held by the employee in the Company ||Any such employee is a relative of any Direc- tor or manager of the Company and if so name of such Director or manager |
|Sanjeev Kathpalia ||Managing Director ||987535 ||Contractual ||B. Tech IIT Delhi (Chemical Engineering) MBA IIM Calcutta ||35 ||March 01 2017 ||64 ||Senior Advisor to the Prime Minister (Republic of Turkey) ||NIL ||NO |
| ||Executive Officer || || || || || || || || || |
| || || || || || || || || || || |
| || || || || || || || || || || |
*Part of the year-Appointed on March 012017
24. COMMITTEES OF THE BOARD
Currently the Board has six Committees: the Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility Committee StakeholdersRelationship Committee Corporate Governance Committee and Risk Management Committee.
A detailed note on the Board and its Committees is provided under the CorporateGovernance report in this Annual Report. The composition of the Committees andcompliances as per the applicable provisions of the Act and Rules are as follows:
|Name of the Committee ||Composition of the Committee ||Highlights of duties responsibilities and activities |
|Audit Committee ||Mr. Narayan A. Menon - Chairman || The Committee oversees the Company's financial reporting process and disclosures of its financial information to ensure accuracy and reliability. The Company has adopted the Whistleblower mechanism for Directors and employees to report concerns about unethical behavior actual or suspected fraud or violation of the Company's Code of Conduct and Ethics. The Whistleblower Policy is attached as Annexure-4 to the Board's report. |
| ||Mr. Yusuf Lanewala - Member |
| ||Mr. Javed Gaya - Member |
| ||Mr. Jagdish Malkani - Member |
| ||Mr. Guhan Subramaniam - Member |
| ||Ms. Prochie Mukherji - Member |
| || || In accordance with the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company has formulated policies on Related Party Transactions and material subsidiaries. The policies including the Whistleblower Policy are available on Company's website. |
|Nomination and Remuneration Committee ||Mr. Javed Gaya - Chairman || The Committee oversees and administers executive compensation operating under a written charter adopted by the Board of Directors. |
|Mr. Jagdish Malkani - Member |
| ||Mr. Narayan A. Menon - Member || The Committee has designed and continuously reviews the compensation program for the Managing Director & Chief Executive Officer and senior executives to align both short-term and long-term compensation with business objectives and to link compensation with the achievement of measurable performance goals. |
| ||Mr. Guhan Subramaniam - Member |
| ||Ms. Prochie Mukherji - Member |
| || || The Committee structures compensation to ensure that it is competitive in the global markets in which it operates in order to attract and retain the best talent. The Committee intends to have a combination of stock options and performance-based stocks to align senior employee compensation. |
| || || The Nomination and Remuneration Committee has framed the nomination and remuneration policy. A copy of the policy is attached as Annexure-3 to the Board's report. |
|Name of the Committee ||Composition of the Committee ||Highlights of duties responsibilities and activities |
|Corporate Social Responsibility Committee ||Mr. Yusuf Lanewala - Chairman || The Board has laid out the Company's policy on Corporate Social Responsibility (CSR) and the CSR activities of the Company are carried out as per the instructions of the committee. |
|Mr. Javed Gaya - Member |
| ||Mr. Jagdish Malkani - Member |
| || || The Company allocated 2% of its average net profits for three years immediately preceding the financial year on CSR activities to various beneficiaries. |
| || || Financial data pertaining to the Company's CSR activities to various beneficiaries for the FY 201617 is attached under the prescribed format in Annexure-8 to the Board's Report. |
| || || The contents of the CSR policy are available on Company's website (Weblink: http://www.mindteck.com/ assets/investor_pdf/CSR_Policy.pdf). |
|Stakeholders Relationship Committee ||Mr. Javed Gaya - Chairman || The Committee reviews and ensures redressal of investor grievances. |
|Mr. Yusuf Lanewala - Member |
| The Committee noted that all the grievances of the investors have been resolved during the year and there are no pending grievances as on the year end. |
| ||Mr. Jagdish Malkani - Member |
|Risk Management Committee ||Mr. Yusuf Lanewala - Chairman || The purpose of the Committee is to assist the Board in fulfilling its Corporate Governance with regard to the identification evaluation and mitigation of operational strategic and environmental risks efficiently and effectively. |
| ||Mr. Meenaz Dhanani - Member |
| ||Mr. Anand Balakrishnan - Member |
| || || The Company has developed and implemented a risk Management framework that includes identification of elements of risk if any which in the opinion of the Board may threaten the existence of the Company. |
| || || The details of the Management framework form part of this Annual Report. |
|Corporate Governance Committee ||Mr. Narayan A. Menon - Chairman || Review Board/Corporate Codes and make suitable recommendations to the Board from time to time. |
|Mr. Yusuf Lanewala - Member |
| Review the Structure/Charters of other Board Committees and make suitable recommendations to the Board from time to time. |
|Mr. Jagdish Malkani - Member |
|Mr. Meenaz Dhanani - Member |
| Recommend best practices and standards in any particular area to the Board of Directors as per its mandate. |
25. RISK MANAGEMENT POLICY
The Company has a robust Enterprise Risk Management (ERM) framework to identify andevaluate business risk opportunities. This framework seeks to create transparencyminimize adverse impact on the business objectives and enhance the Company's competitiveadvantage. The business risk policy defines the Risk Management approach across theenterprise at various levels including documentation and reporting. The model hasdifferent modes that help in identifying risk trends exposure and potential impactanalysis at a Company level and also separately for different business segments. TheCompany has identified various risks and also has mitigation plans for each riskidentified.
26. CORPORATE GOVERNANCE REPORT
Mindteck recognizes good Corporate Governance and is committed to sound corporatepractices based on conscience openness fairness professionalism and accountability for
the benefit of its stakeholders and for long-term success. We adhere to the standardsset by SEBI for Corporate Governance practices as per SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and a report on Corporate Governance pursuantto Regulation 34 read with Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of this report in Annexure-9.
27. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis is part of this Annual Report.
28. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of its knowledge and belief and according to the information andexplanations obtained by the Company your Directors made the following statements interms of Section 134(3)(c) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for the year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. that such accounting policy as mentioned in Note 2 of the notes to the FinancialStatements have been selected and applied consistently. Judgment and estimates have beenmade that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company as at March 31 2017 and of the profit of the Company for the yearended on that date;
c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;
f. that system to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
29. WE CARE
At Mindteck care is rooted in the ways we engage and enable and fundamental to theway in which the Company builds and nurture relationships champion others foster careersin technology and steward community causes. In 2012 Mindteck established WE CARE as aframework for honouring our commitments and making a lasting difference both inside andoutside the organization. The cornerstones are Knowledge Opportunity AdvocacyInclusion Goodwill and Respect. Constituents include Shareholders Clients EmployeesPartners and Communities.
During FY 2016-17 Mindteck made further strides forging positive brand associationsbuilding stronger relationships and innovating within the WE CARE framework:
Mindteck Academy an IT workforce development solution builds opportunities forlearning hiring and economic growth in the communities we serve.
The underserved - qualified military veterans recent college graduatesdisplaced workers - learn the technology skills required for gainful employment;
Companies and government entities struggling to overcome IT skill shortages hirelocal citizens who have been trained to exact specification and need;
Communities grow as their unemployed or underemployed are hired or retrained.
Notable highlights for the Academy's year include:
Conducted their first onsite Business Analyst Bootcamp in Madison WI.
Launched online live instructor-led Java/JEE course.
Established partnerships for graduate placement including one of the largestfinancial institutions in the world.
Conducted internal Java and Agile-Scrum training for three clients.
Hired a Technical Director to oversee classes courseware and traineeperformance.
Consultant Care focuses on retaining and developing Mindteck's valued people assetswho work onsite at client locations. On an ongoing basis our Brand Ambassadors assisteducate and engage consultants in multiple states throughout North America and Canada.During the year the Leads Rewards Program was expanded to include non-W2 Mindteckemployees and consultants. Our Brand Ambassadors also assisted the recruiting team onimproving their process and remarketing reporting. As an adjunct activity the ConsultantCare Manager acquired two new clients and also nurtured relationships related to smartcity initiatives in the US. In the coming year Consultant Care will establish a pilotprogram for global Consultant Care endeavors strengthen dialogue and multi-levelengagement with top-tier 'ambassador consultants' optimize the consultant portal toachieve 'destination' status and continue spearheading footprint expansion in Missouri.
Transition Care provides opportunities for seasoned technology professionals whohave been a victim of downsizing to continue benefiting from their wealth of experienceand knowledge. We match their skillsets to our niche needs to help build a strongerMindteck. Transition Care is also a resource for clients who want to preserve theirreputation and employee morale during a restructuring as well as for outplacement firmsthat want to reduce their roster of displaced IT professionals.
Client Care which focuses on the client constituent of WE CARE is a customerexperience (CX) endeavour designed to engage and enable clients as well as champion acaring culture and business approach. The Client Care Ambassador is a client advocateoperating both cross-functionally and independently across the organization. Key effortsduring the year focused on: Supporting process improvements and delivery and serviceperformance; Liaising with the US sales teams; Referrals to new clients and partners. Anexpansion of these efforts along with increased channel/other engagement will fosteradditional advocacy loyalty and credibility during FY 2017-18.
30. CSR INITIATIVES
Mindteck's Corporate Social Responsibility (CSR) commitment is part of WE CARE. Webelieve that through our successes around the globe we should give back in kind and deed.We do what we can to create shared value and steward our resources to create hopefultomorrows for others.
Core pillars of Mindteck's CSR endeavors are Global Education and Local TargetedGiving. We believe in the empowerment of knowledge and how it helps to bring positivechange and stability to society as a whole; we also know that giving to localorganizations that embrace the interests and values of the communities we serve buildsstronger communities and makes business sense.
In FY 2016-17 Mindteck allocated more than 2% of its three- year average net profitstowards CSR activities and the details of the same are attached to this report as Annexure-8.
Bengaluru Samarthanam Trust - empowers visually impaired disabled and underprivilegedindividuals through developmental initiatives focused on education social economicindependence and technology.
Government Girls High School and Government PreUniversity (PU) College for Girls inHoskote through Bangalore Indiranagar Rotary Trust - supports academic improvementextracurricular activities and sanitation facilities.
Gandhi Old Age Home - Donated an ambulance and provided other infrastructure support toa government recognized institution dedicated to the welfare of the aged and neglected;
Western Railways Mumbai through Rotary Club of Bombay Kandivli Charitable Trust -Repair and major revamp of toilet blocks on suburban railway stations from Virar toChurchgate (Mumbai) for local Stations through Rotary Club of Bombay Kandivli CharitableTrust.
Local targeted CSR efforts in the US for the new year are under way. In 2016-17 theseorganizations were selected:
Northeast: The Seeing Eye - breeds and raises puppies to guide blind people;instructs blind people in proper use/ handling/care of the dogs; conducts and supportsresearch on canine health and development.
Elijah's Promise - harnesses the power of food to break the cycle of povertyeliminate hunger and change lives.
Central Southeast: Pennsylvania Breast Cancer Coalition
- represents supports and serves breast cancer survivors and their families inPennsylvania through educational programming legislative advocacy and research.
Coder Kids - encourages kids to learn about Computer Science and programming; developstheir interests in all areas of Science Technology Engineering and Mathematics (STEM)through active hands-on learning with projects demos and presentations by other kids andlocal technology professionals.
Southwest and Missouri: North Texas Food Bank (Plano Food4Kids) - committed toaddressing food insecurity of Chronically hungry early childhood and elementary schoolchildren in Plano TX. Through partnering with the food bank Food4Kids provides kids witha backpack filled with nutritious shelf-stable food every Friday during the school year.
A.R.C. Angels Foundation - dedicated to saving lives by helping teens be activelyinvolved in the prevention of teenage suicide; provides educational programs that empowerteens to recognize signs/symptoms of suicide and take preventative actions.
West: YES! for Schools - teaches youth healthy strategies to manage stress andemotions so that they may exhibit greater confidence and motivation to succeed in schooland make healthy choices when faced with life's challenges.
31. MINDTECK EMPLOYEES STOCK OPTION SCHEMES
Mindteck believes in the policy of enabling Mindteckians to participate in theownership of the company and share in its wealth creation as they are responsible for themanagement growth and success of the Company. The Company has three Employee Stock OptionsSchemes: Mindteck Employees Stock Options Scheme 2005 Mindteck Employees Stock OptionsScheme 2008 and Mindteck Employees Stock Options Scheme 2014.
a. Mindteck Employees Stock Options Scheme 2005
During the year ended March 312017 under this Scheme the company granted 14400options on November 11
2016 at an exercise price of Rs. 85.05 per share and 14400 options on February 102017 at an exercise price of Rs. 92.10 per share and also issued and allotted 59300shares to eligible employees. There has been no variation in the terms of ESOP Schemeduring the year.
b. Mindteck Employees Stock Options Scheme 2008
During the year ended March 31 2017 under this Scheme the company granted 69600options on May 20 2016 at an exercise price of Rs. 103.90 per share and 239000 optionson August 10 2016 at an exercise price of Rs. 90.75 per share and it has issued andallotted 151494 shares to eligible employees. There has been no variation in the terms ofESOP Scheme during the year.
c. Mindteck Employees Stock Options Scheme 2014
During the year ended March 31 2017 under this Scheme the company granted 250000options on March 30 2017 at an exercise price of Rs. 78.10 per share. There has been novariation in the terms of ESOP Scheme during the year.
The details of the Employees Stock Option Schemes as required under Regulation 14 ofSEBI (Share Based Employee Benefits) Regulations 2014 are displayed on the website of theCompany. (Weblink: http://www.mindteck.com/assets/investor_pdf/Disclosures-pursuant-to-SEBI- Regulations-2014.pdf)
32. MINDTECK EMPLOYEES WELFARE TRUST
The Mindteck Employees Welfare Trust was set up in the year 2000 to implement theCompany's Share Incentive Scheme. As on March 31 2017 the said Trust holds 416000shares of the Company and has not yet granted any shares to the Company's employees underthe said scheme.
33. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE AND OUTGO
Particulars that are required to be disclosed under Sub-section 3(m) of Section 134 ofthe Companies Act 2013 read with the Companies (Accounts) Rules 2014 are set out in Annexure-10included in this Report.
The Directors place on record their appreciation of cooperation and continued supportextended by customers shareholders investors partners vendors bankers theGovernment and statutory authorities for the Company's growth. We thank employees at alllevels across the Group for their valuable contribution in our progress and look forwardto their continued support.
for and on behalf of the Board of Directors
|Bengaluru India ||Sanjeev Kathpalia |
|May 22 2017 ||Managing Director and Chief Executive Officer |
| ||(DIN: 05257060) |