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Saksoft Ltd.

BSE: 590051 Sector: IT
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OPEN 210.85
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52-Week high 333.00
52-Week low 152.00
P/E 28.74
Mkt Cap.(Rs cr) 210
Buy Price 0.00
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Saksoft Ltd. (SAKSOFT) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the seventeenth Annual report together withthe Audited Accounts of the Company for the financial year ended 31st March 2016.

1. Financial Summary

The Audited Standalone and Consolidated financial results summary for the financialyear ended 31st March 2016 and 31st March 2015 are as follows:

Standalone Results (C in mn)

Consolidated Results (C in mn)

Year ended 31st March 2016 Year ended 31st March 2015 Year ended 31st March 2016 Year ended 31st March 2015
Export Revenue 352.59 313.10 2282.44 2100.48
Domestic Revenue 154.88 152.95 154.88 213.52
Other Income 43.64 14.27 21.65 21.22
Total Income 551.11 480.32 2458.97 2335.22
Operating expenses 363.23 351.67 2075.45 2053.16
Operating Profits 187.88 128.65 383.52 282.06
Depreciation 6.14 11.09 10.15 12.96
Interest and Finance Charges 36.39 35.00 43.20 42.08
Net Profit before Tax 145.35 82.56 330.17 227.02
Current Tax 39.00 27.00 111.57 56.04
Deferred Tax 1.61 (1.66) 0.85 (2.75)
Net Profit after Tax 104.74 57.22 184.67 167.05
Profit brought forward 333.62 313.93 805.83 676.31
Available for Appropriation 438.36 370.66 990.50 842.87
Transfer to General Reserve - 5.72 2.49 5.72
Dividend and Dividend Tax 31.35 31.32 35.51 31.32
Balance Carried forward 407.01 333.62 952.50 805.83

2. Results of operation

Standalone Accounts

Total income for the year 2015-16 was H551.11 mn as against H480.32 mn during the year2014-15 registering an increase of 14.74%.

Profit after tax was H104.74 mn during the year 2015-16 as compared to H57.22 mn during2014-15 resulting a growth of 83.05%

Basic earnings per share was H10.67 for the financial year 2015-16 as compared toearnings per share of H5.86 for the financial year 2014-15.

Operating and other expenses during the year were at H363.23 mn as compared to H351.67mn in the previous year.

Consolidated Accounts

Consolidated total income for the year 2015-16 was H2458.97 mn as against H2335.22 mnduring the year 2014-15 registering a growth of 5.30%.

Profit after taxes was H184.67 mn during the year 2015-16 as compared to H167.05 mnduring 2014-15 a growth of 10.55%.

Basic earnings per share was H 18.82 for the financial year 2015-16 as compared toearnings per share of H17.12 for the financial year 2014-15.

3. Business operations

Digital transformation refers to the changes associated with the application of digitaltechnology in all aspects of human society. Enterprises are leveraging disruptivetechnologies like Cloud Applications (web or mobile) Big Data and Analytics tounderstand their customers better and offer customized services for them. SuccessfulDigital Transformation comes not from implementing new technologies but by understandingits need and use and deriving maximum value out of it.

Saksoft is empowering enterprises with the digital transformation journey. We strive tocreate engaging and reliable digital experiences across every touch point providing freshopportunities for progress. Our services encompass 4 key areas which fuel growth fororganizations including Information Management Solutions Application Services Testingand Cloud helps customers to digitally transform their businesses. We help enterpriseswith cohesive Data & processes Analytical competence & Predictive insightsProcess

digitization Custom based Applications Business & IT Integration Data drivendecision-making and better solution delivery.

Information Management

Saksoft offers full range of business consulting and technology services tosuccessfully align any enterprise's Information Management objectives. We consult designimplement train and support on all major IM platforms such as Cognos Datastage BusinessObjects Hyperion Microsoft SAS and Informatica. Saksoft with its partners will providepredictive insights for data driven decision-making.

Application Services

Building custom applications has been another core area for Saksoft and we have beendeveloping and managing large custom build applications for customers across verticals.Whether it is a web application or mobile application Saksoft proprietary tools andframeworks will help enterprise achieve its goals with ease.

Independent testing

Threesixty logica (testing arm of Saksoft) is a strong contender in independentsoftware testing. With a plethora of testing services being offered Saksoft will be ableto bring down the overall cost increase dependability mitigate security risks andenhance performance and scalability.

Cloud Services

Your digital transformation story is not complete without cloud. Enterprises need arobust and scalable architecture to meet their growing information storage demands.Together with our partner we are consulting deploying and migrating infrastructure oncloud. We provide more agile and flexible IT infrastructure ensuring that the data isalways available and more secured.

During the year under review there is no significant material orders passed by theregulators or courts or tribunals impacting the going concern status and company'soperation in future.

4. Dividend

Based on Company's performance the Directors are pleased to recommend for approval ofthe members a Final dividend of H3.00 per share (30% on the face value of H10) for thefinancial year 2015-16. The final dividend on the equity shares if declared as abovewould involve an outflow of H31.19 mn towards dividend and H0.16 mn towards dividend taxthereby resulting in total outflow of H31.35 mn.

5. Share Capital

The paid up equity Capital as on March 312016 was H103950000/-. During the yearunder review the Board of Directors have allotted 35000 equity shares consequent to theexercise of options by certain eligible employees under ESOP 2009 plan of the Company.

6. Transfer to Reserve

During the year under review there were no transfer to General reserves.

7. Subsidiary Companies

Subsidiaries of the company are engaged in the business of providing IT Services orbusiness solutions or consulting services. The details of Subsidiary Companies are givenin Form No. MGT - 9 annexure to this report. There has been no material change in thenature of the business of the subsidiaries.

There are no associate Companies within the meaning Section 2(6) of the Companies Act2013.

The Company's wholly owned subsidiary Saksoft Inc and its subsidiaries earned revenueof $17.49 mn (equivalent to H1142.45 mn) during financial year 2015-16 compared to $14.96mn (equivalent to H912.91mn) during financial year 2014-15 registering a growth of 16.91%in dollar terms over the previous financial year. The profits after tax of Saksoft Incgrew by 37.25% on consolidated basis and increased to $0.70 mn equivalent to H45.72 mn)during financial year 2015-16 compared to $0.51mn (equivalent to H30.91 mn) duringfinancial year 2014-15.

The Company's wholly owned subsidiary Saksoft Pte Ltd. earned revenue of S$ 1.71 mn(equivalent to H80.56 mn) during financial year 2015-16 compared to S$1.92mn (equivalentto H90.99 mn) during financial year 2014-15 registering a decline of 10.94% in Sing dollarterms over the previous financial year. The profits before tax of Saksoft Pte Ltd declinedby 28.57% on consolidated basis and decreased to S$0.25 mn (equivalent to H10.83 mn)during financial year 2015-16 compared to S$0.35 mn (equivalent to HI 6.59 mn) duringfinancial year 2014-15.

The Company's wholly owned subsidiary Saksoft Solutions Ltd together with itssubsidiaries earned revenue of GBP 8.11 mn (equivalent to H798.35 mn) during financialyear 2015-16 compared to GBP 11.15 mn (equivalent to H1097.27 mn) during financial year2014 - 15 registering a decline of 27.27% in Pound Sterling terms over the previousfinancial year. The losses of Saksoft Solutions Ltd before tax and amortisations increasedby 100% on

consolidated basis and decreased to GBP 0.76 mn (equivalent to H70.87 mn) duringfinancial year 2015 - 16 compared to GBP 0.38 mn (equivalent to H56.09 mn) duringfinancial year 2014-15.

The Company's subsidiary ThreeSixty Logica Testing Services Private Limited togetherwith its subsidiary earned revenue of H296.77 mn during financial year 2015-16 compared toH275.58mn during financial year 2014-15 registering a growth of 7.68% in rupee terms overthe previous financial year.The profits before tax of ThreeSixtyLogica Testing ServicesPrivate Limited grew by 31.19% on consolidated basis and increased to H99.18 mn duringfinancial year 2015-16 compared to 75.60 mn during financial year 2014-15.

Saksoft GmbH Germany and Saksoft FR SARL France wholly owned subsidiaries were notin operations during the year under review. Saksoft GmbH Germany is under liquidationunder applicable German Laws.

Pursuant to provisions of Section 129(3) of the Companies Act 2013 a Statementcontaining salient features of the financial statement of subsidiaries is attached to theconsolidated financial statements in Form AOC-1.

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatement of the Company consolidated financial statements along with relevant documentsand separate audited accounts in respect of Subsidiaries are available on the website ofthe Company. Also these documents will be available for inspection during business hoursat the registered office of the Company.

8. Related Party Transactions

The transactions with related parties entered into by the Company are periodicallyplaced before the Audit Committee for its Approval. All related party transactions thatwere entered during the financial year were on arm's length basis and were in the ordinarycourse of the business. No transaction with the related party is material in nature inaccordance with the Company's "Related Party Transaction Policy" and Regulation23 of SEBI (Listing obligations and Disclosure Requirements) Regulations 2015 hence FormAOC-2 is not required to be annexed with this report. In accordance with AccountingStandard 18 the details of the transactions with the related parties are set out in NoteNo. 22.e forming part of Standalone financial statements.

The policy on related party transactions and material subsidiary as approved by theBoard of Directors are available on the company's website. Web link of the same is givenunder point 17 of the Corporate governance report.

9. Particulars of Loans Guarantees or Investments

During the year under review the Company has not given any Loans Guarantees orInvestments. The Particulars of the existing loans Guarantees or Investments are providedunder Note No. 10 & 12 forming part of Standalone financial statements.

10. Public Deposits

There are no deposits covered under Chapter V of the Companies Act 2013 ("theAct") during the year 2015-16 the details of which are required to be furnished.

11. Material Changes after 31st March 2016

There have been no material changes and commitments between 31st March 2016 and thedate of this report having an adverse bearing on the financial position of the Company.

12. Policy on sexual harassment of women at workplace (prevention prohibition andredressal) Act 2013

The Company has zero tolerance for Sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of Sexual Harassment at work place in linewith the requirements of the Sexual Harassment of women at Workplace (PreventionProhibition and Redressal) Act 2013 and rules framed thereunder. Internal ComplaintsCommittee (ICC) has been set up to redress complaints received regarding sexualharassment. All employees (permanent contractual temporary trainees) are covered underthis policy. The constitution of the ICC is displayed at conspicuous place at Deliverycenters in Chennai and Noida.

The following is the summary of the complaints received and disposed off during thefinancial year 2015-16:

a) No. of SH Complaints received: 0

b) No. of SH Complaints disposed off: 0

13. Corporate Social Responsibility (CSR)

During the financial year under review consequent to the sad demise of Mr. AutarKrishna the Board of Directors have reconstituted the CSR committee by inducting Ms.Kanika Krishna Director in place of Mr. Autar Krishna.

The Reconstituted CSR committee is as follows:

1. Mr. Aditya Krishna Chairman & Managing Director

2. Mr. Amitava Mukherjee Independent Director and

3. Ms. Kanika Krishna Non-executive Director

The Committee's responsibilities are as stipulated under Section 135 of the CompaniesAct inter-alia which includes formulating the CSR policy in compliance to Section 135 ofthe Companies Act 2013 and identifying activities to be undertaken as per Schedule VII ofthe Companies Act 2013.

Weblink of the adopted CSR policy of the company is given under point 17 of theCorporate Governance report.

CSR Committee met on February 01 2016 and recommended to the Board of Directors tocontribute not less than 2% of the average net profit of the last three financial yearstoward CSR fund for the financial year 2015-16 to aid NGO's undertaking projects in thefield of promoting gender equality empowering women and providing healthcare to womenand children.

The report on CSR activities is annexed to and forms part of this report as"Annexure -1"

14. Internal Control Systems and their Adequacy

In accordance with Section 134(5)(e) of the Companies Act 2013 the Company hasInternal Financial Controls Policy by means of Policies and procedures commensurate withthe Size and nature of its operations and pertaining to financial reporting. In accordancewith Rule 8(5)(viii) of Companies (Accounts) Rules 2014 the Company has adequateinternal control systems to monitor business processes financial reporting and compliancewith applicable regulations. The systems are periodically reviewed by the Audit Committeeof the Board for identification of deficiencies and necessary time bound actions aretaken to improve efficiency at all the levels. The Committee also reviews the internalauditors' report key issues significant processes and accounting policies.

15. Internal Auditors

M/s. RGN Price & Co. Chartered Accountants Chennai are the Independent Internalauditors of the Company. The Audit Committee determines the scope of internal Audit inline with regulatory and business requirements.

16. Board Meetings Board of Directors & Key managerial personnel

Disclosures with respect to the Board composition Directors and Board meetings heldduring the financial year are covered under the Corporate Governance report forming partof this report. As per the Provisions of the Companies Act 2013 Ms.Kanika Krishnaretires by rotation at the ensuing Annual General Meeting and being eligible offersherself for re-appointment.

Mr. V.V.R. Babu (DIN 07234186) has been appointed on 27th May 2016 as an AdditionalDirector under Independent Director Category. A notice in writing has been received from aMember signifying his intention to propose the appointment of Mr. V.V.R. Babu as aDirector under Independent Director category at the ensuing Annual General meeting to holdoffice for 5 consecutive years with effect from 27th May 2016 without being subject toretirement by rotation.

The brief resume and other details relating to Ms. Kanika Krishna and Mr. V.V.R. Babuas stipulated under Regulation 36(3) of SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015 are furnished in the Notice of Annual General Meetingbeing sent to the Members along with this Annual Report.

During the year under review there are no changes in the Key Managerial personnelappointed under Section 203 of the Companies Act 2013.

As per disclosures made by the Directors none of the Directors are disqualifiedpursuant to Section 164 of the Companies Act 2013 and the disclosures have been taken onrecord by the Board of Directors. The Company has received necessary declaration from eachIndependent Director of the Company under Section 149(7) of the Act that they meet thecriteria of Independence as laid down in Section 149(6) of the Act.

The disclosures required under Section 197(12) of the Companies Act 2013 is given in"Annexure 2".

17. Board Committees

The Company has the following Committees of the Board:

1. Audit Committee;

2. Nomination and Remuneration Committee;

3. Stakeholders Relationship Committee and

4. Corporate Social responsibility Committee (CSR)

The Composition of each of the above Committees 1 to 3 its respective roles andresponsibilities are detailed in the Corporate Governance Report forming part of thisAnnual report. Composition of CSR and its role and responsibility is detailed in thisreport.

18. Board diversity

The Company recognizes that building a Board of diverse and inclusive culture isintegral to its success. Ethnicity age and gender diversity are areas of strategic focusto the composition of our Board. The Board considers that its diversity including genderdiversity is a vital asset to the business. The Board has adopted the Board

Diversity policy which sets out the approach to diversity of the Board of Directors.Web link of the Board Diversity Policy is given under point 17 of the Corporate Governancereport.

19. Board Evaluation

The Board on recommendation of the Nomination and Remuneration Committee has structureda framework for evaluation of the Individual Directors Chairman Board as a whole and itsCommittees. The Independent Directors at their Meeting held during February 2016 evaluatedthe performance of Non Executive Directors Chairman and assessing the quality quantityand timeliness of flow of information between the Company Management and the Board that isnecessary for the Board to effectively and reasonably perform their duties. The evaluationof the Directors and the Board as a whole and its Committees were done through circulationof questionnaires which assessed the performance on select parameters related to rolesresponsibilities and obligations of the Board and functioning of the Committees. Theevaluation criterion was based on the participation contribution and offering guidance toand understanding of the areas which are relevant to the Directors in their capacity asMembers of the Board/Committees.

20. Nomination and Remuneration Policy

The Company has a Nomination and Remuneration Policy for appointment and remunerationof the Directors Key Managerial Personnel and Senior Executives of the Company includingcriteria for determining qualifications positive attributes Independence of a Directorand other related matters as required under Section 178(3) of the Act and SEBI (listingobligations and disclosure requirements) Regulation 2015. The details of the Policy aregiven in Annexure-3 to this Report.

21. Directors' Responsibility Statement

In terms of Section 134(5) of the Companies Act 2013 the Directors' hereby confirmthat:

(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the Company for the year under review;

(c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

(d) The directors have prepared the annual accounts on a going concern basis;

(e) The Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) The Directors have devised proper systems to ensure compliance with the provisionsof applicable laws and that such systems were adequate and operating effectively.

22. Vigil Mechanism/ whistle Blower Policy:

Details of the Vigil Mechanism are covered under the Corporate Governance reportforming part of this Annual report.

23. Auditors

At the Annual General Meeting held on September 26 2014 M/s. Suri & Co.Chartered Accountants Chennai were appointed as Statutory Auditors of the Company tohold office till the conclusion of the Annual General Meeting to be held in the Calendaryear 2017. In terms of the first proviso to Section 139 of the Companies Act 2013 theappointment of the auditors shall be placed for ratification at every Annual GeneralMeeting. Accordingly the appointment of M/s. Suri & Co. Chartered Accountants asstatutory Auditors of the Company is placed for ratification by the Shareholders. In thisregard the Company has received a certificate from the auditors to the effect that ifthey are reappointed it would be in accordance with the provisions of Section 141 of theCompanies Act 2013.

As required under Regulation 33 of SEBI (Listing Obligations and Disclosurerequirements) Regulations 2015 the auditors have also confirmed that they hold a validcertificate issued by the Peer Review Board of the Institute of Chartered Accountants ofIndia.

24. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Lakshmmi Subramanian & Associates a firm of Company Secretaries inPractice to undertake the Secretarial Audit of the

Company. The Secretarial Audit Report is annexed herewith as "Annexure- 4"

25. Auditor's Report and Secretarial Audit Report

There are no qualifications or adverse remarks in the Auditors and Secretarial AuditorsReport.

26. Conservation of Energy

The Company is a software company and hence the operations of the Company are notenergy intensive. The Company employs energy efficient computers and office equipment. Thecompany strives to evolve new technologies to see to that the infrastructure is moreenergy efficient. The Chennai delivery centre is situated in the LEED pre certified goldrated green building.

27. Technology Absorption

The Company adopts "continuous process improvement and is constantly in touch withthe developments in the emerging technologies in relation to Business Intelligence (BI)and the Information Management (IM). The thought leaders within the Company interactregularly with the leading technology and market leaders in BI tools (both open source andlicensed). This ensures your Company is not only able to adopt evolving technologies at anearly stage and package these as services to the customers enhancing value for them butalso ensures the readiness of a trained employee base for undertaking projects indisruptive technologies.

The Company's operations do not require significant import of technology.

28. Research and development (R&D)

As mentioned above the Company is constantly involved in developing solutions for itscustomers using the emerging technologies which involves considerable research anddevelopment efforts on the part of the employees. The efforts and costs incurred in suchresearch is integral to the operations of the Company and are not segregated andidentified separately.

29. Foreign exchange earnings and outgo

(Rs in mn)

Foreign exchange earnings and outgo 2015-16 2014-15
Foreign Exchange earnings 409.88 365.19
Expenditure in Foreign Currency 3.80 22.22

30. Extract of Annual Return

The details forming part of the Annual Return in form of MGT 9 is annexed herewith as"Annexure - 5".

31. Risk Management

Risk Management is an integral part of the business process. Pursuant to Section134(3)(n) of the Companies Act 2013 the Company has developed and implemented a RiskManagement Policy. The Policy envisages identification of risk and procedures forassessment and minimization of risk. The Statement of Risk indicating development andimplementation of risk management policy is annexed to and forms part of this Report asAnnexure 10. At present the Company has not identified any element of risk which maythreaten the existence of the company.

32. Particulars of Employees

During the financial year under review none of the employees drew remuneration of H6mn or more per annum or H0.5 mn or more per month hence the information required pursuantto Section 197 of the Companies Act 2013 read with Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 in respect of employees of theCompany is not applicable.

33. Employees Stock Option Scheme

The Company currently administers two stock option schemes Viz. ESOP 2006 and ESOP2009. During the year under review there are no changes in the above said schemes.Summary information of these stock option schemes grant and allotments under theseschemes are provided under Note No. 22.h forming part of standalone financial statements.In addition the following details are disclosed in Annexure - 6 to this report.

a. Relevant disclosures in terms of the 'Guidance note on accounting for employeeshare-based payments' issued by ICAI and

b. Diluted EPS on issue of shares pursuant to all the schemes covered under theregulations shall be disclosed in accordance with Accounting Standard 20 - Earnings PerShare' issued by ICAI.

The above information forms part of the Annual report. The weblink to access the Annualreport is given under point no. 17 of the Corporate governance report.

34. Corporate Governance

The Company is committed to maintaining high standards of Corporate Governanceprotecting the Customers' Shareholders' and other Stakeholders' interests. Towards thisthe Company has adopted high standards of governance Principles Practices and disclosurelevels.

Pursuant to Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a detailed Corporate Governance Report Compliance Certificateregarding compliance of conditions of Corporate Governance and Management Discussion andAnalysis Report are annexed to and forms part of this report as Annexure 7 8 and 9.

35. Policy on Insider Trading

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees and connectedpersons of the Company in line with SEBI (Prohibition of Insider Trading) Regulations2015.

36. Acknowledgement

The Company takes this opportunity to thank its customers vendors investors businessassociates and bankers for their support extended during the year to the Company.

The Management also likes to thank the Government of India the Governments of variouscountries the concerned State Governments Government Departments and GovernmentalAgencies for their co-operation. The Management would also wish to place theirappreciation to the employees of the Company for the excellent contributions extended atall levels in achieving growth and results.

For and on behalf of the Board
Place: Chennai Aditya Krishna
Date: 27th May 2016 Chairman & Managing Director