Your Directors have immense pleasure in presenting the Eighteenth (18th) Annual reporttogether with the Audited Accounts of the Company for the financial year ended 31st March2017.
1. Financial Summary
The Audited Standalone and Consolidated financial results summary for the financialyear ended 31st March 2017 and 31st March 2016 are as follows:
| || |
| ||Year ended 31st March 2017 ||Year ended 31st March 2016 ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Export Revenue ||368.87 ||352.59 ||2451.77 ||2282.44 |
|Domestic Revenue ||137.90 ||154.88 ||143.26 ||154.88 |
|Other Income ||26.09 ||43.64 ||18.40 ||21.65 |
|Total Income ||532.85 ||551.11 ||2613.43 ||2458.97 |
|Operating expenses ||392.56 ||363.23 ||2257.80 ||2075.45 |
|Operating Profits ||140.29 ||187.88 ||355.63 ||383.52 |
|Depreciation ||7.67 ||6.14 ||13.14 ||10.15 |
|Interest and Finance Charges ||37.67 ||36.39 ||45.61 ||43.20 |
|Net Profit before Tax ||94.95 ||145.35 ||296.89 ||330.17 |
|Current Tax ||24.31 ||39.00 ||82.94 ||111.57 |
|Deferred Tax ||1.91 ||1.61 ||5.53 ||0.85 |
|Net Profit after Tax ||68.73 ||104.74 ||178.41 ||184.67 |
|Profit brought forward ||407.00 ||333.62 ||952.50 ||805.83 |
|Available for Appropriation ||475.73 ||438.36 ||1130.94 ||990.50 |
|Transfer to General Reserve ||- ||- ||- ||2.49 |
2. Results of operation
Total income for the year 2016-17 was H532.85 mn as against H551.ll mn duringthe year 2015-16 registering a decrease of 3.31%.
Profit after tax was H68.73 mn during the year 2016-17 as compared to H104.74 mnduring 2015-16 resulting a decrease of 34.38%
Basic earnings per share was H6.96 for the financial year 2016-17 as compared toearnings per share of H10.67 for the financial year 2015-16.
Operating and other expenses during the year were at H392.56 mn as compared toH363.23 mn in the previous year.
Consolidated total income for the year 2016-17 was H2613.43 mn as againstH2458.97 mn during the year 2015-16 registering a growth of 6.28%
Profit after taxes was H178.41 mn during the year 2016-17 as compared to H184.67mn during 201516 a decrease of 3.38%
Basic earnings per share was H18.06 for the financial year 2016-17 as comparedto earnings per share of H18.82 for the financial year 2015-16.
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 enterpriseswith the digital transformation journey. We strive to create engaging and reliable digitalexperiences across every touch point providing fresh opportunities for progress. Ourservices encompass 4 key areas which fuel growth for organizations including InformationManagement
Solutions Application Services Testing and Cloud helps customers to digitallytransform their businesses. We help enterprises with cohesive Data & processesAnalytical competence & Predictive insights Process digitization Custom basedApplications Business & IT Integration Data driven decision-making and bettersolution delivery.
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 decisionmaking.
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.
Three sixty 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.
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 significantmaterial order passed by the regulators or courts or tribunals impacting the going concernstatus and company's operation in future.
Based on Company's performance the Directors are pleased to recommend for approval ofthe members a Final dividend of 73/- per share (30% on the face value of H10/-) for thefinancial year 2016-17. The final dividend on the equity shares if declared as abovewould involve an outflow of 731.36 mn towards dividend and 72.32 mn towards dividend taxthereby resulting in total outflow of 733.68 mn.
5. Share Capital
The paid up equity Capital as on March 31 2017 was 7104550000/-. During the yearunder review the Board of Directors have allotted 60000 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 was 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 $16.05 mn (equivalent to 71074.87 mn) during financial year 2016-17 compared to $17.49mn (equivalent to 71142.45mn) during financial year 2015-16 registering a decline of 8.23%in dollar terms over the previous financial year. The profits after tax of Saksoft Incdecreased by 41.43% on consolidated basis and decreased to $ 0.41 mn (equivalent to 727.45mn) during financial year 2016-17 compared to $0.70mn (equivalent to 745.72 mn) duringfinancial year 2015-16.
The Company's wholly owned subsidiary Saksoft Pte Ltd. Earned revenue of S$ 1.59 mn(equivalent to 776.92 mn) during financial year 2016-17 compared to S$1.71 mn (equivalentto 780.56mn) during financial year 2015-16 registering a decline of 7.01% in Sing dollarterms over the previous financial year. The profits before tax of Saksoft Pte Ltd declinedby 27.27% on consolidated basis and decreased to S$ 0.16 mn (equivalent to 77.74 mn)during financial year 2016-17 compared to S$0.22 mn (equivalent to 710.83 mn) duringfinancial year 2015-16.
The Company's wholly owned subsidiary Saksoft Solutions Ltd together with itssubsidiaries earned revenue of GBP 10.1 mn (equivalent to 7883.95 mn) during financialyear 2016-17 compared to GBP 8.11 mn (equivalent to 7798.35 mn) during financial year 2015- 16 registering a growth of 24.53% in Pound Sterling terms over the previous financialyear. The profits of Saksoft Solutions Ltd before tax and amortisations increased by100.35 % on consolidated basis and increased to GBP 0.002 mn (equivalent to 70.22 mn)during financial year 2016 - 17 compared to GBP (-0.72) mn (equivalent to 770.87mn) duringfinancial year 2015-16.
The Company's subsidiary Threesixty Logica Testing Services Private Limited togetherwith its subsidiary earned revenue of 7335.33 mn during financial year 201617 compared to7298.81 mn during financial year 201516 registering a growth of 12.22% in rupee terms overthe previous financial year. The profits before tax of Threesixty Logica Testing ServicesPrivate Limited dropped by 9.27% on consolidated basis and decreased to 790.04 mn duringfinancial year 2016-17 compared to 799.24 mn during financial year 2015-16.
During the year under review DreamOrbit Softech Private Limited became a 60%Subsidiary of the Company effective 15th December 2016. DreamOrbit Softech PrivateLimited together with its subsidiary earned revenue of 7358.85 mn during financial year2016-17 compared to 7291.33 mn during financial year 2015-16 registering a growth of23.17% in rupee terms over the previous financial year. The profits before tax ofDreamorbit Softech Private Limited grew by 177% on consolidated basis and increased to760.63 mn during financial year 2016-17 compared to 721.89 mn during financial year2015-16.
Inoperative wholly owned subsidiaries Saksoft FR SARL France and Saksoft GmbH Germanywere liquidated effective 10th August 2016 and 13th October 2016 respectively.
Pursuant to provisions of Section 129(3) of the Companies
Act 2013 a Statement containing salient features of the financial statement ofsubsidiaries is attached to the consolidated financial statements in Form AOC-1. Pursuantto the provisions of Section 136 of the Companies Act 2013 the financial statement ofthe Company consolidated financial statements along with relevant documents and separateaudited accounts in respect of Subsidiaries are available on the website of the Company.Also these documents will be available for inspection during business hours at theregistered 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. 24 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 2016-17 the details of which are required to be furnished.
11. Material Changes after 31st March 2017
There have been no material changes and commitments between 31st March 2017 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 2016-17:
a) No. of SH Complaints received: Nil
b) No. of SH Complaints disposed off: Nil
13. Corporate Social Responsibility (CSR)
CSR Committee consists of :
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 twice on August 28 2016 and January 30 2017. The Committee hasrecommended to the Board of Directors to contribute not less than 2% of the average netprofit of the last three financial years toward CSR fund for the financial year 2016-17 toaid NGO's undertaking projects in the field of "Promoting education including specialeducation and employment enhancing vocational skills especially among children womenelderly and the differently abled and livelihood enhancing projects"
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
R.G.N. Price & Co. Chartered Accountants Chennai were 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.
The brief resume and other details relating to Ms. Kanika Krishna as stipulated underRegulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulation2015 are furnished in the Notice of Annual General Meeting being sent to the Membersalong with this Annual Report. During the year under review there are no changes in theKey Managerial Personnel appointed under Section 203 of the Companies Act 2013.
During the year under review Mr. R. Rajagopalan Independent Non-Executive Directorhas resigned from the Board with effect from 13th August 2016.
During the period from the financial year end date and on the date of signing of thisreport the Board had appointed Mr.S.Muthukrishnan as the Company Secretary with effectfrom 10th April 2017 under Section 203 of the Companies Act 2013. Mr.Vivekanandan Babuhad resigned as the Company secretary with effect from 7th April 2017.
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 Diversitypolicy which sets out the approach to diversity of the Board of Directors. Web link of theBoard Diversity Policy is given under point 17 of the Corporate Governance report.
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 on January 30 2017 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 based on the SEBI Guidelines note on Board evaluation issued on 05thJanuary 2017. The questionnaires assessed the performance on select parameters related toroles responsibilities and obligations of the Board as a whole individual DirectorChairman Independent Directors and functioning of the Committees. The evaluationcriterion was based on the participation contribution and offering guidance to andunderstanding 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 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 is covered under the Corporate Governance report formspart of this Annual report.
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.
Based on the recommendation of the Audit Committee the Board of Directors recommendedthe appointment of M/s. RGN Price & Co. Chartered Accountants Chennai as statutoryAuditors of the Company for the financial years from 2017-18 to 2021-22 subject toratification of the Shareholders at every Annual general meeting. The Company has receivedthe certificate from M/s. RGN Price & Co. Chartered Accountants Chennai to theeffect that if they are appointed it would be in accordance with the provisions ofSection 141 of the Companies Act 2013.
As required under Regulation 33 (d) of SEBI (Listing Obligations and Disclosurerequirements) Regulations 2015 M/s. RGN Price & Co. Chartered AccountantsChennai have also confirmed that they hold a valid certificate issued by the Peer ReviewBoard of the Institute of Chartered Accountants of India.
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 Reportis annexed as "Annexure- 4".
25. Auditor's Report and Secretarial Audit Report
There are no qualifications or adverse remarks in the Auditors' Report and SecretarialAuditors' Report.
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 with thedevelopments in the emerging technologies in relation to Business Intelligence (BI) andthe Information Management (IM). The thought leaders within the Company interact regularlywith 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 oftechnology.
28. Research and development (R&D)
As mentioned above the Company is constantly involved in developing solutions for itscustomers using the emerging technologies which involve considerable research anddevelopment efforts on the part of the employees. The efforts and costs incurred in suchresearch are integral to the operations of the Company and are not segregated andidentified separately.
29. Foreign exchange earnings and outgo
| ||2016-17 ||2015-16 |
|Foreign exchange earnings and Outgo || || |
|Foreign Exchange earnings ||421.24 ||399.91 |
|Expenditure in Foreign Currency ||10.07 ||9.97 |
30. Extract of Annual Return
The details forming part of the Annual Return in form of MGT 9 is annexed 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 top ten employees in terms ofremuneration drew remuneration of H10.20 mn or more per annum or H0.85 mn or more permonth hence the information required pursuant to Section 197 of the Companies Act 2013read with Rule 5 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules 2014 in respect of employees of the Company 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. 24 (h) forming part of standalone financialstatements. The details of the Options granted up to March 312017 and other disclosuresas required under SEBI (Share Based Employee Benefits) Regulations 2014 is given asAnnexure 6 forming part of this report.
The above information forms part of the Annual report. The web link to access theAnnual Report 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.
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: 26th May 2017 ||Chairman & Managing Director |