FOR THE FINANCIAL YEAR 2020-21
Your Directors present the Twenty Eighth Annual Report (the "Report") of theCompany along with the audited financial statements for the financial year ended March 312021.
The Management is pleased to inform you that the Company has completed 5 consecutiveyears of good performance after completion of Debt Realignment Scheme ("DRS")package presented to the Lenders during FY 2015-16. Your Company has earned an operatingrevenue of Rs 608.62 Crores and EBIDTA of Rs 1.82 Crores for financial year ended March31 2021 on a consolidated basis.
During the year the Board of Directors of the Company ("Board") at itsmeeting held on December 28 2020 and the shareholders of the Company vide postal ballotconcluded on February 28 2021 have approved subject to receipt of requisite approvalsA] sale of the global software products business carried on by the Company and itssubsidiaries in India and across the world to Azentio Software Private Limited IndiaAzentio Software Private Limited Singapore ("Azentio Singapore") and AzentioSingapore's subsidiaries in the relevant jurisdictions (collectively "Azentio")as a going concern and on a "slump sale" (as defined under Section 2(42C) of theIncome Tax Act 1961) basis on an "as is where is" basis without values beingassigned to individual assets and liabilities; and (B) sale of the Company's intellectualproperty rights relating solely to the Product Business outside India on an "as iswhere is" basis to Azentio Singapore. The Company and its subsidiaries in relevantjurisdictions executed inter alia business transfer agreements (BTA) with Azentio onDecember 28 2020 towards this transaction. Aggregate consideration for the aforesaidtransaction is INR 10002000000 (Indian Rupees One Thousand Crores Twenty Lakhs)subject to customary working capital and other adjustments in accordance with theprovisions of the BTA and other transaction related documents. The slump sale has beencompleted on March 31 2021 except for subsidiaries in Saudi Arabia and Thailand whereregulatory approvals are yet to be received.
The Board of Directors at their meeting held on January 22 2021 had approved theamendment in terms of 0.01% Cumulative Non-Convertible Redeemable Preference Shares of Rs5/- each ("Class A Preference Shares") and 0.10% Cumulative Non-ConvertibleRedeemable Preference Shares of Rs 5/- each ("Class B Preference Shares") whichare due for redemption on March 15 2026 in terms of Section 48 of the Companies Act 2013(the "Act"). Later Class A Preference Shareholders and Class B PreferenceShareholders had vide resolution passed through Postal Ballot on February 28 2021 theresults of which were declared on March 2 2021 accorded their approval for amendment interms of Class A Preference Shares and Class B Preference Shares. Pursuant to receipt ofrequisite approvals from Preference Shareholders i.e. Class A and Class B PreferenceShares were redeemed on May 27 2021 except one class B preference shareholder.
During FY 2020-21 the Company has filed a Scheme of Arrangement between the Companyand its Shareholders under Sections 230 to 232 of the Act with the stock exchanges with aview to reduce the issued subscribed and paid-up equity share capital of the Company toone tenth to set off the amount so released against the accumulated losses of the Companythereby having a positive impact on the reserves and surplus of the Company. The detailedupdate on this point is given separately in this Report under scheme of arrangement .
CRISIL Limited has rated the Company as "CRISIL BBB-/Watch Developing" inrespect of the long term bank loan facilities of the Company in January 2021. One of theother rating agencies CARE has rated the Company as "CARE BBB-;Stable" inOctober 2021.
Financial Performance of the Company on Standalone and Consolidated basis:
Rs in Crores
|Particulars || |
| ||2020-21 ||2019-20 ||2020-21 ||2019-20 |
|Total Revenue (I) ||250.42 ||300.48 ||632.21 ||717.76 |
|Total Expenses (II) ||286.74 ||244.81 ||351.38 ||765.21 |
|Total Exceptional items (III) ||290.51 ||- ||- ||- |
|Profit / (Loss) before Tax (I-II+MI) ||254.19 ||55.68 ||280.83 ||(47.45) |
|Tax expense || || || || |
|Current Tax ||- ||- ||23.06 ||13.43 |
|Deferred Tax ||- ||- ||- ||- |
|Adjustment of tax relating to earlier periods ||0.15 ||0.07 ||- ||- |
|Profit / (Loss) for the year ||254.04 ||55.61 ||257.77 ||(60.88) |
|Profit/(loss) for the year from Discontinued Operations ||70.37 ||72.29 ||133.39 ||128.90 |
|Other Comprehensive Income || || || || |
|A. Other Comprehensive income not to be reclassified to profit and loss in subsequent year: || || || || |
|Remeasurement of gains / (losses) on defined benefit plans ||(2.80) ||1.41 ||(4.43) ||3.05 |
|Income tax effect ||- ||- ||0.46 ||(0.07) |
|B. Other Comprehensive income to be reclassified to profit and loss in subsequent years: || || || || |
|Other Comprehensive income for the year net of tax ||- ||- ||- ||- |
|Total Comprehensive income for the year ||321.61 ||129.30 ||387.19 ||71.00 |
|Profit for the year attributable to: || || || || |
|Equity holders of the parent ||- ||- ||391.16 ||67.60 |
|Non-controlling interests ||- ||- ||- ||0.42 |
|Other Comprehensive income for the year attributable to: || || || || |
|Equity holders of the parent ||- ||- ||(3.97) ||2.98 |
|Non-controlling interests ||- ||- ||- ||- |
|Total Comprehensive income for the year attributable to: || || || || |
|Equity holders of the parent ||- ||- ||387.19 ||70.58 |
|Non-controlling interests ||- ||- ||- ||0.42 |
|Earnings per equity share for profit attributable to equityshareholders || || || || |
|Basic EPS ||2.01 ||0.79 ||2.42 ||0.42 |
|Diluted EPS ||2.01 ||0.79 ||2.42 ||0.42 |
Standalone sales and other income for FY 2020-21 stood at Rs 250.42 Crores as againstRs 300.48 Crores for FY 2019-20. On a consolidated basis sales and other income for FY2020-21 stood at Rs 632.21 Crores as against Rs 717.76 Crores for FY 2019-20. Aftermeeting all expenditures the Company made a total comprehensive income of Rs 387.19Crores on a consolidated basis against total comprehensive income of Rs 321.61 Crores on astandalone basis.
TRANSFER TO RESERVES
There is no amount proposed to be transferred to general reserve this year.
During the year the Company has paid dividend of Rs 6377607 as preference dividendas per the terms of issue of 0.10% Cumulative Non-Convertible Redeemable Preference Sharesof face value Rs 5/- each ("Class B Preference Shares") to Class B PreferenceShareholders.
The Company has also paid a dividend of Rs 65000/- as preference dividend as per theterms of issue of 0.01% Cumulative Non-Convertible Redeemable Preference Shares of facevalue Rs 5/- each ("Class A Preference Shares") to Class A PreferenceShareholders for the Financial Year 2020-21.
As per the terms of the Master Restructuring Agreement ("MRA") dated March30 2012 entered into by the Company with IDBI Bank Limited the Monitoring Institutionand the CDR Lenders the Company is prohibited from declaring or paying any dividend onits equity shares without prior approval of its Lenders.
In light of this your Directors regret to state their inability to recommend anydividend on equity shares for the financial year ended March 31 2021.
The business activities of the Company are broadly divided into two categories viz. ITSolutions and Transaction Services. The IT Solutions business comprises of CloudComputing Application-Automation-Analytics (AAA) Platform Solutions (BPaaS KPaaS GRC)Infrastructure Management Services Application Development Digital TransformationConsulting and NextGen Business services (5G SASE Edge Computing Cognitive ComputingIIoT Cyber Security Services etc.) while Transaction Services comprise of BPS and KPOservices covering management of back office operations. The Company has sold its softwareproducts business on March 31 2021 while it continues to operate its services business.
Altiray the Company's Services landscape is well integrated across domains andemerging technologies. Its digital frameworks are optimized to deliver the much-neededcore transformation in businesses. Based on a curated technology stack the solutionsenable easy technology adoption and are effortlessly scalable. Mobility together withnew-age technologies like Blockchain Artificial Intelligence IoT Augmented / VirtualReality (AR/VR) is an imperative part of digital transformation and Altiray's offeringscater to all levels of the mobility maturity curve covering Consulting Design &Development Data Testing Support Data Intelligence & Co-Innovation Services.
The contribution of IT Solutions to the revenue for the year was 91.34% and that ofTransaction Services was 8.66%.
The Company has presence in more than 15 countries across 4 continents. The Company hasa strong foothold and customer base in South Asia Asia Pacific (APAC) Middle East andAfrica (MEA) Kingdom of Saudi Arabia (KSA) and North America (US and Canada) and Europegeographies. The Company has marketing network around the world including US Europe MEAand APAC.
During the year under review the Board of Directors at their Meeting held on December28 2020 approved the slump sale of the global software products business of the Company(including its worldwide subsidiaries) on a going concern basis to Azentio SoftwarePrivate Limited (and its affiliates) subject to the receipt of requisite approvals andexecuted inter alia a BTA between the Company and Azentio on December 28 2020.
The Company's software product business consisting of the business intellectualproperty and employees inter alia in India USA UK Kenya UAE Malaysia SingaporeThailand and Saudi Arabia is being transferred under the BTA. The software productbusiness in the offshore jurisdictions will be transferred pursuant to offshore businesstransfer agreements.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As on March 31 2021 the Company had 23 subsidiaries (including step-downsubsidiaries). The voluntary winding up of Elegon Infotech Limited a wholly ownedsubsidiary of the Company based in China was completed on June 28 2021.
As on the date of this Report the number of subsidiaries are 22 (twenty two). Therehas been no material change in the nature of the business of subsidiaries.
As per the first proviso to Section 129(3) of the Act read with Rule 5 of Companies(Accounts) Rules 2014 the statement containing salient features of the financialstatements of subsidiaries/ associate companies/joint venture in the prescribed Form AOC-1is enclosed to the consolidated financial statements. This statement also mentionshighlights of performance of subsidiaries/associate companies/ joint venture and theircontribution to the overall performance of the Company during the year.
Pursuant to the provisions of Section 136 of the Act the standalone and consolidatedfinancial statements of the Company along with relevant documents and separate auditedaccounts in respect of subsidiaries are available on the website of the Company.
This Report has been prepared based on the standalone financial statements of theCompany and highlights the performance of the subsidiaries associates and joint venturecompanies and their contribution to the overall performance of the Company during theperiod under review.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
Particulars of loans guarantees or investments granted/made during the year are givenunder the notes to standalone financial statements forming part of this Report.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review all the contracts/ arrangements/transactions entered intoby the Company with related parties referred to in Section 188 of the Act were in theordinary course of business and on an arm's length basis. During the year the Company hasnot entered into any contract/arrangement/ transaction with related parties which could beconsidered material in accordance with the policy of the Company on related partytransactions.
Since all related party transactions entered into by the Company were in the ordinarycourse of business and were on an arm's length basis Form AOC-2 is not applicable to theCompany.
The Company has in place a Policy on Materiality of Related Party Transactions and aPolicy on dealing with Related Party Transactions. The said policy can be viewed on theCompany's website by accessing the following link: https://www.3i-infotech.com/investors/under "Corporate Governance" in the Investors' section.
Details regarding related party disclosures are given under the notes to standalonefinancial statements which form part of this Report.
SCHEME OF ARRANGEMENT
The Board of Directors at its Meeting held on June 29 2018 had approved a Scheme ofArrangement between the Company and its Shareholders under Sections 230 to 232 and otherapplicable provisions of the Act (the "Scheme"). The Scheme provided for atwo-step process for reducing the equity share capital of the Company:
a) Reduction of equity share capital of the Company on the Record Date (as defined inthe Scheme) by reducing the face value of the equity shares of the Company from Rs 10 toRs 1. The capital so reduced was to be utilized to write off the accumulated losses of theCompany and
b) Consolidation of 10 equity shares of the Company of Rs 1 into one fully paid upequity share of the Company of Rs 10 each immediately upon such reduction.
As already informed to the Members during FY 2020-21 the Company filed the draftScheme with the Hon'ble National Company Law Tribunal (NCLT) Special Bench Mumbai on May25 2020 seeking directions to convene equity shareholders' meeting towards approval ofthe Scheme. Pursuant to directions issued by NCLT Special Bench vide its order dated June1 2020 the Company convened and held meeting of the equity shareholders of the Companyon July 21 2020 through video conferencing / other audio visual means where the equityshareholders approved the Scheme with requisite majority. The NCLT granted an exemption tothe Company from calling a meeting of its Preference Shareholders and Secured andUnsecured Creditors. The Company thereafter filed a petition with the Hon'ble NCLTMumbai Bench on August 3 2020 seeking sanction/approval of the Scheme. NCLT admitted thepetition on October 27 2020 and later fixed February 2 2021 for the final hearing anddisposal of the petition. After the end of the financial year 2020-21 the matter waslisted for pronouncement on April 26 2021 and NCLT sanctioned the Scheme allowing theCompany's application.
The Board of Directors at its meeting held on August 10 2021 fixed Tuesday August31 2021 as the record date for the purpose of determining the shareholders whose shareswill be reduced and consolidated pursuant to the Scheme approved by Hon'ble NCLT MumbaiBench. In view of this the trading in equity shares was temporarily suspended from theopening of business hours on August 30 2021 till October 21 2021. Later on October 222021 the equity shares of the Company got relisted on BSE Limited and National StockExchange of India Limited.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
The Company has sold its global software product business (including that of itsworldwide subsidiaries) on a going concern basis to Azentio Software Private Limited (andits affiliates) subject to the receipt of requisite approvals and executed inter alia BTAbetween the Company and Azentio on December 28 2020. The Company's software productbusiness consisting of the business intellectual property and employees inter alia inIndia USA UK Kenya UAE Malaysia Singapore Thailand and Saudi Arabia is beingtransferred under the BTA. The software product business in the other jurisdictions willbe transferred pursuant to offshore business transfer agreements.
Except above there have been no material changes and commitments if any affectingthe financial position of the Company which have occurred between the end of the financialyear to which the financial statements relate and as on the date of this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and Company'soperation in future.
REPORT ON CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirements. The Corporate Governance Report alongwith auditors' certificate thereon in terms of Regulation 34 read with Schedule V of SEBILODR is appended herewith as Annexure I to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of provisions of Regulation 34 of SEBI LODR the Management Discussion andAnalysis Report is given under a separate section forming part of this Report.
BUSINESS RESPONSIBILITY REPORT (BRR)
Regulation 34 of SEBI LODR mandates the inclusion of the BRR as part of the AnnualReport for the top 1000 listed entities based on market capitalization. In compliancewith SEBI LODR BRR forms part of this Report and is appended hereto as Annexure II.
In accordance with the Act the annual return in the prescribed format is available atCompany's website at the following link : https://www.3i-infotech.com/investors/underCorporate Governance in the Investor's section.
a) Preference Share Capital:
During the year under review the Company has not allotted any preference shares to anyof its Members.
As on March 31 2021 the preference share capital of the Company was Rs 7027607980consisting of 130000000 Class A Preference Shares of Rs 5/- each and 1275521596 ClassB Preference Shares of Rs 5/- each.
Pursuant to the terms agreed for sale of product business on a slump sale basis theBoard of Directors at their meeting held on January 22 2021 approved amendment in termsof Class A and Class B Preference Shares subject to approval of Preference Shareholders.The Company sought approval of preference shareholders for early redemption vide postalballot results of which were declared on March 2 2021.
Accordingly Class A and Class B Preference Shares were redeemed on May 27 2021except one class B preference shareholder.
b) Equity Share Capital:
1) Allotment under Employee Stock Options Scheme (ESOS):
The Company has not allotted any shares under ESOS during the year.
2) Allotments against conversion of Foreign Currency Convertible Bonds (FCCBs):
During the year the Company has not allotted any Equity Shares against conversion ofFCCBs.
The Company has neither issued equity shares with differential rights as to dividendvoting or otherwise nor any shares (including sweat equity shares) to the employees of theCompany under any Scheme.
EMPLOYEES STOCK OPTION SCHEMES
As per SEBI Circular (CIR/CFD/POLICYCELL/2/2015) dated June 16 2015 relating torequirements specified under the SEBI (Share Based Employee Benefits) Regulations 2014details of the Employee Stock Option Schemes (ESOS) of the Company are given in AnnexureIII to this Report.
The Company has received a certificate from the Auditors of the Company that the sharebased scheme(s) are implemented in accordance with the SEBI (Share Based EmployeeBenefits) Regulations 2014 and the same is available for inspection by Members inelectronic mode.
During the year the Company has not invited/accepted any deposit under Sections 73 and76 of the Act. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
During the year under review and thereafter till the date of this Report thefollowing changes happened in the composition of the Board of Directors of the Company:
1. On June 5 2020 due to amalgamation of Allahabad Bank with Indian Bank Mr. AvayaKumar Mohapatra (DIN: 07811921) Nominee Director (Allahabad Bank) resigned from the Boardof Directors following withdrawal of his nomination by Allahabad Bank due to his transferto Hyderabad.
2. On July 30 2020 Dr. Shashank Desai (DIN: 00143638) resigned as an IndependentDirector from the Board of Directors of the Company due to his current and future workcommitments. Dr. Desai also confirmed in his resignation letter that there were no othermaterial reasons behind his resignation other than the reason mentioned above.
3. Mr. Pravir Kumar Vohra (DIN: 00082545) was appointed as an Additional Director(designated as Non-Executive Director) effective September 1 2020. The Members at theAnnual General Meeting held on December 23 2020 regularized the appointment of Mr. PravirKumar Vohra as a Non-Executive Director effective September 1 2020 and also approvedpayment of fees apart from sitting fees.
4. The tenure of Mr. Ashok Shah (DIN: 01194846) as an Independent Director ended onSeptember 30 2020. Accordingly he was appointed as an Additional Director (designated asan Independent Director) with effect from October 1 2020 to hold office for a second termas an Independent Director of the Company. In the opinion of the Board Mr. Ashok Shahpossesses requisite qualification expertise and experience (including proficiency) tofunction effectively in the capacity of an Independent Director and add value to the Boardof Directors of the Company. Hence on the recommendation of Nomination & RemunerationCommittee the Board recommended his re-appointment as an Independent Director for theapproval of the Members of the Company. The Members at the Annual General Meeting held onDecember 23 2020 approved re-appointment of Mr. Ashok Shah as an Independent Directorfor a second term of 5 years effective October 1 2020.
5. Mr. Sandeep Kumar Gupta (DIN-08911963) was appointed as Nominee Director - IndianBank effective October 22 2020 pursuant to nomination letter dated September 1 2020received from Indian Bank.
6. On October 25 2020 Ms. Anjoo Navalkar (DIN-00270356) resigned as a Non-ExecutiveDirector from the Board of Directors of the Company due to her current and future workcommitments.
7. Ms.Zohra Chatterji (DIN-01382511) was appointed as Additional Director (designatedas an Independent Director ) with effect from March 24 2020. The Members at the AnnualGeneral Meeting held on December 23 2020 approved the appointment for Ms. ZohraChatterji as an Independent Director of the Company for a term of 5 years effective March24 2020.
8. The Board at its meeting held on February 19 2021 approved the appointment of Mr.Thompson Gnanam (DIN-07865431) effective March 18 2021 as an Additional Whole-timeDirector (to be designated as CEO and MD- Designate) on the Board of the Company and alsoapproved his terms of remuneration. Later Mr. Thompson Gnanam was appointed as ManagingDirector and Global CEO effective April 1 2021. The Members vide resolution passedthrough Postal Ballot on September 19 2021 also approved his appointment and terms ofremuneration as Managing Director and Global CEO for a period of 5 years effective April1 2021.
9. Mr. Padmanabhan Iyer (DIN -05282942) resigned as Managing Director and Global CEOand CFO of the Company on April 1 2021 as required under the product business saletransaction of the Company and was redesignated as Non-Executive Director of the Companyeffective April 1 2021. Further he resigned as Non-Executive Director on June 9 2021.
10. Mr. Avtar Singh Monga (DIN-00418477) was appointed as an Additional (IndependentNon-Executive) Director effective April 1 2021. His appointment was approved by theshareholders vide Postal Ballot resolution passed on September 19 2021.
As on the date of this Report the Board of the Company consists of 7 Directors out ofwhich three are Independent Directors including [one woman Independent Director] two areNominee Directors one is Non-Executive Director and one is an Executive Director.
In accordance with Section 152 (6) and other applicable provisions of the Act read withArticles of Association of the Company Mr. Pravir Kumar Vohra (DIN: 00082545) is liableto retire by rotation at the ensuing AGM of the Company and being eligible has offeredhimself for re-appointment. The Board recommends his re-appointment at the ensuing AGM foryour approval. As stipulated under Regulation 36 of SEBI LODR a brief profile of theDirector proposed to be re-appointed is given in the Notice convening the ensuing AGMwhich is included in the Annual Report 2020-21.
None of the Independent Directors have had any pecuniary relationship or transactionwith the Company during Financial Year 2020-21 except to the extent of theirdirectorship. None of the Directors or KMP of the Company is related inter-se except tothe extent of Directorship held by Mr. Pravir Kumar Vohra & Zohra Chatterji in thesame company.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from each independent director as per provisionsof Regulation 25(8) of SEBI LODR and Section 149 (7) of the Act that he/she meets thecriteria of independence laid down in Regulation 16 (1)(b) read with Regulation 25(8) ofSEBI LODR & Section 149 (6) of the Act.
NUMBER OF MEETINGS OF THE BOARD
Ten meetings of the Board of Directors were held during the year. The details of thesame are given in Corporate Governance Report section that forms part of this Report. Theintervening gap between two consecutive Board Meetings did not exceed 120 days.
POLICIES AS PER SEBI LODR
SEBI LODR mandated all Listed Companies to formulate certain policies. These policiesare available on the website of the Company at https://www.3i-infotech.com/investors/under "Corporate Governance" in the Investors' section. The policies list ofwhich is given below are reviewed periodically by the Board and amended from time totime:
Whistle Blower Policy;
Policy on Remuneration of Directors Key Managerial Personnel and otherEmployees;
Corporate Social Responsibility Policy;
Policy for determining Material Subsidiaries;
Policy for determination of Materiality of event or information;
Policy on Materiality of Related Party Transactions and dealing with RelatedParty Transactions;
Policy for Board Diversity;
Policy for Preservation of Documents and
Policy for Prohibition of Fraudulent and Unfair Trade Practices relating tosecurities.
POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION
The current policy is to have appropriate mix of Executive Non-Executive andIndependent Directors to maintain the independence of the Board. The Company has put inplace a policy on Remuneration of Directors Key Managerial Personnel (KMP) and otheremployees including criteria for determining qualifications positive attributesindependence of directors and other matters provided under Section 178 (3) of the Act thePolicy can be viewed on the website of the Company by accessing the following link:https://www.3i-infotech.com/investors/ under "Corporate Governance" in theInvestors' section.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In terms of the provisions of the Act and SEBI LODR your Company has laid downcriteria for performance evaluation of Directors and Chairman of the Board and also theprocess for such performance evaluation. Schedule IV of the Act states that theperformance evaluation of Independent Directors shall be done by the entire Board ofDirectors excluding the Director being evaluated. The Company's policy relating toappointment and remuneration of Directors KMPs and other employees including criteriafor determining qualifications positive attributes and independence of a director arecovered under the Corporate Governance Report which forms a part of this Report.
It is a practice of the Board of Directors to annually evaluate its own performance andthat of its committees and individual directors. Accordingly the performances of themembers of the Board as a whole and of individual directors during the year were evaluatedas per provisions of the Act at the Board and Nomination and Remuneration Committeemeetings held on November 8 2021.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
As per provisions of SEBI LODR and the Act the Company has formulated FamiliarizationProgramme for Independent Directors. The same is available on the website of the Companyat https://www.3i-infotech.com/investors/ under "Corporate Governance" in theInvestors' section. At the time of appointment of an Independent Director the Companyissues a formal letter of appointment to an Independent Director outlining his/her rolefunction duties responsibilities etc. The terms and conditions for appointment ofIndependent Directors are also available on the website of the Company at the locationmentioned above.
The Board Members are provided with necessary documents/brochures reports and internalpolicies to enable familiarizing them with the Company's procedures and practices.Periodic presentations are made at the Board Meetings on business performance updates ofthe Company global business environment business strategy and risk involved.
COMMITTEES OF THE BOARD
As on March 31 2021 the Board has four mandatory committees:
i. Audit Committee
ii. Nomination and Remuneration Committee
iii. Stakeholders' Relationship Committee and
iv. Corporate Social Responsibility Committee.
A detailed note on the composition of the Board and its committees is provided in theCorporate Governance Report.
As per recent amendments in Regulation 21 of SEBI LODR top 1000 listed entitiesdetermined on the basis of market capitalization as on March 31 2021 are required toconstitute Risk Management Committee. Accordingly the Board of Directors at its meetingheld on October 25 2021 has formed Risk Management Committee comprising Mr. Avtar SinghMonga (Chairperson ) Mr. Ashok Shah and Mr. Thompson Gnanam.
In line with the provisions of the Act and SEBI LODR the Company has devised andimplemented a vigil mechanism in the form of "Whistle Blower Policy". As per thePolicy the Company has an internal committee comprising of the Head-HR and the ComplianceOfficer of the Company to oversee the functioning of the vigil mechanism as mandated bythe Act and assist the Audit Committee thereunder. The Whistle Blower Policy framed by theCompany is available on the website of the Company athttps://www.3i-infotech.com/investors/ under Corporate Governance in the Investors'section.
The detailed information regarding the committees of the Board including compositionof the Audit Committee has been given in the Corporate Governance Report which forms anintegral part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements presented by the Company include thefinancial results of its subsidiary companies associates and joint ventures and form partof this Report. The Audited Consolidated Financial Statements have been prepared inaccordance with the Indian Accounting Standards (referred to as "Ind AS").
INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY
Your Company has implemented adequate procedures and internal controls which providereasonable assurance regarding reliability of financial reporting and preparation offinancial statements. Your Company also ensures that internal controls are operatingeffectively.
GMJ &Co. Chartered Accountants were appointed as the Statutory Auditor of theCompany to hold office for a period of five consecutive years from the conclusion of the23rd Annual General Meeting held in 2016 till the conclusion of the 28thAnnual General Meeting to be held in 2021.
Under Section 139 of the Act and the Rules made thereunder the Company can appoint anaudit firm as an auditor for two consecutive terms of five years and accordingly theBoard of Directors on recommendation of the Audit Committee has approved re-appointment ofGMJ & Co. as Statutory Auditor of the Company for a second term of five years i.e.from the conclusion of the 28th Annual General Meeting to be held in 2021 till the conclusion of the 33rd Annual General Meeting to be held in 2026subject to the approval of the Shareholders.
The Company has received a consent from GMJ & Co. to act as a Statutory Auditor ofthe Company and a letter that their appointment is within limits prescribed under Section141(3)(g) of the Act and that they are not disqualified. The Directors recommend theirre-appointment for second term of five years.
STATUTORY AUDITOR'S REPORT
The Auditor's Report for the Financial Year 2020-21 does not contain anyqualifications remarks or reservations. The Auditor's Report is enclosed with thefinancial statements in this Annual Report.
SECRETARIAL AUDITOR'S REPORT
Pursuant to the provisions of Section 204 of the Act and Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company had appointed M/s. BNP& Associates Practicing Company Secretaries to undertake the Secretarial Audit ofthe Company for the financial year 2020-21.
The Secretarial Audit Report is appended as Annexure IVto this Report. The SecretarialAudit Report does not contain any qualifications reservations or adverse remarks.
REPORTING OF FRAUD BY AUDITORS
During the year under review neither the statutory auditor nor the secretarial auditorhas reported to the Audit Committee any instances of fraud committed against the Companyby its officers or employees under Section 143 (12) of the Act the details of which wouldneed to be reported in the Board's Report.
The Company complies with all the mandatory secretarial standards issued by theInstitute of Company Secretaries of India as may be applicable.
LISTING ON STOCK EXCHANGES
The Company's equity shares are listed on BSE Limited (BSE) and National Stock Exchangeof India Limited (NSE) and its Foreign Currency Convertible Bonds (FCCBs) are listed onSingapore Exchange Securities Trading Limited (SGX).
CONSERVATION OF ENERGY
Although the operations of the Company are not energy intensive the management ishighly conscious of the criticality of the conservation of energy at all operationallevels. The requirement of disclosure of particulars with respect to conservation ofenergy as prescribed in Section 134(3)(m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 is not applicable to the Company and hence are not provided.
TECHNOLOGY ABSORPTION ADOPTION AND INNOVATION
The Company continues to use the latest technologies for improving the productivity andquality of its services and products.
During the year your Company has taken the following technology initiatives:
Information and Cyber Security Awareness programmes;
Strengthened its IPRs through technology innovation and appropriate securitycontrols;
Improved utilization and delivery productivity by use of LEAN IT techniques forproject delivery and
Partnerships with major technology providers and publishers for win-winrelationships and go-to-market strategies.
RESEARCH AND DEVELOPMENT (R & D)
The solutions offered by the Company for various market segments are continuouslydeveloped and upgraded through the Global Development Centers (GDCs).
The GDCs function as the product research and development arm of the Company and focuson developing and expanding the Company's products and IPRs.
With a focus to further enhance the Company's software products based on market needsthe GDCs work in line with the Company's strategy for growth.
Expenditure on R & D Rs in Crores
|Particulars ||2020-21 ||2019-20 |
|Revenue Expenditure ||22.59 ||22.00 |
|Capital Expenditure ||- ||- |
|Total ||22.59 ||22.00 |
|Total R&D expenditure as a percentage of total standalone revenue ||10.87% ||6.50% |
The Company is committed to providing innovative and high quality products and servicesthat meet or exceed customer expectations.
Maintaining a quality focus on continuous improvement to our Products Processand Services and
Process adherence and governance ensuring lower Defect & On Time delivery.
The Company's Quality Management System (QMS) addresses process required for entireSoftware Development Cycle (SDLC) and Project Management Life Cycle (PMLC) supported withindustry standard templates and guidelines to ensure disciplined project executionthereby transforming business from taking corrective & preventive measures to thestate of predicting outcomes. This framework is designed based on the CMMi Processframework to enhance productivity and to reduce inefficiencies.
The Company has achieved CMMi Level 3 certification to meet the Company's commitmenttowards quality & business process with further plans to extend the certification toCMMi Level 5.
FOREIGN EXCHANGE EARNINGS AND OUTGO
a) Activities relating to exports initiatives taken to increase exports developmentof new export markets for products and services and export plans
Around 58.35% of the revenue of the Company is derived from exports.
b) Foreign Export earnings and expenditure
During the year 2020-21 the expenditure in foreign currencies amounted to Rs 5.82crores on account of cost of professional charges cost of outsourced services and boughtout items travelling and other expenses and interest (excluding expenditure incurred byUAE Branch). During the same period the Company earned an amount equivalent to Rs 121.23crores in foreign currencies as income from its operations abroad (excluding income fromUAE Branch).
The Company has continued to improve the quality of Human Resource. The key facet hasbeen better levels of productivity as compared to earlier years which has contributed inoperating financial parameters showing a strong uplift. Regular interactions and careerenhancements by way of bigger roles to talented employees have helped in strengthening theconfidence of the employees in the tough financial scenario of the Company. The talentpipeline is looking healthy though attrition and retention remains a challenge for theindustry and more so for the Company.
Your Company will continue to focus and build the human potential which would help inimproving operating parameters in the coming year.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules is provided in a separate annexure formingpart of this Report. Having regard to the provisions of the first provision to Section136(1) of the Act the Annual Report excluding the aforesaid information is being sent tothe Members of the Company. In terms of Section 136 the said annexure is open forinspection at the Registered Office of the Company. Any shareholder interested inobtaining a copy of the same may write to the Company Secretary.
Disclosures pertaining to the remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in this Report as Annexure V.
Prevention of Sexual Harassment at Workplace
The Company has in place a policy aiming at prevention of sexual harassment at allworkplaces of the Company in line with the requirements of The Sexual Harassment of Womenat the Workplace (Prevention Prohibition and Redressal) Act 2013 and the rulesthereunder. All employees (permanent contractual temporary trainees) are covered underthis Policy. The Company has complied with provisions relating to constitution of InternalComplaints Committee by setting up such Committee in the Company in accordance with theprovisions of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 to consider and redress complaints received with respect to sexualharassment. The details of complaints received during the year are given separately inCorporate Governance Report.
CORPORATE SOCIAL RESPOSIBILITY (CSR)
In compliance with Section 135 of the Act read with the Companies (Corporate SocialResponsibility Policy) Rules 2014 the Company has constituted a CSR Committee. A briefoutline of the CSR policy of the Company and the statutory disclosures with respect to CSRCommittee and an Annual Report on CSR activities for FY 2020-21 as required under Rule 8(1) of the CSR Rules are set out in Annexure VI of this Report. The CSR Policy asrecommended by CSR Committee and as approved by the Board is available on the website ofthe Company at https://www.3i-infotech.com/investors / under "CorporateGovernance" in Investors' section.
During the year the Company has not spent any amount on CSR activities in view oflosses incurred as per provisions of the Act.
MAINTENANCE OF COST RECORDS
Maintenance of cost records as specified by the Central Government under the provisionsof Section 148(1) of the Act is not required for the business activities carried out bythe Company.
Disclosures required under SEBI LODR are provided in the Corporate Governance Report.The Corporate Governance Report along with auditor's certificate thereon BRR and theManagement Discussion and Analysis Report forms part of this Report.
The business outlook and the initiatives proposed by the management to address itsfinancial risks have been discussed in detail in the Management Discussion and AnalysisReport which forms a part of this Report.
FORWARD LOOKING STATEMENTS
This Report along with its annexures and Management Discussion & Analysis Reportcontains forwardlooking statements that involve risks and uncertainties. When used in thisReport the words 'anticipate' 'believe' 'estimate' 'expect' 'intend' 'will' andother similar expressions as they relate to the Company and/or its businesses are intendedto identify such forward looking statements. The Company undertakes no obligation topublicly update or revise any forward looking statements whether as a result of newinformation future events or otherwise. Actual results performances or achievementscould differ materially from those expressed or implied in such forward-lookingstatements. Readers are cautioned not to place undue reliance on these forward-lookingstatements that speak only as of their dates. This Report should be read in conjunctionwith the financial statements included herein and the notes thereto.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act 2013 your Directors herebyconfirm that:
a) in preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2021 and profit of the Companyfor the financial year ended on that date;
c) they 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) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively and
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and are operating effectively.
Further the financial statements are prepared in accordance with Ind AS as prescribedunder Section 133 of the Act read with Rule 3 of the Companies (Indian AccountingStandards) Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules 2016.Based on the reviews of internal statutory and secretarial auditors externalconsultants the management and respective committees of the Board the Board is of theopinion that the Company's system of internal financial controls was adequate and theoperating effectiveness of such controls was satisfactory during the financial year2020-21.
The Directors are thankful to the Members for their confidence and continued support.The Directors are grateful to the Central and State Government Stock ExchangesSecurities & Exchange Board of India Reserve Bank of India Customs and othergovernment authorities Lenders FCCB holders and last but not the least its trustedclients for their continued support.
The Directors would like to express their gratitude for the unstinted support andguidance received from alliance partners and vendors.
The Directors would also like to express their sincere thanks and appreciation to allthe employees for their commendable team work and professionalism.
|For and on behalf of the Board || |
|Sd/- ||Sd/- |
|AshokShah ||Mr. Thompson Gnanam |
|Chairman ||Managing Director and Global CEO |
|November 8 2021 at Navi Mumbai || |