The Board of Directors hereby submits the report of the business andoperations of Affle (India) Limited ("Affle" or the "Company") alongwith the audited financial statements for the financial year ended March 31 2021.
The results of operations for the year under review are given below:
(In Rs. million)
|Particulars ||Consolidated ||Standalone |
| ||FY2020-21 ||FY2019-20 ||FY2020-21 ||FY2019-20 |
|Revenue from contracts with customers ||5167.79 ||3337.83 ||2667.34 ||1822.26 |
|Other income ||415.31 ||60.88 ||64.45 ||51.30 |
|Total revenue ||5583.10 ||3398.71 ||2731.79 ||1873.56 |
|Total expenses ||4103.89 ||2606.46 ||2336.13 ||1433.31 |
|Profit before exceptional items and tax ||1479.21 ||792.25 ||395.66 ||440.25 |
|Less: Exceptional items ||- ||- ||- ||- |
|Profit before tax ||1479.21 ||792.25 ||395.66 ||440.25 |
|Less: Current tax ||119.80 ||138.35 ||91.45 ||112.60 |
|Less: Deferred tax charge/ (credit) ||9.04 ||(1.27) ||21.94 ||(1.20) |
|Profit for the year ||1350.37 ||655.17 ||282.27 ||328.85 |
|Other comprehensive (loss) / income ||(54.38) ||54.73 ||(0.71) ||1.16 |
|Total comprehensive income for the year ||1295.99 ||709.90 ||281.56 ||330.01 |
|Non-controlling interests ||2.34 ||- ||- ||- |
|Profit attributable to equity holders of the parent ||1348.03 ||655.17 ||282.27 ||328.85 |
|Total comprehensive income attributable to equity holders of the parent ||1293.65 ||709.90 ||281.56 ||330.01 |
|Earnings per equity share - face value of Rs. 10/- each ||52.96 ||26.13 ||11.07 ||13.12 |
REVIEW OF OPERATIONS
Consolidated Financial Review
During the year under review the Company reported total revenue of Rs.5583.10 million an increase of 64.3% from Rs. 3398.71 million in FY2019-20. Revenuefrom contracts with customers was Rs. 5167.79 million an increase of 54.8% from Rs.3337.83 million in FY2019-20. Profit before tax registered a growth of 86.7% to stand atRs. 1479.21 million for the year under review as compared to Rs. 792.25 million inFY2019- 20. Profit after tax registered a growth of 106.1% to stand at Rs. 1350.37million for the year under review as compared to Rs. 655.17 million in FY2019- 20. Profitafter tax attributable to equity holders of the parent (after adjusting fornon-controlling interests) registered a growth of 105.8% to stand at Rs. 1348.03 millionfor the year under review as compared to Rs. 655.17 million in FY2019-20.
Total debt for the Company was Rs. 1168.43 million as of March 312021 and total cash & cash equivalent (including other bank balance') wasRs. 632.45 million as of March 31 2021.
The Company generated Cash flows from operations of Rs. 1016.16million during the year a growth of 41.4% from Rs. 718.52 million generated in FY2019-20.
Standalone Financial Review
During the year under review the Company reported total revenue of Rs.2731.79 million an increase of 45.8% from Rs. 1873.56 million in FY2019-20. Revenuefrom contracts with customers was Rs. 2667.34 million an increase of 46.4% from Rs.1822.26 million in the previous financial year. Profit before tax stood at Rs. 395.66million for the year under review as compared to Rs. 440.25 million in the previousfinancial year. Profit after tax stood at Rs. 282.27 million for the year under review ascompared to Rs. 328.85 million in the previous financial year.
On a standalone basis the Company had no debt as of March 31 2021 andtotal cash & cash equivalent (including other bank balance') was Rs. 342.96million as of March 31 2021.
The Directors wish to invest the profits back into the Company forfurther growth and expansion and therefore did not recommend any dividend for theFY2020-21.
TRANSFER TO RESERVES
The Company did not transfer any amount to the general reserve duringthe year.
MATERIAL CHANGE AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTSRELATE AND THE DATE OF THE REPORT
The Company on May 4 2021 made an allotment of 1153845 equity sharesof face value Rs. 10 each at a price of Rs. 5200 per equity share including a premium ofRs. 5190 per equity share at a discount of 4.11% on the Floor Price amounting to Rs.222.94 per equity share aggregating to Rs. 5999.99 million to Qualified InstitutionalBuyers pursuant to Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2018.
In view of the above the paid-up share capital of the Companyincreased from Rs. 254963670/- divided into 25496367 equity shares of face value Rs.10/- per share to Rs. 266502120 divided into 26650212 equity shares of face value Rs.10/- per share.
CHANGE IN NATURE OF BUSINESS OF THE COMPANY
There was no change in the nature of business of the Company.
As on the date of this report consequent to allotment made toQualified Institutional Buyers on May 4 2021 the paid-up share capital of the Company isRs. 266502120 divided into 26650212 equity shares of face value of Rs. 10/- per share.
BUSINESS ACQUISITIONS AND STRATEGIC INVESTMENTS
Acquisition of Appnext Pte. Ltd.
The Company through its wholly owned subsidiary Affle InternationalPte. Ltd. Singapore ("Affle International") acquired 66.67% shares and 95%control in Appnext Pte. Ltd. ("Appnext") vide Share Purchase Agreement for aconsideration of USD 16.45 million (equivalent to Rs. 1204.73 million). Also Affle MEAFZ-LLC Dubai ("AMEA") a step-down subsidiary of the Company entered into anIntellectual Property Purchase Agreement to acquire 100% Tech IP assets of Appnext for aconsideration of USD 0.80 million (equivalent to Rs. 58.59 million).
Further Affle International in the Share Purchase Agreement also hasthe right to acquire 28.33% shares of Appnext at the end of three years from the date ofcompletion of the Share Purchase Agreement which has been accounted as per anticipatedacquisition method in books of Affle International.
Acquisition of business assets of Discover Tech Limited
On February 17 2021 the Company through its step-down subsidiaryAffle MEA FZ-LLC Dubai completed the necessary closing conditions for acquisition ofbusiness assets of Discover Tech Limited.
For more details on acquisitions and strategic investments by theCompany during the year please refer note 39 of the Consolidated Financial Statements.
Taient Uniimited Oniine Services Private Limited ("Bobbie")
On August 08 2020 the Company had made a strategic non-controllinginvestment and acquired 8% stake on a fully diluted basis in Talent Unlimited OnlineServices Private Limited ("Bobble") for a consideration of Rs. 198.00 millionthrough Compulsory Convertible Preference Shares ("CCPS"). Additionally theCompany also entered into an exclusive global monetisation agreement for Bobble'sintellectual property which also provides rights to the Company to acquire an additionalstake up to 10.74% of Bobble through subscription/purchase to CCPS and Equity Shares at apre-agreed consideration upon meeting of milestones as defined in the global monetisationagreement.
OS Labs Pte. Ltd.
The Company through its wholly owned subsidiary Affle InternationalPte. Ltd. ("Affle International") had made a strategic non-controllinginvestment and acquired 8% stake in CS Labs Pte. Ltd. Singapore for a consideration ofUSD 2.86 million (equivalent to Rs. 209.24 million) through Compulsory ConvertiblePreference Shares ("CCPS"). Cn January 25 2021 Affle International enteredinto a definitive share purchase agreement to sell its minority investment of 8% in CSLabs Pte. Ltd. to its promoter group company Affle Global Pte. Ltd. ("AGPL")for a consideration of USD 2.86 million (equivalent to Rs. 209.24 million) with an optionto purchase the minority investment back from AGPL at a premium of 5% after 1 year or 10%after 2 years subject to any approvals that may be required.
SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES
As on March 31 2021 the Company has the following subsidiary andstep-down subsidiaries:
Affle International Pte. Ltd. Singapore (Subsidiary with effectfrom April 01 2018)
PT. Affle Indonesia Indonesia (Step down
Subsidiary with effect from July 01 2018)
Affle MEA FZ-LLC Dubai (Step down Subsidiary with effect fromApril 01 2019)
Mediasmart Mobile S.L Spain (Step down
Subsidiary with effect from January 22 2020)
Appnext Pte. Ltd. Singapore (Step down
Subsidiary with effect from June 8 2020)
Appnext Technologies Limited Israel (Step down Subsidiary witheffect from July 19 2020)
Mediasmart Mobile Limited United Kingdom has ceased to be a step-downsubsidiary as it was dissolved with effect March 23 2021.
The Company does not has any Joint Venture and Associate Company as onMarch 31 2021.
A statement containing the salient features of the financial statementsof the subsidiaries in the prescribed Form AOC-1 is annexed to this report as AnnexureI.
In terms of Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") a separatesection on "Corporate Governance" with a detailed Report on Corporate Governanceforms part of this Annual Report.
MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion & Analysis Report for the year underreview as stipulated under Listing Regulations is presented separately as part of thisAnnual Report.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met 9 (nine) times during theyear under review. The details of the meetings of the Board including that of itsCommittees are given in the Report on Corporate Governance section forming part of thisAnnual Report.
ESTABLISHMENT OF THE VIGIL MECHANISM
The Company has formulated an effective Whistle Blower Mechanism and apolicy that lays down the process for raising concerns about unethical behavior actual orsuspected fraud or violation of the Company's Code of Conduct or Ethics Policy. Thefull text of the Policy is available under investor relations section on the website ofthe Company at https://www.affle.com.
No complaints were received through the said mechanism.
RISK MANAGEMENT POLICY
The Company has an effective risk management procedure which isgoverned at the highest level by the Board of Directors covering the process ofidentifying assessing mitigating reporting and review of critical risks impacting theachievement of Company's objectives or threaten its existence.
To further strengthen & streamline the procedures about riskassessment and minimization procedures the Board of Directors has a Risk ManagementCommittee and has also formulated a Risk Management Policy. The full text of the Policy isavailable under investor relations section on the website of the Company athttps://www.affle.com.
ADEQUACYOF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIALSTATEMENTS
The Company has in place adequate internal financial controls withreference to financial statements. During the year under review such controls were testedand no reportable material weakness in the design or operation were observed.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186OF THE COMPANIES ACT 2013
Particulars of investments made by the Company in securities of othercompanies are set out in note 5(a) of the Standalone Financial Statements of the Company.
The Company has not given any loan. However the Company issued StandbyLetter of Credit (SBLC) amounting to Rs. 695.74 million (equivalent to USD 9.5 million) infavour of Axis Bank Limited Singapore in lieu of term loan taken by Affle InternationalPte. Ltd a wholly owned subsidiary of the Company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
During the year under review all contracts/ arrangements/transactionsentered into by the Company with related parties under Section 188(1) of the CompaniesAct 2013 were in the ordinary course of business and on arm's length basis. Thusthe transactions reported in Form AOC-2 annexed to this report as Annexure II areall at arm's length basis.
The Company has neither invited nor accepted any deposits from thepublic falling within the preview of section 73 of the Act read with the Companies(Acceptance of Deposits) Rule 2014 during the year.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review following changes took place in the Boardof Directors of the Company.
1. Re-appointment of Mr. Bijynath (DIN: 08160918) Ms. Sumit MamakChadha (DIN: 05207581) and Mr. Vivek Narayan Gour (DIN: 00254383) as Independent Directorof the Company for a term of 5 consecutive years w.e.f June 1 2020.
2. Cessation of tenure of Mr. Naresh Chand Gupta (DIN: 00172311) andMr. Sudhir Mohanlal Jatia (DIN: 00031969) as Independent Director w.e.f June 1 2020.
3. Resignation of Mr. Charles Yong Jien Foong (DIN: 08160891) and Mr.Kapil Mohan Bhutan! (DIN: 00554760) as Executive Director w.e.f June 1 2020.
Retire by Rotation
As per the provisions of the Companies Act 2013 Ms. Mei Theng LeongDirector retires by rotation at the ensuing Annual General Meeting and being eligibleseeks reappointment. The Board recommends her reappointment.
Key Managerial Personnel
During the year under review the following persons were designated asKey Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of theAct read with the Rules framed thereunder:
Mr. Anuj Khanna Sohum Chairman Managing Director & ChiefExecutive Officer
Mr. Kapil Mohan Bhutan! Chief Financial & Operations Officer
Ms. Parmita Choudhury Company Secretary & Compliance Officer
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Nomination and Remuneration Committee has framed a policy forselection and appointment of Directors including determining qualifications andindependence of a Director Key Managerial Personnel (KMP) Senior Management Personneland their remuneration as part of its charter and other matters provided under Section178(3) of the Companies Act 2013.
Pursuant to Section 134(3) of the Companies Act 2013 the Nominationand Remuneration Policy of the Company which lays down the criteria for determiningqualifications competencies positive attributes and independence for appointment ofDirectors and policies of the Company relating to remuneration of Directors KMP and otheremployees is available under investor relations section on the Company's website athttps://www. affle.com.
Further the Company has also formulated a Board Diversity Policy toassure that the Board is fully diversified and comprises of an ideal combination ofExecutive and Non-Executive Directors including Independent Directors with diversebackgrounds.
DECLARATION FROM INDEPENDENT DIRECTORS
The Company received declaration from Independent Directors inaccordance with Section 149(7) of the Companies Act 2013 and Listing Regulations thathe/she meets the criteria of independence as laid out in sub-section (6) of Section 149 ofthe Companies Act 2013 and Listing Regulations.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and ListingRegulations the Board carried out an annual performance evaluation of its ownperformance the Directors individually as well as the evaluation of the working of itsCommittees.
The Board evaluation was conducted through questionnaire designed withqualitative parameters and feedback based on ratings.
Evaluation of the Board was based on criteria such as composition androle of the Board Board communication and relationships functioning of Board Committeesreview of performance of Executive Directors and strategic planning.
Evaluation of Committees was based on criteria such as adequateindependence of each Committee frequency of meetings and time allocated for discussionsat meetings functioning of Board Committees and effectiveness of itsadvice/recommendation to the Board.
Evaluation of Directors was based on criteria such as participation andcontribution in Board and Committee meetings experience and expertise to provide feedbackand guidance to top management on business strategy governance risk and understanding ofthe organization's strategy.
The outcome of the Board Evaluation for the financial year 2020-21 wasdiscussed by the Independent Directors at its meeting held on March 24 2021 and by theBoard at its meeting held on May 29 2021.
INDEPENDENT DIRECTORS MEETING
A separate meeting of Independent Directors without the attendance ofExecutive Directors and members of Management was held on March 24 2021.
Pursuant to Section 92(3) of the Companies Act 2013 read with readwith Rule 12 of the Companies (Management and Administration) Rules 2014 copy of theAnnual Return of the Company (MGT-7) for financial year 2020-21 prepared in accordancewith Section 92(1) of the Act has been placed on the website and is available athttps://affle.com/ images/pdf/Q4/Annual%20Retu rn%20for%20financial%20year%20ended%20March%2031%20 2021.pdf
M/s. S.R. Batliboi & Associates LLP Chartered Accountants(FRN:101049W/E300004) were appointed as the Statutory Auditors of the Company in the 24thAnnual General Meeting of the Company for carrying out the audit of the financialstatements of the Company from FY2019-20 to FY2023-24 subject to ratification by membersat every Annual General Meeting.
The Companies (Amendment) Act 2017 effective May 7 2018 had doneaway with the requirement of annual ratification of appointment of Statutory Auditorstherefore in accordance with the amended Section 139 of the Companies Act 2013 theappointment of M/s. S.R. Batliboi & Associates LLP Chartered Accountants as theStatutory Auditors of the Company shall not require any annual ratification.
The notes on financial statements referred to in the Auditors'Report are self-explanatory and do not call for any further comments. The Auditors'Report does not contain any qualification reservation or adverse remark except thefollowing Emphasis of Matter.
"1/1/e draw your attention to note 39.2 (i) of the consolidatedfinancial statements and note 38.1 of the standalone financial statements which indicatethat business combination under common control has been accounted for using purchasemethod in accordance with previous GAAP resulting in recognition of goodwill amounting toRs. 59.24 million as on March 31 2021 as prescribed under court scheme instead of usingpooling of interest method as prescribed under Ind 4S 103 BusinessCombinations as the approved court scheme will prevail over applicable accountingstandard.
Our opinion is not qualified in respect of this matter."
Pursuant to the provisions of Section 204 of the Companies Act 2013read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014the Company had appointed Kiran Sharma & Co. Company Secretaries as the SecretarialAuditors of the Company to undertake Secretarial Audit of the Company for FY2020-21. TheSecretarial Audit Report is annexed to this report as Annexure III.
The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.
Grant Thornton Bharat LLP performs the duties of Internal Auditors ofthe Company and their report is reviewed by the Audit Committee quarterly.
DETAILS ON CORPORATE SOCIAL RESPONSIBILITY ("CSR")INITIATIVES
The Annual Report on CSR activities of the Company in prescribed formatis annexed to this report as Annexure IV.
BUSINESS RESPONSIBILITY REPORT
Business Responsibility Report in accordance with the ListingRegulations separately forms a part of this Annual Report.
INFORMATION RELATING TO ENERGY CONSERVATION TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE EARNINGS AND OUTGO
a. Conservation of energy
The Company being in mobile advertising technology business isrelatively less resource intensive in terms of material inputs. However as a responsiblecorporate entity the Company endeavours to reduce its energy consumption by tracking theconsumption of resources critically.
b. Technology absorption and innovation
The Company continues to innovate and enhance its technologycapabilities for delivering a sustainable profitable growth to all its shareholders.During the year the Company has worked towards building expertise in the followingtechnology domains:
1. Data Science Deveiopments: During the year we have grown thedata science team both organically and inorganically through hirings. Organically we haveencouraged trainings in Data Science and many employees within the team have taken upthese learnings. Moreover we have increased the use of tools that allow for data scienceto be used by product managers and staff for faster insights and behavioural analysis.
2. Appnext: We have integrated our Out- of-Box-Experience (OOBE)solution with Appnext platform.
3. Omnichannel Developments: Key developments include a faster andbetter feed bus integration which can now ingest large volumes of catalogue / inventoryand feed information that enables better intelligence and engagement with users. Thiscoupled with our drive in data science with smart segments enables us to reach the rightaudience with the right notifications at the right time.
4. DevOps Developments: Our DevOps team continually improves ourinfrastructure costs by implementing the latest stable versions of systems that reducecertain costs in our infrastructure by up to 30-40%. Also ensuring our systems areautomated for fast delivery cycles and faster recovery times.
Method and System for Creating Decentralized Repository of FraudIPs and Publishers using Blockchain
Method and system for click to install behavior-based detectionof fraud
Method and system for application installation and interactionduring a podcast
c. Foreign exchange earnings and outgo
The foreign exchange earned in terms of actual inflows and the foreignexchange in terms of actual outflows during FY2020-21 are as follows:
|Earnings ||489346014 |
|Cutgo ||691592265 |
PARTICULARS OF EMPLOYEES
Details of the top ten employees in terms of remuneration drawn asrequired under the provisions of Section 197 of the Act read with Rules 5(2) & 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed to this report as Annexure V.
The ratio of remuneration of each director and key managerial personnelto the median of employees' remuneration the percentage increase in remuneration asrequired under the provisions of Section 197(12) of the Companies Act 2013 read with Rule5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed to this report as Annexure VI.
There were no employees who were employed throughout the financial yearor part thereof by himself/ herself or along with his/ her spouse and dependent childrenheld more than two percent of the equity shares of the Company.
Further there are no employees posted and working outside India anddrawing salary in excess of the prescribed limits under the above Rules and accordinglythe statement included in this report does not contain the particulars of employees whoare posted and working outside India.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORSCOURTS AND TRIBUNALS
No significant and material order has been passed by the regulatorscourts tribunals impacting the going concern status and Company's operations infuture.
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the CompaniesAct 2013 the Board hereby submit its responsibility Statement:
a. in the preparation of the Annual Accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures.
b. the Directors have selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at March 31 2021and of the profit of the Company for that year.
c. the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
d. the Directors have prepared the annual accounts on a going concernbasis.
e. the Directors have laid down internal financial controls to befollowed by the Company and that such financial controls are adequate and were operatingeffectively.
f. the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Directors place on record their sincere thanks to the customersemployees bankers business associates consultants various Government Authorities andother stakeholders for their continued support extended to the Company during the yearunder review. Your Directors also acknowledges gratefully the shareholders for theirsupport and confidence reposed on your Company.
|For and on Behalf of The Board of Directors Affle (India) Limited |
|Anuj Khanna Sohum |
|Chairman Managing Director & Chief Executive Officer |
|DIN: 01363666 |
|Date: May 29 2021 |
|Place: Singapore |