The Board of Directors ("Board") are pleased to present theCompany's Twenty Eighth Annual Report on the business and operations together AuditedStandalone and Consolidated Financial Statements for the year ended March 31 2022.
1. FINANCIAL PERFORMANCE:
The standalone and consolidated financial statements for the financialyear ended March 31 2022 forming part of this Annual Report have been prepared inaccordance with the Indian Accounting Standards (Ind AS) as notified by the Ministry ofCorporate Affairs. Performance of the Company for the financial year 2021-22 compared withthe previous financial year is as under:
(Rs In Lakhs)
|PARTICULARS || |
| ||2021-22 ||2020-21 ||2021-22 ||2020-21 |
|Total Operating Income ||12258 ||9619 ||48468 ||35808 |
|Other Income ||238 ||406 ||238 ||406 |
|Total Income ||12496 ||10024 ||48705 ||36213 |
|Less: Operating Expenditure ||10154 ||7626 ||41464 ||31341 |
|Profit before Interest Depreciation Amortization Tax & Exceptional Item ||2342 ||2399 ||7241 ||4872 |
|Less: Finance cost ||265 ||347 ||262 ||369 |
|Less: Depreciation ||1269 ||1267 ||2027 ||2154 |
|Profit before Tax and Exceptional Item ||807 ||784 ||4953 ||2349 |
|Exceptional Item ||- ||- ||2399 ||- |
|Profit before Tax ||807 ||784 ||7352 ||2349 |
|Less: Provision for Taxation ||409 ||18 ||1421 ||439 |
|Less: Deferred Tax Liability ||(171) ||(11) ||(171) ||(11) |
|Net Profit after tax ||569 ||777 ||6102 ||1923 |
|Other Comprehensive Income ||93 ||(76) ||189 ||(92) |
|Shares of Profit/(Loss) of Associates & Joint Ventures ||- ||- ||2 ||2 |
|Total Comprehensive Income (after tax) ||662 ||701 ||6292 ||1832 |
|Attributable to Owners of the Company ||662 ||701 ||5238 ||1604 |
|Attributable to Non-Controlling Interest ||- ||- ||1054 ||228 |
|Paid-up equity share capital (Face Value of Rs 5/-) ||2710 ||2535 ||2710 ||2535 |
|Reserves excluding Revaluation Reserves as per Balance Sheet of previous Accounting Year ||46577 ||45303 ||50428 ||44527 |
|Earning per Share || || || || |
|Basic ||1.09 ||1.55 ||11.66 ||3.82 |
|Diluted ||1.02 ||1.45 ||10.94 ||3.58 |
2. RESULT OF OPERATING PERFORMANCE ONGOING PROJECTS & STATEOF AFFAIRS:
To help the business remains competitive profitable and successful wehave setup certain key objectives and respective key performance indicators need to bedefined driven and continuously monitored. The objectives consist of high customersatisfaction increase in market share low employee attrition and optimized employeeproductivity.
There was no change in the nature of business of the Company duringthe year under review. The Company has taken huge strides in driving these objectives inmultiple aspects.
- Setting up a center of excellence in service delivery to ensure -
Customer visibility and transparency in the services deliveredthus strengthening trust and improved customer satisfaction.
Driving automation to save operational labor costs on mundanetasks (shift left initiative) and perform analytics of operational customer data.
Cross functional and new technologies training to employees tomake sure they are ready for new service offerings resulting to new customer acquisitions.
Standardization of operational processes and consistentmeasurement of service performance matching to industry bench- marks thus optimizingemployee productivity and controlling impact of attrition.
- Employee satisfaction improvement measures-
In the COVID times there has been an extra effort from our HRto manage employee health without customer service disruption.
Augment benefits and timely merit appraisal to keep employeesfocus and excited.
Provision internal succession planning as well as hire new freshtalents.
Improve employee morale in this pandemic.
- Improved branding company undertakes various initiatives such associal media communication customer communication new marketing initiatives and deeperpartnership engagements.
a) Standalone Financial Statements:
During the year under review despite having a partial covid impactyour company achieved a promising revenue growth of 27% and also improved operatingmargin. However PAT level reduced marginally on account of notional expenses bookedtowards granting of ESOPs to its employees.
b) Consolidated Financial Statements:
During the year review your company achieved very encouraging resultsby growing its revenue by almost 35% and PAT level increased by 217%. Even withoutconsidering the exceptional income your company achieved 94% jump in PAT level.
c) Ongoing Projects:
The Company scaled to new heights undertaking significant largeprojects and contracts. Some of the key ones completed under the Smart City business wereAurangabad Smart City and Kalyan Dombivli Smart City. Two Major contracts i.e. one fromGlobal automobile Company and second one from a very large Manufacturing conglomerateand the total outsourcing commenced its execution. The Company has active operations withits offices in Japan China and Brazil. One of the major achievements was also the hiringof over 600+ people across the globe this financial year. Several new cybersecurity cloudmigration projects got executed in this financial year. The Company has been activelyoperating 100+ other contracts as a managed services business. The Ongoing Projects &State of Affairs of the Company is presented as a part of Management Discussion andAnalysis Report (MDAR) which forms part of this Annual Report.
Further information regarding the potential impact of COVID-19 andvarious steps taken by the Company are provided as part of the MDAR.
d) State of Affairs:
The financial year 2021-22 was one of the significant year in terms ofgrowth and operational resilience. There have been significant new wins. The contracts andprojects undertaken outperformed the targets envisaged in the beginning of the financialyear and the Company had been able to achieve highest ever turnover in the last 10-yearhistory of the Company during the reported financial year. The Company remains focused inits six business offerings gaining significant revenues and new business.
e) Revision of Financial Statement:
There was no revision in the financial statements pertaining to theprevious financial year during the year under review.
f) Investor Education and Protection Fund:
In terms of the provisions of Investor Education and Protection Fund(Accounting Audit Transfer and Refund) Rules 2016 Investor Education and ProtectionFund (Awareness and Protection of Investors) Rules 2001 Rs 178859.75/- (One LakhSeventy Eight Thousand Eight Hundred & Fifty Nine Rupees & Seventy-Five PaisaOnly) is in unpaid/unclaimed dividend account of the company.
3. REPORT ON HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIESASSOCIATES AND JOINT VENTURE COMPANIES AND THEIR CONTRIBUTION TO THE OVERALL PERFORMANCEOF THE COMPANY:
a. The Company has nine (9) Foreign Subsidiaries two (2) IndianSubsidiaries and three (3) Associate companies. The Company does not have any jointventure company.
Following are the details of Subsidiary and Associate companies:
|Sr. No. Name of Company ||Subsidiary / Associate Company ||Date of becoming of Subsidiary/ Associate Company |
|1. Allied Digital Services LLC (USA) ||Subsidiary ||July 02 2008 |
|2. Allied Digital INC (USA) ||Subsidiary ||October 31 2007 |
|3. Allied Digital Singapore Pte Limited ||Subsidiary ||October 12 2010 |
|4. Allied Digital Asia Pacific Pty Limited (Australia) ||Subsidiary ||September 16 2010 |
|5. Allied Digital Services (UK) Ltd. ||Subsidiary ||December 04 2013 |
|6. Allied Digital Services (Ireland) Limited ||Subsidiary ||November 04 2019 |
|7. En Pointe Technologies India Private Limited ||Subsidiary ||December 29 2006 |
|8. Allied-eCop Surveillance Private Limited ||Subsidiary ||August 06 2007 |
|9. Assetlite Equipment India Private Limited ||Associate ||September 26 2009 |
|10. Soft Shell System (I) Private Limited ||Associate ||August 07 2015 |
|11. Allied CNT Solutions Private Limited ||Associate ||July 06 2004 |
|12. Allied Digital Services DO Brasil LTDA. ||Subsidiary ||September 10 2021 |
|13. Allied Digital IT Services (Beijing) Co. Ltd ||Subsidiary ||November 29 2021 |
|14. Allied Digital Services Japan G.K. ||Subsidiary ||April 01 2021 |
There is no material change in the nature of the business ofSubsidiaries or Associate Companies during the year under review. Pursuant to theprovisions of Section 129(3) of the Companies Act 2013 (the Act') thestatement containing the salient features of the financial statement of Subsidiaries andAssociates Companies in the prescribed Form AOC-1 is appended as "AnnexureI" to the Directors' Report.
b. Material Subsidiaries:
Allied Digital Services LLC USA is a Material Subsidiary whose incomein the immediately preceding accounting year exceeds ten percent of the consolidatedincome of the Company and its Subsidiaries.
The Policy for determining Material Subsidiaries as approved by theBoard may be accessed on the Company's website at the below link:https://www.allieddigital.net/in/downloads/Inv_Policies/Policy_on_Determination_of_MaterialSubsidiaries.pdf
4. RECENT DEVELOPMENTS:
The Company continues to gain momentum in multiple areas. Also theCompany has gained several smart city projects to implement path-breaking technology theyare Amritsar Jalandhar Sultanpur Lucknow and Solapur.
The Company bagged another large financial services customer forapplication support. Cybersecurity business is gaining momentum for the Company as it isin close talks with multiple customers.
The Company has taken major strides in developing a first of its kind"Conversational AI based Digital Banking Platform" for which it has won theinnovation award from leading banking industry conclave.
The Company also got into new global partnerships for RPA work. TheCompany has been nominated as a "New Champion" at World Economic Forumwhich is a sense of pride as well as has embarked on Environmental Social and Governance("ESG") initiatives.
Based on the performance of the Company for the year the Board ispleased to recommend a final dividend of Rs 1.00 (Rupee One only) i.e. 20% per EquityShare of face value Rs 5/- for the financial year 2021-22. The aforesaid dividend willinvolve a total payout of Rs 54205528/- (Rupees Five Crore Forty Two Lakhs FiveThousand & Five Hundred Twenty Eight only) subject to the approval of Members at theensuing Annual General Meeting of the Company. The proposed dividend payout is inaccordance with the Company's Dividend Policy.
6. TRANSFER TO RESERVES:
The Company has not recommended transfer of any amount out of itsprofit to reserves during the year under review. Hence the entire amount of profit forthe year under review has been carried forward to the Profit and Loss Surplus Account.
The Company has not accepted or renewed any amount falling within thepurview of provisions of Section 73 of the Act read with the Companies (Acceptance ofDeposits) Rules 2014 from public during the year under review. However as on the BalanceSheet date i.e. March 31 2022 there are unclaimed fixed deposits amounting to Rs 5.61lakhs lying with the Company.
The details relating to deposits covered as per the Chapter V of theAct are as under:
(Rs in Lakhs)
|Particulars ||March 312022 ||March 31 2021 |
|Deposits accepted during the year || || |
|Deposits unclaimed at the end of the year ||5.61 ||5.91 |
|Repayment of deposits or payment of interest thereon ||0.30 || |
|Default in repayment of deposits or payment of interest thereon || || |
The Company has not accepted any other deposits during the year whichare not in compliance with the Chapter V of the Act.
8. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT2013:
Except as disclosed elsewhere in the report there were no materialchanges and commitments occurred during the period between the end of the financial yearto which the financial statements relate to and date of said report which could affectthe financial position of the Company.
9. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES:
All Related Party Transactions ("RPT") are reviewed andapproved by the Audit Committee and Board on quarterly basis. Omnibus approval is alsoobtained from the Audit Committee and the Board for Related Party Transactions which areof foreseeable and of a repetitive nature.
All RPT entered during the financial year under review were in OrdinaryCourse of the Business and at arm's length basis. None of the transactions enteredinto with the related parties whether singly or taken together with the transactionentered into with the related party during the year was materially significant relatedparty transaction. The particulars of contracts or arrangements made with Related Partiespursuant to Section 188 of the Act is covered in Note 30(4) to the Standalone FinancialStatements forming part of the Annual Report.
There were no transactions/contracts/arrangements with relatedparty(ies) which are required to be reported in Form AOC-2. The policy on RPT as approvedby the Board has been uploaded on the Company's website and can be accessed at:https://www.allieddigital.net/in/downloads/Inv Policies/RelatedParty_Transaction_Policy.pdf. Pursuant to Regulation 23(9) of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) 2015 herein afterreferred to as "Listing Regulations" the Company has filed the reports on RPTwith the Stock Exchanges i.e. BSE Limited & National Stock Exchange of India Limitedand the same is also published on the website of the Company.
10. PARTICULARS OF LOANS ADVANCES GUARANTEES OR INVESTMENTS:
Disclosure on particulars of loans advances guarantees given andinvestments made pursuant to the provisions of Section 186 of Act and Schedule V of theListing Regulations are provided as part of the Financial Statements of the Company.Please refer to Note No.30(4) of the Standalone Financial Statements.
11. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL
a) Change in Board of Directors & Key Managerial Personnel:
The Board of the Company is duly constituted in accordance with therequirements of the Act and the Listing Regulations. Mr. Sunil Vasudev Bhatt (DIN:09243963) was appointed as an Additional Director (Non-Executive & Non-IndependentDirector) of the Company with effect from July 30 2021 and later his appointment wasapproved by the Members in the 27th Annual General Meeting of the Company heldon September 13 2021. Further the Board at its meeting held on May 18 2022 approvedthe appointment of Mr. Sunil Vasudev Bhatt as an Executive Director for a period of five(5) years commencing from May 18 2022 subject to the approval of the Members of theCompany and the Central Government. Ms. Swanubhuti Jain (DIN: 09006117) was appointed asAdditional Director (Non-Executive & Independent Director) with effect from July 302021 and later her appointment was approved for a period of 5 (five) consecutive yearsupto March 31 2026 by the members in the 27th Annual General Meeting of theCompany held on September 13 2021.
Pursuant to the provisions of Section 152 of the Act Mr. PrakashDhanji Shah (DIN: 00189842) Director being the longest in the office shall retire byrotation at the ensuing Annual General Meeting of the Company and being eligible hasoffered himself for re-appointment.
Ms. Shubhada Jahagirdar (DIN: 00895950) Independent Director hasresigned from the Company's Board due to her other personal and professionalcommitments with effect from the closure of business hours of October 28 2021. The Boardappreciates her valuable contribution to the Company during her tenure.
Mr. Shakti Kumar Leekha (DIN: 03246804) was appointed as an IndependentDirector for the term of five (5) years to hold office commencing from January 20 2022 bythe Members of the Company through Postal Ballot.
Mr. Anup Kumar Mahapatra (DIN: 08985605) was appointed as an AdditionalDirector (Non-Executive & Independent Director) with effect from May 18 2022 subjectto the approval of the Members of the Company in the ensuing Annual General Meeting. Inaccordance with the provisions of the Act none of the Independent Directors are liable toretire by rotation.
b) Statement regarding opinion of the Board with regard to integrityexpertise and experience (including the proficiency) of the Independent Director appointedduring the year:
As per Rule 8 of Companies (Accounts) Amendment Rules 2019 in opinionof Board Ms. Swanubhuti Jain (DIN: 09006117) and Mr. Shakti Kumar Leekha (DIN: 03246804)who have been appointed as Independent Directors are persons of integrity and possessrelevant expertise and experience.
c) Declaration given by the Independent Directors and Senior ManagementPersonnel on compliance to Code of Conduct:
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the prescribed criteria forIndependence under the Section 149(6) of the Act and Regulation 16(1)(b) and 25(8) of theListing Regulations and have also confirmed that they have registered themselves with theIndependent Director's Databank maintained by the Indian Institute of CorporateAffairs.
All Independent Directors have afirmed in compliance to the Code ofConduct for Independent Directors as prescribed in Schedule IV to the Act.
Also the Directors and Senior Management Personnel have submitteddisclosures under Regulation 26(3) of the Listing Regulations afirming compliance with theCode of Conduct for Directors and Senior Management Personnel.
d) Key Managerial Personnel (KMP):
During the year under review there was no change in the KMP of theCompany and the details of the KMP in terms of Section 203 of the Act are as below:
Mr. Nitin Dhanji Shah : Managing Director
Mr. Prakash Dhanji Shah : Whole-time Director
Mr. Paresh Bipinchandra Shah : Chief Executive Officer
Mr. Gopal Tiwari : Chief Financial Officer
Ms. Neha Sunil Bagla : Company Secretary
12. DISCLOSURES RELATED TO BOARD COMMITTEES AND POLICIES: a. BoardMeetings:
Regular meetings of the Board and its Committees are held to discussand decide on various business policies strategies financial matters and otherbusinesses. Due to business exigencies the Board has also been approving severalproposals by way of passing circular resolutions from time to time.
Five (5) meetings of the Board were held during the year under review.The meetings were held on May 31 2021 July 30 2021 October 13 2021 November 012021 and January 31 2022. Brief details of the said meetings are provided in theCorporate Governance Report which is a part of this Annual Report.
In terms of requirements of Schedule IV of the Act a separate meetingof Independent Directors was also held on November 01 2021 to review the performance ofNon-Independent Directors (including the Chairperson) the entire Board and its Committeesthereof quality quantity and timelines of the flow of information between theManagement and the Board.
The Board afirms that the Company has complied with the applicableSecretarial Standards (SS') issued by the Institute of Company Secretaries ofIndia (SS1 and SS2) relating to meetings of the Board and its Committees and GeneralMeetings respectively during the year under review.
b. Directors' Responsibility Statement:
Pursuant to Section 134(5) of the Act the Board to the best of itsknowledge and ability confirm that: a. in the preparation of the annual accounts theapplicable accounting standards had been followed along with proper explanation relatingto material departures; b. the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year as at March 31 2022 and of the profit and loss of the Company for thatperiod; c. the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;d. the annual accounts of the Company have been prepared on a going concern basis; e. theDirectors had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and f.the Directors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
c. Committees of Board:
The Company has five (5) Board-level Committee(s) which have beenestablished in compliance with the provisions of the Act and Listing Regulations:
- Audit Committee;
- Nomination and Remuneration Committee;
- Stakeholder's Relationship Committee;
- Corporate Social Responsibility Committee; and
- Management Committee.
The details of meetings of the Committees held during the financialyear under review along with attendance of members thereof changes in the composition ofCommittees during the year and period till date and Role of the Committees are provided inthe Corporate Governance Report which is part of this Annual Report.
I. Audit Committee:
The Audit Committee has been constituted by the Board in accordancewith the provisions of Section 177 of the Act read with Regulation 18 of ListingRegulations. During the year under review the Board had accepted all the recommendationsof the Audit Committee.
II. Nomination and Remuneration Committee:
Pursuant to the provisions of Section 178 of the Act read withRegulation 19 of Listing Regulations the Board has constituted the Nomination andRemuneration Committee which inter-alia recommends to the Board the criteria forappointment of Director(s) along with the compensation terms of Executive Directors andSenior Management Personnel's. The Board has approved the Nomination and RemunerationPolicy for Directors Key Managerial Personnel and all other Employees of the Company. Thesaid policy is hosted on the website of the Company. The web link of the same is asfollows:https://www.allieddigital.net/in/downloads/Inv_Policies/Nomination_Remuneration_policy.pdf
III. Stakeholders' Relationship Committee:
The Stakeholders' Relationship Committee is duly constituted inaccordance with the provisions Section 178 of the Act read with Regulation 20 of ListingRegulations. The primary objective of the Stakeholders' Relationship Committee of theCompany is to consider and resolve the grievances of security holders/members of theCompany.
IV. Corporate Social Responsibility ("CSR") Committee:
In accordance with the requirement of the provisions of section 135 ofthe Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014 thecompany has constituted of CSR Committee. The said Committee has been entrusted with theresponsibilities of formulating and recommending to the Board Corporate SocialResponsibility Policy (CSR Policy) indicating the activities to be undertaken by theCompany monitoring the implementation of the framework of the CSR Policy and recommendingthe amount to be spent on CSR activities. The detailed report on CSR activities isattached as "Annexure II" to this report.
The key philosophy of the Company's CSR initiative is to promotedevelopment through social and economic transformation. The CSR Policy of the Company canbe accessed on the Company's website in the link provided herein below:https://www.allieddigital.net/in/downloads/Inv_Policies/CSR%20Policy.pdf
V. Management Committee:
The Management Committee is entrusted with the operational andadministrative power and operate as per the authority given by the Board from time totime. The Committee comprises of three (3) members i.e. Mr. Nitin Shah Chairman andManaging Director Mr. Prakash Shah Whole-time Director and Mr. Paresh Shah ChiefExecutive Officer of the Company.
13. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO:
The particulars as prescribed under Section 134(3)(m) of the Act readwith Rule 8 of the Companies (Accounts) Rules 2014 are as follows:
A. CONSERVATION OF ENERGY
(i) Steps taken or impact on conservation of energy:
One of the significant steps taken this year is the company'sinitiative to drive Environmental Social and Governance ("ESG") objectives. TheCompany is now also a nominated member at the World Economic Forum. The Company has alwaysconsidered energy and natural resource conservation as a focus area. Though the operationsof the Company are not energy intensive it strongly believes that it is the need of thehour to do best efforts to conserve energy and natural resources like water.
The Company continues to take sustainable steps voluntarily tocontribute towards better environment. Selected few steps/impact are listed below:
- Use of natural Lightning and natural ventilation;
- Use of energy efficient electric equipment such as use of LED bulbs;
- Conservation of water ensuring no leakages in taps;
- Encourage use of environment-friendly reusable water bottles;
- Car-pooling during meetings and encourage use of public transport;
- Discouraging use of non-disposable plastic bags plates etc.;
- Switching off work stations and laptops;
- Controlling the air-conditioning equipment optimally in the premises;
- Educating employees and workers for energy conservation.
(ii) Steps taken by the Company for utilizing alternate sources ofenergy:
The Company is using electricity as main source of its energyrequirement and does not have any alternate source of energy. However the company is keenin promoting green solution to the customers such as solar power devices whereverpossible.
(iii) Capital investment on energy conservation equipment's:
There was no such investment in energy saving equipment during theyear.
(iv) Environment Sustenance Project under World Economic Forum:
The Company along with other leaders such as Microsoft and Deloittehave got involved into developing AI based prediction and proactive measures on WildForest Fires across the globe.
(v) E-Waste Management:
The Company is significantly contributing efforts to manage e-waste forits customers as well as its own company assets. Also an initiative in shaping to plane-waste collection in Mumbai on environment day.
B. TECHNOLOGY ABSORPTION
(i) The efforts made towards technology absorption:
The Company has innovation as part of its motto. It is always thrivento be a pioneer for adoption new technologies which either be useful for generating newbusiness for its customers or for its self-use. It evaluates the best available technologyfor improving its performance and quality of its service operations.
(ii) The benefits derived like product improvement cost reductionproduct development or import substitution:
The Company has adopted new technology to strengthen its infrastructurein the US which is leveraged by many customers that has helped giving top qualityuninterrupted services. It has adopted new technologies to apply to solve challenges facedby customers.
(iii) In case of imported technology (imported during the last threeyears reckoned from the beginning of the financial year):
The Company has not imported technology during the three precedingyears under review.
(iv) Expenditure incurred on Research and Development:
The Company has been continuously working on innovative projects whichare either part of-- New features of their ADiTaaS product and global certification forPinkVerify etc.
- New conversational AI based banking platform
- RPA and DevOps technologies for customers and self-use
- Doing proof-of-concepts on new technologies in cybersecuritymulti-cloud technologies AI - Investing in new technology training/learning.
14. FOREIGN EXCHANGE EARNINGS AND OUTGO:
The details of the Foreign Exchange Earned and Outflow during the yearare as follows:
(Rs In Lakhs)
|Particulars ||2021-22 ||2020-21 |
|Earnings ||5806 ||3722 |
|Outflow (including Capital imports) ||529 ||286 |
|Net Foreign Exchange Earnings (NFE) ||5277 ||3436 |
|NFE/ Earnings (%) ||91 ||92 |
15. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
In terms of Regulation 34 of the Listing Regulations the ManagementDiscussion and Analysis Report capturing the Company's performance industry trendsand other material changes with respect to the company and its subsidiaries whereverapplicable are presented in a separate section forming a part of this Annual Report.
16. CORPORATE GOVERNANCE:
The Company believes in adopting best practices of CorporateGovernance. These guiding principles are also articulated through the Company's codeof business conduct Corporate Governance Guidelines as per Schedule V of ListingRegulations the requisite certificate from the Practicing Company Secretary confirmingcompliance of the conditions of Corporate Governance is annexed to the Report on CorporateGovernance which is forming a part of this Annual Report.
17. ANNUAL RETURN:
Pursuant to section 92(3) and section 134(3)(a) of the Act read withRule 12 of the Companies (Management and Administration) Rules 2014 the draft of AnnualReturn is available on the website of the company i.e.:https://www.allieddigital.net/in/downloads/agm/2022/Draft_Form_MGT_7_2022.pdf
18. ANNUAL EVALUATION:
The evaluation framework for assessing the performance of Directors ofthe Company comprises of contributions at the meetings strategic perspective or inputsregarding the growth and performance of the Company among others.
Pursuant to the provisions of the Act and the Listing Regulations theDirectors have carried out the Annual Performance Evaluation of the Board IndependentDirectors Non-Executive Directors Executive Directors Committees and the Chairman ofthe Board.
The Nomination and Remuneration Committee considered and discussed theinputs received from the Directors and the outcome of such evaluation process wassatisfactory which reflected the overall engagement of the Board and its Committees withthe Company. Further the Independent Directors at their meeting held on November 012021 reviewed the performance of the Board Chairman of the Board Executive and Non-Executive Directors.
19. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS:
Over the years the Company has developed a robust familiarisationprocess for the newly appointed Directors with respect to their roles andresponsibilities way ahead of the prescription of the regulatory provisions. The processhas been aligned with the requirements under the Act and other related regulations. Thisprocess includes providing an overview of the IT industry the Company's businessmodel the risks and opportunities their roles rights and responsibilities vis-?-visthe Company etc. The link for accessing the said program is:https://www.allieddigital.net/in/downloads/Inv_Policies/Familiarisation_Programme_Independent_Directors.pdf
20. THE VIGIL MECHANISM/WHISTLE BLOWER POLICY:
The Company has formulated and published a Whistle Blower Policy toprovide Vigil Mechanism for employees including Directors of the Company to report genuineconcerns and to ensure strict compliances with ethical and legal standards across thecompany. The provisions of the said policy is in line with the provisions of the section177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers)Rules 2014.
The employees of the company have the right to report their concern orgrievance to the Chairman of the Audit Committee. The Company is committed to adhere tothe highest standards of ethical moral and legal conduct of business operations. TheWhistle Blower Policy is hosted on the website of the Company at:https://www.allieddigital.net/in/downloads/Inv_Policies/Whistle_blower_and_vigil_mechanism.pdf.
There were no such reports information received by the Chairman of theAudit Committee during the year under review.
21. AUDITORS AND REPORTS:
The matters related to Auditors and their Reports are as under:
a) Statutory Auditors
At the 25th Annual General Meeting held on September 102019 M/s. Shah & Taparia Chartered Accountant Mumbai (Firm Registration No.109463W) was appointed as the Statutory Auditor of the Company for second term of five (5)years i.e. from conclusion of Twenty Fifth Annual General Meeting until the conclusion ofThirtieth Annual General Meeting of the Company. The Auditor's Report to the Memberson Standalone and Consolidated Financial Statements for the financial year ended March 312022 is unmodified i.e. it does not contain any qualification reservation adverse remarkor disclaimer. The notes to accounts referred to in Auditors' Report are self-explanatory and therefore do not call for any further explanation or comments from theBoard.
b) Secretarial Auditors
PursuanttotheprovisionsofSection204oftheActreadwithCompanies(AppointmentandRemunerationofManagerialPersonnel)Rules 2014 the Board has appointed M/s. Rathi & Associates Company Secretaries(Firm Registration No. P1988MH011900) as Secretarial Auditor to undertake the SecretarialAudit of the Company for the financial year 2021-22. The Secretarial Audit Report wasissued by them in Form MR-3 which forms part of this report and is marked as "AnnexureIII".
The Secretarial Audit Report for the financial year ended March 312022 contains an observation regarding non-compliance with Regulation 24(1) of theListing Regulations read with explanation of "material subsidiary". Theobservation provides that the Company is yet to appoint its Independent Director on theBoard of Director of its unlisted material subsidiary i.e. Allied Digital Services LLCUSA.
The Board has taken note of the above observation and has explainedthat Allied Digital Services LLC USA has received consent letter from Ms. SwanubhutiJain one of the Independent Director of the Company and that the Company is awaiting forcompletion of requisite actions by the Board of Directors of the Material Subsidiary forher appointment.
c) Internal Auditor
M/s. Satya Prakash Natani & Co. Chartered Accountant (FirmRegistration No. 115438W) Internal Auditor of the Company have carried out Internal Auditin various areas/parameters for the financial year ended March 31 2022. The findings ofthe Internal Auditor are discussed on quarterly basis at the meetings of the AuditCommittee and Board and accordingly necessary steps are taken to implement thesuggestions/recommendations if any of the said Internal Auditors.
d) Cost Auditor
The Company was not required to appoint any Cost Auditors or maintainCost Audit Records pursuant to the requirements of Section 148 of the Act during the yearunder review.
e) Reporting of Frauds by Auditors
During the year under review there were no material or seriousinstances of fraud falling within the purview of Section 143 (12) of the Act and rulesmade thereunder by officers or employees reported by the Auditors of the Company duringthe course of the audit conducted.
f) Compliance with Secretarial Standards
The Company complies with all applicable mandatory SecretarialStandards issued by the Institute of Company Secretaries of India.
22. INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY:
The Company's internal financial controls are commensurate withthe scale and complexity of its operations. The Company has put in place adequate internalfinancial controls system over financial reporting which ensures that all transactions areauthorized recorded and reported correctly in a timely manner. The Company'sinternal financial controls ensure the reliability of data and financial informationaccuracy & completeness in maintaining accounting records and prevention &detection of frauds & errors.
23. DISCLOSURE OF REMUNERATION PAID TO DIRECTOR AND KEY MANAGERIALPERSONNEL AND EMPLOYEES:
Information required pursuant to Section 197 (12) of the Act read withRule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided in "Annexure IV" of this report.
There was no receipt of any remuneration or commission by the ManagingDirector or the Whole-time Director of the company from any of its subsidiary companiesduring the year under review.
24. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN ATWORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:
The Company is committed to providing a safe and conducive workenvironment to all of its employees and associates. Accordingly the Company has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace and hasconstituted a Committee in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.
During the year ended March 31 2022 no complaints were received bythe Company pertaining to sexual harassment of women.
25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORSOR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS INFUTURE:
During the year under review no significant and material orders werepassed by the Regulators or Courts or Tribunals impacting the going concern status andCompany's operations in future.
26. RISK MANAGEMENT:
The Company has been very proactive in managing risks. Some of therisks worth to highlight in this financial year were of the continued pandemic. Due to awell-planned operational resilience that continued from the previous year there was nobusiness impact. Also due to conclusion of significant large wins in the start of thefinancial year another significant risk was to timely hire huge scale of resources acrossthe globe. The Company's Human Resource ("HR") played an outstanding rolein hiring varied talent and thus avoiding risk of losing any business.
The current financial year has started with a new risk of employeeattrition due to growing demand for IT resources across the globe. There is impending riskon retaining higher profit margins due to increased cost of hiring as well as retainingresources.
27. EMPLOYEE STOCK OPTION PLAN:
The members at the 26th Annual General Meeting held onSeptember 03 2020 approved ADSL - Employees Stock Option Plan 2020'("ADSL ESOP 2020"). The Company has also received In-principle approval from BSELimited and National Stock Exchange of India Limited on February 09 2021 and February 122021 respectively.
The ADSL ESOP 2020 is in line with the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 ("SEBI SBEBRegulations") as amended from time to time. The Company has obtained a certificatefrom the Secretarial Auditor of the company stating that the ADSL ESOP 2020 has beenimplemented in accordance with the SEBI SBEB Regulations and the resolutions have beenduly passed by the Members. The said certificate is available for inspection for theMembers in electronic mode.
The objects of the ADSL ESOP 2020 is to reward the eligible employeesof the company and its holding company or its subsidiary company (ies) in India and abroadfor their performance and to motivate them to contribute to the growth and profitabilityof the Company. The options will be exercisable into equity shares as per the terms andconditions as stipulated in ADSL ESOP 2020. The ADSL ESOP 2020 is being administered andmonitored by the Nomination and Remuneration Committee of the Board in accordance with theapplicable Securities and Exchange Board of India Guidelines. The Company in its meetingheld on July 30 2021 and October 13 2021 approved the grant of 18.00 lakhs and 16.20lakhs options respectively under the ADSL ESOP 2020 to the eligible employees. There is nomaterial change in the ADSL ESOP 2020 during the year under review. The relevantdisclosures pursuant to Rule 12 (9) of the Companies (Share Capital and Debentures) Rules2014 and Regulation 14 of the SEBI SBEB Regulations as amended from time to time areavailable on the website of the company i.e. www.allieddigital.net and the same is markedas "Annexure V" to this Directors' report.
28. PREFERENTIAL ALLOTMENT
The Company allotted 40 lakhs Convertible Equity Warrants onPreferential basis to Mr. Nitin Dhanji Shah (Promoter) Chairman and Managing Director ofthe Company on September 16 2020 at the price of Rs 18.80 per warrant (Face Value Rs 5 per share Premium Rs 13.80 per share).
The Company received upfront payment of 25% of the warrants allotted atthe time of subscription from the said allottee. As per terms of issue of warrants thewarrant holder shall deposit the balance 75% for conversion of warrants into equity shareswhile exercising right to subscribe.
Post receiving of the balance 75% payment conversion of 40 lakhswarrants were made to the said allottee on March 01 2021 and October 13 2021respectively. The details of the said allotment is as under:
|Date ||Name of the Allottee Category ||No. of share warrants Converted ||No. of fully paid up Equity shares allotted Price per share ||Shareholding post Con- version |
| || || || ||Pre ||Post |
|March 01 2021 ||Mr. Nitin Dhanji Shah (Promoter) ||500000 ||500000 shares Price Rs 18.80 per share (including premium of Rs 13.80 per share) ||14783031 ||15283031 |
|October 13 2021 ||Mr. Nitin Dhanji Shah (Promoter) ||3500000 ||3500000 shares Price - Rs 18.80 per share (including premium of Rs 13.80 per share) ||15283031 ||18783031 |
The Company has also received the trading approval from BSE Limited andNational Stock Exchange of India Limited on April 28 2021 and November 17 2021 for thesaid 500000 Equity Shares and 3500000 Equity Shares allotted respectively. Theproceeds of the Preferential Allotment are utilized by the Company for objects stated inthe explanatory statement to the Notice of 26th Annual General Meeting of theCompany.
The Directors states that no disclosure or reporting is required inrespect of the following items as there were no transactions pertaining to the same duringthe year under review:
1. Issue of equity shares with differential rights as to dividendvoting or otherwise;
2. Issue of shares (including sweat equity shares) to employees of theCompany under any scheme;
3. Neither the Managing Director nor the Whole-time Director of theCompany received any remuneration or commission from any of its subsidiaries.
4. Application made or proceeding pending under the Insolvency andBankruptcy Code 2016.
5. Difference between amount of valuation done at the time of one-timesettlement and the valuation done while taking loan from the Banks or FinancialInstitutions.
The Board wishes to place on record its sincere gratitude andappreciation of the contributions made by the employees of the Company and itssubsidiaries for their hard work solidarity cooperation and dedication during the year.The Directors of the Company thank the customers clients vendors and other businessassociates for their continued support in the Company's growth.
The Directors express their deep sense of gratitude to the GovernmentAuthorities Financial Institutions Stakeholders Business Associates for their supportand look forward to their continued association in future.
For and on behalf of the Board of Directors of
Allied Digital Services Limited
| ||Nitin Shah ||Prakash Shah |
|Place: Mumbai ||Chairman & Managing Director ||Whole-time Director |
|Date: May182022 ||DIN:00189903 ||DIN:00189842 |