TO THE MEMBERS OF APTECH LIMITED
Your Directors are pleased to present their Nineteenth Annual Report on the businessand operations of your Company and the Audited Financial Statement for the year endedMarch 31 2019.
STATE OF AFFAIRS SNAPSHOT OF FINANCIAL RESULTS
The financial results of the Company for the Accounting period ended March 31 2019 arepresented below:
(Rs. In lakhs)
| ||Standalone ||Consolidated |
|Particulars ||Year ended March 31 2019 ||Year ended March 31 2018 ||Year ended March 31 2019 ||Year ended March 31 2018 |
|Operating Revenue ||14078.02 ||15913.97 ||20855.15 ||22914.23 |
|Total Revenue ||14548.58 ||17901.82 ||21271.88 ||24983.27 |
|Total Expenditure ||13849.78 ||15621.83 ||19031.50 ||21325.00 |
|Net Profit before exceptional item and tax ||698.80 ||723.84 ||2240.38 ||2102.12 |
|Net Profit after exceptional item ||698.80 ||2279.99 ||2240.38 ||3658.27 |
|Profit / (Loss) After Tax ||519.83 ||1905.77 ||1822.11 ||3287.23 |
|Total Comprehensive Income ||658.11 ||2015.00 ||1942.95 ||3393.35 |
The Company achieved considerable progress in FY 2018-19 by strengthening its positionin as a Branded Lifecycle Learning Platform and improving the quality of itsrevenue. It ended the year with a Profit Before Tax (before Exceptional Items) of Rs.2240 Lakhs which amounted to a growth of 6.6% vis--vis the previous financial year.The FY 2018-19 EBIT was also higher by 6.7% over FY 2017-18 to Rs. 2249 Lakhs in spiteof headline Revenue from Operations declining by 9% from Rs. 22914 Lakhs in previous yearto Rs. 20855 Lakhs in FY 2018-19. This decline in revenue was primarily on account of aconscious decision to exit from low margin businesses and projects in the InternationalRetail business and a temporary impact of strategic realignment on business traction forthe Institutional segment. The Profit After Tax for FY 2018-19 was Rs. 1822 Lakhswhich was lower than the previous year when the Company had recorded exceptional incomefrom sale of properties. The balance sheet of the Company continued to be healthy withzero debt and Cash Cash Equivalents Short-term Investments & Financial Instrumentsamounting to Rs. 6331 Lakhs as on March 31 2019.
The Retail segment on a like-to-like basis after excluding the discontinued revenuestreams from low margin businesses and projects revenue in the International Retaildivision grew by 6.5%. Domestic Retail the primary growth driver for the Companycontinued growing at a healthy pace in FY 2018-19 i.e. 13.9% on a YOY basis. The revenuemix for the Retail segment moved from 65:35 in FY 2017-18 to 77:23 in FY 2018-19 infavour of Domestic Retail. Retail EBIT expanded by 14% from Rs. 4673 Lakhs to Rs. 5326Lakhs with the EBIT margin for the segment going up to 37.8% from 32.1% in the precedingyear. The Institutional segment ended FY 2018-19 with a top line of Rs. 6762 Lakhsvis--vis Rs. 8362 Lakhs logged in FY 2017-18. The strategic realignment implemented inthe Assessment division of the Institutional segment started delivering results in thelast quarter of FY 2018-19 however the full impact would be seen from the next financialyear onwards. The Company continued to improve operational efficiencies at the corporateoverhead expenses level and the ESOP expenses which have been recognised underEmployees Benefits Expenses as Share Based payment to Employeessaw a net write back of Rs. 306 Lakhs on account of the lapsed/cancelled ESOPs that willnot vest as against an expense of Rs. 1227 Lakhs in FY 2017-18.
Overall system-wide collection from students for the franchise business in Retailsegment was Rs. 42001 Lakhs in FY 2018-19 vs. Rs. 35884 Lakhs in FY 2017-18 translatingto a growth of 17.1%. Out of this total system-wide collection for Domestic Retail wasRs. 29910 Lakhs and for International Retail was Rs. 12091 Lakhs with a YOY growth of20.3% and 9.7% respectively. From April 2018 to March 2019 there was a net addition of 76active centres in Domestic Retail and of 6 active centres in International Retail. Thisexpansion was on the base of 574 active India centres and 121 active overseas centres inMarch 2018.
Performance in the Retail segment was achieved on the back of Companys consistentand committed strategic thrust to strengthen its position as the Branded LifecycleLearning Platform of choice. This was achieved through pursuit of EmploymentDriven Enrolment and its mission to eliminate unemployment primarily in thedomestic market and enhanced value proposition with advanced courses and pathway toworld-class international qualifications through alliances. Some of the major initiativeson these fronts were:
1. Launching high value premium courses and expanding course basket to address moresub-segments within each vertical. Objective is to maintain industry relevance as a sourcefor skilled resources from a quality coverage and number perspective.
2. Leveraging technology to improve quality of learning outcomes and student experiencesuch as use of Augmented Reality by employing latest pedagogy of video-assistedclassrooms online Master Class by international experts and many more with the objectiveto provide holistic and experiential learning.
3. Providing a common online platform Creosouls that would bring its three mainstakeholders viz. student franchisee and recruiter together and help them showcasestudent work jobs events competitions courses etc. to the entire community.
4. Partnering with recruiters to incorporate specific skills or training modules in thecourse so as to ensure job-ready candidates. Also by entering into specific Hire &Train agreements.
5. Enhancing the share of voice through increased marketing intensity and comprehensivemarketing strategy across all mediums. Use of Mr. Rahul Dravid as the brand ambassador forAptech Learning and Arena Animation was the biggest example of increased focus onmarketing.
6. Increasing use of mobile and digital technologies in marketing and counsellingprocess for e.g. use of Virtual Reality kits online tools etc. in counselling and use ofvoice bots AR and VR on websites.
7. Using events as a key thrust for student engagement and industry connect to increaseexcitement around the brand by giving a platform for experience interaction andexpression that would also lead to higher amount of content for social and traditionalmedia. This is also a key element of the revenue model for most brands.
8. Continuing to focus on faster expansion of all brands especially new brands thathave widened the Companys lifecycle coverage at both ends i.e. beforejob and after job.
9. Continued rationalization and restructuring of network by weeding out non-performingand defaulting franchisees to ensure minimizing potential business loss and improvingquality.
The Company had put into motion a plan to re-energize the Assessment & Testingdivision during the year because of the impact of operational setbacks in previous year.This included a new strategy to focus on specific segments of exams where probability ofextraneous factors affecting delivery and customer relationship were negligible. It wasalso found prudent to spread the risk by focusing to acquire a larger base of customerswithout too much dependence on a single client and to rationalize the fixed investmentsin line with the existing revenue base. New tool for Digitisation of Records was alsolaunched in the market to capture a larger share of customers wallet.
The Company has continued to focus on improving the quality and robustness of itsbusiness processes and as a testament the Company was certified by CMMI Institute atCapability Maturity Level 3 for its Enterprise Business group and also received theprestigious Golden Peacock National Training Award 2019. Trust and recognition enjoyed byits star brands was visible from the Brand of the Decade award in theEducation Space that was conferred by Brand Advertising Research and Consulting Asia andHerald Global in May 2018 to Aptech and Arena. Similarly in theinternational arena Aptech Vietnam received the Top ICT award in the Training categoryfor the 16th year in row.
An Interim Dividend of Rs. 3.50 per equity share was paid to the shareholders asapproved by the Board of Directors at its meetings held on 21st May 2019. The Directorshave considered it financially prudent to re-invest profits into the business of theCompany and therefore do not intend to recommend final dividend.
During the year 2018-19 the Directors met four times on 30th May 2018 26thJuly2018 25thOctober 2018 and 11th February 2019. Mr. Rajiv Agarwal Non ExecutiveDirectorretires by rotation at the ensuing Annual General Meeting and is eligible forre-appointment. Mrs. Madhu Jayakumar whose first term of five years will get over on 23rdSeptember 2019 and who meets with the criteria of independence is eligible forre-appointment for the second term of five years.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down in Section 149(6) of the Companies Act 2013 and Regulation 16(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations& Disclosure Requirements) Regulation 2015 during the year under review the Boardcarried out the annual evaluation of its own performance. A structured questionnairecovering various aspects of functioning of the Board Committees and Directors such asadequacy of the composition of the Board and its Committees Board culture execution andperformance of specific duties obligation and governance was distributed to each memberof the Board and inputs were received.
EMPLOYEE STOCK OPTIONS
The Members of the Company at its Annual General Meeting held on 27th September 2016had approved the Aptech Employee Stock Option Scheme 2016 ("the Scheme") tocreate offer and grant upto 4432620 Employee Stock Options to all eligible employeesdirectors (excluding promoter directors) of the Company and employees of its subsidiarieswith a view to attract and retain key talents working with the Company and its SubsidiaryCompany (ies) by way of rewarding their performance and motivate them to contribute to theoverall corporate growth and profitability. All the plans are administered by theNomination & Remuneration Committee of the Board. Disclosures as required under theSEBI (Share Based Employee Benefits) Regulations 2014 are available on CompanysWebsite on the link:https://www.aptech-worldwide.com/downloads/news-and-notification/DISCLOSUREASREQUIREDUNDERSEBIESOP-Aptech-31.03.2019.pdf
EXTRACT OF ANNUAL RETURN
As per the requirements of Section 92(3) of the Companies Act 2013 and Rules framedthereunder the extract of the annual return for FY 2018-19 is available onCompanys website on the link : www.aptech-worldwide.com
PARTICULARS OF LOAN GUARANTEE OR INVESTMENTS
Loan guarantees and investments covered under Section 186 of the Companies Act 2013forms part of the notes to the financial statements provided in the Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
In line with the requirements of the Companies Act 2013 and the SEBI (LODR) 2015 theCompany has formulated a Policy on Related Party Transactions and the same is uploaded onthe Companys website: https://www.aptech-worldwide.com/downloads/InvestorPolicy/Aptech_RPTPolicy2019.pdf Details of Related Party Transactions are given in AOC-2 as Annexure-IV.
As on 31st March 2019 the Company had 7 subsidiaries and 1 joint venture. Pursuant toRule 5 of the Companies (Accounts) Rules 2014 Form AOC-1 is attached to thefinancial statements of the Company. The said Form also highlights performance of the saidentities and their contribution to the overall performance of the Company during the yearended 31st March 2019.
NOMINATION AND REMUNERATION POLICY
The Company has formulated and adopted the Nomination and Remuneration Policy inaccordance with the provisions of the Companies Act 2013 read with the Rules madethereunder and the Listing Regulations.
The Nomination and Remuneration Policy can be accessed on the website of the Companyhttps://www.aptech-worldwide.com/downloads/ aptech-policy/Remuneration-Policy.pdf
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted Corporate Social Responsibility Committee in compliancewith the provisions of Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014. With a view to enlarge the scope ofCSR activities the Company revised the CSR Policy to enable providing skill developmentto underprivileged children and youth besides the existing activities. The revised policyalso facilitates education by providing financial assistance to the NGOs which are workingin the field of development of children and youth through education. The revised policyhas been uploaded on the website of the Company https://www.aptech-worldwide.com/downloads/policy-on-csr.pdf The Disclosure with respect to CSR activities forming partof this report is given in Annexure-I.
The Company does not accept any deposits from public.
The Company has taken insurance cover for its assets to the extent required.
MANAGEMENT DISCUSSION AND ANALYSIS
A separate report on the Management Discussion and Analysis is attached as a part ofthe Annual Report.
Effective corporate governance is necessary to retain the trust of stakeholders and toachieve business success. Corporate governance is about commitment to values and ethicalbusiness conduct. It is about how an organisation is managed. It includes its corporateand other structures its culture policies and the manner in which it deals with variousstakeholders. As shareholders across the globe evince keen interest in the practices andperformance of companies corporate governance has emerged at the centre stage of the waythe corporate world functions. Corporate governance is vital to enable companies tocompete globally in a sustained manner and let them flourish and grow.
A separate Report on Corporate Governance is attached and forms part of the AnnualReport. The Auditors Certificate regarding compliance of the conditions of CorporateGovernance is also annexed.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statement that :
(i) in the presentation of the annual accounts for the year ended March 31 2019applicable accounting standards have been followed and that there are no materialdepartures;
(ii) they have in the selection of the accounting policies consulted the statutoryauditors and have applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany for the year ended March 31 2019 and of the profit of the Company for the yearended on that date;
(iii) they have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.
(v) internal financial controls followed by the Company are adequate and were operatingeffectively
(vi) the system to ensure compliance with the provisions of all applicable laws wereadequate and operating effectively
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH & DEVELOPMENT Conservationof Energy
Adequate measures are taken to conserve energy although the Companys operationsare low energy intensive.
Your Company continues to use the latest technologies for improving the productivityand quality of its services.
Research & Development
Technological obsolescence is certain. We encourage continuous innovation and researchand development for measuring future challenges and opportunities.
DETAILS OF REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT 2013READ WITH RULES 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014.
The percentage increase in remuneration of each Director Chief Financial Officer andCompany Secretary during the financial year 2018-19 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2018-19 and the comparison of remuneration of each Key Managerial Personnel (KMP) aregiven in Annexure-III.
PARTICULARS OF EMPLOYEES
Particulars of employees as required to be disclosed in terms of Section 134 of theCompanies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 shall be made available to any shareholder on aspecific request made by him in writing before the date of the Annual General Meeting andsuch particulars shall be made available by the Company within three days from the date ofreceipt of such request from shareholder. In case the request is received after the AnnualGeneral Meeting such particulars shall be made available to the shareholder within sevendays from the date of receipt of such request.
PREVENTION OF SEXUAL HARASSMENT MECHANISM:
During the year under review the Company has not received any complaint from theemployees related to sexual harassment. The Company has in place prevention of sexualharassment policy which is available on the Companys website i.e.www.aptech-worldwide.com Further your Company has complied with provisions relating toconstitution of Internal Complaints Committee under Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
COST RECORDS AND COST AUDIT
Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable for thebusiness activities carried out by the Company.
As per the provisions of Section 139 of the Companies Act 2013 read with Companies(Audit and Auditors) Rules 2014 as amended from time to time M/s Bansi S. Mehta & Co(ICAI Firm Registration No. 100991W) were appointed as the Statutory Auditors from theconclusion of the seventeenth Annual General Meeting held on 31st July 2017 tillconclusion of the Twenty Second Annual General Meeting subject to ratification of theirappointment at every AGM if required under the law.There are no qualificationsreservations or adverse remarks in their Audit Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rulesframed thereunder the Company has appointed M/s. S G & Associates Practicing CompanySecretaries to undertake its Secretarial Audit. Pursuant to regulation 24A of SEBI(Listing Obligations & Disclosure Requirement) Amendment Regulation 2018 Secretarialaudit report of Maya Entertainment Limited is also annexed to Board Report along with theSecretarial Audit Report of the Company collectively as Annexure-II. There are noqualifications reservations or adverse remarks in their Audit Report.
Your Directors wish to acknowledge all their stakeholders and are grateful for theexcellent support received from the shareholders Bankers Financial InstitutionsGovernment authorities esteemed corporate clients customers and other businessassociates. Your Directors recognise and appreciate the hard work and efforts put in byall the employees of the Company and their contribution to the growth of the Company in avery challenging environment.
| || ||For and on behalf of the Board of Directors |
| ||Sd/- ||Sd/- |
| ||Vijay Aggarwal ||Anil Pant |
| ||Director ||Managing Director & CEO |
| ||DIN: 00515412 ||DIN: 07565631 |
|Place: Mumbai || || |
|Date: 24th June 2019 || || |
|Annexure to Directors Report || || |
|1. Report on CSR is given in Annexure- I || || |
|2. Secretarial Audit Report is given in Annexure II || || |
|3. Details of remuneration is given in Annexure - III || || |
|4. Details of related party transaction is given in Annexure IV || || |