THE MEMBERS OF APTECH LIMITED
Your Directors are pleased to present their 21st Annual Report on the business andoperations of your Company and the Audited Financial Statement for the year ended March31 2021.
STATE OF AFFAIRS - SNAPSHOT OF FINANCIAL RESULTS
The financial results of the Company for the Accounting period ended March 31 2021 arepresented below:
| ||Standalone ||Consolidated |
|Particulars ||Year ended ||Year ended ||Year ended ||Year ended |
| ||March 312021 ||March 312021 ||March 312021 ||March 312021 |
|Total revenue from Continuing Operations ||6228.79 ||9702.68 ||9568.97 ||16333.60 |
|Profit before finance cost depreciation and tax ||1813.63 ||2023.76 ||2698.39 ||4153.33 |
|Finance cost & depreciation ||635.62 ||658.85 ||959.92 ||964.84 |
|Profit before tax & exceptional items || || || || |
|Continuing Operations ||1178.01 ||1364.91 ||1738.47 ||3188.49 |
|Exceptional Cost ||2135.67 ||- ||- ||- |
|Profit before tax after exceptional item ||(957.66) ||1364.91 ||1738.47 ||3188.49 |
|Provision for taxation (incl. deferred tax) ||(197.57) ||(67.86) ||(16.88) ||751.53 |
|Profit after tax from Continuing Operations ||(760.09) ||1432.77 ||1755.35 ||2436.96 |
|Profit after tax from Discontinuing Operations ||(391.73) ||(1411.96) ||(529.38) ||(1086.35) |
|Net Profit/ (Loss) for the period from ||(1 151.82) ||20.81 ||1225.97 ||1350.61 |
|Continuing and Discontinued Operations || || || || |
|Other comprehensive income ||(40.48) ||(165.94) ||(10857.30) ||(171.21) |
|Total comprehensive income for the period ||(1 192.30) ||(145.13) ||(9631.33) ||1179.40 |
|Total equity ||(4067.09) ||4025.46 ||4067.09 ||4025.46 |
|Earnings per share (of 1o each) (Not Annualised) from Continuing Operations || || || || |
| || || || || |
|Basic EPS (Rs.) ||(1.88) ||3.59 ||4.34 ||6.10 |
|Diluted EPS (Rs.) ||(1.88) ||3.52 ||4.28 ||5.98 |
|Earnings per share (of 10 each) (Not Annualised) from Discontinued Operations || || || || |
|Basic EPS (Rs.) ||(0.97) ||(3.54) ||(1.31) ||(2.72) |
|Diluted EPS (Rs.) ||(0.97) ||(3. 47) ||(1.29) ||(2.67) |
|Earnings per share (of 10 each) || || || || |
|(Not Annualised) from Continuing and Discontinuing Operations || || || || |
|Basic EPS (Rs.) - Continuing ||(2.85) ||0.05 ||3.03 ||3.38 |
|Diluted EPS (Rs.) -Continuing ||(2.85) ||0.05 ||2.99 ||3.31 |
The operations of the Company were majorly affected due to the COVID-19 pandemic duringthe FY2020-21 resulting in a fall in the operating revenue for the continuing operationsat the consolidated level from Rs. 15815 lakhs in FY2019-20 to Rs. 8896 lakhs a drop of43.7%. The International Retail division's performance was not hit as hard as the DomesticRetail division because of the variable impact of the pandemic across its differentmarkets. Most of the Company's key international markets recovered and the centresrestarted operations within a few months. The operating revenue for the InternationalRetail division dipped by 9.6% vis--vis a 51.6% drop for the Domestic Retail division.As a result the distribution of revenue within the Retail segment between the Domesticand International Retail divisions changed from 81:19 in FY2019-20 to 70:30. In DomesticRetail the Lakm Academy brand's business recovered sooner than other brands once thebeauty parlours and salons could open in many locations. The"Digital Pivot" putin place by the Company to continue centre operations in a digital mode (i.e. completelyonline) ensured that the effect of the pandemic on the Retail business revenuesprogressively quarter on quarter was substantially arrested.
In addition to this the cost rationalization initiatives bore fruit and ensured thatthe segment profitability (Operating EBIT) of the Retail business was practically steadyat 35.7% as compared to 36.0% in FY2019-20 notwithstanding the revenue decline and thehigher share of fixed costs in the business.
The Company is evaluating a planned exit from the Institutional business segment basedon suitable valuation offers being received and subject to the approval of the Board andthe shareholders. The operating revenue and net loss from this discontinued operationdeclined by 50.4% and 51.3% respectively from FY2019-20 to FY2020-21.
The Other Income went up by 29.6% to Rs. 672 lakhs during the reported year. EBITDAmargins for the continuing operations jumped from 25.4% in the previous year to 28.2% inFY2020-21 on account of cost rationalisation and lower ESOP cost. However the decline inrevenue resulted in the absolute EBITDA coming down by 35%. The Profit Before Tax (PBT)for the continuing operations was Rs. 1738 Lakhs in FY2020-21 a drop of 45.5% from theprevious year's levels.
The Profit After Tax (PAT) in comparison fell only by 28% due to lower tax. The totalnet profit for the period after adding up the PAT for discontinued operations was down by9.2% from Rs. 1351 lakhs in FY2019-20 to Rs. 1226 lakhs in FY2020-21. The Company hasprovided for full impairment of the carrying value of its investment in BJBC-China of Rs.10813.21 Lakhs as part of the Other Comprehensive Income based on recent legal advice andsupported by fair valuation. It has repaid the short-term working capital liability of Rs.2258 lakhs that was taken in the previous year to manage the impact of the pandemicrelated lockdown on cash flow.The balance sheet had zero debt and total Cash CashEquivalents Short-term Investments and Financial Instruments of Rs. 8079 Lakhs as ofMarch 31 2021.
The system-wide billing from students for the franchise business in the Retail segmentwas Rs. 30727 Lakhs in FY2020-21 a dip of 34% from Rs. 46534 Lakhs in FY2019-20.Theshare of system-wide billing from students for the Domestic Retail division was Rs. 19061Lakhs and for the International Retail division was Rs. 11665 Lakhs withYOY growth of-45.1% and -1.4% respectively.
The average number of active centres during the reported financial year was lower inboth Domestic Retail and International Retail at 600 and 143 respectively.Thecorresponding counts in the previous year were 669 and 157 respectively. The total numberof new centre sign-ups went down from 210 in FY2019-20 to 79 in FY2020-21 for the Domesticmarket and down from 20 to 3 for the International market.
The Company achieved significant success in moving to completely digital delivery ofits courses and related services for its Retail division. This is reflected in thestaggering numbers of ~3.5 million hours and ~0.7 million hours in online student hoursand online tutor hours respectively logged in the domestic market during the year. Itwas also effective in enrolling 25000 students in its courses and placing more than 2000students digitally. The International Retail division's digital shift catered to ~15000students across the globe. Some of the activities executed to ensure continued centreoperations and student engagement were training programs on online delivery and digitalcounselling virtual job fairs online events and webinars provision of access to virtuallabs and continuous and clear communication with the stakeholders to ensure informationdissemination and involvement.
This was in addition to the enabling of the Company's staff to Work from Home duringthe lockdowns through adequate resources and communication of a clear policy. It alsoextended its student debt tie-ups beyond the traditional banks and NBFCs to new-ageFintech start-ups such as GyanDhan MoneyTap Eduvanz etc. The Company received adividend of (Polish Zloty) PLN 231000 (340.75 Lakhs) for the year 2019 from SynteaPoland in which it has a 9.09% stake.
The Assessment and Testing division continued to cut down on costs to reduce the levelof break-even revenue during the year. This resulted in a lower loss despite halving ofthe revenues as compared to the previous year. Howeve based on ther decision toexclusively focus on the Retail segment the Company has decided to identify potentialsuitors for selling the Institutional business including the Assessment andTestingdivision.
The Company inked an alliance with the Vancouver Centre of Entertainment Arts (VCEA)that will give an exit pathway for Arena and MAAC students across the world tointernationally renowned diploma programs offered by them in Vancouver Canada. The keybenefits to the students who have completed 2+ year career programs with Arena and MAACfrom the alliance will have a reduced tuition fees permission to work part-time for 20hours per week along with studies dual qualifications access to employment in Vancouverthat is the hub of Media and Entertainment industry in Canada and further pathway todegree programs at Canadian universities. The VCEA programs also improve prospects forwork permits and emigration to Canada.
Within a short period of 25 months the Company was recognized as having matured fromLevel 3 to Level 5 on the CMMI Institute's People Capability Maturity Model (PCMM) in2020. This was achieved notwithstanding the national lockdown in place. One of the manymajor awards and recognitions bagged by the Company during the year was the top ICTcompany award from HCMCA Vietnam for the 18th consecutive year. It also won multiplerecognitions at the 9th ACEF Global Customer Engagement Forum & Awards such asa goldaward for the Most Effective use of Sponsorship and Event Marketing' (by MAAC) asilver award for Most Admired B2C Activation' (for Winged India's firstmakeup and hair reality web series by Lakm Academy) and a bronze award for BestCause-Related Communication Campaign' (Welcome Zindagi campaign supporting LGBTQcommunity with skilled employment by Lakm Academy). The website of Arena Animationbagged the Best UI & UX Design' in Digital Marketing for its "TheCampus" theme at the 11th India Digital Summit.
IMPACT OF COVID-19 PANDEMIC AND MITIGATION MEASURES IMPLEMENTED
The COVID-19 pandemic has created a significant disruption in the normal functioning ofbusinesses due to social distancing norms and lockdowns in place to prevent the spread ofthe disease. The impact on the Company's operations was seen in the following ways:
The educational centres were mandated to be closed for in-class training across Indiafor the entire financial year and a significant period in many international markets.
The cancellation/ deferment of Grade 10th and Grade 12th exams resulted in a shift inthe enrolment pattern in the domestic market. The Institutional business was also affectedas entrance and recruitment exams were also stopped or put off.
Overall demand for the Company's courses was affected due to an economic slowdown thatresulted in lower recruitment numbers an uncertain job market and reduced payingcapacity. The demand was also affected by the reverse migration of people back to theirnative cities and towns.
Delays in payments by institutional clients and financial dropout of students at theretai centres due to tight fiscal situation.
The Company adapted to the situation by completely shifting all the value chainactivities in the Retail business to digital format. It also significantly scaled back itsfixed costs and optimized variable costs to ensure sustained profitability levels. TheCompany focused on capability development resources including ready digital kits andcommunication to enable its staff tutors and counsellors to align their mindset andmethods to the new normal. There were changes or upgrades in the systems used by theCompany to meet the new requirements e.g. digital payment options for student feesupgrade of testing software in the Assessment and Testing business.
The Company's estimate of the financial impact during FY2020-21 due to the pandemic wasRs. 8803 Lakhs in terms of operating revenue. As the nature of the pandemic's impact iscomplex and varied this figure only reflects the Company's assessment of direct impactdue to pandemic and may differ based on availability or consideration of any new ordiverse information on the effects of the pandemic on its business.
TRANSFER TO RESERVE
There has not been any transfer to the General Reserves during the year under review.
The Board of Directors at their meeting held on April 29 2021 have declared InterimDividend of Rs. 2.25 per equity share (22.5%) for the Financial Year 2020-21.
During the year 2020-21 the Directors met five times on May 21 2020 (Adjourned to May25 2020) June 15 2020 July 27 2020 October 28 2020 and February 3 2021.
Our Chairman Mr. Rakesh Jhunjhunwala conveyed his decision to the members of the Boardto step down as Chairman and Director from the Board of Aptech Limited on April 29 2021with immediate effect. He elaborated his journey for more than fifteen years in theCompany stating his intention to now devote his time to family personal andphilanthropic causes.
All the Board Members placed on record their gratitude and best wishes to the Chairmanand the senior management team of the Company placed on record the dynamism guidancevision and direction received by them from time to time from the Chairman.
Upon the resignation of Mr. Rakesh Jhunjhunwala as the Non-Executiv e Chairman of theCompany Mr. Vijay Aggarwal Independent Director was appointed as the Non-ExecutiveChairman of the Company and Mr. Utpal Sheth was appointed as the Non-ExecutiveVice-Chairman of the Company with effect from April 29 2021.
Mr. Utpal Sheth (DIN: 00081012) Non-Executive Directo retires by rotation at theensuingr Annual General Meeting and is eligible for re-appointment.
Mr. Ronnie Adi Talati (DIN:08650816) was appointed as an Additional Non-ExecutiveIndependent Director with effect from September 15 2020 and shall be regularized at thisensuing Annual General Meeting.
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. AllIndependent Directors have registered their name in the Independent Directors data bankand complied with Rule 6 of Companies (Appointment and Qualification of Directors) Rules2014.
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 the performance of the Board its Committees and ofindividual Directors including Independent Directors. A structured questionnaire coveringvarious aspects of functioning of the Board Committees and Directors such as adequacy ofthe 8 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 and independent directors) of the Company andemployees of its subsidiaries with a view to attract and retain key talents working withthe Company and its Subsidiary Company (ies) by way of rewarding their performance andmotivate them to contribute to the overall corporate growth and profitability. All theplans are administered by the Nomination and Remuneration Committee of the Board.Disclosures as required under the SEBI (Share Based Employee Benefits) Regulations 2014are available on Company's Website on: www.aptech-worldwide.com
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 2020-21 is available on Company swebsite' 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 Company's website: https://www.aptech-worldwide.com/downloads/InvestorPolicy/Aptech_RPTPolicy2019.pdf
Details of Related Party Transactions are given in AOC-2 as "Annexure-I".
As on 31st March 2021 the Company had 6 subsidiaries. Pursuant to Rule 5 of theCompanies (Accounts) Rules 2014 Form AOC-1 is attached to the financial statements ofthe Company. The said Form also highlights performance of the said entities and theircontribution to the overall performance of the Company during the year ended 31st March2021.
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 beaccessed on the website of the Company https://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.
T he revised policy also facilitates education by providing financial assistance to theNGOs which are working in the field of development of children and youth througheducation. The revised policy has been uploaded on the website of the Companyhttps://www.aptech-worldwide.com/downloads/ policy-on-csr.pdf. The Disclosure with respectto CSR activities forming part of this report is given in "Annexure-II".
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 the stakeholders andto achieve business success. Corporate governance is about commitment to values andethical business conduct. It is about how an organization is managed. It includes itscorporate and other structures its culture policies and the manner in which it dealswith various stakeholders. As shareholders across the globe evince keen interest in thepractices and performance of companies corporate governance has emerged at the centrestage of the way the corporate world functions. Corporate governance is vital to enablecompanies to compete 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 annexed as "Annexure -III".
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 2021applicable 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 2021 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 AND FOREIGNEXCHANGE EARNINGS AND OUTGO IF ANY.
The particulars as prescribed under Sub-Section (3)(m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are enclosed below.
Conservation of Energy
Adequate measures are taken to conserve energy although the Company's operations arelow 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.
Foreign Exchange Earnings and Outgo
The details of Foreign Exchange Earnings and Outgo if any are given in the financialstatements.
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 2020-21 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2020-21 and the comparison of remuneration of each Key Managerial Personnel (KMP) aregiven in "Annexure-IV".
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 Company's website i.e.www.aptech-worldwide.com
Further your Company has complied with provisions relating to constitution of InternalComplaints Committee under Sexual Harassment of Women at Workplace (PreventionProhibition 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 the conclusionof the seventeenth Annual General Meeting held on July 31 2017 till conclusion of theTwenty Second Annual General Meeting.
There are no qualifications reservations or adverse remarks in their Audit Report.
FRAUD REPORTED BY AUDITOR UNDER SECTION 143(12) OF THE COMPANIES ACT 2013:
There was no instance of fraud reported by the auditor in their report under Section143 (12) of the Companies Act 2013.
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 and Disclosure Requirement) Amendment Regulation 2018 Secretarialaudit report of MEL Training and Assessments Limited (Formerly Maya Entertainment Limited)is also annexed to Board Report along with the Secretarial Audit Report of the Companycollectively as "Annexure-V". There are no qualifications reservations oradverse remarks in their Audit Report.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has complied with the Secretarial Standards issued by The Institute ofCompany Secretaries of India on Meetings of the Board of Directors and General Meetings.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:
During the financial year 2020-21 there were no significant or material orders passedby any regulatory body or court or tribunal impacting the going concern status and theCompany's operations in future except as stated in Corporate Governance Report if any in"Annexure III".
Directors wish to acknowledge all their stakeholders and are grateful for the excellentsupport received from the shareholders Bankers Financial Institutions Governmentauthorities esteemed corporate clients customers and other business associates. YourDirectors recognise and appreciate the hard work and efforts put in by all the employeesof the Company and their contribution to the growth of the Company in a very challengingenvironment.
|For and on behalf of the Board of Directors |
|Sd/- ||Sd/- |
|Vijay Aggarwal ||Anil Pant |
|Director & Chairman ||Managing Director & CEO |
|DIN: 00515412 ||DIN: 07565631 |
|Place: Lonavala ||Place: Bangalore |
|Date: May 21 2021 ||Date: May 21 2021 |