To the Boards' Members
We are pleased to present the 28th Annual Report together with the Audited Accounts ofyour Company for the year ended 31st March 2020
1. Financial Results
(Rs. In Mn.)
| ||2019-2020 ||2018-2019 |
|Income from Software services and Products ||838.40 ||760.59 |
|Other operating income ||39.00 ||55.77 |
|Expenses || || |
|Employee benefits expense ||596.56 ||520.13 |
|Finance Costs ||9.98 ||6.45 |
|Depreciation ||22.41 ||9.40 |
|Other expenses ||224.06 ||188.07 |
|Profit/(Loss) before tax ||24.39 ||92.31 |
|Current Tax ||5.83 ||21.73 |
|Deferred Tax Income/expense ||7.66 ||2.55 |
|Excess provision of earlier years ||- ||(2.30) |
|Profit/(Loss)for the year ||10.90 ||70.33 |
|Other Comprehensive Income || || |
|A (i) Items that will not be reclassified to profit or loss || || |
|Remeasurement of defined benefit plans ||(2.07) ||1.01 |
|(ii) Income tax relating to items that will not be reclassified to profit or loss ||0.52 ||- |
|Deferred tax on remeasurement of defined benefit plans ||- ||(0.29) |
|B (i) Items that will be reclassified to profit or loss || || |
|Changes in fair value of investments in equity instruments ||(1.35) ||0.10 |
|(ii) Income tax relating to items that will be reclassified to profit or loss || || |
|Deferred tax on changes in fair value of investments in equity instruments ||0.31 ||(0.03) |
|Total comprehensive income for the year ||8.31 ||71.12 |
2. Results of Operation
ASM along with its subsidiaries provide world class consulting and product developmentservices in the areas of Engineering Services Product R&D Services and DigitalTransformation with successful Offshore Development with Support Centers in India andOverseas for its global clientele.
During the financial year the Company explored new growth opportunities and performedsignificantly well in both the domestic as well as international markets. The performancereflects ASM`s journey to reposition itself as a unique technology solutions provider thatis committed to develop an emerging breed of platforms thus enabling its customers togain competitive advantage through the Company's future ready digital transformationinitiatives.
On the standalone front your company registered a total revenue of Rs.838.40 Mn for theyear ended 31st March 2020. Domestic sales was Rs.112.07 Mn while Export sales was Rs.726.33 Mn. EBIDTA was at Rs. 56.78 Mn and Net profit after tax was Rs.10.90 Mn.
The Consolidated total revenue for the year ended 31st March 2020 was Rs.920.13 Mn.EBIDTA was at Rs. 64.95 Mn and Net Profit after tax at Rs.6.97 Mn.
3. Dividend/ Transfer to reserves
During the year 2019-20 in keeping with the Dividend policy your Directors are pleasedto recommend for approval of the members a final dividend of Rs.2.50/- per equity share ofRs 10/-each for the financial year 2019-2020. The dividend amount paid/payable if approvedby shareholders will be Rs.12.50 Mn.
The dividend payout for the year under review has been formulated in accordance withthe Company's policy to pay sustainable dividend linked to long term growth objectives ofthe company to be met by internal cash accruals and the shareholders' aspirations.
Your Company has not transferred any amount to reserve for the Financial Year ended31st March 2020.
The paid up Share Capital of your Company is Rs. 50 Mn divided into5000000 equityshares of Rs 10/- each. Your Company has not come out with any issue (public rights orpreferential) during the Financial Year under review.
4. Subsidiary Companies
The consolidated Accounts of your Company and its subsidiaries viz. Advanced SynergicPte Ltd Singapore Pinnacle Talent Inc USA ASM Technologies KK Japan and RV Forms& Gears LLP duly audited are presented as part of this Report in accordance withIndian Accounting Standards ( IndAs) and the Listing Regulations with the Stock Exchangewherever applicable. The statement pursuant to the provisions to Section 129(3) of theCompanies Act 2013 containing salient features of the financial statement of theCompany's Subsidiaries in FormAOC1 is given in Annexure -1. The Accounts of theSubsidiaries audited for the purpose of consolidation shall be placed on your Company'swebsite and made available for inspection by any Shareholder at the Company's RegisteredOffice and at the respective registered offices of the Subsidiary companies. Copies can bemade available on request to the shareholders of the Company.
Your Company has formulated and adopted a "Policy for determining MaterialSubsidiaries" so that your company could identify such subsidiaries and formulategovernance framework for them. The Policy for determining 'material' subsidiaries isposted on Company's website : https://www.asmltd.com/policy-disclosures
5. Future Outlook
We were "spot on" in our Future Outlook last year which is a validation onthe direction embarked. We will continue to harness the wide opportunities in the sameareas.
The entire world is embroiled with the COVID 19 quagmire and the direct negative impactis felt across industries. This has affected the socio-economic fabric of the society atlarge in all facets of life and therefore the situation is an "adversity" .
Like any adversity which throws up opportunities the business direction and decisionsASM has taken over the few years has resulted in continued opportunities which ASM willforay rapidly.
The way the business is being done worldwide in the pre-Covid times has suddenlychanged and there is a New Normal during and post Covid which will result in anaccelerated push towards Digital Transformation and Automation.
ASM has launched its own PATENT PENDING product " SMARTFIX 4.0" which is oneof its kind for the Manufacturing Industry meeting the Global Initiative of Industry 4.0.
The SmartFix 4.0 is an Industrial Artificial Intelligence Product with a potentcombination of Hardware Software and Data Analytics to increase the Yield and Throughputin the manufacturing sector. With a robust global client base and a host of Partnershipwith the OEMs SmartFix is set to make waves in the next 2 years.
ASM has made strategic investments in the emerging technology companies whilstCo-Creating the product in the areas of Cloud Network Cybersecurity Electric VehicleAutonomous Vehicles. This ensures ASM is in the cutting edge technologies and thepotential for business is enormous.
ASM will continue to invest in Technology Manufacturing and Boutique Service / Productcompanies for a step growth
ASM will continue to invest in Product R&D Digital Transformation (Dx) comprisingof Industry 4.0 (Smart Manufacturing) Internet of Things (IoT) Big Data leading toArtificial Intelligence (AI) Machine Learning (ML) Deep Learning (DL) Virtual Reality(VR) Augmented Reality (AR) Mixed Reality (MR) Mobile Applications CloudVirtualization and related Cyber Security.
R&D & Co-Creation
The impact of investments in Innovation and R&D has accelerated growth of ASM andhas set the company into the forefront of Product Development whilst getting a globalrecognition. The initiative has therefore been on developing the products of the futureto align with the changing technologies market and customer demands. While investment inR&D (Research and Development) for the development of " New Products andServices" is a must for the growth and future sustainability of the organizationCo-creation is one step ahead of the R&D activities wherein the new product andservices is jointly developed with our customers to meet specific defined opportunity.ASM's Co-creation Product Development Model fosters closer partnerships with the customers/ consumers and is achieved by the "Shared Innovation and Shared Development" todevelop solutions for defined " High Impact Problems"
Today in the world which is adapting into "Industry 4.0" and "SmartManufacturing" one of the main focus is to increase Productivity by "IncreasedYield" and "Increased Throughput". This is essentially achieved by reducingthe human intervention and automating the process using various technologies.
ASM Technologies has over the years helping customers with extensive usage ofAutomation Robotics and Digital Transformation (Dx) . This initiative has clearly been ofimmense benefit for its customers in quantitatively increasing Yield and Throughputresulting in "Improved Quality High Precision High Repeatability andReliability"
ASM with a proven experience in the Artificial Intelligence (AI) complexmanufacturing process consisting of interrelated parameters is effectively handled bycreating lot of automated data points through "application specific" Sensorsfurther processed through the IoT Gateway incorporating Sensor Fusion Algorithm to createa Big Data. Each of the Sensors are set with "Value Thresholds" for instant" Alerts"to address the Machine Behaviour outside of the Thresholds.
With efficient and smart Analytics in the cloud a wide array of data crunched outputleading to Predictive Maintenance Analysis Machine Downtime Machine Behaviour etc canlead to the "Productivity Enhancement".
The thrust areas for ASM will continue to be in the Semiconductor Equipment MedicalDevices Hi Tech Automotive Mobility Telecom industries. This "New ProductRevolution" has opened opportunities for companies like ASM in the space ofEngineering Services. The IoT ( Internet of Things) offers quality space for new productdevelopment and ASM is working on creating its own products as well as Co-Creation forcustomer's products. The next couple of years will be exciting in this space.
The future looks exciting and upbeat in the R&D Products and Engineering ServicesOutsourcing (ESO) space. There are lot of drivers for the clients like Reducing ProductDevelopment Life Cycle and getting a first mover advantage by ringfencing the IP. Theclients are equally excited to collaborate with the Engineering Service providers likeASM to leverage their capability for global regional and adjacent markets therebyoptimize the R&D Operations.
6. Management Discussion and Analysis Report
Management Discussion and Analysis Report as required under Regulation 34 of SEBI(Listing Obligations and Disclosure Requirements ) Regulations 2015 is disclosedseparately in the Annual Report.
7. Board Meetings
During the year under review the Board of Directors held 6 meetings on 18.04.201918.05.2019 20.06.2019 05.08.2019 08.11.2019 & 07.02.2020. The maximum intervalbetween two meetings did not exceed 120 days.
8. Directors and Key Managerial Personnel
The year saw the demise of Prof B S Sonde a senior member of the Board. The Boardplaced on record the invaluable contributions made by late Prof. B S Sonde during histenure and association with the company as a Director.
Ms. Preeti Rabindra (DIN 00216818) Director retires by rotation and being eligibleoffers herself for re-appointment at the ensuing Annual General Meeting (AGM). The Boardrecommends her appointment for consideration of members of the Company. Brief profile ofMs. Preeti Rabindra is given in the notes to the Notice of the ensuing AGM.
During the Financial Year under review Ms.P N Lakshmi Company Secretary designatedas a Key Managerial Personnel resigned from the services of the Company with effect from31st August 2019.
Further on recommendation of Nomination and Remuneration Committee the Board ofDirectors in their meeting held on 2nd June 2020 have recommended appointment of Mr.Ramesh Radhakrishnan (DIN 02608916) as Non Independent & Non executive Director of theCompany subject to the approval of member's in ensuing Annual General Meeting.
9. Disclosure on compliance with Secretarial Standards
Directors confirm that the Secretarial Standards issued by the Institute of CompanySecretaries of India have been complied with.
10. Independent Directors
Your Company has laid down procedures to be followed for familiarizing the IndependentDirectors with your Company their roles rights responsibilities in your Company and toimpart the required information and training to enable them contribute significantly toyour Company. All the Independent Directors of the Company have given declarations thatthey meet the criteria of independence as laid down under section 149(6) of the Act andRegulation 16(1)(b) of Listing Regulations. The Independent Directors have also confirmedthat they have complied with the Company's Code of Conduct.
Further on recommendation of Nomination and Remuneration Committee the Board ofDirectors in their meeting held on 2nd June 2020 have recommended reappointment of Mr. MLakshminarayan as Independent Directors of the Company for the approval of member's inensuing Annual General Meeting. Independent Directors Your Company has laid downprocedures to be followed for familiarizing the Independent Directors with your Companytheir roles rights responsibilities in your Company and to impart the requiredinformation and training to enable them contribute significantly to your Company. All theIndependent Directors of the Company have given declarations that they meet the criteriaof independence as laid down under section 149(6) of the Act and Regulation 16(1)(b) ofListing Regulations.
11. Director's Responsibility Statement
Pursuant to the provisions of Section 134 (5)of the Companies Act 2013 the Directorshereby confirm that:
a) in the preparation of the annual financial statements for the year ended 31st March2020 the applicable accounting standards has been followed along with proper explanationrelating to material departures:
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit or loss of the company for that period;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared annual accounts of the company on a going concern basis.
e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
12. Significant and material orders passed by the regulators or courts and MaterialChanges and commitments affecting the financial position of the company.
There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the company and its future operations. There are nomaterial changes and commitments if any affecting the financial position of the companywhich occurred between the end the financial year of the company to which the financialstatements relate and the date of this report.
13. Audit Committee
The Audit committee met four times during the Financial year under review and all itsrecommendations were accepted by the Board.
Your Company has established the Vigil Mechanism an Ombuds process which is a channelfor receiving and redressing of employees complaints. This mechanism covers questionablefinancial or accounting matters and reporting fraudulent financial information to theshareholders the government or any other legal authority. This meets the requirementunder Section 177(9) and(10) of the Companies Act 2013 and Regulation 22 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
14. Nomination and Remuneration Committee and Stakeholders Relationship and ShareTransfer Committee
The Nomination and Remuneration Committee has framed a policy for selection andappointment of Directors including determining qualifications of Independent Director KeyManagerial Personnel Senior Management Personnel and their remuneration as part of itscharter and other matters provided under Section 178(3) of the Companies Act 2013. A copyof the policy forms part of this report vide Annexure- I. The Nomination andRemuneration Committee of a company has been obligated under Section 178 of the Act toformulate a policy for recommending to the Board of directors of the company for settingthe criteria based on which the performance of every Director including the performance ofthe Board as a whole shall be assessed by the Board of Directors of the Company.
15. Familiarisation Programme
The Company has put in place an induction and familiarisation programme for all itsDirectors including the Independent Directors. The familiarisation programme forIndependent Directors in terms of provisions of Regulation 46(2)(i) of ListingRegulations is uploaded on the website of theCompany.-https://www.asmltd.com/policy-disclosures
16. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed BMP & Co. LLP Company Secretaries to undertake the Secretarial Audit ofthe Company. The Report of the Secretarial Audit in Form MR3 for the financial year endedMarch 31 2020 is annexed as Annexure - III to the Report. There are noqualifications reservations or adverse marks made by Secretarial Auditor in the Report.
17. Auditor's Report
There are no qualifications reservations or adverse remarks made by M/s B K Ramadhyani& Co LLP Chartered Accountants Statutory Auditors in their report for the financialYear ended 31st March 2020. The Statutory Auditors have not reported any incident offraud under Section 143(12) of the Act and the rules made thereunder to the AuditCommittee of the company in the year under review.
18. Conservation of energy technology absorption and Foreign Exchange Outgo
The company's operations involve low energy consumption. However the efforts toconserve and optimize the use of energy through improved operational method and othermeans will continue.
The company has not imported any technology . Foreign exchange earnings and outgo
During the financial year under review 86.63 % of the revenue came from export ofsoftware services resulting in a foreign exchange inflow of Rs. 726.36 Mn and the foreignexchange outgo on account of overseas salaries traveling etc was Rs. 40.39 Mn.
19. Public Deposits
Your Company has not accepted any deposits from the public during the financial yearunder review.
20. Disclosures as required under Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
Your Company has in place a Prevention of Sexual Harassment ( POSH) Policy in line withthe requirements of Sexual harassment of Women at Workplace ( Prevention Prohibition andRedressal) Act 2013. Your Company has through the Policy constituted a committee and hasestablished a grievance procedure for protection against victimization. Your Company iscommitted to provide a healthy environment to all employees conducive to work without thefear of prejudice and gender bias. During the year under review there were no casesfiled pursuant to the said Act.
|Number of complaint filed during the financial year 2019-20 ||Nil |
|Number of complaint disposed off during the financial year 2019-20 ||Nil |
|Number of complaint pending as end of the financial year ||Nil |
21. Details of Adequacy of Internal Financial Controls
Your Company has deployed adequate Internal Control Systems in place to ensure a smoothfunctioning of its business. The processes and systems are reviewed constantly andimproved upon to meet the changing business environment. The Control Systems provide areasonable assurance of recording the transactions of its operations in all materialaspects and of providing protection against misuse or loss of Company's assets. TheInternal auditors periodically review the internal control systems policies andprocedures for their adequacy effectiveness and continuous operation for addressing riskmanagement and mitigation strategies.
22. Particulars of Loans guarantees or investments
During the Financial Year under review your Company had given Corporate Guarantee andsecurity of Deposits at prevailing bank lending rate to its subsidiary RV Forms &Gears LLP for meeting its working capital requirements. The balance outstanding as on 31stMarch 2020 is Rs 41.10Mn.
23. Risk Management Policy
The Risk management Policy of your company continuously evaluates the various riskssurrounding business and seeks to review and upgrade its risk management process. Tofurther the endeavour your Board constantly formulates strategies directed at mitigatingthese risks which get implemented at the Executive Management level and a regular updateis provided to the Board.
24. Credit rating of securities:
(a) credit rating obtained in respect of various securities: NA
(b) name of the credit rating agency; NA
(c) date on which the credit rating was obtained: NA
(d) revision in the credit rating: NA
(e) reasons provided by the rating agency for a downward revision if any: NA
25. Corporate Social Responsibility Policy (CSR)
Your company has formulated CSR policy which is posted on the website athttps://www.asmltd.com/policy-disclosures. In pursuance to the provisions of Section 135and Schedule VII of the Companies Act 2013 the company constituted a CSR Committee of theBoard to (a) formulate and recommend a CSR policy (b) recommend the amount of expenditureto be incurred on the CSR activities and (c) monitor implementation of the CSR policy fromtime to time. The terms of reference of the CSR committee are in accordance with Section135 of the Companies Act 2013. The Annual Report on CSR in the prescribed format isenclosed to this Report as Annexure-IV.
26. Related Party Transactions
The company has in place formulated a Policy on materiality of Related Partytransactions for dealing with such transactions in line with the requirements of theListing Regulations with the Stock Exchange. . The policy on related party transactions isavailable on the Company's website at -https://www.asmltd.com/policy-disclosures.
Particulars of contracts or Arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the format specified as Form AOC2 forms part of thisReport as Annexure- V
27. Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard is required to monitor and review the Board evaluation framework. In line with theCorporate Governance Guidelines Annual Performance Evaluation is conducted for all BoardMembers as well as the working of the Board and its Committees. The Board works with theNomination and Remuneration committee to lay down the evaluation criteria for theperformance of executive/nonexecutive/independent directors through a peer evaluationexcluding the director being evaluated through a Board effectiveness survey. Thequestionnaire of the survey forms an integral part of reviewing the functioning andeffectiveness of the Board and for identifying possible paths for improvement. Each Boardmember is required to evaluate the effectiveness of the Board and its committees onvarious parameters and feed back on each Director is part of the survey. The outcome ofthe Board evaluation for the financial year 2019-20 was discussed by the Board at theirmeeting held on 2nd June 2020.
28. Remuneration to Director and Employees
Details/Disclosures of ratio of remuneration to each Director to median employee`sremuneration as required pursuant to Section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 and details of remuneration paid to Employees vide Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is given as Annexure-VI
29 Corporate Governance Report
Your Company has taken adequate steps to adhere to all the stipulations as laid down inPursuant to Schedule V (C) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. As required a Report on Corporate Governance is provided elsewhere inthis Annual Report along with Auditor's Certificate on compliance thereof.
At the Annual General Meeting of the company held on 20th June 2017 the shareholdersappointed M/s B K Ramadhyani & Co LLP Chartered Accountants Bangalore bearingRegistration No.002878S/S00021 with the Institute of Chartered Accountants of India asStatutory Auditors of the Company for a period of five years from conclusion of the 25thAnnual Meeting of the Company. The requirement for the annual ratification of auditors'appointment at the AGM has been omitted as per Companies (Amendment) Act 2017 notificationon May 7 2018.
Total fees for all services paid by the Company and its subsidiaries on a consolidatedbasis to the statutory auditor and all entities in the network firm/network entity ofwhich the statutory auditor is a part is given below:
| ||Rs. in Mn. |
|Payment to Statutory Auditors ||FY 2019-20 |
|Audit Fees ||0.93 |
|Others Service ||0.03 |
|Reimbursement of expenses ||0.00 |
|Total ||0.96 |
Your Directors take this opportunity to express their gratitude to -
- Our esteemed customers shareholders vendors business partners advisors andconsultants for their unstinted support. The contribution made by our employees at alllevels. Our consistent growth was made possible by their solidarity cooperation andsupport.
- State Bank of India (India) ICICI Bank Ltd. (India) Indian Bank (Singapore)HSBC Bank (USA) and First Federal Bank (USA) for their support and guidance.
- Customs Reserve Bank of India Software Technology Parks (STPI) and NASSCOM Central& State Governments Software Technology Park (STPI) and NASSCOM for their continuedsupport.
| ||For and on behalf of the Board of Directors |
| ||ASM Technologies Ltd. |
|Place : Bangalore ||M. R. Vikram ||Rabindra Srikantan |
|Date : 02.06.2020 ||Chairman ||Managing Director |