Directors of your Company take great pleasure in presenting the 20thAnnual Report on the business and operations of your Company and the Audited FinancialStatements for the financial year ended March 31 2021.
Pursuant to the notification dated February 16 2015 issued by theMinistry of Corporate Affairs the Company has adopted the Indian Accounting Standards("Ind AS") notified under the Companies (Indian Accounting Standards) Rules2015 w.e.f. April 12016. The performance of the Company for the FY2020-21 is summarisedherein below:
| || || || ||(Rs. in Million) |
|Particulars ||Consolidated ||Standalone |
| ||FY 2020-21 ||FY 2019-20 ||FY 2020-21 ||FY 2019-20 |
|Total Income ||50792.46 ||41074.57 ||13529.55 ||9707.12 |
|Profit Before Interest and Depreciation ||8054.71 ||6377.31 ||5204.22 ||2982.53 |
|Interest and Finance Charges ||522.30 ||583.21 ||153.00 ||156.77 |
|Depreciation/ Amortization ||2063.52 ||1852.00 ||797.95 ||705.84 |
|Profit Before Tax and exceptional items ||5468.89 ||3942.10 ||4253.27 ||2119.92 |
|Exceptional items ||1150.55 ||- ||- ||- |
|Share in net profit of associate ||- ||0.01 ||- ||- |
|Profit from ordinary activities before tax and after share in net profit of associate ||4318.34 ||3942.11 ||4253.27 ||2119.92 |
|Provision for Taxation (including Deferred Tax Charge/ Credit) ||701.57 ||545.26 ||586.74 ||299.77 |
|Net Profit After Tax ||3616.77 ||3396.85 ||3666.53 ||1820.15 |
|Owners of the Company ||3616.86 ||3396.86 ||3666.53 ||1820.15 |
|Non-controlling Interest ||(0.09) ||(0.01) ||- ||- |
|Total ||3616.77 ||3396.85 ||3666.53 ||1820.15 |
|Opening Balance in Profit & Loss Account ||12076.46 ||13004.03 ||11886.49 ||14170.47 |
|Closing Balance in Profit & Loss Account ||13810.25 ||12076.46 ||13669.95 ||11886.49 |
|Earning Per Share (Rs.) - Basic ||5.31 ||4.90 ||5.38 ||2.63 |
|Earning Per Share (Rs.) - Diluted ||5.13 ||4.89 ||5.20 ||2.62 |
RESULT OF OPERATIONS:
The consolidated total income increased from H 41074.57 Million to H50792.46 Million an increase of 23.66% over the previous financial year. Theconsolidated Net Profit After Tax increased from H 3396.85 Million to H 3616.77 Millionan increase of 6.47% over the previous financial year. The detailed analysis of theconsolidated results form as part of the Management Discussion and Analysis Reportprovided separately as part of the Annual Report.
The standalone total income increased from H 9707.12 Million to H13529.55 Million an increase of 39.38% over the previous financial year. The standaloneProfit After Tax increased from H 1820.15 Million to H 3666.53 Million an increase of101.44% over the previous financial year.
INCREASE IN SHARE CAPITAL:
During the year your Company issued/ allotted 2272436 equity sharesof the face value of H 10/- each on the exercise of stock options under FirstsourceSolutions Employee Stock Option Scheme 2003 (ESOS 2003). Consequently the outstandingissued subscribed and paid up capital of the Company has increased from 693826780shares to 696099216 shares of H 10/- each aggregating to H 6960.99 Million as on March31 2021.
CHANGE IN THE NAME OF PROMOTERS:
During the year under review the name of the promoters of the Companyhas been changed w.e.f. January 19 2021 to "RPSG Ventures Limited" from"CESC Ventures Limited".
GLOBAL OPERATION CENTERS:
The Company on a consolidated basis has 39 global operation centers ason March 31 2021. The centers are located across the US the UK India and thePhilippines. 13 of the Company's operation centers are located in 7 cities in India 18 inthe US 6 in the UK and 2 in the Philippines.
During the year the Company incurred capital expenditure of H 1731Million mainly towards refurbishment and maintenance of operation centers technologyupgrade and setting up of new operations centers.
The Company follows global best practices for process excellence andthe quality framework is based on COPC principles. The Company uses innovative techniqueslike Speech & Text Analytics Robotic Process Automation and Intelligent Action Boardto drive improvements across. Also as part of the Quality Management System the Companyhas embraced ISO 9001:2008. The Company continues to follow process improvementmethodologies like Six Sigma Lean and Kaizen.
AWARDS AND ACCOLADES:
The Company received the following awards and accolades during theyear.
International Customer Experience Awards 2020
Won the Silver Award for 'Best Customer Experience Strategy' jointlywith our client giffgaff
Top Patient Engagement Solutions Provider
Named a '2020 Top Patient Engagement Solutions Provider' by HealthcareTech Outlook
HousingWire's Tech100 Mortgage Award
Mortgage business innovative post-closing solution listed in 2021 HWTech100
Business Impact Awards 2020
Recognized as the 'The Most Innovative Company' in the 'MultiCloud'category at the 'Business Impact Awards 2020' hosted by VMware and The Economic Times
IMEA Partner Awards by Automation Anywhere
Awarded the 'Digital Evangelist of the Year - India 2020' award atAutomation Anywhere's prestigious IMEA Partner Awards
Contact Centre Network Northern Ireland Awards 2020
Firstsource's Derry contact centre bagged first place in the 'BestHomeworking Programme' category at the CCNNI 2020
Welsh Contact Centre Awards 2020
Firstsource bagged an award in the 'Contact Centre Manager of the Year'category and the Cardiff centre was declared runner up in the 'Outsourced Contact Centreof the Year' category
NelsonHall's NEAT Evaluation
Positioned as a 'Leader' in NelsonHall's NEAT Evaluation - both for'Overall Mortgage & Loan Services' as well as 'Support for New Digital BusinessModels'
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with Section 129(3) of the Companies Act 2013 and inview of notification issued by the Ministry of Corporate Affairs on Ind- AS the Companyhas prepared consolidated financial statements of the Company and all its subsidiaries asper Ind-AS which forms part of this Annual Report.
The Board approved and declared an interim dividend on February 9 2021at the rate of 30% i.e. H 3.00 per share of Rs. 10/- each.
The interim dividend for FY2020-21 aggregated to H 1928.32 Million (netof applicable TDS).
The Dividend Distribution Policy of the Company was approved by theBoard at its meeting held on August 8 2017 and is available on the Company's website athttps://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/uploads/2021/03/Dividend-Distribution- Policy-1.pdf.
TRANSFER TO RESERVE:
The Board of Directors of the Company (hereinafter referred to as the"Board") have not recommended transfer of any amount of profit to reservesduring the year under review other than as mentioned above. Hence the remaining amount ofprofit for the financial year under review has been carried forward to the Statement ofProfit & Loss.
On a consolidated basis the Company has 28004 employees as of March312021.
PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES:
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act 2013 ("Act") read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 form partof this Report and are annexed as Annexure I.
The statement containing particulars of employees as required underSection 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in a separate annexureforming part of this Report. Further the Report and the accounts are being sent to themembers excluding the aforesaid annexure. In terms of Section 136 of the Act the saidannexure is open for inspection at the Registered Office of the Company. Any shareholderinterested in obtaining a copy of the same may write to the Company Secretary.
During the year under review your Company has not accepted anydeposits under Section 73 of the Act and as such no amount on account of principal orinterest on public deposits was outstanding as of March 312021.
PARTICULARS OF LOANS INVESTMENTS GUARANTEES AND SECURITIES:
Particulars of loans given investments made guarantees given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilized by the recipient are provided in the notes to the standalonefinancial statements. (Please refer to Note No. 6 and 29 to the standalone financialstatements).
During the year under review the rating given by CARE and CRISIL arementioned herein below:
(i) CARE Rating:
|Long/ Short term Bank Facilities ||CARE A+:Stable/CARE A1 + (Single A plus; Outlook:Stable/A One plus) |
|Short Term Bank Facilities ||CARE A1 + (A One plus) |
(ii) CRISIL Rating:
|Long/ Short term Bank Facilities ||CRISIL A+/Stable |
|Short Term Bank Facilities ||CRISIL A1 |
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Company seeks to be a good corporate citizen in all aspects of itsoperations and activities. The Company commits to operating in an economically sociallyand environmentally responsible manner whilst balancing the interests of diversestakeholders. Our CSR Policy is governed and guided by our Group's corporate vision toenable inclusive growth and our aspiration to be India's leading business group servingmultiple market segments for our customers shareholders employees and community. TheCompany seeks to undertake programmes in the areas of Healthcare Education EnvironmentArts & Culture Promotion of Sports as well as support initiatives towards GenderEquality and Empowerment of Women.
The Board constituted a Corporate Social Responsibility (CSR)Committee pursuant to Section 135 of the Act consisting of Mr. Shashwat Goenka(Chairman) Mr. Vipul Khanna Mr. Subrata Talukdar and Mr. Pradip Roy (IndependentDirector) as its members. The CSR Committee meets at least once in a year. During the yearunder review the Committee met once. The details of CSR Committee and its meetings aregiven in Report on Corporate Governance forming part of the Annual Report. The CSRCommittee has framed and formulated a CSR Policy indicating the activities to beundertaken by the Company in accordance with Schedule VII of the Act and the Companies(Corporate Social Responsibility Policy) Rules 2014 issued under the Act. The same hasalso been approved by the Board. The CSR policy is available on the website of the Companyat the link https://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/uploads/2021/04/CSR-Policy.pdf.
The Annual Report on CSR Activities as stipulated under the Act andthe SEBI (LODR) Regulations 2015 forms an integral part of this Report and is appended asAnnexure II. The details of focus areas of engagement as mentioned in the CSR Policy ofthe Company are mentioned in the said Annual Report on CSR Activities.
The CSR activities as per the provisions of the Act may also beundertaken by the Company through a registered trust. Accordingly "RP - SanjivGoenka Group CSR Trust" ("Group CSR Trust") was formed along with otherGroup Companies to pursue CSR activities as mentioned in the CSR Policy of the Company.
During the year the Company has spent an amount of H 0.73 Million onCSR activities as mentioned in the CSR Policy. The Company has been contributing a portionof amount of its CSR obligation every year for the project to set up an InternationalBaccalaureate School in Kolkata taken up by the Group CSR Trust which is as an'ongoing project' as defined in the Companies (Corporate Social ResponsibilityPolicy) Rules 2014. Accordingly the Company had transferred H 38.74 Million to UnspentCSR Account for the above mentioned cause towards CSR expenditure for FY 2020-21.
The CSR at the Company is a platform for giving back to the communitiesin which we live and work. The Company looks to engage employees in focus areas wherepossible through programmes such as employee volunteering payroll giving participatingin fundraising events partnering with NGO's and response to disasters.
A virtual workshop on "Job Readiness" was organisedfor final year engineering school students in collaboration with Foundation for Excellence(FFE). Topics such as resume writing interview skills problem solving techniques andmental health & wellness were covered during the course of this Program. 27 studentswere impacted and a team of 7 Firstsourcers were involved in workshop coordination anddelivery;
Awareness campaigns were organised to promote partner NGOmerchandise. Participating NGOs included Thank you foods & Blessdbuy selling goodssuch as masks sanitizers food items;
We have a long term association with Cheshire which is a homefor about 25+ visual and hearing impaired girls. FSL India sponsored a Dandiya Danceprogram and a meal from Dominos Pizzas for all beneficiaries;
Light of Life Trust (LOLT) was established with a vision totransform the lives of the underprivileged rural communities through Education Skillingand Livelihood and Primary Health Care services. To support LOLT efforts in thisdirection FSL directed funds of H 0.2 Million for Project Anando- that aims at holisticchild development;
Foundation for Excellence was formed with the mission to helpeconomically underprivileged and academically bright students complete their highereducation in the field of medicine and engineering through a Scholarship Program.Firstsource granted Rs.0.2 Million during the financial year 2020-21 towards sponsoringthe education of 5 engineering students from marginalized communities;
Good Friday and Easter meals were distributed amongst 30+ peopleat Cheshire homes.
Firstsourcers donated PHP10059.00 and items such as plasticcontainers of biscuits big packs of powdered milk and hygiene kits to Haven for Children.An agency managed by DSWD (gov't) providing care and rehabilitation services and home toaround 80 abandoned boys age ranging from 7 to 17 years old located at Muntinlupa CityManila;
Support and donation for Firstsource employees whose houses gotdestroyed when typhoons Rolly & Ulysses struck. Cash donations to Philippine Red Crosswere made in order to reach more victims in need of aid.
A six week challenge program was designed to encourage a healthylifestyle through the successful completion of various exercise and dietary related tasksand daily goals at Amherst;
Teaming and Confidence Exercises were organised educatingemployees about recognition and reinforcement of positive interaction at Laporte;
National Heart Disease Awareness Month was celebrated across allUS locations. This was done through a "Wear Red Campaign" to support HeartHealth and increase awareness;
Firstsourcers at Louisville participated in coat and warmclothing donation drive for the community;
Firstsourcers and their children were given virtual sessions (FSEducator) on how to cope with the stress of Covid-19 required homeschooling across all USlocations. Consequently a virtual session on Coping with Back to School Concerns wasorganised as part of the FS Educator series;
A team from Firstsource participated in the WNY Veterans FoodInitiative hosted by WNYHeroes a not-for-profit veteran's organization. The foodinitiative is a program designed to provide food to veterans and their families everyother Tuesday for the remainder of the year. The product is provided by USDA and shippeddirectly to the WNYHeroes Main Office on Main Street in Williamsville NY. It is herewhere the Firstsourcers assisted in the unloading and sorting of all the protein boxesproduce boxes and dairy boxes that were provided. From here the food is either deliveredor it is picked up by the veterans themselves. Each family that receives a meal willreceive a box of each. The program will feed approximately 240+ families every other weekstretching to families from Williamsville to as far East as Rochester NY;
A virtual web session on "How to manage your financesduring a crisis" was delivered by Key Bank for all US employees;
Amherst office witnessed a blood donation drive where 10 unitsof blood impacted 30 patients at various local hospitals;
A virtual candy drive was organised at Louisville using anAmazon wish list to have employees fulfil orders of candy to be delivered to the NortonChildren's Hospital;
A donation drive was organised for 3 homeless children (clothesfood personal hygiene items toys) that a Firstsource employee fostered because thechildren were left parentless by a tragedy in the local community area;
A blood donation drive was organised at Palm Bay;
Toys hats and gloves were donated for Toys for Tots program runby the United States Marine Corps Reserve which distributes toys to children whose parentscannot afford to buy them gifts for Christmas;
Firstsourcers across all US offices shared Holiday Traditionphotos as part of "Show your Spirit Campaign" on Christmas. Approximately 2300employees participated;
1500+ employees participated in donations through theFirstReward platform redeeming Vantage Points to send giftcards to NGOs;
300 Firstsourcers participated in the Ultimate Buffalo Bills FanChallenge at Amherst. They dressed up in their best Bills Gear and submitted a picture anda write up as to why they are the Ultimate Buffalo Bills Fan. Top 3 won a USD100 BuffaloBills store giftcard;
All offices celebrated the Black History Month throughEducational Mailers Trivia Book Club featuring Great Black Leaders (1 event each weekfor a month) with 2300+ employees in attendance;
Awareness campaign on Ergonomics witnessed participation from300 employees. The session was centred around the nuances of posture and how-to setup yourwork station for best results;
Daily Inspirational messages were shared across all USHealthcare business units to bring motivation lift spirits and give inspiration to 1500+Firstsourcers;
International Women's Day witnessed participation from 1500+employees in a photo challenge contest.
Firstsourcers celebrated Autism awareness day World Heath day Earthday Mental Health awareness week across all sites in the UK;
Llamau couch to 5k Challenge & Marathon in a month Challengewas organised at Cardiff which involves developing a running plan for beginners in anattempt to promote wellness;
Firstsourcers collaborated with Domestic Abuse Charity 'MySisters Place' to promote their local services for women & children at high riskspecifically during Covid 19-lockdown;
Middlesbrough centres launched social media messages on MentalWellbeing in collaboration with Red Umbrella- a UK based organisation providing bespokemental healthcare;
Firstsourcers at Derby offices participated in a 5k Rainbowsvirtual challenge where a member of the Rainbows Hospice for Children and Young Peoplewill support in completing the 5k anytime anywhere over a number of days;
Firstsourcers at Derby offices organised a Lockdown HamperRaffle.
Firstsourcers promoted local Mental Health Charity 'One LifeStockton' and 'Be Kind' Appeal during Mental Health Awareness Week;
Firstsourcers celebrated Pride Month through educationalcampaigns on newly recognised genders history of Pride and by wearing bright colours towork across all sites;
All sites celebrated Carers week through advertised support andhelp groups recognising the work of carers and encouraged employees to add their voice tothe cause;
Firstsourcers at the Derby offices raised 171 as part ofChildrens Hospice Week Slush Puppy Day & World Chocolate Day celebration in supportof the Rainbows charity;
Awareness campaigns on single use plastic swap-ablealternatives using no plastic shops and getting commitments from individuals across allsites;
500 Firstsourcers across all sites supported local Food Banks bydonating nonperishable goods;
6 Interactive virtual sessions were organised as part of theVirtual World of Work Programme for second year college students that aims at making themjob ready;
Firstsourcers at Derry offices supported Foyle Foodbank- a localcharity that provides meals for those in the community who are struggling;
As part of LGBT Awareness employees at Belfast & Derryparticipated in various educational campaign on Awareness of local charities working inthis space alongside wearing bright colours to work and sharing personal stories;
Firstsourcers at Belfast donated 168 to a Children's Hospice;
7 Firstsourcers at Cardiff supported a local school througheducational videos;
A Wellness Wednesday Session on Home Gardening was organised foremployees at Cardiff;
Employees participated in the 10000 steps a day challenge forBrain Tumour Reasearch;
Employee Assistance Program (EAP) Promotion Week - Showcasingthe benefits of throughout the week for better mental and physical wellness;
Firstsourcers participated in acknowledgement and informationsharing for World Cancer day Time to Talk day Lunar New Tear and International Motherlanguage day at Cardiff.
NOTE: Firstsource's modes of CSR delivery also extends into"Payroll Giving" where employees volunteer to deduct a small part of theirsalary every month which accumulates and can then be donated to a cause of their choice.Please find below our FY21 update on the same:
Employees in the UK donated to various charities via payrollgiving. A sum of 37904 was raised across all sites;
A sum of PHP 19105 was raised through payroll giving at Cebuand Manila. The sum was directed towards staff welfare (security and housekeeping) andRehabilitation centeres (NGOs) alongiwth food items being donated;
988 Firstsourcers across all India location contributed towardsGiveIndia donation and we raised a sum upwards of H 2 Million.
The Company has implemented a comprehensive and fully integrated'Enterprise Risk Management' framework in order to anticipate identify measure managemitigate monitor and report the principal risks and uncertainties that can impact itsability to achieve its strategic business objectives.
The Enterprise Risk Management drives a common integrated view of risksand optimal risk mitigation responses. This integration is enabled by alignment of RiskManagement and Internal Audit methodologies and processes in order to maximize enterprisevalue of the Company and ensure high value creation for our stakeholders over a time.
The details of the 'Enterprise Risk Management' framework with detailsof the principal risks and the plans to mitigate the same are given in the 'RiskManagement Report section of the 'Management Discussion and Analysis Report' which formspart of this Annual Report.
Further in view of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") effective April 12019the Board constituted a Risk Management Committee on February 4 2019 to monitor &mitigate the Risk.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls withreference to financial statements. Such internal financial controls over financialreporting are operating effectively and the Statutory Auditor has also expressed theiropinion on the same in the Annexures to the Auditors Report.
WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy (the "WB Policy")with a view to provide vigil mechanism to Directors Employees and other Stakeholders
to disclose instances of wrongdoing in the workplace and reportinstances of unethical behavior actual or suspected fraud or violation of the Company'scode of conduct or ethics policy. The WB Policy also states that this mechanism providesfor adequate safeguards against victimization of Director(s)/ Employees who avail of themechanism and also provides for direct access to the Chairperson of the Audit Committee inexceptional cases. The WB Policy has been posted on the website of the Company and thedetails of the same are provided in the 'Report on Corporate Governance' forming partof this Annual Report.
The WB Policy is available on the website of the Company athttps://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/uploads/2021/05/WHISTLE-BLOWER-PQLICY-2021-1.pdf.
PREVENTION OF SEXUAL HARRASSMENT POLICY:
The Company has a 'Prevention of Sexual Harassment Policy' inforce in compliance with the requirements of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The objective of this Policy is toensure a safe secure and congenial work environment where employees deliver their bestwithout any inhibition threat or fear. The Company has Zero Tolerance to any form ofharassment especially if it is sexual in nature. The complaints filed under the Policy arereported to the Audit Committee at its quarterly meetings with details of action takenthereon.
It is confirmed that during the year under review the Company hascomplied with applicable provisions in relation to sexual harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 including the provisions relating tothe constitution of Internal Complaints Committee under the said act.
BOARD OF DIRECTORS:
During the year under review the following are the changes in theBoard of Directors:
Mr. Subrata Talukdar (DIN 01794978) retires by rotation andbeing eligible has offered himself for re-appointment at the ensuing Annual GeneralMeeting CAGM");
The Board appointed Mr. Anjani K. Agrawal (DIN 08579812) as anAdditional Director (Non-Executive Independent) on the Board of the Company w.e.f. May11 2021. He holds office up to this Annual General Meeting (AGM). The Board recommendsappointment of Mr. Anjani K. Agrawal as an Independent Director for a term of three (3)consecutive years effective from May 11 2021 for approval of members of the Company atthis AGM. The Company has received the declaration from Mr. Anjani K. Agrawal confirmingthat he meets the criteria of independence as prescribed under Section 149(6) of the Act;
Mr. Pradip Roy (DIN 00026457) ceased to be an IndependentDirector on account of completion of his two (2) consecutive terms at the conclusion ofensuing AGM. The Board places on record its appreciation towards valuable contributionmade by him during his tenure as a Director of the Company;
All the Independent Directors of the Company have givendeclarations that they meet the criteria of independence as laid down under Section 149(6)of the Act.
Board and Audit Committee Meetings:
During the FY2020-21 the following four (4) Board and Audit CommitteeMeetings were held on:
1. May 26 2020
2. August 12 2020
3. October 28 2020
4. February 9 2021
Note: Due to the exceptional circumstances caused by the COVID-19pandemic and consequent relaxations granted by MCA and SEBI all Board/ Committee Meetingsin FY 2020-21 were held through Video Conferencing.
Time gap between any two meetings was not more than one hundred twenty(120) days.
The full details of the said meetings are given in the 'Report onCorporate Governance' forming part of this Annual Report.
The Familiarisation Programmes for Independent Directors:
The Company has put in place a system to familiarise its IndependentDirectors with the Company their roles rights & responsibilities in the Companynature of the industry in which the Company operates business model of the Company etc.The details of such familiarisation programmes are put up on the website of the Company atthe below link: https://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/uploads/2021/03/Policy-on-familiarisation-of-Independent- Directors.pdf.
(i) Performance Evaluation of the Independent Directors and OtherIndividual Directors:
The Company has framed a policy for Appointment of Directors and SeniorManagement and Evaluation of Directors' Performance ("Board Evaluation Policy").The said policy sets out criteria for performance evaluation of Independent Directorsother NonExecutive Directors and the Executive Directors.
Pursuant to the provisions of the Act and the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015("Listing Regulations") the Board carries out the performance evaluation of allthe Directors (including Independent Directors) on the basis of recommendation of theNomination & Remuneration Committee and the criteria mentioned in the Board EvaluationPolicy. The Board decided that the performance evaluation of Directors should be done bythe entire Board of Directors excluding the Director being evaluated and unanimouslyagreed on the following assessment criteria for evaluation of Directors' performance:
Attendance and active participation in the Meetings;
Bringing one's own experience to bear on the items fordiscussion;
Governance covering Awareness and Observance; and
Value addition to the business aspects of the Company.
(ii) Performance Evaluation of Executive Director:
The performance of the Managing Director & CEO is evaluated on thebasis of achievement of performance targets/ criteria given to him by the Board from timeto time.
(iii) Performance Evaluation by the Board of its own performance andits Committees:
The performance of the Board is evaluated by the Board in the overallcontext of understanding by the Board of the Company's principle and values philosophyand mission statement strategic and business plans and demonstrating this through itsaction on important matters the effectiveness of the Board and the respective Committeesin providing guidance to the Management of the Company and keeping them informed opencommunication the constructive participation of members and prompt decision making levelof attendance in the Board meetings constructive participation in the discussion on theAgenda items monitoring cash flow profitability income & expenses productivity& other financial indicators so as to ensure that the Company achieves its plannedresults effective discharge of the functions and roles of the Board etc.
The performance of the Committees is evaluated by the members of therespective Committees on the basis of the Committee effectively performing theresponsibility as outlined in its Charter Committee meetings held at appropriatefrequency length of the meetings being appropriate open communication & constructiveparticipation of members and prompt decision-making etc.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:
The criteria for Directors' appointment and for determiningqualification positive attributes and independence of a Director as mentioned in the'Policy for Appointment of Directors and Senior Management and Evaluation ofDirectors' Performance' in terms of Section 178(3) of the Act is mentioned below:
Appointment criteria and qualifications:
The Nomination & Remuneration Committee shall identify andascertain the integrity qualifications expertise and experience of the person forappointment as Director Key Managerial Personnel C'KMP") or at Senior Managementlevel and recommend the same to the Board for appointment if found suitable;
A person should possess adequate qualifications expertise andexperience for the position he/ she is considered for appointment. The Committee hasdiscretion to decide whether qualifications expertise and experience possessed by aperson are sufficient/ satisfactory for the concerned position; and
The Company shall not appoint or continue the employment of anyperson as Managing Director/ Whole-Time Director who has attained the age of seventyyears provided that the term of the person holding this position may be extended beyondthe age of seventy years with the approval of shareholders by passing a special resolutionbased on the statement pursuant to the provisions of Section 102 of the Act annexed to thenotice or such motion indicating the justification for extension of appointment beyondseventy years.
Meeting of Independent Directors:
There should be atleast one meeting of Independent Directors in a yearwithout the attendance of non-independent Directors and members of the Management. One (1)meeting of the Independent Directors of the Company was held on February 9 2021.
Review the performance of Non-Independent Directors includingManaging Director & CEO and the Board as a whole;
Review the performance of the Chairman of the Company takinginto account the views of Executive Directors and Non-Executive Directors; and
Assess the quality quantity and timeliness of the flow ofinformation between the Company's Management and the Board that is necessary for the Boardto effectively and reasonably perform its duties.
The Board on the recommendation of the Nomination & RemunerationCommittee framed a Remuneration Policy for Non-Executive Directors (including IndependentDirectors) and a Remuneration Policy for Key Managerial Personnel and other Employees ofthe Company. The details of Remuneration Policy for Non-Executive Directors andIndependent Directors are provided as Annexure IIIA and details of Remuneration Policy forKey Managerial Personnel and Other employees of the Company are provided as Annexure IIIBto this Report.
COMMITTEES OF THE BOARD:
A detailed note on the Board and its Committees is provided in the'Report on Corporate Governance' forming part of this Annual Report. The compositionof the major Committee/(s) is as follows:
As on March 31 2021 the Audit Committee comprised of three (3)Independent Directors viz. Ms. Grace Koshie (Chairperson) Mr. Pradip Roy Mr. Sunil Mitraand one (1) Non-Independent Director Mr. Subrata Talukdar.
Nomination & Remuneration Committee:
As on March 31 2021 the Nomination & Remuneration Committeecomprised of two (2) Independent Directors viz. Mr. Pradip Roy (Chairman) Mr. PratipChaudhuri and one (1) Non-Independent Director Mr. Subrata Talukdar.
Corporate Social Responsibility Committee:
As on March 31 2021 Corporate Social Responsibility Committeecomprised of four (4) members viz Mr. Shashwat Goenka (Chairman) Mr. Vipul KhannaManaging Director & CEO Mr. Subrata Talukdar and one (1) Independent Director Mr.Pradip Roy.
Stakeholders Relationship Committee:
As on March 312021 Stakeholders Relationship Committee comprised ofthree (3) members viz. Mr. Subrata Talukdar (Chairman) Mr. Vipul Khanna ManagingDirector & CEO and one (1) Independent Director Mr. Pradip Roy.
As on March 31 2021 Investment Committee comprised of three (3)members viz. Mr. Shashwat Goenka (Chairman) Mr. Vipul Khanna Managing Director & CEOand one (1) Non-Independent Director Mr. Subrata Talukdar.
As on March 31 2021 Strategy Committee comprised of three (3) membersviz. Mr. Shashwat Goenka (Chairman) Mr. Vipul Khanna Managing Director & CEO and one(1) Non-Independent Director Mr. Subrata Talukdar.
Risk Management Committee:
As on March 31 2021 Risk Management Committee comprised of five (5)members viz. Mr. Shashwat Goenka (Chairman) Mr. Vipul Khanna Managing Director &CEO one (1) Independent Director Ms. Grace Koshie Mr. Dinesh Jain and Mr. Arun TyagiOfficials of the Company.
RELATED PARTY TRANSACTIONS:
All the contracts/ arrangements/ transactions that were entered into bythe Company during the financial year with related parties were on an arm's length basisand in the ordinary course of business and none of such related party transactionsrequired the approval of the the Board of Directors or the Shareholders as per the Act orLODR Regulations. Further there were no materially significant related party transactionsthat may have potential conflict of interests of the Company at large. Prior omnibusapproval is obtained for related party transactions which are of repetitive nature andentered in the ordinary course of business and at arm's length. All Related PartyTransactions are placed before the Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board isavailable on the website of the Company at the link: https://mk0firstsourcecw8t7d.kinstacdn.com/wp-content/uploads/2021/03/Related-Party-Transactions-Policy.pdf.
The details of the related party transactions as required under the Actand the Rules are attached in Form AOC-2 as Annexure IV.
EMPLOYEES STOCK OPTION SCHEME:
The Company grants share-based benefits to eligible employees with aview to attracting and retaining the best talent encouraging employees to alignindividual performances with Company objectives and promoting increased participation bythem. With a view to provide an opportunity to the employees of the Company to share thegrowth of the Company and to create long term wealth the Company has an Employee StockOption Scheme (ESOS) viz. the Firstsource Solutions Employee Stock Option Scheme 2003(ESOS 2003). The Scheme is applicable to all eligible employees and Directors of theCompany and its Subsidiary Companies. The Scheme is in compliance with Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014 (SEBI (SBEB)Regulations) as amended.
FIRSTSOURCE SOLUTIONS LIMITED EMPLOYEE STOCK OPTION PLAN 2019("ESOP 2019 PLAN"):
The Company has established the ESOP 2019 Plan pursuant to approval ofshareholders at the Annual General Meeting on August 2 2019 to allow our employees toacquire greater proprietary stake in our success and growth and to encourage ouremployees to continue their association with us. The ESOP 2019 Plan is in compliance withSEBI (SBEB) Regulations as amended.
As per the ESOP 2019 Plan the Nomination & Remuneration Committeewill issue stock options to the identified eligible employees/ director(s) of the Companyand its Subsidiaries at an exercise price which will be the face value of the Shares orany higher price which may be decided by the Nomination & Remuneration Committeeconsidering the prevailing market conditions and the norms as prescribed by SEBI and otherrelevant regulatory authorities. Further the stock options under the said plan would vest& be exercisable in tranches as determined by the Nomination & RemunerationCommittee basis the power given to the Nomination & Remuneration Committee in linewith the ESOP 2019 Plan.
LONG TERM INCENTIVE STRUCTURE GRANTS UNDER ESOP 2019 PLAN:
In continuation of the Company's philosophy of aligning employeeinterests with shareholder value creation and in line with global practices theNomination & Remuneration Committee of the Board of Directors has approved the LongTerm Incentive Structure ("LTD in the form of ESOP grants which will be granted toidentified eligible employees as per ESOP 2019 Plan. This unique plan is a combination oftenure and performance based ESOPs aligned to shareholder value creation which will deepenemployee ownership in the Company.
A) Tenure based Structure (ESOP Structure):
Options in this structure will be granted to identified eligibleemployees basis the below criteria:
1. Drives ownership of employees in Company's fortunes for betterengagement and retention;
2. Seen as part of the total compensation package in line withcompetition/ market practice;
3. Quantum of grants is based on the performance and potential of theindividual employee.
Vesting Schedule in the given structure is:
|Period within which options will vest unto the participant ||% of options that will vest |
|End of 12 months from the date of grant of options ||25% |
|At the end of every quarter after year 1 till end of year 4 from date of grant ||6.25% |
B) Performance based Structure (PSU Structure):
Option in this structure is granted to identified eligible employees -
Functional and Business heads basis the below criteria:
1. Attainment of options can range between 0% and 150% of trancheeligible for vesting for the respective performance measurement period. Each tranche isseparate. Performance and vesting in one performance period has no bearing on performanceand vesting in another performance period;
2. Subject to terms and conditions of the scheme the performance-basedcomponent of the grant is measured basis the Performance targets as agreed annually by theManagement.
Vesting Schedule in the given structure is:
|Period within which options will vest unto the participant ||% of options that will vest |
|End of 12 months from the date of grant of options ||25% |
|At the end of every year after year 1 till end of year 4 from date of grant ||25% |
Under both the above structures grants will be issued at face value ofthe shares or any higher price which may be decided by the Nomination & RemunerationCommittee and will have an exercise period up to ten years as per the ESOP 2019 Plan andas determined by the Nomination & Remuneration Committee.
Under the ESOP 2019 Plan as on March 31 2021 the Nomination &Remuneration Committee has approved grant of 16569000 options which are a mix of tenurebased and performance-based structure options to its senior leadership team and employees.
FIRSTSOURCE EMPLOYEE BENEFIT TRUST UNDER ESOP 2019 PLAN:
The ESOP 2019 Plan shall be implemented through the Trust which will beadministered under the guidance advice and direction of the Nomination & RemunerationCommittee in accordance with the provisions of the Companies Act 2013 and SEBI (SBEB)Regulations.
The Board of Directors has facilitated setting up of Employee welfaretrust viz "Firstsource Employee Benefit Trust" ("ESOP Trust") toimplement the ESOP 2019 Plan which has been formed by the Company. The Company shallprovide financial assistance to the ESOP Trust for secondary acquisition of equity sharesof the Company for the purpose of implementation of ESOP 2019 Plan. The terms andconditions for the financial assistance provided shall be in compliance with the CompaniesAct 2013 read with Companies (Share Capital and Debenture) Rules 2014 and SEBI (SBEB)Regulations.
As on March 31 2021 the ESOP Trust holds 17010000 equity sharespurchased through secondary market.
As on March 312021 your Company has 17 subsidiaries and 1 AssociateCompany:
Domestic Subsidiary: (1)
1. Firstsource Process Management Services Limited [Wholly OwnedSubsidiary ("WOS") of the Company].
International Subsidiaries: (16)
2. Firstsource Solutions UK Limited UK (WOS of the Company);
3. Firstsource Solutions S.A. Argentina (Subsidiary of FirstsourceSolutions UK Limited);
4. Firstsource BPO Ireland Limited (WOS of Firstsource Solutions UKLimited);
5. Firstsource Group USA Inc. USA (Subsidiary of the Company);
6. Firstsource Business Process Services LLC USA (WOS of FirstsourceGroup USA Inc);
7. Firstsource Advantage LLC USA (WOS of Firstsource Business ProcessServices LLC);
8. One Advantage LLC USA (WOS of Firstsource Business ProcessServices LLC);
9. MedAssist Holding LLC USA (WOS of Firstsource Group USA Inc);
10. Firstsource Solutions USA LLC USA (WOS of MedAssist HoldingLLC);
11. Firstsource Health Plans and Healthcare Services LLC USA(Formerly known as Firstsource Transaction Services LLC) (WOS of Firstsource SolutionsUSA LLC);
12. Sourcepoint Inc. (Formerly known as ISGN Solutions Inc.) (WOS ofFirstsource Group USA Inc);
13. Sourcepoint Fulfillment Services Inc. (Formerly known as ISGNFulfillment Services Inc) (WOS of Sourcepoint Inc.);
14. Firstsource Dialog Solutions (Private) Limited (Subsidiary of theCompany);
15. PatientMatters LLC (WOS of Firstsource Solutions USA LLC);
16. Kramer Technologies LLC (WOS of PatientMatters LLC);
17. Medical Advocacy Services For Healthcare Inc. (WOS ofPatientMatters LLC).
Associate Company: (1)
1. Nanobi Data and Analytics Private Limited
1. During the year under review the name of Firstsource TransactionServices LLC was changed to Firstsource Health Plans and Healthcare Services LLC.
2. Firstsource Solutions USA LLC USA a Wholly Owned Subsidiary (WOS)of MedAssist Holding LLC a step down subsidiary of the Company entered into MembershipInterest Purchase Agreement to acquire 100% stake in PatientMatters LLC("PatientMatters") a leading Revenue Cycle Management solutions provider withfocus on US Healthcare Providers (Hospitals). On account of this PatientMatters LLC andits WOS Kramer Technologies LLC and Medical Advocacy Services For Healthcare Inc. becamea step down subsidiary of the Company.
The Company has no other joint venture Company. No company has ceasedto be a joint venture or associate during the FY2020-21.
Report on the Performance and Financial Position of Subsidiaries:
A report on the performance and financial position of each of thesubsidiaries as per the Act in the prescribed format AOC - 1 is annexed to theconsolidated financial statement and hence not repeated here for the sake of brevity. TheCompany has a policy on material subsidiaries pursuant to Regulation 16(1)(c) of theListing Regulations. The same is available on the website of the Company viz:https://mk0firstsourcecw8t7d. kinstacdn.com/wp-content/uploads/2021/03/Material-Subsidiary-Policy.pdf.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year as stipulatedunder Regulation 34(3) of the Listing Regulations is separately given and forms part ofthis Annual Report.
BUSINESS RESPONSIBILITY REPORT:
Business Responsibility Report for the year as stipulated underRegulation 34(3) of the Listing Regulations is separately given and forms part of thisAnnual Report.
REPORT ON CORPORATE GOVERNANCE:
The adherence to the corporate governance practices by the Company notonly justifies the legal obedience of the laws but dwells deeper conforming to the ethicalleadership and stability. It is the sense of good governance that our leaders portraywhich trickles down to the wider Management and is further maintained across the entirefunctioning of the Company.
The Company is committed to maintain the highest standards of corporategovernance and adheres to the corporate governance requirements set out by SEBI.
The report on Corporate Governance as stipulated under provisions ofChapter IV & Schedule V of the Listing Regulations is separately given and forms partof this Annual Report. The requisite certificate from a Practicing Company Secretaryconfirming compliance of the conditions of corporate governance is attached to the Reporton Corporate Governance.
Pursuant to amendment of Rule 12 of Companies (Management andAdministration) Rules 2014 by MCA wherein instead of attaching an extract of annualreturn (to be prepared in Form MGT - 9) to the Directors' Report the Company can host acopy of annual return on the website if any of the Company and a web link of the same tobe given in the Directors' Report.
Accordingly a copy of Annual Return is available on the website of theCompany at the below link:
STATUTORY DISCLOURES OF PARTICULARS:
A) Conservation of Energy:
The Company continues to make progress towards energy conservationacross all its operation centers by adopting efficient Air-conditioning management systemusage of Energy efficient LED and efficient power back-up system . The Company iscontinuously monitoring earlier initiatives of reducing energy consumption within datacenter/(s) and across its' operation centers. The Company similar to its previous year'sinitiatives of GREEN IT continued to replace the normal Desktops and old Thin clientswith Mini Desktops/ Zero thin-clients in US Geography as the power consumption of minidesktop & Zero thin-clients was 2.5 times less than the power consumed by normaldesktops and nearly 5 times less during standby mode. Scripts have been deployed wherepossible to shut down the Desktops/ Thin clients which are not being used for more than 1hour which helps conserve energy.
B) New Technology Adoption:
Cloud-First Initiatives: As part of Company's Cloud-First andDigital-First-Digital-Now (DFDN) journey the Company has moved significant part of itsOperations and Deliveries across the geographies and business units to cloud. Over thepast few years the Company has adopted multiple state- or-art technologies by partneringwith Global Cloud Services Platforms (e.g. Amazon Web Services Microsoft Azure Googlecloud etc.) to move its applications and digital workload to Multi-Cloud. Most ofCompany's client facing application are deployed on Multi-Cloud environment to make themmore Scalable Resilient and Fault-tolerant;
Digital Enabled Contact center (DECC): As part of our DECCimplementation the company has implemented multiple Next Generation Contact Centers(NGCC) across the global and business units. The DECC and Omni Channel Platform is furtherenhanced with Digital Capabilities such as AI Social Integration Chat-Bot Analyticsetc. These state-of-art technologies are implemented to enhance and automate call handlingcapabilities by Digital/ AI interference thus enhancing the Customer Experience (CX);
NextGen Cybersecurity: The Company has also investedsignificantly in a cloud based Next Generation Cyber-Security solution covering theentire horizon of endpoints servers and network security integrated with Cisco ThreatResponse and Threat Intelligence. The security solution provides complete protection toendpoints servers in Data Center and also Company's cloud platform.
C) Foreign Exchange Earnings and Outgo Activities relating to exportsinitiatives taken to increase exports development of new export markets for services andexport plans:
The Company's income is diversified across a range of geographies andindustries. During the year 87.12% of the Company's standalone total revenues werederived from exports. The Company provides BPO services mostly to clients in NorthAmerica UK and Asia Pacific region. The Company has established direct marketing networkaround the world to boost its exports.
FOREIGN EXCHANGE EARNED AND USED:
The Company's Foreign Exchange Earnings and Outgo during the year wereas under:
| ||(Standalone figures in Rs.Million) |
|Particulars ||FY2021 ||FY2020 |
|Foreign Exchange Earnings ||11541.17 ||7703.35 |
|Foreign Exchange Outgo (including capital goods and imports) ||62.39 ||69.54 |
Pursuant to the provisions of Section 204 of the Act read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyobtained Secretarial Audit Report from MMJB & Associates LLP Company Secretaries forthe FY2020-21. The Secretarial Audit Report is annexed to this Report as Annexure V.
ANNUAL SECRETARIAL COMPLIANCE REPORT:
SEBI vide its Circular No. CIR/CFD/CMD1/27/2019 dated February 8 2019read with Regulation 24(A) of the Listing Regulations directed listed entities to conductAnnual Secretarial Compliance Audit from a Practicing Company Secretary of all applicableSEBI Regulations and circulars/ guidelines issued thereunder. The said SecretarialCompliance report is in addition to the Secretarial Audit Report by Practicing CompanySecretaries under Form MR - 3 and is required to be submitted to Stock Exchanges within 60days of the end of the financial year or as per the extended timelines by the Governmentfrom time to time. The Company has engaged the services of MMJB & Associates LLP (CPNo. 8968) Company Secretaries for providing this certification.
STATUTORY AUDITORS AND AUDITORS' REPORT:
M/s. Deloitte Haskins & Sells LLP Chartered Accountants bearingRegistration Number: 117366W/W-100018 were appointed as the Statutory Auditors of theCompany by the members at their 16th Annual General Meeting (AGM) for a term ofconsecutive five (5) years i.e. till the conclusion of 21st AGM.
The Notes on financial statements referred to in the Auditors' Reportare self-explanatory and do not call for any further comments. The Auditors' Report doesnot contain any qualification reservation or adverse remark.
Your Directors state that no disclosure or reporting is required inrespect of the following matters as there were no transactions on these matters during theFY2020-21:
Issue of equity shares with differential rights as to dividendvoting or otherwise;
Issue of shares to employees of the Company under any schemesave and except Employees Stock Option Schemes as referred to in this Report;
No significant or material orders were passed by the Regulatorsor Courts or Tribunals which impact the going concern status and the Company's operationsin future.
Further your Directors would like to mention that the ManagingDirector & CEO received USD 139.42 Million as remuneration during the year fromFirstsource Group USA Inc. subsidiary of the Company.
The disclosure pursuant to Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 read with Circular No. CIB/CFD/Policy/CELL/2 2015 dated June 16 2015 will be placed on the website of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134(3) (c) and 134(5) of theCompanies Act 2013 Directors of your Company state and confirm that:
1. In the preparation of the annual accounts for the FY2020-21 theapplicable Ind-AS accounting standards have been followed and there are no materialdepartures from the same;
2. The Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 312021 andof the profit of the Company for year ended on that date;
3. The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safe-guarding the assets of the Company and for preventing and detecting fraud andother irregularities;
4. The Directors had prepared the annual accounts on a going concernbasis;
5. The Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
6. The Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Board wishes to place on record its sincere appreciation for thesupport and co-operation extended by all the customers vendors bankers and businessassociates. The Board also expresses its gratitude to the Department ofTelecommunications Collector of Customs and Excise Director of Special Economic ZoneMinistry of Labour Ministry of Corporate Affairs Software Technology Parks of India andvarious Governmental departments and organisations for their help and cooperation.
Further the Board places on record its appreciation to all theemployees for their dedicated service. The Board appreciates and values the contributionsmade by every member across the world and is confident that with their continued supportthe Company will achieve its objectives and emerge stronger in the coming years.
COVID-19 extracted a huge toll on lives and livelihoods of millions ofpeople in India and other parts of the world. COVID-19 pandemic continues to poseconsiderable risks across the globe. The Company had implemented its business continuitystrategies including work from home and has put in place processes and guidelines toensure safety of workplace for functioning offices. The Company is also in continuousengagement with its clients to ascertain the COVID-19 situation and is accordinglydevising strategy to mitigate the impact.
As a result of continuous monitoring of the situation and formulationof its business strategies on an ongoing basis during difficult times the Company'sfinancial result for the year 2020-21 has been encouraging.
Your directors specially thank the employees in the front line andsupport staffs who had acted selflessly to keep the business continuity during thechallenging times of COVID-19 and have supported to serve our clients and otherstakeholders in the challenging times.