Your Directors are pleased to present their Report on the business and operations ofyour Company along with the Audited Financial Statements (Standalone and Consolidated) forthe financial year ended March 31 2019.
| || |
(Rs. in million* except per share data)
| || |
| ||FY 2019 ||FY 2018 ||FY 2019 ||FY 2018 |
|Revenue from Opeations ||21964 ||20587 ||47855 ||38494 |
|Other Operating Income ||- ||- ||312 ||- |
|Sub Total ||21964 ||20587 ||48167 ||38494 |
|Other Income ||427 ||207 ||445 ||363 |
|Total Income ||22391 ||20794 ||48612 ||38857 |
|Operating Expenses ||18337 ||17402 ||43756 ||34433 |
|Depreciation & Amortization ||972 ||837 ||1968 ||1413 |
|Financial Expenses ||116 ||95 ||406 ||347 |
|Profit Before Tax and Exceptional items ||2966 ||2460 ||2482 ||2664 |
|Exceptional item ||- ||- ||- ||120 |
|Profit Before Tax ||2966 ||2460 ||2482 ||2544 |
|Provision for tax (including Deferred Tax) ||661 ||334 ||718 ||553 |
|Profit After Tax ||2305 ||2126 ||1764 ||1991 |
|Less: Non-controlling Interest ||- || ||(8) ||(15) |
|Add: Balance brought forward from Previous year ||8394 ||6507 ||7114 ||5063 |
|Add/(Less): Adjustments & Appropriation: || || || || |
|Adjustments during the year ||- ||11 ||(412) ||295 |
|Dividends ||(208) ||(208) ||(208) ||(208) |
|Dividend Distribution Tax ||(43) ||(42) ||(43) ||(42) |
|Balance Carried Forward ||10448 ||8394 ||8223 ||7114 |
|Earnings per share (R) || || || || |
|- Basic ||110.68 ||102.31 ||85.08 ||96.55 |
|- Fully Diluted ||110.52 ||102.04 ||84.96 ||96.31 |
*(1 million = Rs.10 lakhs)
The Standalone and Consolidated Financial Statements for the year ended March 31 2019have been prepared in accordance with the Companies (Indian Accounting Standards) Rules2015 (Ind AS) and Companies (Indian Accounting Standards) Amendment Rules 2016 asprescribed under Section 133 of the Companies Act 2013 and other recognized accountingpractices and policies to the extent applicable.
The financials for the year under review are not comparable with the reportedfinancials of the previous year due to following reasons:
As reported last year the Scheme of Amalgamation of the Company ('the Scheme')with its wholly owned subsidiary in India namely HGS International Services PrivateLimited ("HGSISPL") was sanctioned by the Hon'ble National Company Law Tribunal(NCLT) Mumbai Bench vide its Order dated June 20 2018. The Scheme became effective onAugust 01 2018 but made operative from April 01 2017 being the appointed date as per theScheme. Accordingly HGSISPL got amalgamated with the Company on April 01 2017 and standsdissolved without winding up. Consequent to the amalgamation of HGSISPL with the Companythe standalone and consolidated financials for FY 2018 have been recast and hence wouldnot match with the financials for FY 2018 as published in the Annual Report of FY 2018.
As reported last year effective April 02 2018 and April 03 2018 the Companythrough its overseas subsidiaries acquired CMH Services Subsidiary LLC USA and ElementSolutions LLC USA respectively. Further in July 2018 HGS Population Health LLC USAthe holding company merged into CMH Services Subsidiary LLC USA. Thereafter the name ofCMH Services Subsidiary LLC USA was changed to HGS AxisPoint Health LLC. In view of theseacquisitions the financials of FY 2019 are not comparable with the financials of FY 2018.
On a Consolidated basis your Company registered a strong performance during thefinancial year ended March 312019. Compared to the previous financial year Revenues fromOperations and Other Operating Income increased by 25.1% from R 38494 million to R 48167million. FY 2019 reported Other Operating Income of R 312 million from sale of contractsof GuidePoint business of HGS AxisPoint Health LLC.
Out of the growth of 25.1% around 8.4% revenue growth came from the two acquisitions(AxisPoint Health and Element Solutions) made in early April 2018 around 11.3% fromorganic growth and around 5.4% came on account of exchange rate fluctuations. The Companysaw strong growth in revenues across all verticals especially healthcare telecom andtechnology.
EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) excluding OtherIncome grew 8.6% from R 4061 million to R 4411 million. This growth in EBITDA wasachieved despite significant drop in revenues of the India domestic CRM business increasein minimum wages in the state of Karnataka and challenging business environment in UK dueto the uncertainties about Brexit. EBITDA for FY 2018 and FY 2019 has been computed on thesame basis i.e. excluding gains and losses on account of fluctuations in foreign exchangecurrencies.
Other Income during FY 2019 rose by 22.7% from Rs.363 million to Rs.445 million. Thisincrease is on account of interest on tax refunds and foreign exchange variations.
PAT (Profit after Tax) for FY 2019 decreased from Rs.1991 million to Rs.1764 milliona drop of 11.4%. This drop is on account of increase in depreciation (includingaccelerated depreciation of assets of some of the delivery sites/centres which were closeddue to adverse business conditions and accelerated depreciation for self-developedsoftware) and increase in interest costs (including cost of deferred compensation for theacquisitions made during FY 2019 and borrowings made to fund loss making businesses).
On a Standalone basis in FY 2019 Revenues from Operations grew by 6.7% from Rs.20587million to Rs.21964 million. This revenue growth has to be seen in the context of theIndia domestic CRM business which was down by around 7%. Increase in 'Other Income' was onaccount of exchange rate variations and interest on income tax refunds. Increase indepreciation was on account of accelerated depreciation of the assets of delivery siteswhich have been shut down due to adverse business scenario. EBITDA for FY 2019 increasedby 13.9% from Rs. 3185 million to Rs. 3627 million. PAT in FY 2019 grew by 8.4 % fromRs. 2126 million to Rs. 2305 million.
A review of the Financial and Operating Performance of the Company and its keysubsidiaries have been given in the 'Management Discussion and Analysis' section whichforms part of this Report as Annexure E'.
Other financial highlights:
Cash flow from operations and after working capital changes: Rs. 1705 millionin FY 2019 as compared to Rs. 3432 million in FY 2018 a decrease of 50%;
CAPEX: Rs. 1861 million as compared to Rs. 1214 million in FY 2018;
Gross Debt of Rs. 6022 million as at March 31 2019 (as compared to Rs. 5854million as at March 312018 i.e. an increase of Rs. 168 million during the year);
Net Worth: Rs. 16436 million as at March 312019 as compared to Rs. 15195million as at March 31 2018 an increase of 8.2%.
Revenue by Origination Geography-US: 71%; Canada: 12%; UK & Europe: 6% andIndia: 11%.
Revenue by Verticals-Healthcare: 52%; Telecom and Technology: 18%; Consumer:12%; Banking and Financial Services: 8% and Others: 10%.
Client Wins: 41 new clients across BPM and HRO.
Active Clients: 237 core BPM clients and 656 Payroll processing HRO and F&Aclients.
Delivery Centres: 73 global delivery centres across seven countries at the endof the FY 2019.
Employee Headcount: 42190 as on March 312019; of which India: 57%Philippines: 20% USA: 9% Canada: 6% Jamaica: 5% and UK: 3%.
Your Directors are pleased to recommend a Final Dividend of Rs. 2.50 per equity share(25% on face value of Rs. 10/- each) for the year ended March 31 2019 subject to yourapproval. This is in addition to the three Interim Dividends aggregating to Rs. 7.50 perequity share of Rs. 10 each for the financial year 2018-19 declared by the Board ofDirectors on August 9 2018 November 2 2018 and February 7 2019 respectively and havebeen duly paid. The total dividend for the financial year ended March 31 2019 would beRs. 10 per equity share (100% on face value of Rs. 10/- each) if approved by the Members.
The world is witnessing rapid changes led by consumer preferences disruptivetechnologies and competitive forces and concerns over data privacy. Businesses areconstantly looking for solutions to enhance customer experience increase sales addcustomers and reduce costs. To meet the changing needs of businesses Business ProcessManagement (BPM) players are combining analytics automation and digital technologies tooffer new business models and alternate delivery channels.
The Global BPM spend is estimated to have grown by 4.5% in FY 2018 to touch US$ 198billion. As per NASSCOM the growth of the Indian BPM industry remains steady reaching anestimated US$ 34.8 billion in revenue for FY 2019 an increase of 7.2% on year-on-yearbasis. The domestic BPM market is expected to have grown at 7.7% in rupee terms to reachRs. 286 billion in FY 2019.
As per IT and Business Process Association of the Philippines (IBPAP) revenues for thePhilippines BPM industry are estimated to have grown by around 6% in 2018 to touch $24.8billion and directly employing around 1.23 million people.
Detailed information pertaining/relating to Business Review has been provided in the'Management Discussion and Analysis' section which forms part of this Report as AnnexureE'.
HGS International Mauritius a wholly-owned subsidiary of your Company isprimarily engaged in investment activity. HGS International owns 100% of the share capitalof Hinduja Global Solutions Inc. USA C-Cubed N.V. Curacao Hinduja Global SolutionsEurope Ltd. UK HGS St. Lucia Ltd. Saint Lucia and Hinduja Global Solutions MENA FZ-LLC Dubai. HGS International jointly with HGS UK Limited owns 100% of the share capitalof HGS AxisPoint Health LLC.
HGS International owns 95.2% of the common shares of HGS Colibrium Inc. with one ofits founders owns balance share capital. HGS International holds 76% of share capital ofHinduja Global Solutions UK Ltd while the balance 24% is held by Hinduja Global SolutionsEurope Ltd. UK.
Revenue for FY 2019 was US$ 1.6 million as compared to US$ 4.5 million for FY 2018.
Hinduja Global Solutions Inc. USA (HGS Inc.) HGS Inc. a wholly-owned subsidiaryof HGS International Mauritius specializes in marketing and provision of both voice andnon-voice related Customer Contact and Business Process Outsourcing services to itsclientele. Its wholly-owned subsidiaries are HGS (USA) LLC HGS Canada Inc. HGS EBOS LLCand HGS Healthcare LLC.
The Consolidated Revenue was US$ 506.7 million for FY 2019 as compared to US$ 431.8million in FY 2018.
HGS (USA) LLC a wholly-owned subsidiary of HGS Inc. USA operates in threecities in the US. It partners with Fortune 1000 companies and Government agencies toprovide comprehensive Customer Relationship Management programs in the verticals ofconsumer goods and services e-commerce telecom and media. HGS (USA) LLC also subcontracts work to HGS India and its branch in the Philippines and to Jamaica. For FY 2019it recorded revenue of US$ 104.7 million as against revenue of US$ 86.7 million in FY2018.
HGS Healthcare LLC is a wholly-owned subsidiary of HGS (USA) LLC and rendersbusiness process management services to healthcare clients primarily in the PayerSegment. HGS Healthcare renders services from three cities in the US as well as subcontracts work to HGS India and its branch in Philippines and to Jamaica. For FY 2019 itrecorded revenue of US$ 272.6 million as compared to US$ 251.9 million in FY 2018.
HGS EBOS LLC is a wholly-owned subsidiary of HGS Inc. and renders businessprocess management services to healthcare clients primarily in the Provider Segment. HGSEBOS renders services in USA as well as sub contracts work to HGS India and its branch inPhilippines. For FY 2019 it recorded revenue of US$ 48.4 million as compared to USD 32.5million in FY 2018.
HGS Canada Inc. a wholly-owned subsidiary of HGS Inc. USA is a Canadian ContactCenter service provider servicing marquee customers across verticals such as MediaTelecom Technology and Banking & Financial Services. HGS Canada offers technicalsupport inbound and outbound sales customer care and customer retention in English andFrench languages. For FY 2019 it recorded revenue of CAD 105.8 million as compared torevenue of CAD 77.2 million in FY 2018.
Hinduja Global Solutions Europe Ltd. is the UK-based wholly owned subsidiary ofHGS International Mauritius focusing on providing consulting services for BPM callcenter services and offshoring services to UK-based clients. It owns 24% stake in HindujaGlobal Solutions UK Ltd (and 100% stake in HGS France SARL France (a non-operatingcompany).
For FY 2019 it recorded revenue of GBP 2.5 million as compared to GBP 1.6 million inFY 2018.
Hinduja Global Solutions UK Ltd. is a leading contact center company with centersin London Preston and Selkirk (Scotland). It offers a range of services for inbound andoutbound interactions to marquee customers across verticals such as Government FMCGFinancial Services Automobiles and Retail. Its inoperative branch in Rotterdam(Netherlands) was wound up in FY 2018 while the other inoperative branch in Hamburg(Germany) is in the process of being wound up.
For FY 2019 it recorded revenue of GBP 32.9 million as compared to GBP 33.1 million inFY 2018.
HGS St. Lucia Ltd. Saint Lucia is the holding company of Team HGS Ltd. Jamaica.
Team HGS Ltd. Jamaica began call center operations in FY 2013 at KingstonJamaica and continues to show strong performance. It services local Jamaican clients aswell as US clients from healthcare and other verticals. Revenue for FY 2019 was JamaicanDollars 3877.6 million compared to Jamaican Dollars 3585.7 million in FY 2018.
Hinduja Global Solutions MENA FZ-LLC: It has an office in Dubai Internet City withthe objective to build sales pipeline and provide technology based support services toother HGS entities. In FY 2019 it recorded revenues of AED 1.4 million as compared to AED2.0 million in FY 2018.
HGS Colibrium Inc. USA: It offers platform-based services to help health insurancecompanies enroll customers. Revenue for FY 2019 was US$ 3.8 million as compared to USD 4.9million for FY 2018.
HGS AxisPoint Health LLC: The share capital of this company is held as follows: HGSInternational Mauritius holds 51% and Hinduja Global Solutions UK Ltd. holds the balance49%.
Effective April 02 2018 HGS International and Hinduja Global Solutions UK Ltd.jointly acquired 100% of CMH Services Subsidiary LLC USA. Further in July 2018 HGSPopulation Health LLCUSA the holding company merged into CMH Services Subsidiary LLCUSA. Thereafter the name of CMH Services Subsidiary LLC USA was changed to HGS AxisPointHealth LLC.
In December 2018 HGS AxisPoint Health LLC had sold some customer contracts andtransferred employees related to its GuidePoint division for a consideration of USD 5.30million which was duly received.
HGS AxisPoint Health LLC through its CarePoint division is engaged in providing caremanagement services and case management programs that provide quantified results forpayers and their members with predictive intelligence laser-focused targeting pulsedinterventions and a digital health experience.
For FY 2019 it recorded revenue of US$ 30.8 million.
Element Solutions LLC: Effective April 032018 Hinduja Global Solutions UK Ltd;acquired 57% stake in Element Solutions LLC and the balance 43% is held by its Founders.
The Company is engaged in providing digital marketing services digital consultingservices as well as cloud migration and cloud monitoring services.
For FY 2019 it recorded revenue of US$ 15.5 million.
Particulars of Loans Guarantees and Investments
Particulars of Loans Guarantees and Investments as per Section 186 of the CompaniesAct 2013 have been disclosed in this Annual Report as a part of the Notes to thefinancial statements.
Increase in Authorized Share Capital
The members of the Company had approved resolutions relating to the consolidation/increase in Authorized share capital of your Company from Rs. 250000000/- (RupeesTwenty Five Crores) divided into 25000000 (Two Crores Fifty Lakhs) Equity Shares of Rs.10/- (Rupees Ten) each to Rs. 276500000 (Rupees Twenty-Seven Crores Sixty Five Lakhs)divided into 27500000 (Two Crores Seventy Five Lakhs) Equity shares of Rs. 10/- (RupeesTen) each and 150000 (One Lakh Fifty Thousand) 1% Participatory RedeemableNon-Cumulative Preference Shares of Rs. 10/- (Rupees Ten) each and consequent alterationto Clause V of the Memorandum of Association of the Company on June 07 2018 provided inthe Postal Ballot Notice dated April 25 2018.
Such consolidation/increase in Authorized Share Capital and consequent alteration toClause V of the Memorandum of Association of the Company were subject to the sanction ofthe Scheme of Amalgamation of HGS International Services Private Limited (TransferorCompany) a wholly owned subsidiary of the Company with the Company ('the Scheme') by theHon'ble National Company Law Tribunal Mumbai Bench ('NCLT') and the effective date ofsuch consolidation/increase in Authorized Share Capital and consequent alteration toClause V of the Memorandum of Association of the Company was to be the date on whichcertified copy of the Order of the NCLT sanctioning the Scheme was filed by the TransferorCompany and the Company with the Registrar of Companies Maharashtra. The NCLT hadsanctioned the Scheme on June 20 2018 and both the Transferor and the Company had filedthe certified copy of the Order with the Registrar of Companies Maharashtra on August012018 i.e. within thirty days of receipt of the Order as required by the statutoryprovisions.
Effective August 01 2018 HGS International Services Private Limited stands dissolvedwithout winding up and its Authorized share capital stands consolidated with theAuthorized Share Capital of the Company resulting into increase in Authorized Sharecapital of the Company.
Communications and Public Relations
HGS is evolving its positioning in the market place to emphasize the unique ways theCompany creates value for its clients by putting the customer first being brilliant atthe basics leveraging its deep domain expertise and intelligently innovating to supportits clients' business process optimization and digital transformation. The focusedapproach to buyer education and messaging that leverages our go-to-market positioning isresonating among key stakeholders including through media such as Forbes.com HealthcareCall Center Times and Becker's Hospital Review.
In an independent report by Apollo Research (February 2019) measuring market share ofvoice in select media among the top 22 BPO competitors HGS ranked in the top 5 acrossNorth America and the UK on key topics relevant to its industry.
In India HGS continues to leverage media as a key channel to enhance visibility andthought leadership amongst key stakeholders including investors clients employees andgovernment. HGS is amongst the leading voices in the BPM industry working on driving thetransformation message. HGS is also using news media and social media to reach out toprospective employees and establish itself as an "Employer of Choice". Theannual Investor Meet is another key channel that is helping increase awareness andengagement with investors and communicate HGS' perspectives to the market.
HGS has redesigned its website to make it more accessible and engaging for all sitevisitors. Our design team focused on making the web experience more fluid device agnosticand more intuitive to the buyer journey-with quick access to key thought leadership casestudies and service line content. HGS also incorporated new messaging and robust contentthat offers transformative solution alternatives for customers and prospects in all keybusiness sectors.
In FY 2019 HGS has been recognized by industry analysts and third-party organizations.HGS won a record 25 awards and recognition across the globe including: named Leader in theGlobal Outsourcing 100 by the International Association of Outsourcing Professionals(IAOP) for the 9th consecutive year Training Magazine's 2019 Top 125 TrainingOrganizations NASSCOM Customer Services Excellence Award in transformation category andInstitute of Human Resources Development (IHRD) Great HR Practices Award. HGS hasleveraged these distinctions as credentials to reach industry influencers analystsadvisers potential customers current customers potential and current employees.
HGS continues to work towards creating an inclusive and transparent culture at theworkplace. Different platforms-e-mailers newsletters blogs and articles are leveraged toshare views and news with our employees around the world. The Company intranet-HGSConnect is an integrated two-way communication platform which serves as a one-stopsolution across the globe. This internal portal also serves as a time-out for employeesoffering various business and fun elements to enable them to be empowered with businessknowledge and interact with each other on a common platform. Additionally various otherdigital and non-digital channels are being used to engage HGS employees globally.
Corporate Social Responsibility (CSR)
As a socially responsible corporate entity the CSR initiatives of your Companycontinues to aim at the overall development of the Society with major thrust onupliftment of the economically and socially weaker communities of the society. Towardsachieving such objective CSR initiatives/ activities undertaken by your Companyessentially focus on following core areas: Healthcare Education and CommunityDevelopment. CSR projects for honing the vocational skills of the youth and of thedifferently abled are also undertaken with the objective of enhancing their employmentopportunities and livelihood.
Your company would continue to carry out CSR activities in the aforementioned areas andwill undertake CSR activities as specified in Schedule VII to the Companies Act 2013including any amendment to the said Schedule.
During the year your Company had won two CSR awards i.e. CSR Project of the Year awardfor 'Treat to Cure MDR-TB Eradication Program' and Stakeholders EngagementAward-"Voluntary initiatives across the cities".
The Corporate Social Responsibility Committee ("CSR Committee") of theCompany as at March 31 2019consisted of following Members:
Mr. Anil Harish (Independent Director)-Chairman Mr. Ramkrishan P.Hinduja (Non-Executive Non-Independent Director) Member Ms. Vinoo S. Hinduja(Non-Executive Non-Independent Director) Member *Mr. Rajendra P. Chitale(Independent Director) Member and *Mr. Rangan Mohan (Independent Director)Member.
*Mr. Rajendra P. Chitale and Mr. Rangan Mohan Independent Directors ceased to bemembers of the Committee effective July 03 2019 since they ceased to be IndependentDirectors of the Company on the expiry of their tenure from the said date.
Effective May 30 2019 Mr. Pradeep Mukerjee an Independent Director was appointed asa member of the Committee.
During the Financial Year 2018-19 one meeting of CSR Committee was held on January 102019.
In terms of the CSR Policy of the Company the CSR Forum consisting of senioremployees of the Company identify and evaluate CSR projects/ initiatives and recommendthe same for the consideration of the CSR Committee. The CSR Committee reviews therecommended projects/ initiatives and the expenditure to be incurred as per the provisionsof the Companies Act 2013 and the Rules made thereunder. The CSR Committee post reviewrecommends CSR projects/ initiatives to the Board of Directors for approval. The Boardreviews and approves the CSR Projects/ initiatives recommended by the CSR Committee. TheCSR Forum monitors the progress of the approved CSR Projects/initiatives and providesperiodical updates on status of implementation expenditure incurred/ to be incurred andbeneficiaries of such projects to the CSR Committee and to the Board.
The Report on CSR activities in the format as required under Companies (CorporateSocial Responsibility) Rules 2014 is set out in Annexure G' forming part ofthis Report. The CSR Policy of the Company is available on the website of the Company at www.teamhgs.com/investors/corporate-policies.
Directors' Responsibility Statement
The financial statements are prepared in accordance with the Indian AccountingStandards (Ind AS) to the extent applicable as prescribed under Section 133 of theCompanies Act 2013 read with Companies (Indian Accounting Standards) Rules 2015 andCompanies (Indian Accounting Standards) Rules 2016 as amended thereof.
As stipulated under the provisions contained in Section 134(3)(c) read with Section134(5) of the Companies Act 2013 the Directors based upon the information andexplanations obtained by them as also documents made available to them and to the best oftheir knowledge and belief states that:
a) in preparation of the Annual Accounts for the financial year ended March 312019the applicable accounting standards have been followed and there have been no materialdepartures in the adoption and application thereof;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the Profitand Loss of the Company for that period;
c) they have taken proper and sufficient care towards the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) they have prepared the Annual Accounts on a going concern basis;
e) they have laid down adequate internal financial controls to be followed by theCompany and that they are adequate and operating effectively;
f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and are operating effectively.
The Company has in place internal financial controls framework which inter alia consistof Function wise Status of Testing (Risk and Control Matrix Test of Design Test ofOperating Effectiveness) Summary of Controls (Key and Non-Key) Process level controls(Process/ Function wise) IT General controls (Application wise and Process wise) andSummary of Gaps in Process Level Controls IT General Controls etc. Total number ofcontrols in FY 2018-19 has decreased due to consolidation of similar manual controlsfalling part of the same activity.
Total number of automated controls have increased due to elimination of manual controlsand putting automated controls in place. Such framework is periodically internally testedas well as reviewed and tested by the external consultant. Based upon the said frameworkand the compliance systems established and maintained by the Company work performed bythe statutory internal and secretarial auditors including audit of internal financialcontrols over financial reporting the reviews carried on by the Management confirmationsprovided by the external consultants and update on such 'Framework' presented to the AuditCommittee and to the Board the Board is of the opinion that the Company's internalfinancial controls were adequate and effective during FY 2018-19.
Number of Meetings of the Board
Eight meetings of the Board were held during the financial year 2018-19 on thefollowing dates i.e. April 25 2018 May 30 2018 August 09 2018 August 16 2018August 24 2018 November 02 2018 February 07 2019 and March 29 2019. The time gapbetween any two meetings did not exceed one hundred and twenty days. The further detailsin this regard are given in the Corporate Governance Report which forms part of thisReport as
Declaration by Independent Directors
As required under Section 149(7) of the Companies Act 2013 ('the Act') all theIndependent Directors on the Board have given declaration of their independence confirmingthat they meet the criteria of independence laid down in Section 149(6) of the Act andRegulations 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ('Regulations'). In the opinion of the Board they fulfill theconditions of independence as specified in the Act and the Regulations and are independentof management.
Pursuant to Section 134 178 of the Companies Act 2013 and Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 during the year underreview the performance evaluation for Financial Year 2018-19 of individual directors(Independent Directors and Non-Independent Directors) Committees of the Board and of theBoard as a whole based upon the 'Rating Document' which consists of criteria forevaluation of performance was carried out by the Board of Directors ('the Board'). TheNomination and Remuneration Committee ('the NRC') and the Board have earlier approved the'Rating Document'. The NRC has confirmed that the manner of carrying out performanceevaluation on the basis of 'Rating Document' is appropriate and is an effective process ofevaluation.
The performance of the Individual Directors was inter alia evaluated on criteria suchas: Exercise of independent judgment offering constructive contribution to the Board'sdiscussions and deliberations based on his/ her expertise and domain knowledgeNon-partisan appraisal of issues etc. Evaluation of the performance of the Committees ofthe Board and the Board as a whole was inter alia based on the following criteria:structure of the Committees/Board frequency regularity and discussions at the meetingsof the Committees/Board functioning of the Committees/Board mandate and composition ofthe Committees/Board effectiveness of the Committees contribution of the Committees tothe decisions of the Board etc.
The Board based upon "evaluation process" carried out concluded that overallperformance of each of the Directors is "aleast satisfactory" and on certaincriteria "exceptional". The Board also concluded that the performance of theCommittees of the Board and the Board as a whole is "Satisfactory".
At the separate meeting of Independent Directors held during the Financial Year endedMarch 312019 (without the attendance of Non-Independent Directors and the Members of theManagement) performance evaluation of Non-Independent Directors the Chairman of theCompany and the Board as a whole was carried out for the Financial Year 2018-19 on thebasis of aforementioned criteria. The Independent Directors also assessed the qualityquantity and timeliness of the flow of information between the Company's Management andthe Board.
The Independent Directors concluded that there has been a constructive contributionfrom each of the Non-Independent Directors and overall their performance is 'satisfactory'and in the best interest of the Company. As regards the evaluation of performance of theChairman of the Board based upon the 'criteria' considered by the Independent Directorsthey concluded that the performance of the Chairman of the Board is 'outstanding' and thathe steers the Company to perform better in the challenging business and economicenvironment. They also concluded that the Board as a collective body is proactive andparticipating Board and its functioning is towards the wellbeing and in the best interestof the Company and aims at enhancing the performance of the Company and that theperformance of the Board is more than satisfactory. Relevant information is provided bythe management on timely basis as also periodical presentations are made which has enabledin depth discussions on key matters at the meetings of the Committees and the Board. Theyconcluded that the flow of information between the Company's Management and the Board interms of quality quantity and timeliness is satisfactory.
At the Nineteenth Annual General Meeting of the Members of the Company held on July 032014 Mr. Rajendra Prabhakar Chitale (DIN: 00015986) and Mr. Rangan Mohan (DIN: 01116821)were appointed as Independent Directors of the Company for a period of five consecutiveyears from July 03 2014 to July 02 2019 (both days inclusive). Mr. Rajendra P. Chitaleand Mr. Rangan Mohan have not sought reappointment for a second term of consecutive fiveyears from July 03 2019 as such their tenure as Independent Directors of the Companyexpired effective July 03 2019.
The Board placed on record its sincere appreciation for the contribution guidance andadvice provided by Mr. Rajendra P Chitale and Mr. Rangan Mohan during their tenure asIndependent Directors which has immensely benefitted the Board and the Company.
In terms of the provisions of the Companies Act 2013 and the Articles of Associationof the Company Ms. Shanu S. P. Hinduja Director and Co-Chairperson (DIN:06512872) isliable to retire by rotation at the ensuing Twenty Fourth Annual General Meeting and beingeligible offers herself for re-appointment.
None of the Directors of the Company are disqualified for appointment/continue to actas Director under Section 164 of the Companies Act 2013.
Details relating to the composition of the Board meetings of the Board held during theyear ended March 312019 attendance of the Directors thereat have been provided in theReport on Corporate Governance which forms part of this Report as Annexure C'.
Appointment of Independent Directors
The Company is required to appoint two Independent Directors to comply with SEBI (LODR)Regulations 2015 and the Company has initiated the process of identification of potentialcandidates. Based on the recommendation of Nomination and Remuneration Committtee thecriteria for selection would include; veracity of the independence fulfillment ofcriteria for appointment as per the provisions of the Companies Act 2013 and SEBI (LODR)Regulations 2015 industry expertise functional specialization international experienceetc.
The Nomination and Remuneration Committee and the Board at the meetings held on August5 2019 and August 23 2019 have been updated on the process and progress relating toappointment of Independent Directors.
Audit Committee constituted by the Board pursuant to the provisions of Section 177 ofthe Companies Act 2013 and Regulation 18 of SEBI (LODR) Regulations 2015 is in place. Asat March 312019 the Committee consisted of following Members:
Mr. Anil Harish
Mr. Ramkrishan P Hinduja
(Non-Executive Non-Independent Director) Member
*Mr. Rajendra P Chitale (Independent Director) Member and
*Mr. Rangan Mohan (Independent Director) Member
*Mr. Rajendra P. Chitale and Mr. Rangan Mohan Independent Directors ceased to bemembers of the Committee effective July 03 2019 since they ceased to be IndependentDirectors of the Company on the expiry of their tenure from the said date.
Effective May 30 2019 Mr. Pradeep Mukerjee an Independent Director was appointed asa member of the Committee.
Recommendations made by the Audit Committee during the year under review have beenaccepted by the Board.
Further details pertaining to the Audit Committee are included in the CorporateGovernance Report which forms part of this Report as Annexure C'.
Key Managerial Personnel
In terms of Section 203 of the Companies Act 2013 the Company has following KeyManagerial Personnel: Mr. Partha DeSarkar Manager (designated as 'Chief ExecutiveOfficer'); Mr. Srinivas Palakodeti Chief Financial Officer and Mr. Makarand D. DewalCompany Secretary.
There was no change in the Key Managerial Personnel during the Financial Year 2018-19.
Manager and Chief Executive Officer's confirmation towards Code of Conduct
The Manager and Chief Executive Officer's confirmation to the effect that all membersof the Board and Senior Management Personnel have affirmed compliance with the Code ofConduct for the year ended March 312019 forms part of this Report as AnnexureA'.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134(3)(m) of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 relating to Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo forms part of this Report as AnnexureB'.
Report on Corporate Governance
As required under Schedule V of the SEBI (LODR) Regulations 2015 a detailed report onCorporate Governance forms part of this Report as Annexure C'.
The Statutory Auditors of the Company have examined the compliance of conditions ofCorporate Governance as stipulated in Schedule V (C) of the SEBI (LODR) Regulations 2015and have certified compliance thereof. Their certificate is attached as AnnexureD' to this Report.
Report on Management Discussion and Analysis
In terms of the Provisions of Regulation 34 of the SEBI (LODR) Regulations 2015 aseparate report on
Management Discussion and Analysis is annexed to this Report as Annexure E'.
Two ESOP Schemes viz. 'Hinduja Global Solutions Limited Employees Stock Options Plan2008' and 'Hinduja Global Solutions Limited Employees Stock Options Plan 2011' have beenin operation during the Financial Year 2018-19. These ESOP Schemes are in compliance withthe provisions of SEBI (Share Based Employee Benefits) Regulations 2014. The particularsof aforesaid ESOP Schemes are available on the Company's 4 website www.teamhgs.com/investors/other-reports.
No changes have been made to the aforesaid ESOP Schemes during the Financial Year2018-19.
Extract of Annual Return
Pursuant to Section 134(3)(a) of the Companies Act 2013 an Extract of Annual Returnas on Financial Year ended March 31 2019 in the prescribed format is available on theCompany's website www.teamhgs.com/ investors/other-reports and forms part of thisReport as Annexure F'.
Related Party Transactions
All contracts /arrangements /transactions entered into with the related parties duringthe Financial Year 2018-19 are in the ordinary course of business and at arm's lengthbasis and therefore outside the purview of Section 188(1) of the Companies Act 2013 andsame are disclosed in the financial statements of the Company. Policy on Related PartyTransactions as recommended by the Audit Committee and adopted by the Board is availableon the Company's website at www. teamhgs.com/investors/corporate-policies.Information on related party transactions pursuant to Section 134(3) (h) of the CompaniesAct 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 is given in FormAOC-2 and the same forms part of this Report as Annexure H'.
Material changes and commitments affecting the financial position of the Companybetween the end of the financial year and date of the Report
There were no material changes and commitments affecting the financial position of theCompany between the end of the Financial Year and date of the Report.
Policy on Directors' Appointment and Remuneration
Policy on Directors' Appointment and Remuneration and on other matters provided inSection 178(3) of the Companies Act 2013 have been disclosed in the Corporate GovernanceReport which forms part of this Report as Annexure C' and available on theCompany's website at www.teamhgs.com/investors/corporate- policies.
Whistle Blower Policy and Vigil Mechanism
The Company has a Whistle Blower Policy and Vigil Mechanism in place and is availableon the website of the Company at www.teamhgs.com/investors/corporate- policies. Thedetails of this Policy are disclosed in the Corporate Governance Report which forms partof this Report as Annexure C'.
As reported last year one complaint was received during the year which wasinvestigated and post investigation requisite action was taken. Apart from that nocomplaint was received during the year under the Policy.
Internal Complaints Committee
Pursuant to the provisions of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has in place an Internal ComplaintsCommittee (ICC) as also Policy on appropriate social conduct at workplace. The Policy isapplicable to all employees of the Company at all locations. Employees for the purpose ofthis policy shall include all persons engaged in the business and operations of theCompany and shall include permanent temporary and part-time employees. In addition thisPolicy shall also be applicable to all third parties such as visitors clients customerscontractors service providers and any other person authorized to be present within thepremises/ workplace of the Company. Reference to the Company's workplace includesCompany's premises as well as the premises of other third parties vendors and associatesof the company where the employees of the Company are required to perform work or that arevisited by the employees of the Company arising out of or during the course of employment;
The Reports of the ICC are periodically placed before the Board of Directors for reviewand suggestions as an ongoing process initiatives are taken by the Management to make thework place safer for the employees. The status of complaints received disposed of by theICC and pending as at March 31 2019 is as under:
a. Number of complaints received : 25
b. Number of complaints disposed of : 22
c. Number of complaints pending as at March 312019 :
3 Risk Management Policy
Your Company has formulated Risk Management Policy & Procedures which inter aliaidentifies risks taking into consideration the business and operations of the Company andadoption of mitigation measures. The Policy & Procedures identify elements of riskswhich in the opinion of the Board may threaten the existence of the Company. The detailsof the Policy & Procedures are given in the Management Discussion and Analysis Report(MDA) annexed to this Report as Annexure E'.
The Risk Management Committee consisting of the Chief Executive Officer ChiefFinancial Officer and Executive Vice President-Legal Compliance and Risk Managementperiodically review the Enterprise Risk Management framework as well as the risks thatmatter and update on the same is provided to the Audit Committee and the Board. Thesuggestions of the Audit Committee and the Board are implemented wherever feasible. TheRisk Management Committee met three times during the year to review and update theCompany's Enterprise Risk Management Framework. As per the extant SEBI ListingRegulations the Company is not required to constitute a Risk Management Committeeconsisting of Directors.
Fixed Deposits from Public
Your Company has not accepted any fixed deposits from the public during the year underreview and as such no amount on account of principal or interest on fixed deposits wasoutstanding as on the Balance Sheet date.
At the Twenty Second Annual General Meeting (AGM) of the Company held on September 282017 M/s Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No.117366W/W-100018) were appointed as the Statutory Auditors of the Company for a period offive consecutive years i.e. from the conclusion of the Twenty Second AGM up to theconclusion of the Twenty Seventh AGM.
Pursuant to the Companies (Amendment) Act 2017 notified on May 7 2018 ratificationof appointment of Auditors at every subsequent AGM after their appointment is notrequired. However the Company has taken on record confirmation from the said StatutoryAuditors confirming that they are eligible to continue to act as Statutory Auditors ofyour Company.
The Auditors' Report contains 'Unmodified Opinion' on the financial statements(standalone and consolidated) for the year ended March 31 2019 of the Company and thereare no qualifications in their Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors had appointed Ms. Rupal D. Jhaveri Practicing Company Secretary [FCS No. 5441and Certificate of Practice No.4225] as the Secretarial Auditor to carry out theSecretarial Audit for the Financial Year 2018-19.
The Secretarial Audit Report in the prescribed format for the Financial Year 2018-19forms part of this Report as Annexure I'. The Report does not contain anyqualifications reservations or adverse remarks.
Maintenance of Cost Records and Appointment of Cost Auditor
The Company is not required to maintain cost records pursuant to Section 148 of theCompanies Act 2013 and thus not required to appoint a Cost Auditor.
Disclosures as required under section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014and amendments thereto are given in Annexure J' to this Report.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names and other particulars of theemployees drawing remuneration in excess of the limits set out in the said Rules areprovided in the Annual Report.
Having regard to the first proviso to Section 136(1) of the Companies Act 2013 theAnnual Report excluding the aforesaid information is being sent to the members of theCompany. The said information is available for inspection at the Registered Office of theCompany during working hours (i.e. 10:00 am to 6:00 pm) and any member interested inobtaining such information may write to the Company Secretary and the same will befurnished without any fee and free of cost.
In accordance with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 details of foreign employees excluding directors and theirrelatives have not been included in the Annual Report. Members interested in obtainingthe said information may write to the Company Secretary at the Registered Office of theCompany and the requested information shall be furnished to such member without any feeand free of cost.
Significant and Material Orders
There are no significant and material orders passed by the Regulators or Courts orTribunals that would impact the going concern status and your Company's operations in thefuture.
Internal Financial Controls and its adequacy
The Board has adopted policies and procedures for ensuing the orderly and efficientconduct of its business including Internal Financial Controls (including InternalFinancial Controls over Financial Reporting) and their adequacy are included under theheading 'Internal Controls' in the Management Discussion and Analysis section which formspart of this Report as Annexure E'.
Your Directors express their grateful appreciation for the co-operation and supportreceived from the customers vendors business associates investors financialinstitutions bankers the Government of India State Governments Governments of variouscountries in which your company operates regulatory authorities and the society at large.Your Directors place on record their sincere appreciation for the dedicated effortscommitments and contribution of employees at all levels of the Company which has enabledthe Company to achieve consistent growth in challenging business environment.
For and on behalf of the Board of Directors
| ||Ramkrishan P. Hinduja |
|Place : Mumbai ||Chairman |
|Date : August 23 2019 ||(DIN: 00278711) |