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 2020.
(R in million* except per share data)
| || |
| ||FY 2020 ||FY 2019 ||FY 2020 ||FY 2019 |
|Income || || || || |
|Revenue from Operations ||23814 ||21964 ||52257 ||47855 |
|Other Operating Income ||97 ||- ||97 ||312 |
|Other Income ||1159 ||427 ||869 ||445 |
|Total Income ||25070 ||22391 ||53223 ||48612 |
|Expenses || || || || |
|Operating Expenses ||18849 ||18337 ||45189 ||43756 |
|Finance cost ||667 ||116 ||1031 ||406 |
|Depreciation and amortisation expense ||2154 ||972 ||3300 ||1968 |
|Total expenses ||21670 ||19425 ||49520 ||46130 |
|Profit before exceptional items and tax ||3400 ||2966 ||3703 ||2482 |
|Exceptional items ||- ||- ||211 ||- |
|Profit Before Tax and after exceptional items ||3400 ||2966 ||3492 ||2482 |
|Income Tax expense ||882 ||661 ||1436 ||718 |
|Profit for the period ||2518 ||2305 ||2056 ||1764 |
|Less: Non-controlling interest ||- ||- ||(37) ||8 |
|Add: Balance brought forward from Previous Year ||10448 ||8394 ||8223 ||7114 |
|Add/(Less): Adjustments and appropriation || || || || |
|Adjustments during the year ||(586) ||- ||(651) ||(412) |
|Dividends ||(469) ||(208) ||(469) ||(208) |
|Dividend Distribution Tax ||(96) ||(43) ||(96) ||(43) |
|Balance Carried Forward ||11815 ||10448 ||9026 ||8223 |
|Earning per equity share [nominal value per share Rs.10/- each] || || || || |
|(a) Basic (for the period - not annualised) ||120.72 ||110.68 ||96.85 ||85.08 |
|(b) Diluted (for the period - not annualised) ||120.66 ||110.52 ||96.79 ||84.96 |
*(1 million = R 10 lakhs)
The Standalone and Consolidated Financial Statements for the year ended March 31 2020have 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:
On November 28 2019 your Company entered into a definitive agreement for saleof its India Domestic Customer Relationship Management (CRM) Business with AltruistTechnologies Private Limited. The transaction has been concluded on January 31 2020.
Your Company adopted the Indian Accounting Standard 116 on Leases (Ind AS 116)notified by the Ministry of Corporate Affairs with the date of initial application beingApril 1 2019. Ind AS 116 replacing the earlier lease standard Indian Accounting Standard17 on Leases (Ind AS 17) and related interpretation and guidance.
Your Company has applied Ind AS 116 using the modified retrospective approachunder which the cumulative effect of initial application is recognized in retainedearnings at April 12019. As a result the comparative information has not been restated.
On a Consolidated basis your Company registered a strong performance during thefinancial year ended March 312020. Compared to the previous financial year revenues fromOperations and Other Operating Income increased by 8.7% from R 48167 million to R 52354million. Of the growth over FY 2019 1.9% is on account of exchange variations. While theorganic growth was 9.5% the reported growth is lower on account of the sale of the IndiaDomestic business in January 2020 and the sale of the contracts relating to the GuidePointbusiness in December 2018. The Company saw strong growth in revenues across all verticalsespecially healthcare and telecom & technology.
EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) excluding OtherIncome grew 62.4% from R 4411 million to R 7165 million. This growth in EBITDA waspartly due to adoption of Ind AS 116 of R 1788 million improvement in performance ofhealthcare business improvement of the business in Canada and improvement in theperformance of the India Domestic CRM business during the period April 2019 to January2020.
Other Income during FY 2020 rose by 95.3% from R 445 million to R 869 million. Thisincrease is on account of foreign exchange variations increase in interest on treasurysurplus and income from sale of SEIS scrips.
PAT (Profit after Tax) for FY 2020 increased from R 1764 million to R 2056 millionan increase of 16.6%. This increase is despite a rise in depreciation and interest onadoption of Ind AS 116. The increase in depreciation is also due to accelerateddepreciation of assets of some of the delivery sites/ centres which were closed due toadverse business conditions. Exceptional items of R 211 million are due to impairment ofgoodwill and intangibles (customer relationships) of HGS Axis Point Health LLC.
Standalone financials comprise the financials of the Company in India and its branch inPhilippines. On a Standalone basis revenues from Operations in FY 2020 grew by 8.9% fromR 21964 million to R 23911 million. This revenue growth has to be seen in the context ofthe sale of India Domestic CRM business in January 2020.
Increase in 'Other Income' was on account of foreign exchange variations increase ininterest on treasury surplus and loans given and income from sale of SEIS scrips.
EBITDA for FY 2020 increased by 39.6% from R 3627 million to R 5062 million. Thisincrease is partly on account of adoption of Ind AS 116 (Rs 1402 million) and improvedperformance of India and Philippines.
PAT in FY 2020 grew by 9.2% from R 2305 million to R 2517 million despite increasein depreciation and interest due to adoption of Ind AS 116.
A review of the Financial and Operating Performance of your 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: R 8886 million inFY 2020 as compared to R 1705 million in FY 2019 an increase of 421.3%;
CAPEX: R 1176 million in FY 2020 as compared to R 1940 million in FY 2019;
Gross Debt (exclusive of finance lease liability) of R 6042 million as at March312020 as compared to R 5911 million as at March 312019 i.e. an increase of R 131million during the year;
Net Worth: R 17318 million as at March 312020 as compared to R 16512 millionas at March 31 2019 an increase of 4.9%.
Revenue by Origination Geography - US 70.8%. Canada 11.0%; UK & Europe:6.1% India: 9.3% and others 2.8%.
Revenue by Verticals - Healthcare: 53.5%; Telecom and Technology: 15.7%;Consumer: 10.6%; Banking and Financial Services: 8.8% and Others: 11.4%.
Client Wins: 59 new clients overall
Active Clients: 221 core BPM clients and 686 Payroll processing HRO and F&Aclients
Delivery Centres: 61 global delivery centres across seven countries at the endof the FY 2020
Employee Headcount: 37460 as on March 312020; of which India: 48.3%Philippines: 25.0% USA: 9.6% Canada: 7.4% Jamaica: 6.9% and UK: 2.9%.
Sale of India Domestic Business
On November 28 2019 your Company entered into a definitive agreement for sale of itsIndia domestic Customer Relationship Management ("CRM") business with AltruistTechnologies Private Limited. The business which was operated as a division of yourCompany has been sold under a slump sale for a consideration of INR 400 million. YourCompany has completed this sale transaction on January 31 2020.
The sale of the India Domestic CRM Business resulted in reduction of 9 deliverycentres around 7000 employees and 32 clients.
Three Interim Dividends aggregating to R 20/- per equity share of R 10/- each for thefinancial year 2019-20 were declared by the Board of Directors on August 5 2019
November 112019 and February 7 2020 and have been duly paid. The Board of Directorsdid not recommend a final dividend. Thus the total dividend for the financial year endedMarch 31 2020 remains R 20/- per equity share (200% on face value of R 10/- each).
Today's business environment and landscape are being transformed by many technologicalchanges and consumer behavior trends. The cumulative effects of these changes are creatinga systemic impact on the market place giving consumers more choices and options.Businesses are constantly looking to identify the right emerging trends and the attendantsolutions so that they can differentiate from the competition.
To compete better in the market place many firms are adopting and positioning theirbusinesses based on their own customer experiences and feedback. They are changing theway their business functions and leaning towards value-driven and technology-ledoutsourcing model and are looking towards the Business Process Management (BPM) servicesfirms to help them generate value. From a vendor perspective BPM companies are investingin technology-led solutions to offer new service offerings business models and alternatedelivery channels.
The global BPM spending between 2017-2022 will see a CAGR of 5.1% to reach $206.7billion in 2022 according to Gartner. Traditional BPO services led by voice will continueto dominate; however BPaaS is growing significantly and will likely account for 30% ofthe spend in 2022. The Indian BPM industry continues to show steady growth and isestimated to have grown by 8.2% to reach US$38 billion in revenue in FY2020 accountingfor ~38% of global BPM sourcing.
Detailed information pertaining/relating to Business Review has been provided in the'Management Discussion and Analysis' section which forms part of this Report as AnnexureE'.
HGS International Mauritius a wholly-owned subsidiary of your Company is primarilyengaged in investment activity. HGS International owns 100% of the share capital ofHinduja Global Solutions Inc. USA C-Cubed N.V. Curacao Hinduja Global Solutions EuropeLtd. UK HGS St. Lucia Ltd. Saint Lucia and Hinduja Global Solutions MENA FZ- LLCDubai. HGS International jointly with Hinduja Global Solutions UK Limited owns 100% ofthe share capital of HGS AxisPoint Health LLC.
HGS International holds 76% of share capital of Hinduja Global Solutions UK Ltd whilethe balance 24% is held by Hinduja Global Solutions Europe Ltd. UK.
Revenue for FY 2020 was US$ 1.4 million as compared to US$ 1.6 million for FY 2019.
Hinduja Global Solutions Inc. USA (HGS Inc) HGS Inc. a wholly-owned subsidiary ofHGS International Mauritius specializes in marketing and providing of both voice andnon-voice related Customer Contact and Business Process Outsourcing services to itsclientele. It's wholly-owned subsidiaries are HGS (USA) LLC HGS Canada Inc. HGSHealthcare LLC HGS Colibrium LLC and HGS EBOS LLC.
The Consolidated Revenue was US$ 573.3 million for FY 2020 as compared to US$ 506.7million in FY 2019.
HGS (USA) LLC a wholly-owned subsidiary of HGS Inc. USA operates in four cities inthe US. It partners with Fortune 1000 companies and Government agencies to providecomprehensive Customer Relationship Management programs in the verticals of consumer goodsand services e-commerce telecom media and travel and logistics. HGS (USA) LLC also subcontracts work to HGS India its branch in the Philippines and to Jamaica.
For FY 2020 it recorded revenues of US$127.3 million as against revenue of US$ 104.7million in FY 2019.
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 its branch in Philippines and to Jamaica.
For FY 2020 it recorded revenue of US$ 316.3 million as compared to US$ 272.6 millionin FY 2019.
HGS EBOS LLC is a wholly-owned subsidiary of HGS Inc. and renders business processmanagement services to healthcare clients primarily in the Provider Segment. HGS EBOSrenders services in USA as well as sub contracts work to HGS India its branch inPhilippines and Jamaica.
For FY 2020 it recorded revenues of US$ 45.8 million as compared to US$ 48.4 millionin FY 2019.
HGS Colibrium LLC (earlier HGS Colibrium Inc) is a wholly owned subsidiary of HGSInc. and renders platform-based services to help health insurance companies enrollcustomers. It also offers healthcare related technology support services to HGS HealthcareLLC HGS EBOS LLC and their clients.
For FY 2020 HGS Colibrium LLC recorded revenues of US$ 5.1 million as compared to US$3.8 million in FY 2019.
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 Logistics. HGS Canada offers technical support inbound andoutbound sales customer care and customer retention in English and French languages.
For FY 2020 it recorded revenue of CAD 107.7 million as compared to revenue of CAD105.7 million in FY 2019.
Hinduja Global Solutions Europe Ltd. is the UK-based wholly owned subsidiary of HGSInternational Mauritius focusing on providing consulting services for BPM call centerservices and offshoring services to UK-based clients. It owns 24% stake in Hinduja GlobalSolutions UK Ltd. and 100% stake in HGS France SARL France a non-operating company.
For FY 2020 it recorded revenue of GBP 2.7 million as compared to GBP 2.5 million inFY 2019.
Hinduja Global Solutions UK Ltd. is a leading contact center company with centers inLondon Preston Liverpool and Selkirk (Scotland). It offers a range of services forinbound and outbound interactions to marquee customers across verticals such asgovernment FMCG financial services and retail.
For FY 2020 it recorded turnover of GBP 35.3 million as compared to GBP 32.9 millionin FY 2019.
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 Kingston andcontinues to show strong performance. It services local Jamaican clients as well as USclients from healthcare and other verticals.
Revenue for FY 2020 was Jamaican Dollars 4860.9 million compared to Jamaican Dollars3877.6 million in FY 2019.
Hinduja Global Solutions MENA FZ-LLC: It has an office in Dubai Internet City with theobjective to build sales pipeline and provide technology-based support services to otherHGS entities.
In FY 2020 it recorded revenues of AED 7.4 million as compared to AED 1.4 million inFY 2019.
HGS AxisPoint Health LLC: The share capital of this company is held by HGSInternational Mauritius (51%) and Hinduja Global Solutions UK Ltd. (49%).
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 2020 it recorded revenue of US$ 15.9 million as compared to US$ 30.8 million inFY 2019.
HGS Digital LLC (formerly known as Element Solutions LLC): Hinduja Global Solutions UKLtd. was holding 71.33% in HGS Digital LLC USA as on March 31 2020 while the balance28.67% was held by its Founders.
On August 3 2020 Hinduja Global Solutions UK Limited acquired an additional 14.33%equity interest in HGS Digital LLC USA. After this acquisition Hinduja Global SolutionsUK Limited's equity interest in HGS Digital LLC has increased to 85.66% and balance areheld 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 2020 it recorded revenue of US$ 18.4 million as compared to US $ 15.5 millionin FY 2019.
Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of financial statements of your Company's subsidiaries in Form AOC- 1 isattached to the financial statements of your Company.
Further pursuant to Section 136 of the Act the financial statements of your Companyconsolidated financial statements along with relevant documents and separate auditedaccounts in respect of subsidiaries as may be applicable are available on the website ofCompany (www.teamhgs.com).
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.
During the financial year there was no change in the Authorized Share Capital of theCompany. As on March 31 2020 the Authorized Share Capital of the Company was R276500000/- divided into 27500000 Equity shares of R 10/- each and 150000 1%Participatory Redeemable Non-Cumulative Preference Shares of R 10/- each.
During the financial year your Company issued / allotted 26989 Equity shares of 10/-each under ESOP Schemes (i.e. ESOP 2008 and ESOP 2011) pursuant to exercise of stockoptions by eligible employees. Consequently the issued subscribed and paid up capital ofyour Company has increased from 20838944 equity shares to 20865933 equity shares ofR 10/- each aggregating to R 208.66 Million as on March 31 2020.
During the financial year your Company has not issued shares with differential votingrights and sweat equity shares.
Further no amount is proposed to be transferred to the General Reserves of yourCompany out of the profits for the year.
As on March 31 2020 your Company has a long-term rating of CRISIL A+ and short-termrating of CRISIL A1+.
Investor Education and Protection Fund (IEPF)
The detailed information pertaining/relating to IEPF has been provided in the'Corporate Governance Report' section which forms part of this Report as AnnexureC'.
Communications and Public Relations
Your Company continued to grow its brand position in the global market during FY2020.Globally and primarily in the US your Company has established itself as an industryleader with an 18.3% media share of voice - an almost 8% year over year increaseaccording to an independent report by Apollo Research (April 2020).
In India your Company continues to leverage media and social media as a key channel toenhance visibility and thought leadership amongst key stakeholders including investorsemployees and government. Focus areas include driving the transformation message businessgrowth HR trends led by technology our community efforts etc.
With your Company's Executive Director (Whole-time Director) and Global CEO Mr. ParthaDeSarkar becoming the Nasscom BPM Council Chairperson in FY2020 your Company has beenamongst the leading voices in the industry on everything related to the BPM sector. Theannual Investor Meet is another key channel that is helping increase awareness andengagement with investors and communicate HGS' perspectives to the market.
With the development of the COVID-19 global health crisis and so many large BPOpublicly struggling due to weak highly-leveraged balance sheets your Company isre-emphasizing its unique position of financial strength leveraging the company's robustclient portfolio very little debt and strong backing by parent Company Hinduja Group inpress releases blog posts and social media content.
In FY 2020 your Company focused on expanding its presence share of voice and verticalexpertise in healthcare. From a PR perspective your Company saw significant increase incoverage year-over-year in this key vertical including in influential healthcare outletssuch as Managed Healthcare Executive Health IT Outcomes Healthcare Business Today andElectronic Health Reporter.
Your Company launched the new HGS Digital brand in FY 2020 enabling the Company todouble down on its customer experience (CX) messaging. To that end your Company launchedthe new Better CX digital ad campaign to establish the brand among key c-suite audiencesincluding CIOs CXOs and CMOs.
The campaign has ensured that HGS CX messaging reaches all key demographic of buyersand elevates the Company's profile while securing qualified leads. The brand launch wasaugmented with a still-ongoing media relations campaign to create awareness and mindshareamong key audiences.
Your Company has also been featured in key outlets such as Forbes.com The EconomicTimes Yourstory Business Standard Moneycontrol etc. as well as influential tradeoutlets like MarTech Advisor Tech Talks Daily and Business2Community. These key mediaplacements have consisted of proactive thought leadership messaging in the form ofcontributed content quotes from your Company's leadership podcast interviews and guestcolumns that enhance your Company's industry awareness and position your Company'sexecutives as leading experts in their field.
Your Company is especially proud of its work in enabling an inclusive and transparentculture at the workplace through its internal communications. Your Company leveragesvarious communication platforms - both online and offline - to share views and news andholds interactive conversations with your Company's employees globally. With an objectiveto further enhance the Employer of Choice brand your Company organized several townhallsevents campaigns contests awareness camps and other fun engagement activities to builda more cohesive teamhgs.
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 a major thrust onupliftment of the economically and socially weaker communities of the society. Towardsachieving such objectives 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 three CSR awards: CSR Project of the Year awardfor 'Advanced Mobile Health Unit (AMHU) Project' and Best CSR Practice Award for'Voluntary initiatives across the cities' at the UBS Corporate Social ResponsibilitySummit & Awards and the 'Best Work Place Practice' award for HGS' volunteeringpractices at the ET Now - World HRD Congress Awards 2020.
The Corporate Social Responsibility Committee ("CSR Committee") of yourCompany as at March 31 2020 consisted of following Members:
Mr. Anil Harish (DIN: 00001685) Independent Director - Chairman
Mr. Sudhanshu Tripathi (DIN: 06431686) NonExecutive Non-Independent Director -Member (with effect from September 30 2019)
Mr. Partha DeSarkar (DIN: 00761144) Executive Director (Whole-time Director) -Member (with effect from September 30 2019)
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 upon expiry of their tenure as Independent Directors from thesaid date.
Mr. Pradeep Mukerjee Independent Director was a member of the Committee effective May30 2019 and ceased to be a member of the Committee effective September 02 2019 since heresigned as member of the Board.
Mr. Ramkrishan P Hinduja and Ms. Vinoo S. Hinduja Non-Executive and Non-IndependentDirectors ceased to be members of the Committee effective September 03 2019 since theyresigned as members of the Board.
During the Financial Year 2019-20 one meeting of CSR Committee was held on March 282020.
In terms of the CSR Policy of the Company the CSR Forum consisting of senioremployees of your Company identifies and evaluates CSR projects/ initiatives andrecommend the same for the consideration of the CSR Committee. The CSR Committee reviewsthe recommended projects/ initiatives and the expenditure to be incurred as per theprovisions of the Companies Act 2013 and the Rules made thereunder. The CSR Committeepost review recommends CSR projects/ initiatives to the Board of Directors for approval.The Board reviews and approves the CSR Projects/ initiatives recommended by the CSRCommittee.
The CSR Forum monitors the progress of the approved CSR Projects/initiatives andprovides periodical updates on status of implementation expenditure incurred/ to beincurred and beneficiaries 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 of thisReport. The CSR Policy of the Company is available on the website of your Company atwww.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 state that:
a) in preparation of the Annual Accounts for the financial year ended March 312020the 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.
Your Company has in place internal financial controls framework which inter-aliaconsist of Function wise Status of Testing (Risk and Control Matrix Test of Design Testof Operating 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 2019-20 has decreased due to consolidation of similar manual controlsfalling part of the same activity. Total number of automated controls have increased dueto elimination of manual controls and putting automated controls in place. Such frameworkis periodically internally tested as well as reviewed and tested by the externalconsultant. Based upon the said framework and the compliance systems established andmaintained by the Company work performed by the statutory internal and secretarialauditors including audit of internal financial controls over financial reporting thereviews carried on by the Management confirmations provided by the external consultantsand update on such 'Framework' presented to the Audit Committee and to the Board theBoard is of the opinion that your Company's internal financial controls were adequate andeffective during FY 2019-20.
Number of Meetings of the Board
Sixteen meetings of the Board were held during the financial year 2019-20 on thefollowing dates i.e. May 18 2019 May 30 2019 August 05 2019 August 23 2019September 04 2019 (2 Meetings) September 30 2019 (2 Meetings) October 25 2019November 11 2019 November 27 2019 February 07 2020 March 24 2020 March 25 2020and March 31 2020 (2 Meetings). The time gap between any two meetings did not exceed onehundred and twenty days. The further details in this regard are given in the CorporateGovernance Report which forms part of this Report as Annexure C'.
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.
Familiarization Program for Independent Directors
All the new independent directors inducted into the Board attend an orientationprogram. The details of training and familiarization program are provided in the CorporateGovernance Report as applicable. Further at the time of the appointment of anindependent director the Company issues a formal letter of appointment outlining his /her role functions duties and responsibilities. The format of the letter of appointmentis available on the website of your Company at https://www.teamhgs.com/investors/corporate-governance/familiarization-programme-for- directors.
Pursuant to Sections 134 178 of the Companies Act 2013 and applicable regulations ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the BoardEffectiveness Evaluation was carried out. It consists of 3 components:
1. Independent Directors meeting
2. Board and committee effectiveness evaluation
3. Individual Directors effectiveness evaluation.
At the separate meeting of Independent Directors held for the Financial Year endedMarch 31 2020 (without the attendance of Non-Independent Directors and the Members of theManagement) performance evaluation of Non-Independent Directors the Chairman of yourCompany and the Board as a whole was carried out for the Financial Year 2019-20. TheIndependent Directors also assessed the quality quantity and timeliness of the flow ofinformation between your Company's Management and the Board.
Mr. Rajendra P Chitale (DIN: 00015986) and Mr. Rangan Mohan (DIN: 01116821)Independent Directors ceased to be Independent Directors of the Company upon expiry oftheir tenure effective July 03 2019.
Mr. Pradeep Mukerjee (DIN: 02287773) an independent Director resigned as a member ofthe Board effective September 02 2019 due to various professional and personalengagements. Further it is confirmed that there were no other material reasons for hisresignation.
Mr. Ramkrishan P Hinduja (DIN: 00278711) Chairman Ms. Shanu S. P Hinduja(DIN:06512872) Co-Chairperson and Ms. Vinoo S. Hinduja (DIN: 00493148) NonExecutive andNon-Independent Directors resigned as members of the Board effective September 03 2019to enable re-constitution of the Board. The Board placed on record its sincereappreciation for the contribution guidance and advice provided by the said Directorsduring their tenure as members of the Board which has immensely benefitted the Board andyour Company.
Ms. Bhumika Batra (DIN: 03502004) was appointed as an Independent Director of theCompany at the 24th AGM of the Company held on September 28 2019 for a period of five (5)consecutive years effective September 04 2019.
Mr. Partha DeSarkar (DIN: 00761144) who was earlier appointed as Manager (designatedas 'Chief Executive Officer') of your Company as defined under Section 2(53) of theCompanies Act 2013 was appointed as an Executive Director (Whole-time Director) of yourCompany at the 24th AGM of your Company held on September 28 2019 for a period of five(5) years effective September 04 2019 liable to retire by rotation.
Pursuant to Article 152(1) of Articles of Association of the Company Mr. YashodhanMadhusudan Kale (DIN: 00013782) Non- Executive Director and Non-Independent Director hasbeen appointed as Chairman of the Board effective September 30 2019.
Mr. Sudhanshu Tripathi (DIN: 06431686) was appointed as an Additional Director andNon-Executive NonIndependent Director on the Board liable to retire by rotationeffective September 30 2019 subject to the approval of members at the 25th AGM of yourCompany. The notice convening the meeting sets out the details of his appointment.
Dr. Ganesh Natarajan (DIN: 00176393) was appointed to the Board considering hisintegrity expertise and experience as an Additional Director (Independent Director) fora period of five (5) consecutive years effective September 30 2019 subject to theapproval of members at the 25th AGM of your Company. The notice convening the meeting setsout the details of his appointment.
In terms of the provisions of the Companies Act 2013 and the Articles of Associationof the Company Mr. Partha DeSarkar (DIN: 00761144) Executive Director (Whole-timeDirector) is liable to retire by rotation at the ensuing 25th AGM and being eligibleoffers himself 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 duringfinancial year ended March 31 2020 attendance of the Directors have been provided in theReport on Corporate Governance which forms part of this Report as Annexure C'.
Appointment of Independent Directors
Pursuant to the recommendation of Nomination and Remuneration Committee and pursuant toprovisions of the Companies Act 2013 and the SEBI (LODR) Regulations 2015:
Dr. Ganesh Natarajan (DIN: 00176393) was appointed to the Board as an AdditionalDirector (Independent Director) for a period of five (5) consecutive years effectiveSeptember 30 2019 subject to the approval of members at the 25th AGM of the Company. Thenotice convening the meeting sets out the details of his appointment.
Mr. Anil Harish (DIN: 00001685) is proposed to be re-appointed as an IndependentDirector of the Company for a period of five (5) consecutive years effective September 292020 subject to the approval of members at the 25th AGM of the Company. The noticeconvening the meeting sets out the details of his reappointment.
Registration in Independent Director Databank
Pursuant to a notification dated October 22 2019 issued by the Ministry of CorporateAffairs the Independent Directors to the extent applicable have completed theregistration with the Independent Directors Databank.
Pursuant to the provisions of Section 177 of the Companies Act 2013 and Regulation 18of SEBI (LODR) Regulations 2015 Audit Committee of the Board as at March 31 2020comprises of following Members:
Mr. Anil Harish Independent Director - Chairman
Mr. Yashodhan Madhusudan Kale Non-Executive Non-Independent Director - Member(with effect from September 04 2019)
Ms. Bhumika Batra Independent Director - Member (with effect from September 042019) and
Dr. Ganesh Natarajan Independent Director - Member (with effect from September30 2019)
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 upon expiry of their tenure from the said date.
Mr. Pradeep Mukerjee Independent Director was a member of the committee effective May30 2019 and ceased to be a member of the Committee effective September 02 2019 since heresigned as member of the Board.
Mr. Ramkrishan P. Hinduja Non-Executive and NonIndependent Director ceased to bemember of the Committee effective September 03 2019 since he resigned as member of theBoard.
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 your Company has the following KeyManagerial Personnel: Mr. Partha DeSarkar Executive Director (Whole-time Director); Mr.Srinivas Palakodeti Chief Financial Officer and Mr. S. Mahadevan Executive VicePresident - Legal Compliance and Company Secretary.
During the financial year Mr. Makarand D. Dewal resigned as the Company Secretary (KeyManagerial Personnel) effective October 012019. Subsequently Mr. S. Mahadevan wasappointed as the Company Secretary (Key Managerial Personnel) of the Company effectiveOctober 01 2019.
Confirmation of Code of Conduct
The Executive Director and Chief Executive Officer's confirmation to the effect thatall members of the Board and Senior Management Personnel have affirmed compliance with theCode of Conduct for the year ended March 312020 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 your Company have examined the compliance of conditions ofCorporate Governance as stipulated in Schedule V (C) of the SEBI (LODR) Regulations 2015and their certificate is attached as Annexure D' 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 asAnnexure E'.
Employees Stock Options Plans (ESOP')
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 2019-20. These ESOP Schemes are in compliance withthe provisions of SEBI (Share Based Employee Benefits) Regulations 2014. The particularsof aforesaid ESOP Schemes are available on your Company's website atwww.teamhgs.com/investors/other-reports. No changes have been made to the aforesaid ESOPSchemes during the Financial Year 2019-20.
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 2020 in the prescribed format is available on yourCompany's website www.teamhgs.com/ investors/other-reports and forms part of this Reportas Annexure F'.
Related Party Transactions
All contracts /arrangements /transactions entered into with the related parties duringthe Financial Year
2019-20 are in the ordinary course of business and at arm's length basis and thereforeoutside the purview of Section 188(1) of the Companies Act 2013 and same are disclosed inthe financial statements of your Company. Policy on Related Party Transactions asrecommended by the Audit Committee and adopted by the Board is available on the Company'swebsite at www.teamhgs. com/investors/corporate-policies. Information on related partytransactions pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2)of the Companies (Accounts) Rules 2014 is given in Form AOC- 2 and the same forms part ofthis Report as Annexure H'.
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 yourCompany'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 your 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'.
There were no complaints 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 your Company has in place an Internal ComplaintsCommittee (ICC) and also Policy on appropriate social conduct at workplace. The Policy isapplicable to all employees of your Company at all locations. Employees for the purposeof this policy shall include all persons engaged in the business and operations of yourCompany and includes 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 your Company. Your Company's workplace includes Company's premisesas well as the premises of other third parties vendors and associates of your companywhere the employees of your Company are required to perform work or that are visited bythe employees of your 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 2020 is as under:
a. Number of complaints received: 25*
b. Number of complaints disposed of: 23*
c. Number of complaints pending as at March 31 2020: 2
* One complaint was filed and withdrawn by the complainant before the case evenstarted.
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 your 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 Company Secretaryand the Risk Head periodically review the Enterprise Risk Management framework as wellas the risks that matter and update on the same is provided to the Audit Committee and theBoard. The suggestions of the Audit Committee and the Board are implemented whereverfeasible. The Risk Management Committee met two times during the year to review and updatethe Company's Enterprise Risk Management Framework. As per the extant SEBI ListingRegulations your Company is not required to constitute a Risk Management Committeeconsisting of Directors.
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.
Statutory Auditors and Auditors' Report
At the 22nd AGM of your Company held on September 28 2017 M/s Deloitte Haskins &Sells LLP Chartered Accountants (Firm Registration No. 117366W/W- 100018) were appointedas the Statutory Auditors of your Company for a period of five consecutive years i.e.from the conclusion of the 22nd AGM till the conclusion of the 27th 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 your Company has taken on record confirmation from the 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 312020 of the Company and thereare no qualifications in their Report.
Secretarial Audit and Compliance with Secretarial Standards
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 2019-20.
The Secretarial Audit Report in the prescribed format for the Financial Year 2019-20forms part of this Report as Annexure I'. The Report does not contain anyqualifications reservations or adverse remarks except an observation.
The response to the observation relating to appointment of an independent director onan unlisted material subsidiary given in Secretarial Audit Report is as under:
In terms of the requirement stipulated in regulation 24(1) of the SEBI (LODR)Regulations an independent director of the Company is required to be on the Board ofHinduja Global Solutions UK Limited ('HGS UK') an unlisted material subsidiary. While anindependent director of the Company has been attending the Board meetings of HGS UK as aninvitee from January 2020 onwards the Board of Directors of the Company on September 52020 has nominated an independent director of the Company on the Board of HGS UK.
During the year your Company has complied with all the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.
Maintenance of Cost Records and Appointment of Cost Auditor
Your Company is not required to maintain cost records pursuant to Section 148 of theCompanies Act 2013 and requirement to appoint a Cost Auditor is not applicable to yourCompany.
Particulars of Employees
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 yourCompany. The said information is available for inspection at the Registered Office of theCompany and any member interested in obtaining such information may write to the CompanySecretary and the same will be furnished without any fee.
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 yourCompany and the requested information shall be furnished to such member without any fee.
Business Responsibility Report (BRR)
Regulation 34(2)(f) of the SEBI (LODR) Regulations 2015 mandates inclusion of the BRRas part of the Report of your company for top 1000 listed entities based on marketcapitalization. In compliance with said regulation BRR forms part of this Report asAnnexure K'.
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'.
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 yourCompany between the end of the Financial Year and date of the Report.
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 your Company which has enabledyour Company to achieve consistent growth in challenging business environment.
For and on behalf of the Board of Directors Yashodhan Madhusudan Kale
|Place : Mumbai ||Chairman |
|Date : September 05 2020 ||(DIN: 00013782) |