THE MEMBERS OF INSPIRISYS SOLUTIONS LIMITED
The Directors are pleased to present the 27th Annual Report of the Company togetherwith the Standalone and Consolidated Audited Financial Statements for the financial yearended 31st March 2022.
1. FINANCIAL RESULTS
Rs in lakhs
|Particulars ||Consolidated ||Standalone |
| ||31 March 2022 ||31 March 2021 ||31 March 2022 ||31 March 2021 |
|Total Revenue ||34698 ||40912 ||30355 ||33095 |
|Earnings before interest tax depreciation and amortization (EBITDA) ||229 ||1672 ||1297 ||1687 |
|Finance costs ||843 ||1073 ||550 ||778 |
|Depreciation and amortization expense and impairment loss ||549 ||693 ||547 ||669 |
|Profit / (loss) before tax and exceptional items ||(1163) ||(94) ||200 ||240 |
|Exceptional items ||- ||- ||- ||- |
|Profit / (loss) before tax ||(1163) ||(94) ||200 ||240 |
|Tax expense ||171 ||192 ||171 ||192 |
|Profit for the year ||(1334) ||(286) ||29 ||48 |
|Other comprehensive income for the year net of tax ||(115) ||50 ||(23) ||(77) |
|Total comprehensive income for the year ||(1449) ||(236) ||6 ||(29) |
Uncertainties relating to the global health pandemic from COVID-19. The novelcoronavirus (COVID-19) pandemic continued to impact the business performance of thecompany with wave II that started spreading from March / April 2021 onwards. Just when theimpact of Wave II was subsided and normalcy was being restored by Nov. / Dec. 2021 a newvariant Omicron started spreading from Jan 2022. These have impacted the businessperformance of the company. The Company has considered possible effects that may resultfrom COVID-19 pandemic in the preparation of these financial results for the year ended31st March 2022.
As per the Company's assessment which is based on the use of internal and externalsources of information the Company does not expect any significant impact on carryingamounts of financial and non-financial assets. The Company will continue to monitorchanges in future economic conditions and take
appropriate actions. The impact of COVID-19 on the financial statements may differ fromthat estimated as at the date of approval of these financial statements owing to thenature and duration of COVID-19 pandemic.
The Company continues to monitor the impact of COVID-19 with the utmost priority andfully complies with all advisories and guidelines from the Government. The companycontinues to monitor new variants and the infection across geographies where the companyoperates. Employees have started returning to work from office.
3. BUSINESS PERFORMANCE
Total Revenue for the year ended 31st March 2022 on Consolidated basis stood at Rs34698 Lakhs which is a reduction of 16% from the Total Revenue of Rs 40912 Lakhsreported for 31st March 2021. Total Revenue on a Standalone basis for the year ended 31stMarch 2022 stood at Rs 30355 Lakhs which is a reduction of 9% from the Total Revenue ofRs 33095 Lakhs reported for year ended 31st March 2021.
Reduction in revenue has come from all segments of the business and from all geos whereISL and group companies are operating. Large projects were being deferred / delayed due tothe impact of Covid-19 since March 2020 and the continued sluggish market conditionsprevailing in India and other geos where the company is operating. Covid had impactedalmost all industries & businesses (except for essential services like BankingGovernment and healthcare / pharma) on account of the lock down.
Due to reduction in revenue and the impact on margins EBITDA for the financial yearended 31st March 2022 was at Rs 229 Lakhs compared to Rs 1672 Lakhs for year ended 31stMarch 2021 on a consolidated basis. The Company made an EBITDA of Rs 1297 Lakhs on astandalone basis for the year ended 31st March 2022 compared to Rs 1687 Lakhs for 31stMarch 2021. Whilst the company's standalone performance was still profitable at EBITDAlevel the EBITDA losses from the subsidiary company in Dubai for the year was Rs (1838)Lakhs primarily brought down the EBITDA at a consolidated level to a positive Rs 229Lakhs.
The Directors do not recommend any dividend for the year ended 31st March 2022 due toinadequate profits.
5. HUMAN RESOURCES DEVELOPMENT
Attracting and retaining the right talent has been the foremost objective of the HRFunction and the actual results indicate the role of Human Capital in the growth of theCompany and its strategic activities. The Company recognises people as the primary sourceof its competitiveness and continues its focus on people development by leveragingtechnology. For which the Company has set in place an agile Talent Acquisition Systemwhich helps the Company to handle demands from business by providing resources on acontinuous basis.
The worldwide head count was 1609 as on 31st March 2022.
The on-boarding model followed helped the Company to integrate associates acquiredlocally to the culture of the Company.
The learning and development team working as part of the Human Resources function hasimparted 6228 man-days of training to employees on various technology solutions and skilldevelopment.
The Company continues to initiate training of resources to keep up with the newtechnological challenges meet the market requirements and deliver high quality servicesto our clients. The thrust of Human Resource has been on improvement of the performance ofemployees through training and development.
The company's pursuit to connect with its employees on a regular basis and communicatein an open and transparent manner is evident from the voluntary attrition rates during theyear which was 37.76 percent that is equivalent to the current industry trend given themarket dynamics.
6. BUSINESS EXCELLENCE AND QUALITY INITIATIVES
The Company continues to maintain highest levels of quality to enhance customersatisfaction.
In FY 2021-22 the company kept the Quality Management Systems updated with continuedinvestment in technologies infrastructure and processes.
The company has certifications for:
ISO 9001:2015 (Quality Management System)
ISO 27001:2013 (Information Security Management System)
ISO 20000-1:2018 (Service Management System)
CMMI Level 3 Dev 2.0
ISO 14001:2015 (Environmental Management System)
The Company has various policies processes and systems in place that will not onlyenable strengthening and smooth functioning of the operations but also improve the qualityof operations.
7. DOCUMENTS PLACED ON THE WEBSITE (www.inspirisys.com)
The following documents have been placed on the company's website in compliance withthe Companies Act:
a. Consolidated and Standalone Financial Statements of the Company.
b. Separate audited accounts in respect of subsidiaries as per fourth proviso toSection 136(1).
c. Details of Vigil Mechanism for Directors and Employees to report genuine concerns asper proviso to Section 177(10).
d. The terms and conditions of appointment of Independent Directors.
e. Details of unpaid dividend as per Section 124(2).
8. SUBSIDIARY COMPANIES
As at 31st March 2022 the Company has operating wholly owned subsidiaries in theUnited States United Kingdom and United Arab Emirates (Dubai). The wholly ownedsubsidiaries in Japan and India had suspended its operations in March 2020 and March 2019respectively. The company also has a branch office in Singapore. There are no associate orjoint venture companies within the meaning of Section 2(6) of the Companies Act 2013("Act"). The Statutory Audit Report of the Subsidiary Companies for thefinancial year are placed before the Audit Committee and reviewed by them. Shareholdersinterested in obtaining a copy of the audited annual accounts of the subsidiary companiesmay write to the Company Secretary. Pursuant to the provisions of Section 129(3) of theAct a statement containing the salient features of financial statements of the Company'ssubsidiaries is in Form No. AOC- 1 which forms part of this Annual Report.
Impairment of Investment & Loan to Subsidiary Company in Dubai : The Company has aninvestment of Rs 120 Lakhs in a wholly owned subsidiary named Inspirisys Solutions DMCCDubai (ISDMCC) and has further advanced loans (including accumulated interest) amountingto Rs 275 Lakhs to this subsidiary as at 31st March 2022. ISDMCC has accumulated lossesand the net-worth is negative as at 31st March 2022. ISDMCC has been working withcustomers and have been engaging them for onsite business in the Middle East and offshorebusiness for ISL India. The company continues to have onsite employees placed on variouscustomer projects and have continuing contracts for onsite and offshore work. The Companyin accordance with Ind AS 36 - "Impairment of Assets" and Ind AS 109 -"Financial instruments" carried out impairment assessment of its investment andloans in ISDMCC. Considering the impairment indicators due to COVID uncertainties hasrecognised in accordance with Ind AS 36 and Ind AS 109 a provision for the carrying valueof investment of Rs 120 lakhs and carrying value of Loan of Rs 275 Lakhs in the Standalonefinancial results as on 31st March 2022.
9. CORPORATE GOVERNANCE REPORT REQUIRED UNDER SEBI (LODR) REGULATIONS 2015
As per SEBI LODR Regulations 2015 Corporate Governance Report with AuditorsCertificate on Compliance with the conditions of Corporate Governance is attached and formpart of this report.
10. MANAGEMENT DISCUSSION & ANALYSIS
In terms of Regulation 34 of SEBI (LODR) Regulations a separate Annexure II to thisReport is enclosed where the Management Discussion and Analysis and various initiativesand future prospects of the Company are provided.
11. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Board of Directors to the best of itsknowledge and ability confirm that:
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;
ii. 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 profitof the Company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
On the basis of the internal financial control framework and compliance systemsestablished and maintained by the Company the work performed by the internal statutoryand secretarial auditors including internal financial controls audit over financialreporting by the statutory auditors and the reviews performed by management and therelevant board committees including the audit committee the Board is of the opinion thatthe Company's internal financial controls were adequate and effective during the financialyear 2021-22.
12. STATUTORY AUDITORS REPORT
Management response to the qualification in the Statutory Auditor's Report :
As disclosed with Note 7c to the Standalone Financial and Consolidated FinancialStatements the Company has a trade receivable of Rs 3628 Lakhs as on 31st March 2022from one of its subsidiary company Inspirisys Solutions North America Inc. (ISNA). Thebalance reflects accumulation of receivables since 2016-17. ISNA the wholly ownedsubsidiary of Inspirisys Solutions Limited (ISL) India is the marketing arm for theoffshore services offered and delivered to the US customers of ISNA from ISL India. ISNAhas been working with customers in North America and have been engaging them for onsitebusiness in the US and offshore business for ISL India.
The trade receivables in the books of ISL India represents services performed andbilled on ISNA over the years in respect of offshore services for the clients of ISNA. TheManagement is working on turning around the business performance of ISNA and are hopefulof generating profits to pay ISL India against the trade receivables and to this effecthave drawn up business plans for the subsidiary for the next few years. In view of theabove the Management considers not making any provision towards any expected credit lossagainst these Accounts Receivable from ISNA including GST liability if any on such exportreceivables together with interest thereon as we are hopeful of collecting the dues fromISNA.
Emphasis of Matter - Show Cause Notice from SEBI:
As disclosed with Note 41(b) to the Standalone Financial and Note 40(b) to theConsolidated Financial Statements the Company has received a show cause notice from SEBIunder sections 11(1) 11(4) 11(4A) 11B(1) and 11B(2) read with 15HA and 15HB of theSecurities Exchange Board of India Act 1992 and Rule 4(1) of Securities and ExchangeBoard of India (Procedure for Holding Inquiry and Imposing Penalties) Rules 1995 andSections 12A(1) 12A(2) read with 23E and 23H of the Securities Contracts (Regulation)Act 1956 and Rule 4(1) of Securities and Exchange Board of India (Procedure for HoldingInquiry and Imposing Penalties) Rules 2005 in the matter of alleged mis-representation offinancials / manipulation of books of accounts of Inspirisys Solutions Limited (formerlyknown as Accel Frontline Limited) in relation to FY2012-13 to FY2015-16. The Company hasengaged legal counsel and has been evaluating the options that are available for thecompany to pursue. The liability at this point in time is contingent and hence theCompany believe that such alleged violations will not have any material impact in thestandalone and consolidated financial results of the year under consideration.
13. IMPORTANT DISCLOSURES MADE BY THE COMPANY UNDER REGULATION 30 OF THE SEBI (LODR)REGULATIONS 2015 TO THE STOCK EXCHANGES
Proceedings of the 26th Annual General Meeting of the Company.
Receipt of Show Cause Notice from Securities and Exchange Board of India (SEBI)in the matter of alleged misrepresentation of financials / manipulation of books ofaccounts of Accel Frontline Limited (now known as Inspirisys Solutions Limited) inrelation to FY 2012-13 to FY 2015-16.
Intimation on Re-appointment of Independent Director Mr. Rajesh R. Muni for thesecond term of five years subject to the shareholders approval through Postal Ballot.
Proceedings relating to resolution passed through Postal Ballot forRe-appointment of Independent Director
Mr. Rajesh R. Muni for the second term of five years.
14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO
The Company has strong commitment towards conservation of energy and adoption of latesttechnology in its areas of operations. The particulars as prescribed under Rule 8(3) ofthe Companies (Accounts) Rules 2014 are set out in an Annexure-III to this Report.
15. SEPARATE MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met on 28th February 2022 and evaluated the performance ofNon- Independent Directors the Board as a whole and Chairperson of the company andinformation flow from the company. Details regarding the same is provided in the CorporateGovernance Report.
16. EVALUATION OF THE BOARD'S PERFORMANCE
The Board has carried out an evaluation of its own performance also that of itsDirectors individually and it's Committees. The manner in which the evaluation has beencarried out is explained in the Corporate Governance report.
a) Statutory Auditors
The Statutory Auditors of the Company M/s. Walker Chandiok & Co LLP CharteredAccountants (Firm's Registration No. 001076N/N500013) hold office till the conclusion ofthe 29th Annual General Meeting of the Company.
As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Auditors have confirmed that they hold a valid certificate issued by the PeerReview Board of the Institute of Chartered Accountants of India.
b) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. M.Alagar Managing Partner (Membership No. F7488 and CoP No. 8196) of M/s.M.Alagar & Associates Practicing Company Secretaries Chennai to undertake theSecretarial Audit of the Company for the financial year ended 31st March 2022. TheSecretarial Audit Report is annexed as Annexure IV to this report. The said SecretarialAudit Report does not contain any qualifications reservations or adverse remarks.
18. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rules 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the Annual Report. Noemployee draws remuneration in excess of the limits in terms of the provisions of theSection 197(12) of the Companies Act 2013 read with Rules 5(2) & 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
The statement containing names of top ten employees in terms of remuneration drawn andthe particulars of employees as required under Section 197(12) of the Act read with Rule5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is available for inspection in electronic mode. Any Member interested inobtaining a copy of the same may write to the Company Secretary.
19. FIXED DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from the public within the meaning ofsub-section (31) of Section 2 and Section 73 of the Companies Act 2013 and the Rulesframed thereunder and as such no amount on account of principal or interest on depositswere outstanding as on the date of the Balance Sheet.
20. CORPORATE SOCIAL RESPONSIBILITY
Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act 2013Corporate Social Responsibility Committee was formed to recommend: (a) the policy onCorporate Social Responsibility and (b) implementation of the CSR Projects or Programs tobe undertaken by the Company as per CSR Policy for consideration and approval by the Boardof Directors. The policy on Corporate Social Responsibility is posted on the company'swebsite www.inspirisys.com. Detailed report on CSR activities in the prescribed format isforming part of this annual report.
As a responsible corporate entity at Inspirisys we always strive to make a positiveand lasting impact on our environment and the community we operate in. In the year2020-21 the company through its CSR efforts initiated a collaborated CSR Program on"Student Skill Development" between Inspirisys & ICT Academy (ANot-for-profit autonomous society). The Company continued the program for the financialyear 2021-22 and was to aim at industry-ready students through advanced technology skillstraining.
Through this program 394 Students in Financial year 2020-21 and 350 Students infinancial year 2021-22 from rural areas in the states of Tamilnadu Kerala KarnatakaAndhra Pradesh Telangana & Delhi were identified and trained by Industry CertifiedExperts & ICT Academy's experienced in house trainers across 6 technology courses. Atotal of 23640 hours of technical training and 7880 hours of soft skills training infinancial year 2020-21 and 28500 Hours of Technical Training & 7000 Hours ofSoft-skill Training in financial year 2021-22 was imparted.
The students who were trained have come out confident in their TechnologyCommunication & Soft skills which has improved multi-fold through this CorporateSocial Responsibility Program of Inspirisys and has increased their employability.
21. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMPs) Directors
Mr. Koji Iketani Director is liable to retire by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for reappointment.
The Directors have recommended the appointment / reappointment for the approval ofShareholders. The brief profile of the Directors are furnished in the Notice convening theAGM of the Company.
The Directors take this opportunity to thank the Company's employees customersvendors investors alliance partners business associates bankers for their continuoussupport given by them to the Company and their confidence reposed
on the management. The Directors also thank the Central and the State Governments inIndia Governments of the countries where the Company has operations and concernedGovernment departments and agencies for their continued co-operation. The Directorsacknowledge the unstinted commitment and valuable contribution made by all members of theInspirisys family.
For and on behalf of the Board of Directors
|Place: Chennai ||Malcolm F. Mehta |
|Date: 10th May 2022 ||Chairman & Chief Executive Officer |