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Intellect Design Arena Ltd.

BSE: 538835 Sector: IT
NSE: INTELLECT ISIN Code: INE306R01017
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VOLUME 15767
52-Week high 986.00
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P/E 41.36
Mkt Cap.(Rs cr) 6,174
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OPEN 459.10
CLOSE 464.25
VOLUME 15767
52-Week high 986.00
52-Week low 407.80
P/E 41.36
Mkt Cap.(Rs cr) 6,174
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Intellect Design Arena Ltd. (INTELLECT) - Director Report

Company director report

To the members

We are pleased to present the 11th Annual Report on ourbusiness and operations for the year ended 31st March 2022 of Intellect DesignArena Limited ("Company"). This is our eighth year of business operations.

1. Results of operations

(In Rs. Millions except EPS data)

Description Standalone Consolidated
Year ended March 31
2022 2021 2022 2021
Income (Including Other Income & exceptional item if any) 12913.55 10186.08 19186.87 15101.41
Expenses (Excluding Depreciation Finance charges & Including exceptional item if any) 9549.83 7385.17 14061.24 11426.45
Profit/(Loss) before Interest Depreciation & Tax (PBIDTA) 3363.72 2800.91 5125.63 3674.96
Finance Charges 29.63 74.98 42.71 91.74
Depreciation & amortization 690.33 500.14 975.62 767.14
Net Profit/(Loss) Before Tax (excluding share of profit / (Loss) from Associate Companies) 2643.76 2225.79 4107.30 2816.08
Provision for tax including Deferred Tax 622.94 153.26 627.41 254.51
Net Profit/(Loss) after tax before Share of Profit/(Loss) from Associate Companies 2020.82 2072.53 3479.89 2561.57
Add / (Less): Share of Profit / (Loss) on Associate Companies 24.53 84.79
Net Profit / (Loss) 2020.82 2072.53 3504.42 2646.36
Re-measurement gains/(losses) on defined benefit plans 15.56 (10.54) 16.10 (10.32)
Exchange differences on translation of foreign operations (4.56) (7.03)
Net movement on cash flow hedges 154.78 527.45 154.78 527.45
Other comprehensive income for the year net of tax 170.34 516.91 166.32 510.10
Total comprehensive income for the year net of tax 2191.16 2589.44 3670.74 3156.46
Less: Non Controlling Interest - - 17.21 15.28
Total comprehensive income for the year net of tax (Excluding Non controlling Interest) 2191.16 2589.44 3653.53 3141.18
EPS
Basic Rs. 15.19 15.63 26.25 19.82
Diluted Rs. 14.55 15.42 25.14 19.55

Table No. 1.1

Function wise classification of statement of consolidated Profit andLoss

(In Rs. Millions)

PARTICULARS Year Ended
March 31 2022 March 31 2021
INCOME
Income from software product license and related services 18565.00 14992.00
Hedge Impact 217.00 (17.00)
Total Income 18782.00 14975.00
EXPENDITURE
Software development expenses 8026.00 6646.00
Gross Margin 10756.00 8329.00
Gross Margin % 57% 56%
Selling and marketing & General and administrative expenses 4878.00 3836.00
Research & Engineering expenses 1157.00 933.00
Total Expenditure 14061.00 11415.00
EBITDA 4721.00 3559.00
Depreciation and Amortisation (976.00) (767.00)
Finance Charges (43.00) (92.00)
Fx Reins. (loss)/gain (60.00) 28.00
Other Income/Expenses 476.00 154.00
Profit / (Loss) before Tax 4118.00 2882.00
Provision for taxation (627.00) (255.00)
Profit / (Loss) after tax (excluding non-controlling interest) 3491.00 2628.00

Table No. 1.2

2. State of Company's Affairs

The consolidated revenue of the Company for the year ended March 31st2022 stood at Rs.19186 Millions as against Rs.15101 Millions for the previous year andthere is an increase in the revenue to the tune of 27.05%. The consolidated NetProfit/(Loss) after tax for the fiscal year ended March 31st 2022 stood at Rs. 3504Millions as against the previous year's Net Profit/(Loss) after tax of Rs. 2646 Millions.The Consolidated Reserves and Surplus as of 31st March 2022 stood at Rs.17414 Millions asagainst Rs. 13263 Millions as of March 31st 2021. For the financial year ended2021-2022 the Company has not transferred any amount to the reserves.

3. Material Changes and Commitments

There were no material changes and commitments from the end of thefinancial year till the date of this report.

4. Dividend

The Board at its meeting held on May 05 2022 has proposed finaldividend of Rs. 2.50/- per share at face value of Rs 5/- for the financial year endedMarch 31 2022 subject to the approval of shareholders at the ensuing Annual GeneralMeeting and if approved would result in the cash flow of Rs. 336.38 Millions.

The Dividend Distribution Policy in terms of Regulation 43A of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") is uploaded on the Company's website.

The weblink of the Dividend Distribution Policy is

https://www.intellectdesign.com/investor/general/2018-apr-dividend-distribution-policy.pdf.

5. COVID-19

The COVID pandemic continued to be a global challenge and createsdisruption across the world. It's effect has been felt by everyone regardless of theirposition. Your Company's top priority is the physical and emotional wellbeing of itsemployees. The Company has taken several initiatives to support its employees and theirfamilies during the pandemic like organising Doctor on call facilities Isolation /Quarantine facilities medical helpline Ambulance Services Vaccination for 45+ and othersupport. The Company has set up a dedicated Covid Response Team which helps employees andtheir families with the above facilities. The Company has also organised counselling andself-help services to support its employees in maintaining their mental & emotionalhealth.

With the work from home approach the Company has been able to providecontinuous services to all the customers across the globe. This approach hasstrengthened the customers' confidence in the Company. Our stakeholders have expressedtheir appreciation for ensuring that business continues despite the challengingconditions.

6. Subsidiaries

Details of Subsidiary Companies Associate Companies and theirfinancial position.

Your Company has 22 (12 direct and 10 step down) Subsidiary Companiesand 2 associate companies as on March 31 2022. The information as required under thefirst provision to sub-section (3) of Section 129 is given in Form AOC-1 in Annexure 1.

7. Cash Reserves

Your Company has cash reserve of Rs. 5588.73 Millions.

8. Share Capital

The paid-up Capital of the Company was increased to Rs. 672.77 Millionthrough share allotments made against exercise of Options (1579251 equity shares) underthe ASOP / ISOP / IIPS Schemes comprising of 134553614 equity shares at a face value ofRs. 5/- each as on March 31 2022.

The details of all the stock option plans including terms ofreference and the requirements are set out in Annexure 2.

9. Corporate Governance

Your Company has been complying with the provisions of CorporateGovernance as stipulated in SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (referred as "Listing Regulations"). A separate report onCorporate Governance along with the Certificate on Compliance of the Corporate Governancenorms as stipulated under Chapter IV of the Listing Regulations and Management Discussion& Analysis forming part of this report is provided elsewhere in this Annual Report.

10. Transfer to Investor Education and Protection Fund

As required under the provisions of Section 125 and other applicableprovisions of Companies Act 2013 (hereinafter "the Act") dividend that remainunpaid/ unclaimed for a period of seven years are to be transferred to the accountadministered by the Central Government viz: Investor Education and Protection Fund("IEPF").

As the Company has not paid any dividend in the previous years theprovisions of Section 125 of the Companies Act 2013 is not applicable to our Company.

11. Conservation of energy technology absorption foreign exchangeearnings and outgo

The particulars as prescribed under Section 134 (3) (m) of theCompanies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 are set outin Annexure 3 of this Report.

12. Particulars of employees

(a) The statement containing particulars of employees as required underSection 197 (12) of the Companies Act 2013 read with Rule 5 (2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 does not form part ofthis report. In terms of Section 136 of the Act the same is open for inspection duringworking hours at the registered office of your company. A copy of this statement may beobtained by the members by writing to the Company Secretary.

(b) The ratio of remuneration of each director to the medianremuneration of the employees of the company and other details in terms of Section 197(12) of the Companies Act 2013 read with Rule 5 (1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are part of this report as Annexure 4.

13. Directors' responsibility statement as required under Section 134(5) of the Companies Act 2013

Pursuant to the provisions of Section 134 (3) (c) of the Companies Act2013 the Directors of your Company confirm that:

a) In the preparation of the Annual Accounts the applicable accountingstandards have been followed along with the proper explanation relating to materialdepartures;

b) The Directors have selected such accounting policies applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company for that period;

c) The Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

d) The Directors have prepared the Annual Accounts on a "goingconcern basis";

e) The Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and

f) The Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

14. Board Meetings Board of Directors Key Managerial Personnel &Committees of Directors

(a) Board Meetings:

The Board of Directors of the Company met 5 times during the year2021-22. The details of various Board Meetings are provided in the Corporate GovernanceReport. The gap intervening between two meetings of the board is as prescribed in the Act.

(b) Changes in Executive Directors Non-Executive Directors & KeyManagerial Personnel

During the year Mr. Anil Kumar Verma (DIN: 01957168) was re-appointedas Whole-time Director of the Company for a period of 5 years in its Annual GeneralMeeting held on August 4 2021 with effect from February 1 2021 to January 31 2026through a special resolution.

The Board at its meeting held on May 05 2022 has appointed Mr. AmbrishPandey Jain as an Additional Director - Independent category for a term consisting of 5years who shall hold office upto the date of the ensuing Annual General Meeting which isto be held within three months from the date of appointment subject to the approval ofshareholders at the ensuing Annual General Meeting through a special resolution.

(c) Re-Appointment

In terms of Section 152 (6) of the Companies Act 2013 and as perArticle 34 (l) of the Articles of Association of the Company one third of the Directorsother than Independent Directors are liable to retire by rotation at the Annual GeneralMeeting of the Company. Mr. Andrew Ralph England Non Executive Non Independent Directoris liable to retire by rotation and offers himself for reappointment.

(d) Independent Directors

Mr. Arun Shekhar Aran was re-appointed as an Independent Director atthe 8th AGM held on 21st August 2019 for a second term of five (5) years.

Ms. Vijaya Sampath was appointed as an Independent Director w.e.f.October 25 2018 for the first term of 5 years and was regularised at the AGM held on 21stAugust 2019.

Mr. Abhay Anant Gupte was appointed as an Independent Director w.e.f.June 15 2020 for the first term of 5 years and was regularised at the AGM held on 21stAugust 2020.

Mr. Ambrish Pandey Jain was appointed as an Additional Director(Independent Category) of the Company at the Board of Directors' Meeting held on05.05.2022 who shall hold office till the next Annual General Meeting of the Company or 3months from the date of appointment whichever occurs earlier. He will be appointed as anIndependent Director subject to the approval of the members in the ensuing Annual GeneralMeeting for a period of 5 years w.e.f from 05.05.2022.

No Directors resigned during the year 2021-2022.

The Company has received necessary declarations from each IndependentDirector of the Company under Section 149 (7) of the Companies Act 2013 that they meetthe criteria of independence as laid down in Section 149 (6) of the Act and in accordancewith Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. Further no Independent Director is a non-Independent Director ofanother Company on the Board on which any non-independent Director of the listed entity isan Independent Director and no director has been debarred by any order / judgement of anyregulator in force.

(e) Details of remuneration to Directors: The information relatingto remuneration of directors as required under Section 197(12) of the Companies Act 2013is given elsewhere in the report.

(f) Board Committees

The Company has the following Board Committees:

1. Audit Committee

2. Nomination Remuneration & Compensation Committee

3. Stakeholders' Relationship Committee

4. Corporate Social Responsibility Committee

5. Risk Management Committee

Sub-committees:

1. Share Transfer Committee

2. Cyber Security Committee

The composition of each of the above Committees their respective roleand responsibility is as detailed in the Report of Corporate Governance.

The policy framed by the Nomination Remuneration and CompensationCommittee under the provisions of Section 178(4) of the Act is as below:

(g) Remuneration policy The remuneration policy of the Company hasbeen so structured as to match the market trends of the IT industry. The Board inconsultation with the Nomination and Remuneration & Compensation Committee decidesthe remuneration policy for Directors. The Company has made adequate disclosures to themembers on the remuneration paid to the Directors from time to time. Remuneration /Commission payable to Directors is determined by the contributions made by the respectiveDirectors for the growth of the Company.

The remuneration policy of the Company and other matters as requiredunder Section 178 (3) of the Act can be accessed through

https://www.intellectdesign.com/investor/general/remuneration-policy.pdf.

There has been no change in the policy since the last fiscal year. Weaffirm that the remuneration paid to the Directors are as per the terms laid out in theremuneration policy of the Company.

(h) Board Evaluation

As required under the provisions of Section 134 (3) (p) of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board has carried out an annual performance evaluation of its ownperformance and that of its committees and individual directors. The manner in which suchperformance evaluation was carried out is as under:

The performance evaluation framework is in place. Prof. Ashok Korwarwas appointed to evaluate the performance of the Directors and made a presentation to theBoard summarising the views and suggestions made by the individual Directors and theBoard. The performance of the Board was evaluated on the basis of criteria such as theBoard composition and structure effectiveness of Board processes information andfunctioning etc.

The performance of the committees was evaluated by the Board afterseeking inputs from the committee members on the basis of criteria such as the compositionof committees effectiveness of committee meetings etc.

The Board and the Nomination Remuneration and Compensation Committeereviewed the performance of Individual Directors on the basis of criteria such as exerciseof responsibilities in a bonafide manner in the interest of the Company striving toattend meetings of the Board of Directors / Committees of which he/she is a member /general meetings participating constructively and actively in the meetings of the Board /committees of the Board etc.

In a separate meeting of independent directors held on March 22 2022performance of Non-Independent Directors performance of the Chairman of the Company andthe performance of the Board as a whole were evaluated.

(i) Vigil Mechanism

The Company has established a whistle-blower policy and also amechanism for Directors and employees to report their concerns. The details of the same isexplained in the Corporate Governance Report.

(j) Related Party Transactions

All related party transactions that were entered during the financialyear were on arm's length basis and were in the ordinary course of business. There are noother materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large.

During the year Related Party Transaction has undergone variousmodifications in line with SEBI(Listing Obligations and Disclosure Requirements)(SixthAmendment) Regulations 2021.

The details of the related party transactions as required under Section134 (3) (h) read with Rule 8 of the Companies (Accounts) Rules 2014 is attached asAnnexure 5.

15. Auditor reports and auditors

Statutory Auditors: M/s. S.R. Batliboi & Associates LLPChennai Chartered Accountants have been appointed at the Annual General Meeting held on21st August 2019 to hold office as statutory auditors until the conclusion of the 13thAnnual General Meeting of the Company. There are no qualifications or adverse remarks inthe Auditor's Report for the financial year ended 31st March 2022.

Secretarial Auditors: Pursuant to the provisions of Section 204 ofthe Companies Act 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 Secretarial Audit has been carried out by M/s B Ravi &Associates Company Secretaries and their report is annexed as Annexure 6. There are noqualification or adverse remarks in the Secretarial Audit report for the financial yearended 31st March 2022.

Internal Auditors: Pursuant to Section 138 of the Companies Act2013 M/s. ANB & Co. has been appointed as the Internal Auditors of the Company.Reports of the Internal Auditors' has been reviewed and taken on record by the AuditCommittee of the Board of Directors of the Company.

Cost Records and Cost Audit: Maintenance of cost records andrequirements of cost audit as prescribed under Section 148(1) of the Companies Act 2013are not applicable for the business activities carried out by the Company.

16. Deposits

Our Company has not accepted any deposits during the financial year andas such no amount of principal or interest was outstanding as on 31st March 2022.

17. Reporting of fraud:

During the year under review there were no instances of fraud asrequired to be reported by the Statutory Auditors / Secretarial auditors of the Company.

18. Social Connect

Ullas Trust

Is the collective social responsibility of Intellect that bringstogether our associates with the adolescent young minds in the communities we live andwork in and even going to back our roots in the districts to experience the magic ofmentoring young minds! Magic as one experiences the joy of shaping young minds butalso the reverse learning that one receives from these bright sparks that inspires everymentor to do more and be more.

Since its inception in 1997 Ullas has grown into a thriving communityof dedicated associate volunteer mentors from Intellect from our Clients and otherCorporates; partners from Civil Society Organisations and youth from Colleges - allunited by the common purpose of shaping the thinking of adolescent young minds. Over the 24years Ullas has sown the seed of a dream ignited and nurtured over 17.5 lakhyoung minds across 115 Districts in 8 States and 2 Union Territories.

Primary motive of the Trust continues to be - to ignite young minds andnurture them during their most vulnerable space in life (adolescence). This isaccomplished through seeding the "Can Do" spirit encouraging them to dream bigwith conviction positive role model influences and enrichment programs delivered bymentors to nurture them towards achieving their potential and their dreams.

While the year seemed a repeat of 2020 in many ways it was withrenewed energy that Ullas not only delivered the interventions but also curated anddelivered several new programs that aligned with the purpose of "igniting youngminds" and sowing the seeds of "Can Do" spirit in everyintervention and interaction. Also the repurposed Virtual Summit (20 module weekendenrichment program) gave Ullas the impetus to get the year started on a strong note.

Highlights of this Academic Year:

• Wellness at the heart of Ullas: As the pandemic spilled intoyet another academic year Ullas continued to keep the wellness of our Young AchieversYoung Leaders and their families at heart through calling campaigns regular check-ins andwellness sessions. Ullas was right there with them supporting them as they navigatedthrough uncertain periods and in some cases helping them find new pathways. Humbled bythe opportunity to go beyond the defined interventions to do the right thing and be ofdeeper assistance at their moment of need!

• Summit Enrichment Program: Ullas continued to nurture thedreams of 2596 students from 371 schools across 5 States (Delhi NCRHaryana Maharashtra Tamil Nadu and Telangana) through the virtual Summit interventions.These interventions brought cheer all around - from the volunteer mentors to the YoungAchievers and Young Leaders - everyone coming alive despite the virtual medium. It was ajoy to witness the essence and ethos of Ullas continue to flourish virtually creating theintended impact. A great reaffirmation of our belief in the "Can Do" spirit andthe far reaching impact of our programs!

• Career Pathways: With yet another batch of Grade 12 studentsgoing through angst about their next steps - college research and admissions - Ullasreached out to its Batch of Young Leaders who faced a similar situation in 2020 to sharetheir journey of virtual college admissions and how they overcame it successfully. What wewitnessed was heartwarming - power of an "Akka (elder sister) or Bhaiya (elderbrother)" relatable role models in action for their juniors. The Young Leaderscollaborated curated and delivered a series of sessions covering the do's and don'ts ofvirtual admission process. It was extremely gratifying for the young mentors and theirmentees!

• History came alive: A chance inquiry about an educationalvirtual tour by our Trustee Mrs. Manju Jain during her visit to New York State Museum(NYSM) became a reality. NYSM collaborated with Ullas to put together a first of itskind curated virtual tour of the museum for nearly 3500+ Ullasians (YoungAchievers Young Leaders and even our Friends of Ullas!). The virtual tour kindled theircuriosity a love for history and certainly increased our cultural capital.

• NITI Aayog - a seat at the table: Ullas Trust was chosen asone of the CSOs to be a part of the "Education subgroup" by NITI Aayog. It wasvalidation of the impactful work by Ullas over the years and a wonderful opportunity toshare our learnings experiences working with Young Achievers in Schools and Young Leadersin College. Ullas submitted a well- researched report on "Access to Higher Education- Opportunities and Recommendations" to the sub-committee that was well appreciated.

• Virtual Touch The Soil - reconnecting digitally to our roots: Secondyear into the pandemic with greater resolve Team Ullas took Ullas interventions tostudents in the classrooms of district schools. Despite the many opportunities on theground Ullas delivered "Can Do" and "Planning" workshops to 10295students from 95 Schools 28 Districts across 7 States.Definitely not at scale like the offline Touch The Soil but in these times of need evenmore heartening to reach and ignite young minds in district schools.

• Mission Samriddhi Clusters: Across the four MissionSamriddhi Clusters - Baghpat in UP Osmanabad Wardha and Yavatmalin Mahrashtra Ullas coordinators ensured vibrant inspiring interactions with youngminds. The enrichment programs were even more relevant in these uncertain times inencouraging them to Dream Big with deep conviction. With the support of teachers and rolemodels from the community the intervention programs were powerful in driving home the"Can Do" spirit.

• Ullas Young Leaders Program: The Higher EducationScholarship program rechristened as Ullas Young Leader program continued to seeexponential growth in e-mentoring programs that ran the gamut of Conversational Englishto Discovering your "Ikigai". e-Expert talks by professionals fromacross verticals was an eye-opener for Young Leaders on the various career pathwaysupskilling and internships to further one's professional standing. Young Leaders lookedforward to these "real life" discussions that added great value to theirresumes.

• Ullas - a community of Engaged Givers: "The greatnessof a community is most accurately measured by the compassionate actions of its members -Coretta Scott King". Especially during the most uncertain and perilous times. Thesewords reflect what the Ullas community is all about - a community made up of ourincredible volunteer mentors - Friends of Ullas as they are known our awesome Alumnifrom across the globe our very own inspiring Young Leaders who came togetherto collectively lift the spirits of young minds through the various programs. Be it awellness call to check in on a student and their family or a 2 hour Summit interventionvirtually or a 1-1 mentoring program our Ullas community was not just empathetic but "compassionin action"! We could not have done this without this ONE team!

Yet another extraordinary year where the "purity of purpose"of Ullas continued to shine bright! As we step into the 25th year of Ullaswe are humbled by the path traversed lives touched transformed and yet know that thereare miles to go!

19. Audit Committee Recommendation

During the year all the recommendations of the Audit Committee wereaccepted by the Board. The Composition of the Audit Committee is as described in theCorporate Governance Report.

20. Annual Return

Pursuant to Section 92 (3) read with Section 134 (3) (a) of theCompanies Act 2013 the Annual Return in Form MGT 7 shall be placed on the website of thecompany at www.intellectdesign.com/investor-relations after the conclusion of the 11thAnnual General Meeting.

21. Significant & Material Orders passed by the Regulators orCourts

During the Financial Year 2021-22 no order has been passed by anyRegulatory authorities or Courts.

22. Particulars of Loans Guarantees and Investments u/s 186

During the financial year there was no loan given or guarantee givenor security provided pursuant to Section 186 of the Companies Act 2013 and the relevantprovisions as applicable have been compiled by the Company. Details of investments made bythe Company are given in the Notes to the Financial Statements

23. Risk Management Policy

Intellect being a pioneer in the Intellectual property led Business inIndia the company is continuously focussing and committing itself to have a RiskManagement system suited for the Products business.

Towards this the Board has formed a Risk Management Committee withDirectors the Chief Financial Officer and the Chief Risk Officer as members of thecommittee. The Committee works to mitigate any inherent risks faced by the Business and tomeet the increasing demand of Customer's liability through different means within theoverall framework listed below.

Risk Management Framework Objective

The Organisation is subject to certain risks that may affect ourability to operate may disrupt our business model due to changes in competitivelandscape changes in Technology which may render our capabilities obsolete and thushamper our ability to serve our customers and protect assets. These risks could adverselyaffect Customer projects Employees Shareholders liability to Third Party and risks toProperty among others. Controlling these risks through a formal process is necessary forthe well being of the Organization and its stakeholders.

The organisation's Risk policy facilitates identification of theseRisks on a continuous basis and proposes mitigation measures. Our risk policy aims tominimize adverse impact of these risks on Company's growth Profit margins and Peopleengagement besides Regulatory Compliance. Risk Management has been made an integral partof the Organisation by encouraging Risk Awareness among employees.

Risk Management Framework

The Risk Management Committee (RMC) of the Board of Directors overseesthe Risk Management process under the overall direction of the Board of Directors. TheRisk Management Committee consists of the Board of Directors Chief Financial Officer andthe Chief Risk Officer. The Organisation use BELIEF (Brand End Customer LeadershipIntellectual Property Execution and Finance) framework for its risk classification. TheRMC is supported by Information and Cyber Security Sub Committee Cloud Risk Council andEnterprise Risk Department to execute the overall risk management plan and periodicallyupdate the Risk Management Committee.

Risk Management Process

Risk Management is a continuous and developing process which runsthroughout the Organisation's strategy and the implementation of that strategy. The RiskManagement helps the organisation to proactively manage uncertainties in the internal andexternal environment and to limit the negative impacts and benefit on the opportunities.The process includes risk identification risk evaluation risk prioritsation riskmitigation risk monitoring & review.

BRAND CAPITAL

1. Reputation Risk

The brand / reputation risk may arise in case of issues around productimplementation customer relationships & escalations etc. Risk may accentuate due toincreased use of social media & other internet based applications in the corporateworld. The risk is mitigated by adoption of Product Delivery & Customer Excellenceprocesses to manage implementations & relationships effectively.

END CUSTOMER CAPITAL

2. Business Risk

2.1 Economic Political and Social Outlook Risk

Volatility in the financial markets coupled with politicaluncertainities trade war inflationary trends recession pandemic or unforeseen externalevents may have resulting cascading effects on the financial sectors such as costreductions measures etc. Further demographic shift in usage of technology or financialservices by consumer in general may have adverse impact on sale of Intellect products.Intellect global presence wide range of products to cater different segments within thefinancial sectors penetration into diversified market & various geographies; spreadof product concentration and increased partnerships facilitates to mitigate the risk.

2.2 Market Competition Risk

The company faces competition from large Multinational companies localcompanies in the geography in which we operate and Indian Product companies. While many ofthese companies are established companies the start ups may also disrupt our business.This may pose a challenges to maintain or sustain the business growth or profitability ina longer run.

Company makes focussed investments in R&D with continuousevaluations of product endurance across segments / geographies to keep products relevant& competitive in market place. Ongoing efforts made to enhance the customer experiencethrough deployments of innovative products competitive pricing through operationalefficiencies cost optimisation measures & improved implementations with minimal no.of defects helps us to remain ahead in the innovation curve.

2.3 Business Model Risk

With increased usage of cloud hosting across the industry a strategicshift from traditional License / AMC based model to cloud model may pose risk to theCompany's existing business model. The Company keeps a close eye on the changing businessmodel scenario and takes appropriate required actions. A certain portion of our revenue isalready derived from the Cloud model through SaaS & subscription.

2.4 Business Concentration Risk

The company is specialised in BFSI space and could face the risk ofconcentration in a single space. Significant reliance on a particular product customersegments or geography may heighten the risk of revenue loss & consequential impact onthe profitability in case of adverse conditions such as customer exit volatilegeo-political scenarios sector specific slowdown etc. However this risk is mitigated toa large extent by fairly diversifying the concentration across lines of business marketsegments & geographies.

The company has presence in all the 4 sub segments of BFSI namelyCorporate Banking Retail Banking Capital Markets and Insurance. These 4 sub segmentshave different boom and bust cycle and therefore protect the company. Further Company hasmultiple products and client base to further de-risk the product / business concentration.Intellect mitigates its geography concentration risk by having its presence acrossdifferent geographies.

2.5 Customer Service Management Risk

Intellect has the contractual agreements with multiple clients fromdifferent countries with varied needs requirements and their legal & operatingenvironment. Morever the nature of the contracts are long term and relationships if notmanaged appropriately could have repercussions on the customer persistency & businessgrowth. The risk is mitigated through regular assessment of the customer relationshipsthrough customer feedback and satisfaction scores. Mechanisms are built in to monitoradherence to the contractual clauses with its customers. The robust long-term strategicrelationships are build with the customers to enhance customer satisfaction & valuemaximisation along with designing developing & implementing the products according toindustry needs and requirements.

2.6 Contractual Compliance Risk

As a product based company Intellect bears the risk of IPinfringements arising from the use of its products and non-performance of its contractualobligations. These risks may accentuate if the contractual obligations are not aligned toIntellect's risk appetite. The company has an established process in place to review allcontracts. As a policy it restricts its obligation under each contract are restrictedappropriately. The Company has adequate Insurance obtained to mitigate against risk ofErrors and Omissions Commercial General Liability etc

LEADERSHIP CAPITAL

3.1 People Risk

The company operates in niche BFSI product space which requires peoplewith specialised skill as against mass recruitment that was followed in Servicesbusiness. The Company minimises the risk through in-depth in-house training &recruitment from top end Engineering colleges B Schools Tier 2 cities & lateralhires. The Background Checks (BGC) is mandated for all new hirers and is audited from timeto time.

3.2 Associate Conduct Risk

Mechanisms to prevent or minimise inappropriate conduct such as fraudsexual harassment criminal attempts bribery or violation of Company policies such ascode of conduct conditions of employment Insider trading or any other professionalnegligence errors & omissions etc. if not adequate may jeopardise work culture /reputation / asset / property damage or business performance. Established various policies& process adequate trainings and awareness programmes on policies & proceduresfor its associates conducted along with regular monitoring. Policies on whistle blowerescalations incident management & response mechanisms in conjunction with theestablished discipliniary committee faciliates to effectively address the inappropriateconducts if any.

INTELLECTUAL PROPERTY

4.1 Information & Cyber Security Risk

Internal and external cyber threats if not appropriately managed canpotentially result in data leakage source code compromise etc. which may significantlydisrupt core operations and may damage Company's Brand Image / reputation. The risk ismitigated through Information & Cyber Security Forum and Central Security Group whichadminister the Information & Cyber security programme for the organisation. MoreoverCyber liability insurance is obtained to safeguard against any loss arising out of anysecurity breaches.

4.2 Data Protection & Privacy Risk

The confidential data of the customers / associates are subject to dataprivacy laws of various states. Procedures to effectively handle the confidentiality andprivacy if not robust can lead to data breaches. The risk gets accentuated on account ofheightened regulations or guidelines such as GDPR widespread usage of emergingtechnologies used to enhance customer experience also may pose challenges to protect data& the privacy elements. The risk is mitigated by putting data authorisation process inplace provision of necessary guidance to the delivery teams with data security practices.GDPR related compliance reviews are facilitated for applicable business / functionalteams.

4.3 Intellectual Property Rights Infringement Risk:

a) IP protection: The Company may face challenges to protect theIntellectual property rights which are pivotal for its revenue generation. The risk ismitigated through registration of IPs in the countries having robust protection laws.

b) Risk of use of "Open Source" Software

"Open Source" Software may be used in some of our solutions.Failure to abide with the terms of the open source licenses could have a negative impacton our business. The risk is mitigated through adoption of the open source policy whichfacilitates to identify monitor review report & thereby facilitate restricted &acknowledged usage of the open source software's on ongoing basis.

EXECUTION:

5.1 Global Operations Risk

Global operations may get impacted on account of various factorsinherent to the international business activities and differences in the following: Lawsand Regulations in the banking & financial service work practices (e.g. working fromhome) complex tax regimes licensing requirements varied trade / tarrif policies &corruption perception index data protection and privacy laws economic sanctionsoutbreaks of war hostilities terrorism mass immigration international embargoeseconomic sanctions and boycotts and staffing challenges and immigration laws. Specificpolicies and procedures put in place with regard to work practices Code of Conductanti-bribery anti-money laundering data protection and privacy etc.

Consultation support from reputated tax firms.

5.2 Cloud Infrastructure Management Risk

With increased cloud adaptability requirements to have highly skilledresources to manage cloud environments unique contractual agreements with the customers& cloud service providers ensuring adequacy of security measures by the serviceproviders heightened regulations like GDPR the company is exposed to a risk of SLA /security breaches by cloud service providers which may result in financial implications(imposition of fines & penalties) or reputation damage. The risk is mitigated bydefining the Cloud governance framework to consistently manage cloud environments acrossthe lines of businesses. Periodic reviews are performed to assess the security internalcontrols DR backup processes SLAs service contracts etc. with cloud service providers.

5.3 Product Implementation Risk

Delays errors or omissions in implementations could hamper ourdelivery capabilities leading to multiple risks such as delay in collections violation ofcontractual commitments fines / penalties and damages to Brand image. The risk ismitigated through delivery excellence processes & continuous monitoring &reporting of implementations through use of various tools. Further Company adequatelyinsures itself for any liabilities arising on account of errors & omissions or anydelays.

5.4 Defects or Security Vulnerability Risk

Inability to identify or detect defects or security vulnerabilities inthe Intellect's existing or new products either at development stage or subsequently inthe various versions or enhancements of the products. Inability to meet the customerexpectations in its entirety regarding the timeliness and the quality of the defectresolution process. This may result in refunds damage claims termination of existingarrangements product replacement or negative publicity impacting future demandproposition of the product increased costs (service maintenance & warranty costetc.) Intellect has a comprehensive Delivery Excellence framework and Quality Managementprocess in place as part of the software development lifecycle. Moreover extensivetesting is performed to identify and resolve any issues which may adversely affect thefunctionality security and other performance of the products and offerings.

5.5 Compliance Risk

Inadequate or non compliances to the material laws & regulationsapplicable in the respective countries having business presence may lead to fines /penalties/ closure of the offices resulting in revenue loss. The Company Secretarial teammonitors the secretarial & compliance related activities. Country specific statutorycompliance requirements of our Overseas Subsidiaries is regularly monitored and reported.The subsidiary compliance is ensured periodically under various jurisdiction.

5.6 Legal Risk:

Intellect operates in multiple jurisdictions and therefore is subjectto different regulations. Any legal proceedings in geography are likely to have uncertainoutcomes resulting in damages or injunctive measures that could hinder Intellect's abilityto conduct business in these geographies. Monetary risks and other risks impacting thecompany's financial condition and reputation are balanced off through the contract reviewprocesses. The Company has a dedicated legal team which works closely with the businessand other stakeholders (through business) to ascertain the scope and risks of the deal.

5.7 Business Continuity Risk:

In light of recent pandemic scenario arising on account of Covid19 thesignificance of business continuity is of paramount importance. The Business continuityplans for people processes & technology if not robust or inadequate may createchallenges to manage unforeseen crisis or events such as natural or man made calamities /disasters and may disrupt the business performance. The risk is managed by designingappropriate recovery strategies / business continuity plans. Dedicated teams monitor theadequacy of the business continuity arrangements. Periodic testing and simulations carriedout on an annual basis.

5.8 Fraud Risk:

Mechanisms to prevent detect measure monitor and report thepotential collusion touch points fraud events or criminal hackings if not robust mayresult in revenue leakage financial losses or the reputation damage for the Company. Tomitigate the risk potential fraud areas are assessed as part of regular audit programmesincluding performance of Vulnerability and Penetration testing across product release.Risks associated with potential fraud for identified design gaps are reported to theInternal Audit Committee with suitable action plans. Further Crime insurance cover isobtained to safeguard against any direct financial loss arising out of fraudulentactivities by associates.

5.9 New Country Entry Risk:

Failure to effectively study evaluate identify analyse and addressthe country specific risks at the time of entry into a particular geography couldadversely affect long term interests of the organisation. Any new business opportunity ina new country is subject to a Country Risk Assessment which helps in developing a robustknowledge platform and also to understand the local conditions and business culture at theearly stages of the business and design adequate risk mitigation measures to facilitatebusiness in new countries.

FINANCIAL

6.1 Foreign Exchange / Currency Fluctuations Risk

The company earns a large portion of its revenue in foreign currenciesand is exposed to the risk of currency movements. To mitigate this risk the companyfollows a 2 step strategy.

• As the first step quotation in foreign currencies is restrictedto few selected major currencies. Quotation in any other currency is highly controlled.

• The second leg of this strategy is to hedge the foreign earningsafter subtracting the local expenses.

6.2 Larger Order to Cash Cycle and Liquidity Risk

Our customers being large Banks and Financial Institutions the creditworthiness is in comfort even though the cycle is long. The percentage of bad debts isalso minimal. Since the Products business has a long order to cash cycle delays inconversion of REB into invoicing or recovery of the billed invoices from the clients /customers may result in strain over the company to meet their working capitalrequirements recurring fixed & direct costs which may require increased borrowingsfinance charges and thereby impact the Company's profitability. The risk is mitigated byarrangement of required credit lines through various Banks regular monitoring of ageingof receivables / REB balances by the management and robust recovery & follow-upsmechanisms with clients / customers.

The Company has identified Liquidity Risk as an area to monitor. TheFinance organisation headed by the CFO monitors the liquidity position consisting of cashand near cash instruments on a continuous basis.

6.3 Financial Reporting Risk - Internal Financial Control (IFC)

The Company has to comply with additional controls enforced by Section134 of the Companies Act 2013. This is to report on the Internal Financial Control in theDirectors Report and also by the Statutory Auditors. Key internal controls over financialreporting if not designed identified and operate effectively may result in mis-statementsgoing unnoticed and impact the true and fair view of the financial / operational resultsof the Company. To comply with this the company assesses the existing control environmentthrough regular internal and statutory audits and ensures that the requirements arecomplied.

Risk Mitigation through Insurance

The Company has appointed a Global leader for Risk & Insuranceadvisory to advice on the risk and insurance coverage. The following Insurance coverage istaken to mitigate risks.

1. Errors & Omissions Insurance - To safeguard against any lossarising of an error negligent act or omission which would result in failure in performingthe professional services or duties for others.

2. Cyber Liability Insurance - To safeguard against any loss arisingout of a security breach and or privacy breach that would result in sensitive orunauthorised data or information being lost or compromised.

3. Crime Insurance - To safeguard against any direct financial loss ofproperty money or securities arising out the fraudulent activities committed by theemployee or in collusion with others.

4. Directors & Officers Liability Insurance - To safeguard againstany loss arising out of a wrongful act made by the Directors Officers and Employees ofthe organisation with reference to the Company's business operations and activities.

5. Commercial General Liability Insurance - To safeguard against ThirdParty bodily injury or property damage arising out of our business operations.

6. Standard Fire & Special Perils Insurance - To protect theCompany's Assets (movable & immovable Assets) from the risk of Fire or Perils.

24. Corporate Social Responsibility

The Company has formed Corporate Social Responsibility Committee on15th October 2014 and reconstituted on 24th July 2019 and August 05 2020. Following arethe members of the Committee:

a) Mr. Anil Kumar Verma - Chairman

b) Mr. Abhay Anant Gupte - Member

c) Mr. Arun Jain - Member

As per Section 135 of the Companies Act 2013 a company meeting theapplicability threshold needs to spend at least 2% of its average net profits for theimmediately preceding three financial years on CSR activities. The details of the policydeveloped and implemented by the Company is given as a part of annual report on CSR asAnnexure 7.

25. Secretarial Standards

The Company complies with all applicable mandatory secretarialstandards as issued by the Institute of Company Secretaries of India.

26. Disclosure as required under Section 22 of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013

The Company has in place an Anti-Sexual Harassment Policy in line withthe requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. The Internal Complaints Committee ("ICC") has been setup to redress the complaints received regarding sexual harassment. All employees arecovered under this policy.

The following is the summary of the complaints received and disposedoff during the financial year 2021-22:

a) No. of complaints filed during the year: NIL

b) No. of complaints disposed during the year: NIL

c) No. of complaints pending as at end of the financial year: NIL

27. Listing Fees

The Company confirms that it has paid the annual listing fees for theyear 202122 to both the National Stock Exchange of India Limited and BSE Limited.

28. Certifications

Your Directors would like to appreciate the achievements of the QualityDepartment which enabled your Company to get certified at CMMi level 5 by CMMI InstituteUSA for its Global Consumer Banking (iGCB) business. Your Directors would also like toappreciate the achievements of Cards Business team and Corporate Security Group for PCI -DSS certification and the achievements of iSEEC business team and Corporate SecurityGroup for SOC 2 certification for Insurance products.

29. Acknowledgment

Your Directors take this opportunity to express the gratitude to allinvestors clients vendors Bankers Regulatory and Government authorities StockExchanges and business associates and all other stakeholders for their cooperationencouragement and continued support extended to the Company. Your Directors also wish toplace on record their appreciation to the Associates for their continuing support andunstinting efforts in ensuring an excellent allround operational performance at alllevels.

By Order of the Board For Intellect Design Arena Limited
Place: Chennai Arun Jain
Date : May 5 2022 Chairman and Managing Director DIN:00580919

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