Your Directors have great pleasure in presenting the 36th Directors' Reportfor the financial year ended March 31 2018:
1. HIGHLIGHTS OF CONSOLIDATED AND STANDALONE FINANCIAL RESULTS
Rs. in Lakhs
|Particulars ||Consolidated ||Standalone |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Revenue from operations ||81721 ||56016 ||16232 ||16948 |
|Other Income ||2099 ||1260 ||2323 ||1282 |
|Total Income ||83820 ||57276 ||18555 ||18230 |
|Expenses ||71755 ||51160 ||14683 ||14259 |
|Depreciation and amortisation expenses ||1876 ||1493 ||1119 ||1204 |
|Finance costs ||586 ||377 ||19 ||24 |
|Exceptional items ||- ||340 ||- ||340 |
|Profit before tax ||9603 ||3906 ||2734 ||2403 |
|Tax expense ||2607 ||665 ||1160 ||91 |
|Profit after tax ||6996 ||3241 ||1574 ||2312 |
|Other comprehensive income ||(248) ||(4157) ||(1315) ||790 |
|Total Comprehensive income ||6748 ||(916) ||259 ||3102 |
|Equity Holders ||6748 ||(916) ||259 ||3102 |
|Dividend ||(1056) ||(233) ||(1056) ||(233) |
|Dividend Distribution Tax ||(12) ||- ||(12) ||- |
|EPS || || || || |
|-Basic ||29.74 ||13.96 ||6.69 ||9.96 |
|-Diluted ||28.14 ||13.38 ||6.33 ||9.55 |
2. OVERVIEW OF THE FINANCIAL PERFORMANCE A. MASTEK OPERATIONS
On a Consolidated basis the Group registered revenue from operations of Rs. 81721lakhs for the year ended March 31 2018 as compared to Rs. 56016 lakhs in the year endedMarch 31 2017 which is an increase of 45.9%. The Group registered a net profit of Rs.6996 lakhs in the year ended March 31 2018 as compared to Rs. 3241 lakhs in the yearended March 31 2017 thereby registering an increase of 115.9%.
On a Standalone basis Mastek registered revenue from operations of Rs. 16232 lakhsfor the year ended March 31 2018 as compared to Rs. 16948 lakhs for the year endedMarch 31 2017. The Company made a Net profit of Rs. 1574 lakhs for the year ended March31 2018 as compared to Net Profit of Rs. 2312 lakhs for the year ended March 31 2017.Further details are included in notes to the Accounts of Standalone Financial Statement.
The Consolidated and Standalone Financial Statements of the Company for the year endedMarch 31 2018 are prepared in compliance with the applicable provisions of the CompaniesAct 2013 and Indian Accounting Standards (IND-AS). The said financial statements havebeen prepared on the basis of the audited financial statements of the Company and un-auditedfinancial statements of its subsidiaries which have been reviewed by the StatutoryAuditors.
No material changes or commitments have occurred between the end of the Financial Yearand the date of this Report which affect the financial statements of the Company inrespect of the Financial Year under review.
Pursuant to the provisions of Section 136 of the Companies Act 2013 the Standaloneand Consolidated Financial Statements along with the
Directors' Report and Auditors' Report thereon form part of this Annual Report. TheFinancial Statement of the Company and its subsidiaries are also available on the websiteof the Company and can be accessed at the weblink:http://www.mastek.com/financial-information.
B. BREAKUP OF THE OPERATING REVENUE BY REGIONS
|Region || |
Year ended March 31 2018
Year ended March 31 2017
| ||Rs. in Lakhs ||% of Revenue ||Rs. in Lakhs ||% of Revenue |
|UK ||56315 ||68.9% ||46040 ||82.2% |
|North America ||23715 ||29.0% ||7078 ||12.6% |
|Others (India/Asia Pacific) ||1691 ||2.1% ||2898 ||5.2% |
|Total ||81721 ||100.0% ||56016 ||100.0% |
The U.K. operations contributed Rs. 56315 lakhs in total operating revenue for theyear 2017-18 as compared to Rs. 46040 lakhs for the year ended 2016-17 resulting in agrowth of 22.3%. This growth was driven by increased business in the Government verticalfollowed by Retail and Finance vertical. UK business grew by 27.6% on constant currencybasis.
The North America operations contributed Rs. 23715 lakhs in revenue for the year2017-18 witnessing a growth of 235% driven by full year revenue contribution and growthfrom TAISTech acquisition.
Revenue of other region i.e. India and Asia Pacific region is Rs. 1691 lakhs for theyear 2017-18 as compared to Rs. 2898 lakhs for the year 2016-17 resulting in a decreaseof (41.6%). The degrowth is due to selective bidding in this segment during the year aspart of Group strategy.
C. BREAK UP OF REVENUE BY SERVICE LINES
|Service Lines ||2017-18 ||2016-17 |
| ||Rs. in Lakhs ||% of Revenue ||Rs. in Lakhs ||% of Revenue |
|Application Development ||38891 ||47.6% ||32480 ||58.0% |
|Digital Commerce ||21211 ||26.0% ||5614 ||10.0% |
|Application Support & Maintenance ||8008 ||9.8% ||8495 ||15.1% |
|BI & Analytics ||6484 ||7.9% ||2007 ||3.6% |
|Agile Consulting ||4771 ||5.8% ||5473 ||9.8% |
|Assurance & Testing ||2356 ||2.9% ||1947 ||3.5% |
|Total ||81721 ||100.0% ||56016 ||100.0% |
During the Year ended March 31 2018 the Group earned a profit of Rs. 6996 lakhs ascompared to Rs. 3241 lakhs for the year ended March 31 2017. The profits for thefinancial year ended 2017-18 achieved growth of 115.9% driven by focused profitablegrowth in revenue acquisition in US operational improvement and better utilisation ofexisting investment in SG&A and capacity to service growth.
3. HOLDING AND SUBSIDIARIES
Your Company continues to be the Holding Company of Trans American Information SystemsPrivate Limited and Mastek (UK) Limited which in turn has IndigoBlue Consulting Ltd UKand Digility Inc. USA as its wholly owned subsidiaries.
Digility Inc. USA the step down subsidiary of your Company has TAISTech LLC USA andTrans American Information Systems Inc. USA as its wholly owned subsidiaries andconsequently they are also step down wholly owned overseas subsidiaries of the Company.
Your Company has two direct wholly owned subsidiaries and four step down subsidiariesas at March 31 2018 and the statement containing salient features of the financialstatements of all the subsidiaries along with the highlights of the performance of thesubsidiaries and their contribution to overall performance of the Company are provided in
Form AOC-1 is annexed as Annexure 1.
Your Company is a Global IT service provider focused on Enterprise DigitalTransformation in agile manner. It combines the business knowledge and industry expertiseof its domain specialists and the technical knowledge and implementation skills of itsDelivery team leveraging its Tools Platforms Partnerships and Solutions in itsDevelopment Centers located across India UK and US.
Your Company offers comprehensive services covering full range of the softwaredevelopment process starting with agile consulting application development testing toongoing support and maintenance. With over three decades of experience and excellent trackrecord of delivery manifesting in our 96% delivery success ratio has empowered us withthe capability to drive the growth of our diverse clients.
In the UK rate of growth is likely to be subdued owing to uncertainty over the outcomeof Brexit negotiations. However it provides significant opportunity to Mastek as atleast27 core systems across central government will need to be reconfigured. This includesimmigration borders and customs controls amongst other departments. Mastek holdssuccessful long term client relationship with proven track record with Home office andHealth which are expected to have bigger share of IT spend.
In the US your Company is supporting its customers in Digital Commerce space tomodernise and compete in evolving Retail sector which is undergoing disruption andsignificant transformation in acquiring and retaining customers.
Businesses across globe recognise the imperative to leverage new and emergingtechnologies to drive efficiencies. As per Forbes more than 84% of digital transformationprojects fail to meet expectations. Your Company with proven capabilities in deliveringlarge and complex enterprise-wide transformation projects is well placed to successfullypartner businesses from end-to-end in their transformational journeys.
For further details please refer Management Discussion Analysis Report.
Your Company closed the financial year with a satisfactory performance achievinggrowth across all the parameters as well as making Mastek a future-ready organisation. TheCompany is well poised to achieve its objectives defined under "Vision 2020"i.e. to be a global leader in digital transformation services. Mastek is eyeing for anall-round growth in agile and digital transformation space and geared up to unlock itspotential.
For further details please refer Management Discussion Analysis Report.
6. DIVIDEND & RESERVES
The Board of Directors at its meeting held on October 26 2017 approved payment ofInterim Dividend of Rs. 2/- per share (Face value of Rs. 5/- each) i.e. @ 40% which waspaid on November 15 2017.
Further the Board of Directors at its Meeting held on April 18 2018 were pleased torecommend the payment of a final dividend @ of Rs. 4/- per equity share (face value of Rs.5/- each) i.e. @80% subject to the approval of the Shareholders at the ensuing 36thAnnual General Meeting.
Therefore the total dividend for the financial year ended March 31 2018 stands at Rs.6/- per share involving an total outflow approximately of Rs. 1422 lakhs compared to
` 3.50/- per share paid during the previous year.
The final dividend if approved at the ensuing 36th Annual General Meeting(AGM) will be paid to those shareholders whose names appears on the Register of Membersof the Company as of the end of the day on July 12 2018 being the record date.
During the year under review no amount from profit was transferred to GeneralReserves.
7. PARTICULARS OF LOANS GUARANTEE OR INVESTMENT UNDER SECTION 186 OF THECOMPANIES ACT 2013
In compliance with the provisions of the Companies Act 2013 there were no loans orinvestment made by the Company. Further the details of guarantee provided and outstandingare given in the respective Notes to the Financial Statements.
Company had provided a Corporate guarantee in December 2016 for an amount of USD 12mn. and also security/ charge/ mortgage over its Property as a Security for a term loanfacility availed of an aggregate principal amount not exceeding USD 10 million from Bankvalid for a period of 5 (_ve) years for acquisition of 100% share-holding in two US basedsoftware services companies by Digility Inc. a first level step-down subsidiary of theCompany.
8. OTHER DISCLOSURES UNDER THE COMPANIES ACT 2013 i) Extract of Annual Return:
Pursuant to section 92(3) of the Companies Act 2013 (the Act') and Rule 12(1) ofthe Companies (Management and Administration) Rules 2014 extract of Annual Return isannexed as Annexure 2.
ii) Number of Board Meetings:
The Board of Directors met 5 (Five) times during the financial year 2017-18. Thedetails of the board meetings and the attendance of the Directors there at are providedin the Corporate Governance Report appearing elsewhere as a separate section in thisAnnual Report.
iii) Change in Share Capital:
During the year the Company allotted 314523 Equity Shares of face value of Rs. 5/-each for a total nominal value of Rs. 1572615 under various ESOP Plans to the eligibleemployees of the Company who exercised their vested Employee Stock Options. These EquityShares rank pari passu in all respects with the existing Equity Shares of the Company.
As on March 31 2018 the issued subscribed and paid up share capital of your Companystood at ` 118460280/- comprising 23692056 Equity shares of Rs. 5/- each. (PreviousYear Rs. 116887665 comprising 23377533 Equity shares of Rs. 5/- each.)
iv) Composition of Audit Committee:
Mastek has an Audit Committee that currently comprises of four IndependentDirectors and one Non-Executive Director. The Chairman of the Audit Committee is anIndependent Director. The Independent Directors are accomplished professionals from thecorporate fields. The Group Chief Financial Officer attends the meetings on invitation.The Company Secretary act as the Secretary to the Committee.
During the year ended March 31 2018 the Committee met 4 (Four) times. The details ofthe Audit Committee Meetings and the attendance of the Members there at are provided inthe Corporate Governance Report appearing elsewhere as a separate section in this AnnualReport.
During the year all the recommendations of the Audit Committee were accepted by theBoard.
v) Related Party Transactions:
In line with the provisions of the Companies Act 2013 and the Securities and ExchangeBoard of India (Listing Obligations & Disclosure Requirements) Regulations 2015("SEBI Listing Regulation") the Company has formulated a Policy on materialityof Related Party Transactions and also on dealing with Related Party Transactions. Thesame has been posted on the website of the Company at https://www.mastek.com/corporate-governance
All the Related Party Transactions are entered into at an arm's length basis and are incompliance with the applicable provisions of the Companies Act 2013 and SEBI ListingRegulations. There are no materially significant Related Party Transactions made by theCompany with Promoters Directors or Key Managerial Personnel etc. which may havepotential conflict with the interest of the Company at large.
Omnibus approval is given by Audit Committee for the transactions which are foreseenand are repetitive in nature. A statement of all Related Party Transactions is presentedbefore the Audit Committee and the Board on a quarterly basis specifying the naturevalue and terms and conditions of the transactions. The said transactions were unanimouslyapproved by the Audit Committee as well as by the Board.
In accordance with Section 134(3)(h) of the Companies Act 2013 and Rule 8(2) of theCompanies (Accounts) Rules 2014 the particulars of contract or arrangement entered intoby the Company with related parties referred to in Section 188(1) of the Companies Act2013 in FORM AOC-2 is annexed as Annexure 3.
vi) Changes in the Nature of Business:
There has been no change in the nature of business of the Company during the financialyear ended March 31 2018.
vii) Listing with Stock Exchanges:
Your Company is listed with the BSE Limited and National Stock Exchange of IndiaLimited.
viii) Compliance with Secretarial Standards on Board and Annual General Meeting:
The Company has complied with the Secretarial Standards 1 and 2 issued by the Instituteof Company Secretaries of India on Meetings of Board of Directors and General Meetings. ix)Insurance:
The Company has sufficiently insured itself under various Insurance policies tomitigate risks arising from third party or customer claims property casualty etc. x)Equity shares with differential rights:
Your Company has not issued any equity shares with differential rights as to dividendvoting or otherwise.
9. CREDIT RATING
The Company enjoys a good reputation for its sound financial management and the abilityto meet its financial obligations. During the year under review ICRA Limited a reputedRating Agency had reaffirmed the ratings assigned for the bank facilities as [ICRA]A+(Stable) rating for fund based limits and [ICRA]A1+ for non-fund based limits for theWorking Capital facilities granted to the Company by its Bankers.
10. MANAGEMENT OF RISKS OF FRAUD CORRUPTION AND UNETHICAL BUSINESS PRACTICES
Whistle Blower Policy / Vigil Mechanism
In compliance with the requirement of the Companies Act 2013 and SEBI ListingRegulations the Company has established a Whistle Blower Policy / Vigil Mechanism Policyand the same is placed on the web site of the Company. vizhttps://www.mastek.com/corporate-governance
The Company has a Vigil Mechanism for Directors and Employees to report their concernsabout unethical behavior actual or suspected fraud or violation of the Company's Code ofConduct. The mechanism provides for adequate safeguards against victimisation ofDirector(s) and Employee(s) who avail of the mechanism.
The Company has also adopted Anti Bribery Policy and all concerned staff / employeesare trained to avoid falling foul of the laws in the respective geographies where Companyoperates.
The employees of the Company are made aware of the said policy at the time of joiningthe Company and are also provided online training.
11. INDUSTRY RECOGNITION
Mastek Group received following awards / accolades during the year:
Mastek was a Finalist at the European Testing
Awards 2017 within the Best Test Automation Category - Functional';
3rd prize in all India level NASSCOM Hackathon -
"Build for India & Women in Technology";
UK IT Industry Awards 2017.
12. DIRECTORS' RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company audit and reviews performed by the internalauditors statutory auditors and secretarial auditors and the reviews undertaken by themanagement and the Audit Committee the Board is of the opinion that the Company'sinternal financial controls have been adequate and effective during the year under review.
Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 and to the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements:
(a) that in the preparation of the annual financial statements for the year ended March31 2018 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
(b) that such accounting policies as mentioned in Note 1 of the Notes to the Financialstatements have been selected and applied consistently and judgments and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2018 and of the profits of the Company for theyear ended on that date;
(c) that proper and sufficient care has been taken for 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) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls to be followed by the Company have beenlaid down and that such internal financial controls are adequate and were operatingeffectively; and
(f) that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
13. STATUTORY AUDITORS THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS AND FRAUD IFANY
As per the requirements of the Companies Act 2013 the Audit Committee and the Boardof Directors at their meeting held on April 20 2017 appointed M/s. Walker Chandiok &Co. LLP Chartered Accountants (Firm Registration No. 001076N/N500013) as the StatutoryAuditors of the Company and the shareholders of the Company at the 35th AnnualGeneral Meeting (AGM) appointed M/s. Walker Chandiok & Co. LLP Chartered Accountants(Firm Registration No. 001076N/N500013) as Statutory Auditors of the Company for aperiod of 5 years commencing from the conclusion of 35th AGM till theconclusion of the 40th AGM subject to ratification by members every year.
Ratification of the appointment of the Statutory Auditors as recommended by the Boardis being sought from the Shareholders at the ensuing 36th Annual GeneralMeeting of the Company.
Further the report of the Statutory Auditors along with the notes is enclosed with thefinancial statements. The observations made in the Auditors' Report which containsunmodified opinion are self-explanatory and does not contain any qualification/modifiedopinion. Therefore it does not call for any further comments. Also the Auditors of theCompany have not reported any fraud as specified under Section 143(12) of the CompaniesAct 2013.
14. SECRETARIAL AUDIT
In terms of Section 204 of the Companies Act 2013 and Rules made thereunder the Boardof Directors at their Meeting held on April 20 2017 appointed Mr. Soumitra MujumdarPracticing Company Secretary as Secretarial Auditor of the Company for the financial year2017-18. However Mr. Soumitra Mujumdar had resigned w.e.f. November 30 2017 asSecretarial Auditor voluntarily and to fill the casual vacancy in his place Mr. PrashantS. Mehta Practising Company Secretary was appointed by the Board of Directors at theirMeeting held on January 18 2018 as the Secretarial Auditor for the Financial Year 2017-18to conduct Secretarial Audit and issue the Secretarial Audit Report pursuant to theprovisions of Section 204 of the Companies Act 2013.
The report of the Secretarial Auditors is annexed as Annexure 4 to this report.The report is self-explanatory and does not contain any qualification. Therefore it doesnot call for any further comments.
15. HUMAN RESOURCES
Mastek deploys its intellectual capability to create and deliver Intellectual Property(IP)-led solutions that make a business impact for its global clients. For this the keysuccess enabler and most vital resource is world-class talent. Mastek continuallyundertakes measures to attract and retain such high quality talent.
As on March 31 2018 Mastek Group had a total Head count of 2058. Your Directors wishto place on record their appreciation for the contributions made by employees to theCompany during the year under review at all levels.
The disclosure required under Section 197(12) of the Companies Act 2013 read with theRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is annexed as Annexure 5 and forms part of this report.
16. EMPLOYEE STOCK OPTION PLANS
During the year under review the Company had allotted 314523 equity shares underEmployee Stock Option Plans to its eligible employee. The Board of Directors confirms thatthere is neither new plan introduced nor their are any material change in the existingESOP Plans and all the existing ESOP Plans are in compliance with the SEBI Guidelines. Therequired disclosures in this regard are annexed as Annexure 6 and forms part ofthis report.
17. ENTERPRISE RISK MANAGEMENT (ERM)
In terms of the requirement of the Companies Act 2013 the Company has developed andimplemented the Risk Management Policy and the Board and the Governance Committee of theBoard reviews the risks and remedial measures taken on a periodical basis.
The risks are identified and discussed at regular intervals. The various risks arecategorised as High risk Medium risk and Low risk and appropriate mitigationsteps/measures are taken/ initiated to mitigate the identified risks from time to time.
The Company's Risk Management Policy with a robust supporting risk management structure& frame work facilitates identification and assessment of new risks and review ofalready identified risks. The process is based on identified risks and the risk events orfactors which require regular assessment and quick response. Based on the probability& impact of the risk the requisite controls and mitigation action plans have beendesigned and implemented for risk treatment.
The objective of Risk Management in the Company is to act as an enabler in maintainingits knowledge edge sustaining and expanding the business being competitive and ensuringexecution of projects within budgeted cost time and quality resulting in improvedturnover and profitability.
Risk compliance verifications are reviewed regularly to test the compliance of controls& mitigation action plans and the summary is reported to the Board. This spreadsawareness about various risk management activities/achievement new topics/ practices/updates on ERM and to create enthusiasm in them to proactively control risks in their workprocesses & areas. Mastek is committed to further strengthen its risk managementcapabilities in order to protect interests and enhance shareholder value.
18. UPDATES ON BOARD OF DIRECTORS/KEY MANAGERIAL PERSONNEL (KMP)
A brief profile of all the Directors has been given in the Corporate Governance Sectionwhich forms part of the Annual Report.
A. Manner of Evaluation of the Board's Performance
In compliance with Companies Act 2013 and SEBI Listing Regulations the Board ofDirectors has carried out an annual evaluation of its own performance Board CommitteesIndividual Directors Chairpersons and the Managing Director for the year under review.
In respect of individual Directors including the Non- Executive Chairman and theManaging Director their personal performance was carried out using a peer review processfacilitated by an outside subject matter expert with confidential processing of inputsinterpretation of findings followed by one-on-one meeting of the individual Directors andconcluding with an aggregate presentation to the entire Board.
Board and Committees functioning was reviewed and evaluated on the basis of responsesfrom Directors Committee Members and the Managing Director to structured questionnairescovering various aspects of the composition and functioning of the Board and itsCommittees.
In a separate meeting of the Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman were alsoevaluated taking into account the views of Executive Director and Non- ExecutiveDirectors. The Directors were asked to provide their valuable feedback and suggestionsabout the overall functioning of the Board and its Committees and its areas of improvementfor a higher degree of engagement with the Management.
The Board expressed its satisfaction with the Evaluation results which refiects thehigh degree of engagement of the Board and its Committees with the Company and itsManagement. Based on the outcome of the evaluation and assessment cum feedback of theDirectors the Board and the Management have also agreed on some action points which willbe implemented over an agreed time-frame.
B. Induction and familiarisation programme for Directors
The details of the induction and familiarisation program for the Directors are given inthe Corporate Governance Report which forms part of the Annual Report.
C. Independent Directors
Mr. S. Sandilya Ms. Priti Rao Mr. Atul Kanagat and Mr. Keith Bogg have been theIndependent Directors on the Board of the Company as at March 31 2018.
The Shareholders at the Extra Ordinary General Meeting held on March 05 2015 hadapproved the appointment of Mr. S. Sandilya Ms. Priti Rao and Mr. Atul Kanagat asIndependent Directors of the Company for a term of four (4) years from April 01
2015 to March 31 2019 and Mr. Keith Bogg was appointed as an Independent Director fora period of 5 years with effect from January 17 2017 and was confirmed by theshareholder at the 35th AGM of the Company held on June 22 2017 asNon-Executive Independent Directors.
The Company has received and after due assessment took on record the necessarydeclarations from each of the Independent Directors under section 149(7) of the CompaniesAct 2013 that they meets the criteria of Independence laid down in section 149(6) of theCompanies Act 2013 and Regulation 25 of SEBI Listing Regulations and also in the opinionof the Board and as confirmed by these Directors they fulfil the conditions specified insection 149 of the Companies Act 2013 and the Rules made thereunder about their status asIndependent Directors of the Company.
D. Director and Key Managerial Personnel (KMP):
There has been no change in the Board of Directors and Key Managerial Personnel of yourCompany since the last Annual General Meeting held on June 22 2017. Pursuant to theprovisions of Section 2(51) and 203 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the following are theKey Managerial Personnel of the Company:
Mr. Sudhakar Ram - Vice Chairman & Managing Director;
Mr. Abhishek Singh - Group Chief Financial Officer; and
Mr. Dinesh Kalani - Company Secretary.
During the year under review Mr. Abhishek Singh was re-designated from Chief FinancialOfficer to Group Chief Financial officer w.e.f July 19 2017
E. Retirement by Rotation:
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Ashank Desai retires by rotation at the forthcoming AnnualGeneral Meeting and being eligible offers himself for reappointment. Necessary resolutionfor approval of re-appointment of Mr. Ashank Desai as a Director of the Company isincluded in the Notice of the ensuing Annual General Meeting. The Board recommends theresolution for your approval.
F. Code of Conduct:
Mastek has formulated a Code of Business Conduct and Ethics for Board of Directors andSenior Managerial Personnel. The confirmation of compliance of the same is obtained fromall concerned on an annual basis. All Board Members and Senior Managerial Personnel havegiven their confirmation of compliance for the year under review. A declaration dulysigned by Vice Chairman & Managing Director is given under Corporate Governance Reportappearing elsewhere as a separate section in this Annual Report. The Code of BusinessConduct and Ethics for Board of Directors and Senior Managerial Personnel is also postedon the website of the Company at https:// www.mastek.com/corporate-governance
19. COMPANY'S POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND SENIOR MANAGERIALPERSONNEL
The Company has a policy on Remuneration of Directors and Senior Managerial Personnel.The policy has been approved by the Nomination & Remuneration Committee and the Board.The policy is available at the website of the Company athttps://www.mastek.com/corporate-governance The policy inter-alia covers:
1. Directors' appointment and remuneration; and
2. Remuneration of Key Managerial Personnel and other senior employees.
Please refer the Notes to Accounts and Corporate Governance Section for the details onRemuneration of Directors and Key Managerial Personnel.
20. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and the Company'soperations.
21. INTERNAL FINANCIALS CONTROLS OVER FINANCIAL STATEMENT
A strong internal control system is pervasive in the Company. The Company hasdocumented a robust and comprehensive internal control system for all the major processesto ensure reliability of financial reporting.
The Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. During the year such controls were testedand no reportable material weakness in the design or operations were observed. The Companyhas policies and procedures in place for ensuring proper and efficient conduct of itsbusiness the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information.
The Company has a robust financial closure certification mechanism for certifyingadherence to various accounting policies accounting hygiene and accuracy of provisionsand other estimates.
22. INDIAN ACCOUNTING STANDARDS (IND AS)
Your Company has adopted Indian Accounting Standard (Ind AS) notified under theCompanies (Indian Accounting Standards) Rules 2015 with effect from April 01 2017.Accordingly these financial results along with the comparatives have been prepared inaccordance with the recognition and measurement principles stated therein prescribedunder Section 133 of the Companies Act 2013 read with the relevant rules issuedthereunder and the other accounting principles generally accepted in India.
The Consolidated and Standalone Financial Statements have been prepared in accordancewith Indian Accounting Standards ("Ind AS") notified under the Companies (IndianAccounting Standards) Rules 2015 and Companies (Indian Accounting Standards) AmendmentRules 2016 as applicable. Please note that the Company has transitioned to IndianAccounting Standard (Ind AS) with effect from April 01 2017. Accordingly the impact oftransition has been provided in the opening reserves as at April 01 2016 and figures forthe financial year ended March 2017 have been restated accordingly. For all the periodsupto the year ended March 31 2017 the Company/Group had earlier prepared and presentedits financial statements in accordance with Accounting Standards notified under section133 of the Companies Act 2013 (Indian GAAP). These financial statements for the financialyear ended March 31 2018 are the first financial with comparatives prepared under IndAS. The adoption was carried out in accordance with Ind AS 101 First Time adoption ofIndian Accounting Standards. The transition was carried out from Indian AccountingPrinciple generally accepted in India as prescribed under Section 133 of the Act read withthe Rule 7 of the Companies (Accounts) Rules 2014 (Indian GAAP) which was the previousGAAP. Reconciliations and description of the effect of the transition to Ind AS fromIndian GAAP is given in Note 33 of the Consolidated Financial Statement and Note 32 of theStandalone Financial Statement.
All applicable Ind AS have been applied consistently and retrospectively whereverrequired. The resulting difference between the carrying amounts of the assets andliabilities in the consolidated/standalone financial statements under both Ind AS andIndian GAAP as of the Transition Date have been recognised directly in equity at theTransition Date. In preparing the financial statements the Company has availed itself ofcertain exemptions and exceptions in accordance with Ind AS 101. Financial results for allthe periods presented have been prepared in accordance with the recognition andmeasurement principles of IND AS 34 Interim Financial Reporting.
23. PUBLIC DEPOSITS
Your Company has not accepted any deposits from public in terms of Section 73 and/or 74of the Companies Act 2013.
24. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis comprising an overview of the financial resultsoperations / performance and the future prospects of the Company given elsewhere formspart of this Annual Report.
25. DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTGO
(a) Conservation of energy and Technology absorption
The Company is entirely a Services Company and thus essentially a non-energy intensiveorganisation. Additionally the Company's facilities are set up at locations chosen foradequate availability and supply of energy regardless of power shortages recentlywitnessed across many markets.
Further The Company was able to reduce the power consumption by 18% over the previousyear through monitoring energy use and installing LED lights. To further save energy andimprove efficiency we implemented smarter solutions with automated controls to maintainoptimal temperature at optimal power consumption. LEDification of our offices as well asreplacement of old power guzzler with new smarter solutions has helped to reduce energycosts as well. The Company is studying the viability of a solar powered energy / hot watersolution for our cafeteria. The initiative is currently in the initial stage.
Company is also studying the viability of a solar powered energy / hot water solutionfor the cafeteria. The initiative is currently in the initial stages.
(b) Foreign exchange earnings and outgo
Total Foreign Exchange used and earned by the Company are given as follows:
Rs. in Lakhs
|Particulars ||Year Ended March 31 2018 ||Year Ended March 31 2017 |
|Exchange Used ||490 ||795 |
|Exchange Earned ||16026 ||12749 |
26. CORPORATE GOVERNANCE
The Company has complied fully with Corporate Governance requirements under theCompanies Act 2013 and SEBI Listing Regulations. A separate section on CorporateGovernance practices followed by the Company together with the Certificate from Mr.Prashant Mehta Practicing Company Secretary appearing elsewhere in this report forms anintegral part of this report.
27. CORPORATE SOCIAL RESPONSIBILITY
In compliance with the provisions of Section 135 of the Companies Act 2013 the Boardof Directors of the Company have formed a Corporate Social Responsibility (CSR) Committee.The committee met two times during the year and a detailed report about CSR activitiesundertaken during the year is annexed as Annexure 7. Pursuant to the recommendationof the CSR Committee the Board has approved a CSR Policy and the same has been uploadedon the website of the Company www.mastek.com/corporate-governance. The contents of thepolicy are as follows:-
Mastek CSR programmes shall fall under the following categories:
1. Promoting education enhancing skills of children and development of children andwomen working in red-light areas. We are also involved in special education and employment- enhancing vocation skills especially among women elderly and the differently abled andlivelihood enhancement projects.
2. Eradicating hunger poverty and malnutrition promoting preventive health care andsanitation and making safe drinking water available.
3. Promoting gender equality and empowering women: Activities include setting up homes/ hostels for women and orphans old age homes and other such facilities for seniorcitizens day care centres and measures to reduce inequalities faced by socially andeconomically backward groups.
4. Protection and up gradation of environmental conditions: These include ensuringenvironmental sustainability ecological balance protection of flora and fauna animalwelfare agro-forestry conservation of natural resources and maintaining the quality ofsoil air and water.
5. Any other projects with the approval of the Board.
The corpus of the CSR policy includes:
2% of the average net profit of the preceding three years
Any income arising there from
Surplus arising out of the above activities
Payroll contribution from the employees
Mastek may pool its resources and CSR spending with other groups or associate companieson collaborative efforts that qualify as CSR spending.
Roles and Responsibilities:
Decide CSR projects or programmes or activities to be taken up by the Company.
Place before the Board the CSR activities proposed to be taken up by the Company forapproval each year.
Oversee the progress of the initiatives rolled out under this policy.
Define and monitor the budgets for carrying out the initiatives.
Submit a report to the Board of Directors on all CSR activities/projects spent duringthe financial year.
Monitor and review the implementation of the CSR policy.
CSR Committee Composition:
The Chairperson of the Committee is Ms. Priti Rao an Independent director. The othermembers are Mr. Sudhakar Ram and Mr. Ashank Desai. The Company Secretary Act as theSecretary to the Committee.
During the financial year ended March 31 2018 the Board approved a Budget of Rs. 84lakhs. Based on the Average net profit of the Company for three immediately precedingfinancial years the amount to be spent on CSR activities during the financial year2017-18 was budgeted at Rs. 83.94 lakhs. A total sum of Rs. 84 lakhs was spent on Projectsapproved under Section 135 of the Companies Act 2013 on CSR activities during the year.
The said expenditure is within the prescribed parameters and the Company is incompliance of the provisions of Section 135 of the Companies Act 2013.
28. TRANSFER OF UNCLAIMED DIVIDEND AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Your Company has transferred a sum Rs. 168805/- of Final Dividend for the year2009-10 during the financial year 2017-18 to Investor Education and Protection Fund(IEPF) established by Central Government in compliance with section 125 of the CompaniesAct 2013. The said amounts represent unclaimed Dividends which were lying with theCompany for a consecutive period of 7 (seven) years from their respective due dates ofinitial payment.
Pursuant to the provisions of the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 the Company has already filed thenecessary form and uploaded the details of unpaid / unclaimed amounts lying with theCompany as on the date of last Annual General Meeting (i.e. June 22 2017) and with theMinistry of Corporate Affairs website.
TRANSFER OF CONCERNED EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY(IEPF AUTHORITY)
Pursuant to the provisions of Section 124 and 125 of the Companies Act and the InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 and amendments made thereunder all the concerned shares in respect of which dividendhad not been claimed or remained unpaid for seven consecutive years or more had beentransferred by the Company in the name of Investor Education and Protection Fund Authority("IEPF Authority") in their Demat Account in November 2017 and January 2018.
The Company had identified and initiated the share transfer process with Depositoriesand transferred 48285 shares in November 2017 and 7033 shares in January 2018 (due tobe transferred to IEPF based on Un-Paid Interim Dividend of year 2009-10 and Un-Paid FinalDividend of year 2009-10 in November 2017 and January 2018 respectively) to InvestorEducation and Protection Fund Authority Demat Account to comply with the said Rules. TheList of shares transferred to IEPF Authority is available on the Company's website athttps:// www.mastek.com/investor-information
In case the shareholders have any queries on the subject matter and the Rules they maycontact the Company's Share Transfer Agent Karvy Computershare Private Limited. TheMembers / claimants whose shares unclaimed dividend etc. have been transferred to IEPFmay claim their shares and unclaimed dividend or apply for refund by making an applicationto IEPF Authority in IEPF Form-5 (available on www.iepf.gov.in). The Member / claimant canfile only one consolidated claim in a financial year as per the IEPF Rules. It is in theMembers interest to claim any un-encashed dividends from IEPF and for future to considerdematerialisation of their shares and opt for Automated Clearing House (ACH) mode with theCompany so that dividends paid by the Company are credited to the investor's account ontime.
29. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
Mastek has zero tolerance towards any action on the part of any employee which may fallunder the ambit of
Sexual Harassment' at workplace and is fully committed to uphold and maintainthe dignity of every women employee working in the Company. The Company's Policy providesfor protection against sexual harassment of women employees at workplace and forprevention and redressal of such complaints.
The Company has a qualified Internal Committee who along with the external memberreview the policy and framework on a regular basis. Additionally the company ensures thatevery new employee undergoes an awareness program which will sensitise them to uphold thedignity of their colleagues at workplace particularly with respect to prevention ofsexual harassment. During the year no such case was reported.
Your Directors are grateful to the Investors for their continued patronage andconfidence in the Company. Your Directors also thank the Central and State Governmentsother statutory and regulatory authorities for their continued support.
Your Directors thank all our esteemed clients for the faith and trust reposed inthe Company. With continuous learning skill up-gradation and technology development
Company will continue to provide world class professionalism and services to itsclients.
Your Directors wish to thank all associates vendors and contractors within the countryand abroad for their continued support without which Mastek could not have achieved thedesired results.
Your Directors also wish to convey their appreciation to all employees at all levelsfor the valuable services and cooperation extended by them and are confident that theywill continue to contribute their best towards achieving still better performance infuture.
For and on behalf of the Board
|Sudhakar Ram ||S. Sandilya |
|Vice Chairman & Managing Director ||Non-Executive Chairman |
|Date : April 18 2018 ||and Independent Director |
|Place : Mumbai || |