Your Directors have great pleasure in presenting the 37th Annual Report on the businessand operations of the Company together with the Audited Financial Statements for thefinancial year ended 31 March 2019. The Consolidated Performance of the Company and itsSubsidiaries has been referred to wherever required.
1. Highlights of Consolidated and Standalone Financial Results
| || || |
(Rs. in lakhs)
| ||Consolidated ||Standalone |
|Particulars || || || || |
| ||2018 19 ||201718 ||2018 19 ||201718 |
|Revenue from operations ||103321 ||81721 ||18944 ||16232 |
|Other Income ||2478 ||2099 ||3459 ||2323 |
|Total Income ||105799 ||83820 ||22403 ||18555 |
|Expenses ||90167 ||71755 ||17252 ||14683 |
|Depreciation and amortization expenses ||1735 ||1876 ||1208 ||1119 |
|Finance costs ||613 ||586 ||27 ||19 |
|Exceptional items ||55 ||- ||- ||- |
|Profit before tax ||13339 ||9603 ||3916 ||2734 |
|Tax expense ||3192 ||2607 ||865 ||1160 |
|Profit after tax ||10147 ||6996 ||3051 ||1574 |
|Other comprehensive income ||8755 ||(248) ||872 ||(1315) |
|Total Comprehensive income ||18902 ||6748 ||3923 ||259 |
|Equity Holders ||18902 ||6748 ||3923 ||259 |
|Dividend ||(1788) ||(1056) ||(1788) ||(1056) |
|Dividend Distribution Tax ||- ||(12) ||- ||(12) |
|EPS || || || || |
|- Basic ||42.61 ||29.74 ||12.81 ||6.69 |
|- Diluted ||40.32 ||28.14 ||12.12 ||6.33 |
2. Overview of Company's Financial Performance
a Mastek Operations
On a Consolidated basis the Group registered revenue from operations ofर 103321lakhs for the year ended 31 March 2019 as compared toर 81721 lakhs in theprevious year ended 31 March 2018 which is an increase of 26.4%. The Groupregistered a Net Profit of` 10147 lakhs for the year ended 31 March 2019 as compared toRs. 6996 lakhs in the previous year ended 31 March 2018 thereby registering anincrease of 45%.
On a Standalone basis Mastek revenue from operations ofर 18944 lakhs for the yearended 31 March 2019 as compared toर 16232 lakhs in the previous year ended 31March 2018. The Company made a Net profit ofर 3051 lakhs for the year ended 31 March2019 as compared to Net Profit of` 1574 lakhs in the previous year ended 31 March 2018.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 ended31 March 2019 have been prepared in accordance with applicable Accounting Standards andthe relevant provisions of the Companies Act 2013. The said Financial Statements havebeen prepared based on the Audited Financial Statements of the Company and Audited /Un-audited Financial Statements of its Subsidiaries which have been reviewed by theStatutory Auditors. The Company discloses Consolidated and Standalone financial results ona quarterly basis which are subjected to limited review and publishes Consolidated andStandalone audited financial results on an annual basis.
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.
In accordance with the provisions contained in Section 136 of the Companies Act 2013the Annual Report of the Company containing therein its Consolidated and StandaloneFinancial Statements are available on the website of the Company at web linkhttp://www.mastek.com/financial-information. Further the Financial Statements of each ofthe subsidiary companies are uploaded on the Company's website and shall be available forinspection during business hours at the Registered Office of the Company. Any member whois interested in obtaining a copy of the Subsidiaries Financial Statements may write tothe Company Secretary at the Registered Office of the Company.
Further a detailed analysis of Company's performance is included in the ManagementDiscussion and Analysis which forms part of this Annual report.
b Break-Up of the Operating Revenue by Regions
|Region ||Year ended 31 March 2019 ||Year ended 31 March 2018 |
| ||Rs. in lakhs ||% of Revenue ||Rs. in lakhs ||% of Revenue |
|UK ||76361 ||73.9% ||56315 ||68.9% |
|North America ||25275 ||24.5% ||23715 ||29.0% |
|Others ||1685 ||1.6% ||1691 ||2.1% |
|Total ||103321 ||100.0% ||81721 ||100.0% |
The U.K. operations contributedर 76361 lakhs in total operating revenue for thefinancial year ended 201819 as compared toर 56315 lakhs for the financial yearended 2017 18 resulting in a growth of 35.6%. This growth was driven by increasedbusiness in the Government vertical followed by Retail and Finance vertical. UK businessgrew by 29.3% on constant currency basis.
The North America operations contributedर 25275 lakhs in revenue for the financialyear ended 2018 19 as compared toर 23715 lakhs for the financial year ended 2017 - 18witnessinga growth of 6.6%.
Indian operations contributedर 1685 lakhs for the financial year ended 2018 19 ascompared to` 1691 lakhs for the financial year ended 2017 18 resulting in a marginaldecrease of (0.4%).
c Break-Up of Revenue by Service Lines
|Service Line ||Year ended 31 March 2019 ||Year ended 31 March 2018 |
| ||Rs. in lakhs ||% of Revenue ||Rs. in lakhs ||% of Revenue |
|Application Development ||48917 ||47.3% ||38891 ||47.6% |
|Digital Commerce ||23914 ||23.1% ||21211 ||26.0% |
|Application Support & Maintenance ||14394 ||13.9% ||8008 ||9.8% |
|BI & Analytics ||8899 ||8.6% ||6484 ||7.9% |
|Agile Consulting ||3109 ||3.0% ||4771 ||5.8% |
|Assurance & Testing ||4088 ||4.0% ||2356 ||2.9% |
|Total ||103321 ||100.0% ||81721 ||100.0% |
During the Year ended 31 March 2019 the Group earned a profit of` 10147 lakhs ascompared toर 6996 lakhs for the year ended 31 March 2018. The profits for thefinancial year 2018 - 19 achieved growth of 45% driven by focused profitable growth inrevenue operational improvement and better utilization of existing investment in SalesGeneral & Administrative expenses (SG&A) and capacity to service growth.
The Company has a robust track record of its members with a generous dividend payout(both
Interim and Final). Based on Company's Financial performance the Board of Directorsat its meeting held on 16 April 2019 has recommended payment of a Final Dividend @ ofर5/- per Equity Share (face value ofर 5/- each) i.e. @100% subject to approval of themembers at the ensuing 37th Annual General Meeting to be held on 23 July 2019.
Further the Board of Directors at its meeting held on 25 October 2018 had alsoapproved the payment of Interim Dividend ofर 3.50/- per share i.e. @ 70% which waspaid on 15 November 2018.
Therefore the total dividend for the financial year ended 31 March 2019 stands atर8.50/- per share (Previous Yearर 6/- per share) involving a total outflowapproximately ofर 2035 lakhs (Previous Yearर 1422 lakhs).
The Final Dividend if approved at the ensuing 37th Annual General Meeting will bepaid to those members whose names appears on the Register of Members of the Company as ofthe end of the day on Saturday 13 July 2019.
4. Transfer of Unclaimed Dividend Amounts and Concerned Shares to InvestorEducation and Protection Fund (IEPF) Authority
There were neither Unclaimed Dividend Amount nor Concerned Shares which were due andrequired to be transferred to IEPF Authority during the year under review.
5. Transfer to Reserves
There was no amount from profitwhich was transferred to General Reserves during theyear under review.
6. Management Discussion and
Management Discussion and Analysis as stipulated under the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements)
Regulations 2015 (the SEBI Listing Regulations) is presented in a separate sectionforming part of this Annual Report. It provides details about the overall industrystructure global and domestic economic scenarios developments in business operations/performance of the Company's various businesses internal controls and their adequacyrisk management systems human resources and other material developments during thefinancial year 2018 19.
7. Credit Rating
The Company enjoys a good reputation for its sound financial management rewarding andthe ability to meet its financial obligations. During the year under review ICRA Limiteda reputed Credit Rating Agency had reaffirmedthe ratings assigned for the Bank facilitiesas [ICRA] A+ (Positive) rating for fund-based limits and [ICRA] A1+ for non-fund basedlimits for the Working Capital Facilities granted to the Company by its Bankers.
8. Subsidiary Companies
Your Company continues to be the Holding Company of Trans American Information SystemsPrivate Limited and Mastek (UK) Limited (MUK). MUK in turn has IndigoBlue ConsultingLimited and Mastek Inc. (formerly known as Digility Inc.) as its wholly ownedsubsidiaries.
IndigoBlue Consulting Limited the step down subsidiary of the Company has entered intoBusiness Transfer Agreement w.e.f. 30 June 2018 with its parent Company to merge itself(transfer of its business assets and liabilities). This will enable greater synergiesbetween them and will also achieve higher operational efficiencies.
Mastek Inc. the step down subsidiary of your Company has TAISTech LLC (100% membershipinterest) and Trans American Information Systems Inc. as its wholly owned subsidiaries andconsequently they are step down wholly owned overseas subsidiaries of the Company.
Your Company has 2 direct wholly owned subsidiaries and 4 step down subsidiaries as at31 March 2019 and pursuant to the provisions of Section 129(3) of the Companies Act 2013read with Rule 5 of the Companies (Accounts) Rules 2014 the statement containing salientfeatures of the Financial Statements of all the subsidiaries and their contribution tooverall performance of the Company are provided in Form AOC-1 which is annexed as Annexure1 to the report. There has been no material change in the nature of the business ofthe subsidiaries.
The Company does not have any Joint Venture or Associate Company or any jointoperations during the year under review.
9. Material Subsidiary
Mastek (UK) Limited a UK based entity is the only material subsidiary of the Company.
The Board of Directors of the Company has revised the Policy for determining materialsubsidiaries in accordance with the amendments to the SEBI Listing Regulations with effectfrom 1 April 2019. The policy can be accessed on the website of the Company at web linkhttps://www.mastek.com/ corporate-governance.
10. Update on Board of Directors / Managerial Personnel
a. Directorship Changes:
There has been no change in the Board of Directors of the Company during the year underreview.
All the directors of theCompanyhaveconfirmed that they are not disqualified from beingappointed as Directors in terms of Section 164 of the Companies Act 2013.
b Independent Directors Re-
Mr. S. Sandilya (DIN 00037542) Ms. Priti Rao (DIN 03352049) and Mr. Atul Kanagat (DIN06452489) were appointed as Independent Directors of the Company pursuant to Section 149of the Companies Act 2013 for the first term of 4 years i.e. from 1 April 2015 to 31March 2019. Considering their knowledge expertise and experience in their respectivefields and the substantial contribution made by these Directors during their tenure asIndependent Directors since their appointment the Nomination and Remuneration Committeeand the Board recommends the re-appointment of all the 3 Directors as IndependentDirectors on the Board of the Company to hold office for the second term of 5 consecutiveyears i.e. from 1 April 2019 to 31 March 2024 and not liable to retire byrotation subject to approval by the members at the ensuing 37th Annual General Meeting.The proposal for their re-appointment is based on individual performance evaluation by theBoard.
Pursuant to the provision of Regulation 17(1A) of the SEBI Listing (Amendment)Regulations 2018 notified by the SEBI on 7 June 2018 and which is effective from 1April 2019 which prescribes that no listed entity shall appoint a person or continue thedirectorship of any person as the Non-Executive Director who has attained the age of 75years unless a special resolution is passed to that effect in which case the ExplanatoryStatement annexed to the Notice for such motion shall indicate the justification forappointing such person. In view of the amendment the Board of Directors is of the opinionthat considering Mr. Sandilya's integrity relevant expertise vast experience in depthindustry knowledge continuous valuable guidance to the management and his strong Boardperformance his continuous association as Non-Executive Independent Director will bebeneficial and to the best interest of the Company. Accordingly the Board recommends his Keyre-appointment for the approval of the members even after him attaining the age of 75years on 11 April 2023 during his on-going second term till the expiry of his termi.e. on 31 March 2024.
Further the Company after due assessment took on record the necessary declarationsreceived from each of the Independent Directors under Section 149(7) of the Companies Act2013 that they meet the criteria of Independence laid down in Section 149(6) of theCompanies Act 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations and also inthe opinion of the Board and as confirmed by these Directors they fulfil the conditionsspecified in Section 149 of the Companies Act 2013 and the Rules made thereunder abouttheir status as Independent Directors of the Company.
During the year under review the Non-Executive Directors of the Company had nopecuniary relationship or transactions with the Company other than sitting feescommission perquisites and reimbursement of expenses incurred by them for the purpose ofattending meetings of the Board / Committees of the Company.
Accordingly approval of the members by special resolutions for re-appointing theaforesaid directors as Independent Directors for a further term of 5 consecutive yearsi.e. from 1 April 2019 to 31 March 2024 has been sought in the enclosed Notice conveningthe Annual General Meeting of the Company. (Please refer to Item Nos. 4 5 and 6 of theNotice). The Board recommends all the three re-appointments of Individual Directors to themembers.
c Director liable to retire by rotation:
In accordance with the provisions of Section 152 and other applicable provisions ifany of the Companies Act 2013 and the Articles of Association of the Company Mr.Sudhakar Ram (DIN: 00101473) is liable to retire by rotation at the forthcoming AnnualGeneral Meeting and being eligible has offered himself for re-appointment. TheBoard recommends his re-appointment to the members at the ensuing 37th AnnualGeneral Meeting.
d Board Effectiveness:
1. Manner of Evaluation of the Board's Performance
In compliance with the provisions of the Companies Act 2013 and the SEBI ListingRegulations the Board of Directors has carried out an Annual Evaluation of its ownperformance Board Committees Individual Directors Chairpersons and the ManagingDirector for the year under review.
The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual Directors including the Non-Executive Chairman and the Managing Director theirpersonal performance carried out using a peer review process facilitated by an outsidesubject matter expert with confidential processing of inputs interpretation of findingsfollowed by one-on-one meeting with the individual Directors and concluding with anaggregate presentation to the entire Board.
Board and Committees functioning was reviewed and evaluated on the basis of responsesreceived from Directors Committee Members and the Managing Director to structuredquestionnaires covering various aspects of the composition and functioning of the Boardand its Committees.
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 reflects 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 period.
2. Induction and Familiarisation Programme for Directors
The Familiarisation Programme for Independent Directors which also extends to otherNon-Executive Directors aims to familiarise them with the Company nature of the ITindustry business model processes & policies compliances etc. and seeks to updatethem on the roles responsibilities rights and duties under the Companies Act 2013 andthe SEBI Listing Regulations and other applicable statutes. The details of the inductionand familiarisation programme for the Directors are given in the Corporate GovernanceReport which forms part of the Annual Report.
3. Code of Conduct
The Company has formulated a Code of Business Conduct and Ethics for theBoard of Directors and Senior Managerial Personnel. The confirmation of compliance of thesame is obtained from all concerned on an annual basis. All Board Members and SeniorManagerial Personnel have given their confirmation of compliance for the year underreview. A declaration duly signed by Vice Chairman & Managing Director is given underCorporate Governance Report appearing elsewhere as a separate section in this AnnualReport. The Code of Business Conduct and Ethics for Board of Directors and SeniorManagerial Personnel is also posted on the website of the Company at web linkhttps://www.mastek.com/corporate-governance
e Board Independence:
The definition of Independence' of Directors is derived from Regulation 16(1)(b)of the SEBI Listing Regulations and Section 149(6) of the Companies Act 2013. Based onthe confirmation / disclosures received from the Directors and on evaluation of therelationships disclosed by the Directors during the Board evaluation process thefollowing Non-Executive Directors are Independent of the Management:
1) Mr . S. Sandilya
2) Ms. Priti Rao
3) Mr. Atul Kanagat and
4) Mr. Keith Bogg
There has been no change in the circumstances affecting their status as IndependentDirectors of the Company.
f Key Managerial Personnel:
Pursuant to the provisions of Sections 2(51) and 203 of the Companies Act 2013 readwith the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 (asamended from time to time) the following are the Key Managerial Personnel of the Company:
1) Mr. Sudhakar Ram - Vice Chairman & Managing Director;
2) Mr. Abhishek Singh - Group Chief Financial Officer; and
3) Mr. Dinesh Kalani - Company Secretary
There is no change in the composition of Key Managerial Personnel during the year underreview.
g Committees of the Board:
The Board has 5 Committees:
1) Audit Committee
2) Nomination and Remuneration Committee
3) Stakeholders' Relationship Committee
4) Corporate Social Responsibility Committee and
5) Governance Committee
Details of all the Committees along with their amended charters composition andmeetings held during the year are given under Corporate Governance Report appearingelsewhere as a separate section in this Annual Report.
11. Nomination and Remuneration
The Company has a policy on Remuneration of Directors and Senior Managerial Personnelapproved by the Nomination and Remuneration Committee and the Board. The policy isavailable at the website of the Company at web linkhttps://www.mastek.com/corporate-governance.
The policy inter-alia covers:
1. Directors' appointment and remuneration; and
2. Key Managerial Personnel and other senior employees appointment and remuneration.
Please refer the Notes to Accounts and Corporate Governance Section for the details onRemuneration of Directors and Key Managerial Personnel.
12. Employee Stock Option Plans
The Company has 3 ongoing Employee Stock Option Plans (ESOPs) at present. During theyear under review the Company had granted 386000 Employee Stock options to its selectedemployees. The Board of Directorsconfirmsthat there is neither any new plan introduced northere were any material changes made in the existing ESOP Plans and all the existing ESOPPlans comply with the SEBI Guidelines. Details of shares issued under ESOPs as also thedisclosure in compliance with the SEBI (Share Based Employee Benefits) Regulations 2014read with SEBI circular dated 16 June 2015 are uploaded on the website of the Company atweb link https://www.mastek.com/ corporate-governance.
The Annual Certificate Co. LLP Chartered Accountants Statutory Auditors stating thatthe ESOP Plans have been implemented in accordance with the SEBI Regulations and theresolutions have been passed by the members in their general meeting will be obtained andplaced at the ensuing 37th Annual General Meeting for inspection of members.
13. Audit Committee
The Company has an Audit Committee that currently comprises of 4 Independent Directorsand 1 Non-Executive Director. The Chairman of the Audit Committee is Independent Director.The Independent Directors are accomplished professionals from the Corporate fields. TheManaging Director and Group Chief Financial Officer attend the meetings as permanentinvitees. The Company Secretary acts as the Secretary to the Committee. and During thefinancial year 2018 19 the Committee met 5 times. The details of the Audit Committeemeetings and the attendance of the members there at are provided in the CorporateGovernance Report appearing elsewhere as a separate section in this Annual Report.
During the year under review the Board accepted all the recommendations of the AuditCommittee.
14. R elated Party Transactions
The ompany revised its Policies on determining materiality of related partytransactions and also on dealing with Related Party Transactions in accordance with theamendments to the applicable provisions of the SEBI Listing Regulations. The same has beenposted on the website of the Company at web linkhttps://www.mastek.com/corporate-governance During the year under review the Company hasnot entered into transactions with related parties (except with its wholly ownedsubsidiaries which are exempt for the purpose of Section 188(1) of the Companies Act2013). As defined under Section 2(76) of the Companies Act 2013 read with Companies(Specification and Definitions all of the Related Party Transactions entered into were atan arm's length basis and in compliance with the applicable provisions of the CompaniesAct 2013 and the SEBI Listing Regulations. There are no materially significant by theCompany with Promoters Directors or Key Managerial Personnel etc. which may havepotential conflict with the interest of the Company at large.
Omnibus approvals are given by the Audit Committee for the transactions which areforeseen and are repetitive in nature on yearly basis. A statement of all Related PartyTransactions is presented before the Audit Committee and the Board on a quarterly basisspecifying the nature value and terms & conditions of the transactions. The saidtransactions were unanimously approved by the Audit Committee as well as by the Board.
During the year under review the Company had not entered into any contract /arrangement / transaction with any related parties which could be considered material inaccordance with the policy of the Company on determining materiality of related partytransactions. Accordingly particulars of contracts or arrangements with related partiesreferred to in Section 188(1) of the Companies Act 2013 along with the justification forentering into such contract or arrangement in Form AOC-2 is not required tobe given. However the Directors draw attention of the members to the Note no. 24of the Standalone Financial Statement which sets out related party transactiondisclosures.
15. H uman Resource and Relations
Human Resources are vital and most valuable assets for the Company. Mastek Groupdeploys its intellectual capability to create and deliver Intellectual Property (IP)-ledsolutions that make a business impact for its global clients. For this the key successenabler and most vital resource is excellent talent.
As on 31 March 2019 Mastek Group had head count of 2069. The Directors wish to placeon record their appreciation and acknowledgment of the efforts and dedication andcontributions made by employees at all levels during the year under review. Mastek Groupcontinues to focus on attracting new talent & help them to acquire new skills explorenew roles and realise their potential by way of providing training Programmes and retainsuch high quality talent.
The detailed information pertaining to Human Resources initiatives taken by the Companyis given Details) Rules 2014 under the Management Discussion and Analysis which formsPart of this Annual Report.
16. Particular of Employees
Party Transactions made The disclosure pertaining to remuneration and other details asrequired under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed asAnnexure 2 to the report.
Further a statement showing the names and other particulars of employees drawingremuneration in excess of the limits as set out in the Rules 5(2) and 5(3) of theaforesaid Rules forms part of this report. However in terms of first provision of Section136(1) of the Companies Act 2013 the Annual Report and Accounts are being sent to themembers and others entitled thereto excluding the aforesaid information. The saidinformation is available for inspection to the members at the Registered Office of theCompany during business hours on working days up to the date of the ensuing Annual GeneralMeeting. If any member is interested in obtaining a copy thereof such member may write tothe Company Secretary whereupon a copy would be sent.
17. E qual Opportunity Employer
The Company has always provided a congenial atmosphere for work that is free fromdiscrimination and harassment including sexual harassment but not limited to. It hasprovided equal opportunities of employment to all irrespective of their caste religioncolour marital status and gender.
18. Management of Risks of Fraud Corruption and Unethical Business Practices
a Whistle Blower Policy / Vigil Mechanism
In compliance with the requirements of the Companies Act 2013 and the SEBI Listing atotal Regulations the Company has established a Whistle Blower Policy / Vigil MechanismPolicy and the same is placed on the web site of the Company at web linkhttps://www.mastek.com/ corporate-governance
The Company has a Vigil Mechanism for Directors and Employees to report their concernsabout unethical behavior leakage of unpublished price sensitive information actual orsuspected fraud or violation of the Company's Code of Conduct. The mechanism provides foradequate safeguards against victimisation of Director(s) and / or Employee(s) who availthe mechanism.
b. Anti - Corruption and Bribery Policy
In furtherance of the Company's Philosophy of conducting business in an honesttransparent and ethical manner the Board has laid down
Anti-Corruption and Bribery Policy ' as part of the Company's Code ofBusiness Conduct and Ethics. As a Company Mastek has zero-tolerance to bribery andcorruption and is committed to act professionally and fairly in all its business dealings.To spread awareness about the Company's commitment to conduct business professionallyfairly and free from bribery and corruption and as part of continuous education to theemployees an Anti- Bribery' mandatory online training & testing through aweb-based application tool was conducted for relevant employees. The above policy and itsimplementation are closely monitored.
The concerned employees of the Company are made aware of the said policy at the time ofjoining the Company and are also provided online training wherever necessary.
19. Policy on Prevention of Harassment of Women at Workplace
The Company has zero tolerance towards any on the part of any employee which may fallunder the ambit of Sexual Harassment' at workplace and is fully committed toprovide a safe and conducive work environment to all its employees and associates touphold and maintain the dignity of every women employee working in the Company. TheCompany's Policy provides for protection against sexual harassment of women employees atworkplace and for prevention and redressal of such complaints.
The Company has a qualified Internal Complaints Committee who along with the externalmember reviews the policy and framework on a regular basis. Additionally the Companyensures that every new employee undergoes an awareness programme which will sensitise themto uphold the dignity of their colleagues at workplace particularly with respect toprevention of sexual harassment.
During the year under review the Company has not received any complaint.
No cases of child labour forced labour and involuntary labour were reportedduring the year.
20. Corporate Social Responsibility
Mastek Foundation is the CSR wing of the Company. Founded in 2002 the mission ofMastek Foundation evolves as Informed Giving Responsible Receiving. Theinstitution seeks to inspire Company employees by creating awareness among them to giveback to the community in ways which would meet the needs and challenges faced by thecommunity members.
One such medium could be through volunteering and giving opportunities. The Foundationalso supports Non - Governmental Organisation (NGOs) to scale and build their capabilitiesthrough our core skill of IT. Hence the Foundation has 3 clearly defined pillars:
ENGAGE GIVE AND BUILD.
In compliance with the provisions of Section 135 of the Companies Act 2013 the Boardof the Company has formed a Corporate Social Responsibility (CSR) Committee. The Committeemet once during the year under review and a detailed report about CSR activitiesundertaken during the year is annexed as Annexure 3 to the report. The CSR Policyhas been uploaded on the website of the Company at web linkwww.mastek.com/corporate-governance. The CSR projects or programmes undertaken are withinthe broad framework of Schedule VII of Companies Act 2013. The highlights of the policyare as follows:-
Mastek CSR programmes falls under the following categories:
a. Promoting education enhancing skills of action children and development ofchildren and women working in red- light areas. We are also involved in special educationand employment - enhancing vocational skills especially among women elderly and thedifferently abled and livelihood enhancement projects.
b. Eradicating hunger poverty and malnutrition promoting preventive health care andsanitation and making safe drinking water available.
c. 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.
d. 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.
e. Any other projects with the the Board.
The corpus for the CSR consists of:
2% of the Average Net Profit of the preceding 3 years
Any income / surplus arising out of the above activities
Payroll contribution from the employees
Proceeds from Fund-raising events
Mastek may pool its resources and CSR spending with other Groups or Associate Companieson collaborative efforts that qualify as CSR spending.
Roles and Responsibilities:
D ecide CSR projects programmes or activities to be taken up by theCompany
The CSR activities proposed to be taken up by the Company each year are placedbefore the Board for approval
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 spentduring the financial year
Monitor and review the implementation of the CSR policy
CSR Committee Composition:
The Chairperson of the Committee is Ms. Non - Executive Independent director. The othermembers are Mr. Ashank Desai Non - Executive Director and Mr. Sudhakar Ram Vice -Chairman & Managing Director. The Company Secretary acts as the Secretary to theCommittee.
Based on the Average Net Profits of the Company for 3 immediately preceding financialto be spent on CSR activities during the financial year 2018 19 was budgetedatर 54 lakhs. However a total sum ofर 100.05 lakhs was spent on projects approvedunder Section 135 of the Companies Act 2013 on CSR activities during the year which isalmost 85% higher than the budgeted amount.
a. Statutory Auditors of As per the requirements of the Companies Act 2013 theAudit Committee and the Board of Directors at their meeting held on 20 April 2017 and themembers of the Company at the 35th Annual General Meeting (AGM) appointed M/s. WalkerChandiok & Co. LLP Chartered Accountants (Firm Registration No. 001076N / N500013)as the Statutory Auditors of the Company for a period of 5 Consecutive years commencingfrom the conclusion of 35th AGM untill the conclusion of the 40th AGM subject toratification by members every year.
Pursuant to the provisions of Section 139 and the Companies (Amendment) Act 2018effective from 7 May 2018 the requirement of seeking ratification from the members forthe continuation of re-appointment of the Statutory Auditors has been withdrawn from theStatute hence re-appointment of M/s. Walker Chandiok & Co. LLP Statutory Auditors ofthe Company does not require ratification and will continue to be Statutory Auditors ofthe Company. Hence the resolution seeking ratification of the members for theirappointment is not being placed at the ensuing AGM.
M/s. Walker Chandiok & Co. LLP has confirmed their eligibility and consent underSections 139 and 141 of the Companies Act 2013 and the Companies (Audit and Auditors)Rules 2014 for their continuance as the Auditors of the Company for the financial year20192020. In terms of the SEBI Listing Regulations the Auditors have alsoconfirmed that they hold Rao a valid certificate issued by the Board of the ICAI.
Further the report of the Statutory Auditors along with the notes is enclosed with theFinancial Statements. The Auditors have issued an unmodified opinion on the FinancialStatements for the financial year ended 31 March 2019. years the amount The Auditors ofthe Company have not reported any fraud as specified under Section 143(12) of theCompanies Act 2013.
b. Secretarial Auditors
In terms of Section 204 of the Companies Act 2013 and Rules made thereunder the Boardhas appointed Mr. Prashant S. Mehta Proprietor of P. Mehta & Associates PracticingCompany Secretaries as Secretarial Auditor of the Company for the financial year 2018 19to conduct the Secretarial Audit and issue the Secretarial Audit Report in Form MR-3pursuant to the provisions of Section 204 of the Companies Act 2013 and read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. The reportof the Secretarial Auditors for the financial year 201819 is annexed as Annexure4 to this report. The report is self-explanatory and does not contain anyqualification reservation and adverse remarks.
Pursuant to the circular issued by the SEBI dated 8 February 2019 Secretarial Auditorwill issue the Annual Secretarial Compliance Report and the same will besubmitted to the stock exchanges in time.
22. Enterprise Risk Management (ERM)
In terms of the requirements of the Companies 2013 the Company has developed andimplemented the Risk Management Framework which captures and classifies the risks faced bythe Company. This is periodically reviewed by the Governance Committee of the Board aswell as by the Board of Directors of the Company.
The objectives of ERM includes:
Identifying and assessing a broad array of risks that could negatively impact theachievement of Organizational goals and objectives
Ensuring appropriate ownership and accountability of risks
Developing and implementing appropriate risk mitigation and monitoring plans by riskowners
Risk identified are defined in the Risk Register and categorized as HighMedium or Low risks. The risk owners quantify the impact of identified risks and outlinethe steps taken to mitigate it. The risks identified are reviewed periodically to assessits impact on the business. As a result a risk can go up or down in its impact. Oncemitigated it can go out of the Risk Register as well. This is a robust process governedby the Board in conjunction with the risk owners. Based on the probability & impact ofthe risk the requisite controls and mitigation action plans have been designed andimplemented.
Risk of non-compliance can result in reputational damage penalty and business risk. Toensure optimal compliances periodic checks and tests of compliance and controls areperformed by the Company. The report of such checks are presented to the Boardperiodically. This spreads awareness about various risk management activities /achievement new topics / practices / updates on ERM and to create enthusiasm in them toproactively control risks in their work processes & areas. Mastek is committed tofurther strengthen its risk management capabilities in order to protect interests ofstakeholders and enhance shareholder value.
The detailed information pertaining to ERM is given under the management Discussion andAnalysis which forms part of this Annual Report.
23. Internal Control Systems
Internal Audit and its Adequacy
The scope and authority of the Internal Audit function is defined by the AuditCommittee.
With a view to maintain independence and objectivity in its working the Internal Auditfunction reports directly to the Audit Committee. Act At the beginning of each financialyear a risk based Annual Audit Plan is rolled out after the same is approved by the AuditCommittee. The Audit Plan is aimed at evaluation of the efficacy and adequacy of internalcontrol system and compliance thereof robustness of internal processes policies andaccounting procedures compliance with laws and regulations. Based on the reports ofinternal audit function process owners undertake corrective action in their respectiveareas. Significant and corrective actions thereon are presented to the Audit Committee ofthe Board.
Internal Financial Controls over Financial Reporting (IFCoFR)
The internal financial controls within the Company are commensurate with the sizescale and complexity of its operations. The controls were tested during the year and noreportable material weaknesses either in their design or operations were observed. TheCompany has robust policies and procedures which inter alia ensures integrity inconducting its business safeguarding of its assets timely preparation of reliablefinancial information accuracy and completeness in maintaining accounting records andprevention and detection of frauds and errors.
24. 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 InternalStatutory and Secretarial Auditors and the reviews undertaken by the Management and theAudit Committee the Board is of the opinion that the Company's Internal FinancialControls have been adequate and effective during the year under review.
Pursuant to Section 134 of the Companies Act 2013 and to the best of their knowledgeand belief and according to the information and explanations obtained by them yourDirectors confirm the following statements:
(a) that in the preparation of the Annual Financial Statements for the year ended 31March 2019 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 31 March 2019 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 been laiddown 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.
25. Details of Conservation of Energy and Technology Absorption & Foreign ExchangeEarnings and Outgo
a. Conservation of Energy and Technology Absorption
The Company is entirely a Services and thus essentially a non-energy intensiveorganisation. Additionally the Company's facilities are set up at locations chosen foradequate availability and supply of energy. The Company has optimisation of IT power usageas well as higher operational efficiency.
Further the Company was able to reduce the power consumption over the previous yearthrough monitoring energy use and installing LED lights. To further save energy andimprove efficiency the Company implemented smarter solutions with automated controls tomaintain optimal temperature at optimal power consumption. LED lights fitment in ouroffices as well as replacement of old power guzzler with new smarter solutions have helpedto reduce energy costs as well.
The Company continues to adopt and use the latest technologies to improve theproductivity and quality of its services. The Company's operations do not requiresignificant import of technology.
b. Foreign Exchange Earnings and Outgo
Total Foreign Exchange used and earned by the Company is as follows:
| || || |
|Particulars ||Year Ended 31 March 2019 ||Year Ended 31 March 2018 |
|Foreign Exchange Used ||413 ||490 |
|Foreign Exchange Earned ||19526 ||16026 |
26. Corporate Governance
The Company is committed to highest standards of Corporate Governance and adhering tothe Corporate Governance requirements as set out by the SEBI Listing Regulations.
The Company has complied fully with Corporate Governance requirements under the SEBIListing Regulations. A separate section on Corporate Governance practices followed by theCompany together with a Certificate this report and forms an integral part of this report.
27. Code of Conduct for Prevention of Insider Trading
The Board of Directors has revised the Internal Procedures and Conduct for regulatingmonitoring and reporting of trading by Insiders in accordance with SEBI (Prohibition ofInsider Trading) Regulations (Amendment) 2018. The code is available on website of theCompany at web link https://www.mastek.com/corporate-governance
28. Disclosures under the Companies Act the 2013 and the SEBI ListingRegulations
a Extract of Annual Return:
As required under the provisions of Sections 134(3)(a) and 92(3) of the Companies Act2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014(including any statutory modification(s) or re-enactment thereof for the time beingappearing elsewhere in in force) the extract of Annual Return in Form No. MGT-9 isannexed herewith as Annexure 5 to this report.
b Number of Board Meetings:
The Board of Directors met 5 times during the Code of financial year 201819.The details of the Board Meetings and the attendance of the Directors there at areprovided in the Corporate Governance Report appearing elsewhere as a separate section inthis Annual Report.
c. Increase in Issued Subscribed and Paid-up Equity Share Capital:
During the year the Company has issued and allotted 280747 number of Equity Sharesof face value ofर 5/- each for a total nominal value ofर 1403735 undervarious ESOP Plans to the selected employees of the Company who exercised their vestedEmployee Stock Options. These Equity Shares rank pari passu in all respects with theexisting Equity Shares of the Company.
The movement of share capital during the year was as under:
|Particulars ||No. of shares allotted ||Cumulative outstanding No. of shares ||Cumulative outstanding capital (Rs.) |
|Capital at the beginning of the year i.e. as on 1 April 2018 ||- ||23692056 ||118460280 |
|Allotment of shares to employees pursuant to exercise of options granted under ESOP Plans on || || || |
|1. 17 April 2018 ||35894 ||23727950 ||118639750 |
|2. 04 July 2018 ||57863 ||23785813 ||118929065 |
|3. 24 October 2018 ||97250 ||23883063 ||119415315 |
|4. 16 January 2019 ||59498 ||23942561 ||119712805 |
|5. 27 March 2019 ||30242 ||23972803 ||119864015 |
|Capital at the end of the Year i.e. as on 31 March 2019 ||- ||23972803 ||119864015 |
d. Changes in the Nature of Business:
There has been no change in the nature of business of the Company during thefinancial year ended 31 March 2019.
e. Listing with Stock Exchanges:
our Company is listed with the BSE Limited the National Stock Exchange of IndiaLimited.
f. Compliance with Secretarial Standards Board and General Meetings:
During the year under review the Company has complied with Secretarial Standards onmeetings of the Board of Directors and on General Meetings issued by the Institute ofCompany Secretaries of India in terms of Section 118(10) of the Companies Act 2013.
The Company has sufficiently under various Insurance policies to mitigate risks arisingfrom third party or customer claims property casualty etc.
h. Equity Shares with Differential Rights:
our Company has not issued any Equity with differential rights as to dividendvoting or otherwise.
i. Particulars of Loans Guarantees Investment:
In compliance with the provisions of the Companies Act 2013 there were no loans givenor investments made by the Company during the year.
Further the Company had provided a Corporate Guarantee for an amount of GBP 17 millionand also security / charge / mortgage over one of its Property as a Security for a termloan facility availed by one of its wholly owned subsidiary for an aggregate principalamount not exceeding GBP 15 million from the Bank. The Company had released its earlierCorporate Guarantee of US$ 12 million during the year based on prepayment of the loan bythe Subsidiary.
j. Other Disclosures:
No disclosure or reporting is made with respect to the following items as there wereno transactions during the year under review:
There were no revision in the Financial Statements. and
No material fraud has been reported by the Auditors to the Audit Committee orthe Board. on
The Managing Director of the Company has not received any remuneration orcommission from any of its subsidiaries.
The Company does not have any scheme or provision of money for the purchase ofits own shares by trustees for employees benefit.
The Company is not required to maintain cost records as per Section 148 of theCompanies Act 2013. itself y
There were no buy back of shares during the year under review
Your Company has not accepted any deposits from public in terms of Section 73and / or 74 of the Companies Act 2013.
During the year under review no significant and material orders were passed bythe regulators or courts or tribunals impacting the going concern status and the Company'soperations and legal compliances. or
29. Industry Recognition
During the year under review your Company its Subsidiaries and Executives receivedmany awards and felicitations conferred by reputable organisations. Some of them are:
a. Gartner listed your Company in its prestigious Leading IT Service ProviderOffering RPA Services section
b. Mastek Learning & Development team won the award for Best LearningStrategy of the Year this award was presented at the 3rd Edition of the Futureof L&D Summit & Awards 2019
c. Outstanding Contribution - IT at CNBC-AWAAZ CEO Awards d.
our Company was shortlisted in not 1 3 categories of the UK IT Industry Awardsincluding:
1. Vendor of the Year
2. Digital Project of the Year and
3. IT Service and Support Professional of the Year
e. Your Company was selected as a finalist in 2 categories of this year's EuropeanSoftware Testing Awards. The categories were:
1. Best Agile Project: Student Loans Company (SLC) in partnership with Mastek
2. Best Test Automation Project Functional: Specsavers in partnership with Mastek
f. Insights Success magazine which has over 70000 qualified subscribers across theglobe ran a cover story recognising Mr. John Owen's exemplary leadership skills his workas the Group CEO - leading by example and effectively driving transformation to deliveroutstanding results and bringing about positive change and awarded him The 10Best Performing IT Leaders to Watch in 2019'.
g. Mr. John Owen Group Chief Executive Officer won the Finance Monthly CEO Award 2018for his outstanding contribution in driving Mastek's growth agenda over the past 12months.
h. The CFO100 2019 Roll of Honor was presented to Mr. Abhishek Singh Group ChiefFinancial Officer in recognition of his contributions to Financial Planning & CostManagement. He is Recipient of this honor for 3rd year in a row.
30. Enhancing Shareholders Value
The Company accords top priority for enhancing shareholders value. All the Company'soperations are guided and aligned towards maximising shareholders value.
31. Appreciation and Acknowledgement
our Directors are grateful to the Investors their continued patronage andconfidence in the Company over the past several years. Your Directors also thank theCentral and State Governments other Statutory and Regulatory Authorities for theircontinued guidance assistance co-operation and support received.
Your Directors thank all our esteemed clients associates vendors and contractorswithin the country and overseas for their continued support faith and trust reposed inthe professional integrity of Mastek. With continuous learning skill upgradation andtechnology development Company will continue to provide world class professionalism andservices to its clients associates vendors and contractors.
Your Directors also wish to convey their sincere appreciation to all employees at alllevels for their dedicated efforts and consistent contributions and co-operation extendedand is confident that they will continue to contribute their best towards achieving stillbetter performance in future to become a significant leading player under InformationTechnology Industry.
For and on behalf of the Board of Directors
|Sudhakar Ram ||S. Sandilya |
|Vice Chairman and ||Non- Executive Chairman and |
|Managing Director ||Independent Director |
|(DIN: 00101473) ||(DIN: 00037542) |
|Date: 16 April 2019 || |
|Place: Mumbai || |