Nucleus Software Exports Ltd.
|BSE: 531209||Sector: IT|
|NSE: NUCLEUS||ISIN Code: INE096B01018|
|BSE 00:00 | 16 Nov||361.60||
|NSE 00:00 | 16 Nov||363.75||
|Mkt Cap.(Rs cr)||1,050|
|Mkt Cap.(Rs cr)||1050.09|
Nucleus Software Exports Ltd. (NUCLEUS) - Director Report
Company director report
We are pleased to present your Company's Twenty Ninth Annual Reporttogether with the Audited Statement of Accounts for the year ended March 31 2018.
1. RESULTS OF OPERATIONS - Financial Results
The Company has adopted Indian Accounting Standards (Ind-AS) witheffect from April 1 2017 (transition date being April 1 2016) pursuant to thenotification issued by Ministry of Corporate Affairs dated February 16 2015 regarding theCompanies (Indian Accounting Standards) Rules 2015. Accordingly the financial resultshave been prepared in accordance with the Indian Accounting Standards (Ind-AS) asprescribed under Section 133 of the Companies Act 2013 read with relevant rules issuedthereunder. The results for the year ended March 31 2017 have been restated to complywith Ind AS to make these comparable.
The financial statements are prepared in accordance with the Companies(Accounting Standards) Rules 2015 notified under Section 133 of the Act and otherrelevant provisions of the Act. The accounting policies have been consistently appliedexcept where a newly issued accounting standard if initially adopted or a revision to anexisting accounting standard requires a change in the accounting policy hitherto in use.The Management takes
into cognisance all new as well as revised accounting standards on anongoing basis.
The Company has nine subsidiary companies all of which arewholly-owned subsidiaries except Avon Mobility Solutions Pvt. Ltd. in which the Companyacquired a 96% stake in March 2016. The Company discloses stand-alone audited financialresults on a quarterly and annual basis consolidated un-audited financial results on aquarterly basis and consolidated audited financial results on an annual basis.
a) Consolidated Operations
Revenue from consolidated operations for the year was ' 411.81 croreas compared to '372.39 crore in the previous year. As the Company continued its focus onstrategic initiatives for new products focused sales and market development and hiring ofsenior experienced personnel to help drive transformation the overall operational expensefor the year increased to ' 353.63 crore against ' 319.06 crore in the previous year. TheOperating Profit (EBITDA) was at ' 58.18 crore 14% of revenue against ' 53.33 crore 14%of revenue in the previous year. Profit after Tax for the year was at ' 62.55 crore 15%of revenue against ' 66.16 crore 18% of revenue in the previous year.
b) Standalone Operations
Revenue from the standalone operations for the year was ' 337.32 croreagainst ' 299.35 crore in the previous year an increase of 13%. Total operational expensefor the year was ' 294.94 crore against ' 264.15 crore in the previous
year an increase of 12%. Operating Profit (EBITDA) for the year was at' 42.38 crore 13% of revenue against ' 35.20 crore 12% of revenue in the previousyear. Profit after Tax for the year was at ' 65.60 crore 19% of revenue against ' 51.78crore 17% of revenue in the previous year.
A detailed analysis on the Company's performance both consolidated andstandalone is included in "Management's Discussion and Analysis" Report whichforms part of the Annual Report.
2. TRANSFER TO RESERVES
In order to augment resources your Directors do not propose to transferany amount to reserves. Appropriations to retained earnings for the financial year endedMarch 31 2018 as per financial statements are as under:
3. BUY BACK OF EQUITY SHARES
During the year the Company bought back 3343000 equity sharesthrough the Tender Offer route at a price of ' 350/- per equity share for an aggregateconsideration of ' 117.00 crore.
The Buyback size was 24.83% of the aggregate Paid-Up Equity ShareCapital and Free Reserves of the Company as per the audited standalone accounts for thefinancial year ended March 31 2017. The Buyback process was completed and the shares wereextinguished on September 14 2017. Further details/ documents relating to the Buyback areavailable on our website at http://nucleussoftware.com/investors/
4. SHARE CAPITAL
Issued and Paid-Up Share Capital
During the Year the Company extinguished 3343000 equity
shares in September 2017 consequent to Buyback of shares. Consequentlythe Paid-Up Share Capital of the Company as on March 31 2018 is 29040724 equityshares of ' 10 each as compared to 32383724 equity shares of ' 10 each as on March 312017.
Shares under Compulsory Dematerialization
The shares of the Company are under compulsory dematerialization("Demat") category and are available for trading on both the depositories inIndia viz. National Securities Depository Limited (NSDL) and Central Depository Services(India) Limited (CDSL) of the entire paid up shares 28960841 shares or 99.72% are indematerialized form as at March 31 2018. The International Securities IdentificationNumber (ISIN) allotted to the Company's shares is INE096B01018.
Your Company is listed at National Stock Exchange of India Ltd. and BSELtd.
6. LIQUIDITY AND CASH EQUIVALENTS
Your Company continues to retain its debt-free status and maintainssufficient cash and cash equivalents to meet future strategic initiatives. The Company hasbeen conservative in its investment policy over the years maintaining a reasonably highlevel of cash and cash equivalents which enable the Company to completely eliminate shortand medium-term liquidity risks
and at the same time also help scale up operations at a short notice.The goal of cash management at Nucleus is to:
a. Use cash to provide sufficient working capital to manage businessoperations of the Company to be able to add value to all our stakeholders and continuouslyenhance the same.
b. Maintain sufficient cash as reserves that will aid the Company incapturing meaningful business opportunities including acquisitions.
c. Invest surplus funds in low-risk bank deposits debt schemes ofmutual funds preference shares and tax free secured bonds of Public Sector Enterprises.
Cash and cash equivalents including current investments at aconsolidated level of ' 214.97 crore constitute 47% of the shareholders' funds at theyear end against ' 300.36 crore 56% of the shareholders' funds at the close of theprevious year. In addition the Company holds tax-free bonds issued by public sectorenterprises at amortised cost of ' 87.13 crore against ' 81.55 crore in the previous yearlong-term fixed maturity plans of mutual funds at amortised cost of ' 59.75 crore against' 19.83 crore last year preference shares at amortised cost of ' 46.90 crore against '51.49 crore last year debentures of ' Nil against ' 5.14 crore in the previous year andInvestment in equity shares of a listed company (at FVOCI) at ' 8.64 crore against ' 10.60crore in the previous year.
The Dividend Policy of your Company prescribes a dividend pay-out inthe range of 15-30% of the profits available for distribution subject to:
a) Provisions of The Companies Act 2013 and other applicable laws and
b) Cash flows of the Company
We are pleased to state that for the 18th consecutive year yourCompany has recommended a Dividend . The Proposed Dividend is 80% ('8.00 per equity shareof ' 10 each) as compared to last year Dividend of 50% (' 5.00 per equity share of ' 10each). The Proposed Dividend is subject to the approval of shareholders at the forthcomingAnnual General Meeting. If approved the total dividend payout will be ' 23.23 croreagainst payout of '16.19 crore in the previous year.
The Register of Members and Share Transfer Register shall remain closedduring the period June 26 to July 2 2018 (both days inclusive) for the purpose of AnnualGeneral Meeting and payment of Dividend. The Dividend if approved at the Annual GeneralMeeting will be payable to such members whose names appear on the Register of Members ofthe Company and as beneficial owners in the records of National Securities DepositoriesLtd. and Central Depository Services (India) Ltd. at close of business hours as on June25 2018.
8. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to applicable provisions of the Companies Act 2013 read withIEPF Authority (Accounting Audit Transfer and Refund) Rules 2016 ('the Rules') allunpaid or unclaimed dividends are required to be transferred by the Company to the IEPFestablished by the Central Government after completion of seven years. Further accordingto the Rules the shares in respect
of which dividend has not been paid or claimed by the members for sevenconsecutive years or more shall also be transferred to the Demat account created by IEPFAuthority. Accordingly the Company has transferred all unclaimed or unpaid dividends andshares to IEPF as per applicable regulations.
9. DEPOSITS FROM PUBLIC
Your Company has not accepted any deposits covered under Chapter V ofthe Companies Act 2013 and as such no amount of principal or interest was outstandingon the date of the Balance Sheet.
10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The Company policy for determining 'Material Subsidiaries' and on'Related Party Transactions' as approved by the Board can be accessed on the Companywebsite link: http://www.nucleussoftware.com/investors .
Particulars of contracts or arrangements with related parties in theprescribed Form AOC-2 are provided as Annexure A to this Directors' Report.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are provided in the notes to theFinancial Statements.
12. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OFTHE COMPANY BETWEEN THE END OF FINANCIAL YEAR 2018 AND DATE OF THIS DIRECTORS' REPORT
No material changes and commitments have occurred after the close ofthe year till the date of this Directors' Report which affect the financial position ofthe Company.
13. CHANGE IN THE NATURE OF BUSINESS
There has been no change in the nature of business of the Company.
14. MANAGEMENT DISCUSSioN & ANALYSIS
As per requirements of Regulation 34 of Securities and Exchange Boardof India (Listing Obligations and Disclosures) Regulations 2015 the Management'sDiscussion and Analysis of the financial condition and results of both standalone andconsolidated operations have been provided separately in the Annual Report.
15. REVIEW OF BUSINESS & OUTLOOK
Your Company continues its journey as a preferred partner for bankingand financial organizations worldwide providing innovative and pioneering productsservices and solutions. Continuing the relentless focus on customer success your Companylaunched a range of innovative solutions during the year.
Overall the Indian IT companies had a decent year in terms offinancial performance driven by factors such as digitisation and non-linear growthmodels. The Indian IT firms continue to move up the value chain by providing moreend-to-end solutions and engaging more closely with the clients.
Recent forecasts for technology spending have shown growth - forexample Gartner from 5.8 to 6.7% and Forrester from 3.9 to 5.1%. Part of this growth hasbeen driven by increased investment to support digital initiatives.
As per NASSCOM the Indian IT Industry is expected to add USD 14-16billion in revenue in FY19 with Domestic Technology adoption to continue with double digitgrowth.
Digital technologies are increasingly becoming all pervasive and arenot only blurring the boundaries between business units (technology finance marketingetc.) but also between companies it is now no longer tech and non-tech companies. Thefuture of the industry will lie in 'Digital at Scale' as global digital spend is expectedto increase from USD 180 Bn in 2017 to USD 310 Bn in 2020 growing over 20% YoY as perEverest research
Since the rise of FinTech the world of lending has been abuzz with thepower of "digital" - FinTechs positioned themselves as offering "digitalonly" and "neo-digital" experiences while traditional lenders focused onadding a digital flavor to their services. Transformation disruption and revolution haveall been associated with digital. Clients are welcoming these developments expecting thattheir lending experiences are changing for the better.
16. NEW PRODUCT LAUNCHES
During the Year Your Company has continued to enhance its solutions totake advantage of market trends such as increasing digitization of financial services. Wehave leveraged India Stack further to offer end to end digitization of Loan lifecycle.
Your Company launched customer portal modules - eApply and eServe thatoffer a host of services to the end customer for applying for and servicing of the loan.We also launched ECM - Enterprise Content Management solution which can be used toseamlessly store and retrieve documents images letters customer communications etc.
As a part of ongoing development program your Company also launchedFinnAxia 5.0 including a newly launched Trade Finance Portal which would help corporatecustomers with a single global view of their trade finance business. This will reduce therisk of fraud and will also enable the lenders to make faster and more efficient financingdecisions. FinnAxia 5.0 also comes with comprehensive cash management features to ensureworking capital optimization for the bank's corporate customers. The solution also allowsthe corporates to define their own liquidity structures and visualize the prospectiveoutcomes graphically. With a constant emphasis on ensuring compliance of regulations thenew release of FinnAxia comes with the International Transaction and External PositionSystem (ITEPS) to achieve payments compliance in the Malaysian market and also offersIndia-based NPCI compliant Direct Debit Mandate capabilities via both physical andelectronic forms.
With FinnAxia 5.0 banks can capture new business opportunities enableworking capital management for their corporate customers and ensure compliance with newregulations in the transaction banking space.
During the year the PaySe payment solutions have been enhancedwith the online mobile payment capability thus making PaySe an ideal paymentsolution for both the connected and the non-connected world. PaySe has been rolledout in a couple of villages and has found favour with consumers to make payments for theirdaily purchases in the village and for LPG and PDS payments. In keeping with the UGCguidelines advising colleges and universities to move towards a less cash economy Nucleusis focusing on such institutions to make their campuses cashless campuses by enablingdigital payments for all financial transactions in the campus and extending the same totransactions around the campus.
Your Company remains committed to providing its existing and potentialcustomers with competitive and cutting-edge products and will continue to focus oninvestments in product innovation and business expansion.
17. NOTABLE ACCOLADES RECEIVED DURING THE YEAR
Best Lending Technology Implementation of the Year
award at the BFSI Innovative Technology Awards 2018 for project Lendingon cloud for Sai Point Finance with FinnOne Neo.
Received an award in Mid Corporate Segment-for Excellence inIT/ITES Sector at SME Business Excellence Awards 2017 organized by Dun & BradstreetInformation Services India Pvt. Ltd (D&B).
Annual Report for the Year Ended March 31 2017 won the PlatinumAward for Excellence within the Technology- Software industry and ranked 7thamongst the World's Top 100 Annual Reports within the Technology-Software industry and bythe League of American Communications Professional (LACP).
18. SUBSIDIARY COMPANIES
Your Company has nine subsidiaries across the globe. There are noassociate companies or joint venture companies within the meaning of Section 2(6) of theCompanies Act 2013 ("Act").
The following table provides a list of all these subsidiaries as onMarch 31 2018:
There has been no material change in the nature of the business of thesubsidiaries.
A statement containing the salient features of the financial statementof our subsidiaries in the prescribed form AOC 1 is provided as Annexure B to thisDirectors' Report. The statement also provides the details of performance financialposition of each of the subsidiaries.
Further pursuant to the provisions of Section 136 of the Act thefinancial statements of the Company consolidated financial statements along with relevantdocuments and separate audited accounts in respect of subsidiaries are available on thewebsite of the Company.
a) Nucleus Software Solutions Pte. Ltd.
Nucleus Software Solutions Pte. Ltd. (NSS) is based in Singapore. Itwas incorporated in 1994 to expand the Company's business in South East Asia. Currentlyit is the central entity for Asia-Pacific excluding Japan and Australia withresponsibility for business development sales and software development services forcustomers in the region.
b) Nucleus Software Inc.
Nucleus Software Inc. (NSI) is based in New Jersey USA. It wasincorporated in 1997 for providing business presence in the Americas. NSI operates as abusiness development and sales hub for the region.
c) Nucleus Software Japan Kabushiki Kaisha
Nucleus Software Japan Kabushiki Kaisha (NSJKK) is based in TokyoJapan. It was incorporated in 2001 to expand business in the country. NSJKK operates as abusiness development and sales hub for Japan. Additionally the subsidiary providessoftware development services to the local customers in Japan.
d) VirStra i- Technology Services Ltd.
VirStra i- Technology Services Ltd. is based in Pune India. It wasincorporated in 2004 to provide software development services targeted at the Japanesemarket.
e) Nucleus Software Netherlands BV
Nucleus Software Netherlands BV (NSBV) is based in Amsterdam TheNetherlands. It was incorporated in 2006 for enlarging business presence in the Europeanmarket. NSBV is a business development and sales hub for Nucleus in Europe.
f) Nucleus Software Ltd.
Nucleus Software Ltd. (NSL) has operations in Jaipur with registeredoffice in New Delhi. It was incorporated in 2008 for facilitating delivery to largerclients through operations in a Special Economic Zone. NSL had acquired 17.41 acre of landin 2008 in the Mahindra World Special Economic Zone Jaipur and has co-developed a250-seater facility.
g) Nucleus Software Australia Pty. Ltd.
Nucleus Software Australia Pty. Ltd. (NSA) is based in SydneyAustralia. It was incorporated in 2014 for tapping the growing business opportunities inANZ region. NSA operates as a business development and sales hub for the region.Additionally the subsidiary provides software development services to the local customersin Australia.
h) Nucleus Software South Africa Pty. Ltd.
Nucleus Software South Africa Pty. Ltd. (NSSA) is based inJohannesburg South Africa. It was incorporated in 2015 for tapping the growing businessopportunities in South African region. NSSA operates as a business development and saleshub for the region.
i) Avon Mobility Solutions Pvt. Ltd.
Avon Mobility Solutions Pvt. Ltd is based in Chennai and has very goodexperience in logistics domain and expertise in developing mobile applications.
Avon Mobility Solutions Pvt. Ltd. became subsidiary of your Company onMarch 17 2016.
Your Company along with its subsidiaries has offices at severallocations across the globe. The office space and seating capacity of these offices as onMarch 31 2018 is detailed below:
Noida New Delhi and Jaipur premises are owned by the Company and itssubsidiaries.
20 QUALITY PROCESSES
Your Company is committed to ensure the highest level of quality forits products and services. The key focus for this year was to synchronize and standardizethe quality processes with the transformational journey of the organisation. Processimprovement initiatives were centred on 'Process Optimization'. The FinnEdgeimplementation methodology has emerged as standard implementation methodology for NewProducts. Extension to FinnEdge i.e. Rapid is introduced and piloted in few projects thatwill help implementation of solution in quick time for greenfield customers. FinnEdgecovers various aspects of the project from 'Value Creation to Value Realization' and from'Project Discovery' to 'Project Implementation' to 'Project Upgrade'. Process was definedand baselined for Cloud Implementation projects. To improve and measure Product QualityDefect Management Lifecycle is getting simplified and standardized.
A dedicated Quality Assurance team handles the process changemanagement implementation and its adherence across the organization. This team monitorsquality and productivity improvements through audits and dashboard reporting.
21. BRAND VISIBILITY
In FY 2018 your Company continued to grow its marketing operations andactivities in support of its strategic aspirations.
During the Year the Company moved forward on its agenda of growth intonew markets around the world by establishing brand awareness and generating demand fromfocused target segments. Your Company is continually investing in marketing with thebelow objectives:
Ensure that your Company is known to provide high qualityinnovative lending and transaction banking solutions to the target markets.
Establish your Company as an Industry Thought Leader.
Equip the sales team fully with the material and tools requiredto sell the product or service they represent.
To showcase our expertise and product offerings your Company continuedto participate in the leading industry events and business forums worldwide.
During the Year Our teams travelled worldwide to demonstrate ourexpertise and product offerings; participated in many of leading Industry forums. Few ofthem includes: In Australia: Sponsored the Australian Retail Banking Summit 2017 with theoverarching theme of "Retail: Ripe for Revolution". Demonstrated expertise at8th annual Australian Mortgage Innovation Summit 2018. Showcased comprehensive lendingsolution FinnOne Neo for Mutuals at Customer Owned Banking Association's premiere annualconvention COBA 2017. In South East Asia: hosted a roundtable discussion around"Profiting from Transaction Banking - Converting Challenges into Opportunities"at Asian Banker's Future of Finance Summit 2017 in Singapore. Presented insights on 'HowBanks and other Financial Services companies can benefit from Digital' at a gathering ofindustry leaders at Ho Chi Minh City and Hanoi Vietnam. Hosted an exclusive conferencefor the leaders of Banks and other Financial Services companies in Manila on 'DrivingInnovation in Lending Manila 2017'. In the Middle East: Presented insights on 'DigitalLending and Advanced Analytics' at the Middle East Banking Innovation Summit (MEBIS) 2017in Dubai. Hosted an exclusive webinar on 'How do you become the Digital Bank of Tomorrow -Today?' for sharing expertise on leveraging the power of digital personalization andanalytics. In Africa: showcased expertise on the fast-evolving trends that aretransforming the microfinance industry at the Microfinance South Africa 2017 AnnualGeneral Meeting & Conference (MFSA AGM) in South Africa Organized an exclusiveindustry roadshow on 'driving Innovation in Lending' for leading banks and financialinstitutions in Tanzania. In India: hosted an exclusive industry roundtable discussion forNon-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) with thetheme of 'Driving Innovation in Lending' in association with Dun & Bradstreet andAmazon Web Services in Mumbai and Delhi. Demonstrated insights on 'How next generationdigital lending
solutions can help you transform your business' at the NationalCooperative Banking Summit 2017 (NCBS) in Jaipur.
Digital Presence & Visibility
Your Company continued to build its presence in the traditional mediaas well as on social media channels. Media activities continued with interactions withworldwide media including television print wires and online portals and source exclusivemedia opportunities in various geographies such as Australia Africa the Middle East andIndia. Social media has been a focus area covering a wide range of brand activities andour successes. Your Company used social media primarily for activities involving thoughtleadership blogs articles press releases customer video testimonials and other businesscontent marketing purposes.
22. HUMAN RESOURCE MANAGEMENT
Your Company is determined to accelerate its growth story bycorresponding to the changing needs of diverse workgroup by fostering an engaging workenvironment to constantly build the unique capabilities and skills of the people.
The global employee strength of the Company at the end of FY 2018 was1851.
During the Year there were launches of various organizationwideinitiatives to ensure high-performing and engaged workforce like:
1. Delivering Business Excellence - Frequent connect sessions withassociates largely targeting the high potentials
a. Gathering insights about the workplace culture & opportunitiesoffered & sharing them with the business for preventive action
b. Acting as strategic business partner by regularly sharing HR metricsin the form of dashboard
c. Launch of Trust Survey
2. Employee Assist - Conceptualize & execute suitable interventionsto keep associates motivated
a. Revamping referral program to attract talent from the industry
b. Aligning the annual performance management process (NucEDGE18) tothe industry standards
c. Launch of day care in Nucleus Software premises
Going forward your Company's focus lies in creating aperformance-based culture driven by focused growth and clear career development plan foreach employee. The HR roadmap will also focus on 'Collaboration & Acceleration' tostimulate our strategic growth through employee empowerment to make it a great place towork for.
23. CORPORATE GOVERNANCE
We at Nucleus believe that good and effective Corporate Governance iscritical to achieve corporate vision and mission of the organization; it is more of anorganizational culture than a mere adherence to rules and regulations. Law alone cannotbring changes and transformation and voluntary compliance both in form and in substanceplays an important role in developing good Corporate Governance.
Your Company has established and maintained a strong ethicalenvironment overseen by Board of Directors where 5 out of 8 Directors are Independent.The Company's practices and policies reflect the true spirit of Corporate Governanceinitiatives.
Your Company is in compliance of all mandatory requirements ofCorporate Governance as stipulated as per Securities and Exchange Board of India (ListingObligations and Disclosure) Regulations 2015. Compliance status is provided in theCorporate Governance section of the Annual Report. A certificate issued by the StatutoryAuditors of the Company under Regulation 34 of Securities and Exchange Board of India(Listing Obligations and Disclosure) Regulations 2015 confirming compliance of theconditions of Corporate Governance is provided as Annexure C to this Directors' Report.The auditors' certificate for fiscal 2018 does not contain any qualificationsreservations or adverse remark.
A detailed report on Corporate Governance for the year forms part ofthe Annual Report.
24. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
In accordance with the provisions of the Companies Act 2013 and theArticles of Association of the Company Mr. R P Singh CEO and Whole time Directorretires by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for re-appointment.
Mr. S. M. Acharya Mr. Prithvi Haldea Prof. Trilochan Sastry Mr. N.Subramaniam and Mrs. Elaine Mathias are Independent Directors as per the Companies Act2013 not liable to retire by rotation to hold office for five consecutive years. Theyhave submitted a declaration that each of them meets the criteria of independence asprovided in Section 149(6) of the Act and there has been no change in the circumstanceswhich may affect their status as Independent Director during the year. Ms. Ritika Dusad aNon-Executive Director was appointed by Board on July 20 2016 as a Director liable toretire by rotation.
During the year Mr. Janki Ballabh retired from the Chairmanship ofthe Board w.e.f. Oct 31 2017 due to attainment of retirement age. Mr. Ballabh had joinedas the Chairman of our Board on November 15 2008. The Board members thanked Mr. Ballabhfor his immense contribution and guidance and in framing a strategic roadmap of theCompany during his tenure.
The Board of Directors on the recommendation of the Nomination andRemuneration/Compensation Committee appointed Mr. S. M. Acharya Independent Director asthe Chairman of the Board w.e.f. November 1 2017.
The Board of Directors on the recommendation of the Nomination andRemuneration/Compensation Committee also appointed Mr. R P Singh Whole time Director asthe Chief Executive Officer of the Company w.e.f April 1 2018 and redesignated Mr. VishnuR Dusad CEO and Managing Director as the Managing Director of the Company w.e.f. April 12018.
Mr. Vishnu R. Dusad was reappointed as Managing Director w.e.f. January1 2017 for a period of 5 years. His present term expires on December 31 2021.
During the year the Non-Executive Directors of the Company had nopecuniary relationship or transactions with the Company other than sitting feescommission and reimbursement
of expenses incurred by them for the purpose of attending meetings ofthe Company.
Pursuant to provisions of Section 203 of the Companies Act 2013 Mr.Vishnu R. Dusad Managing Director Mr. R P Singh CEO Mr. Ashish Nanda Chief FinancialOfficer and Ms. Poonam Bhasin Company Secretary are the Key Managerial Personnel of theCompany as on date of the report.
25. BOARD EVALUATION
The Board of Directors carried out an annual evaluation of its ownperformance and performance of the Chairman Board committees and individual Directorspursuant to the provisions of the Companies Act 2013 and the Corporate Governancerequirements under Regulation 25 (4) of Securities and Exchange Board of India (ListingObligations and Disclosure) Regulations 2015.
The Board along with the Nomination and Remuneration/ CompensationCommittee developed and adopted the criteria and framework for the evaluation of each ofthe Directors and of the Board and its Committees.
The evaluation was then conducted as per the approved process(explained in detail in the Report on Corporate Governance of the Annual report). TheChairman of the Committee also had interactions with each of the Directors and soughttheir feedback and suggestions on the overall Board Effectiveness and Directorsperformance.
In addition pursuant to the provisions of Schedule IV to the CompaniesAct 2013 the Independent Directors reviewed the performance of the Non-IndependentDirectors and of the Board as a whole performance of the Chairman of the Board takinginto account the views of all the Directors and the quality quantity and timeliness offlow of information between the Company management and the Board and its sufficiency forthe Board to effectively perform its duties.
The Chairman placed the Evaluation Summary before the committeemembers. The same was discussed in detail and the members recorded their satisfaction
26. COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The primary responsibility of the Nomination and Remuneration /Compensation Committee (NRC) is to identify and nominate suitable candidates for Boardmembership. The Committee also formulate policies relating to the remuneration ofDirectors Key Managerial Personnel and other senior employees of the Company.
The Committee while evaluating potential candidates for Boardmembership considers a variety of personal attributes including experience intellectforesight judgment and transparency and match these with the requirements set out by theBoard. The basic responsibilities of NRC with regard to Directors' appointment are asfollows:
Recommending desirable changes in Board size compositionCommittee structure and processes and other aspects of the Board's functioning;
Formulating criteria for determining qualifications positiveattributes and Independence of a Director
Conducting search and recommending new Board members in light ofresignation of current members or a planned expansion of the Board;
Identifying persons who are qualified to become Directors andwho may be appointed in senior management in accordance with the criteria laid down andrecommend to the Board their appointment and removal.
The policy of the Company for selection of Directors is provided asAnnexure D and Remuneration Policy for Directors Key Managerial Personnel and otheremployees is provided as Annexure E to this Directors' Report.
27. DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the IndependentDirectors that they meet the criteria of independence as laid down under Section 149(6) ofthe Companies Act 2013 and Regulation 25 of Securities and Exchange Board of India(Listing Obligations and Disclosure) Regulations 2015.
28. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTOR'S
The details of programmes for familiarisation of Independent Directorswith the Company their roles rights responsibilities
in the Company nature of the industry in which the Company operatesbusiness model of the Company and related matters can be accessed on the Company websitelink : http://www . nucleussoftware.com/investors .
29. MEETINGS OF THE BOARD OF DIRECTORS
The Board met 9 times during the year. The details are provided in theReport on Corporate Governance a part of the Annual Report.
30. COMMITTEES OF THE BOARD
There are four Committees of the Board as on March 31 2018 asfollows:
Nomination and Remuneration/Compensation Committee
Stakeholder Relationship Committee
Corporate Social Responsibility Committee
Details of all the Committees along with their charters compositionand meetings held during the year are provided in the Report on Corporate Governance apart of the Annual Report.
The Composition of Board Committees as on March 31 2018 is as follows:
31. VIGIL MECHANISM
The Company has a well established whistle blower policy as part ofvigil mechanism for observing the conduct of Directors and employees and report concernsabout unethical behaviour actual or suspected fraud or violation of the Company's Code ofconduct or ethics policy. This mechanism also provides for adequate safeguards againstvictimization of Director(s)/ employee(s) who avail of the mechanism and also provides fordirect access to the Chairman of the Audit Committee in exceptional cases.
32. SIGNIFICANT AND MATERIAL ORDERS
No significant or material orders were passed by the Regulators orCourts or Tribunals which impact the going concern status and Company's operations infuture.
33. RISK MANAGEMENT POLICY
The Company has developed and implemented a 'Risk Management Policy'that includes identification of elements of risk which in the opinion of the Board maythreaten the existence of the Company. Risk Management Report forms a part of the AnnualReport.
34. ADDITIONAL INFORMATION TO SHAREHOLDERS
Detailed information to the shareholders is provided in theShareholders' Referencer a part of the Annual Report.
Pursuant to the provisions of Section 139 of the Companies Act 2013 andthe rules framed thereafter M/s BSR and Co. LLP Chartered Accountants were appointedas statutory auditors of the Company from the conclusion of the Annual General Meeting(AGM) of the Company held on July 8 2016 until the conclusion of Annual General Meetingof the Company to be held in Calendar year 2021 subject to ratification of theirappointment at every AGM.
M/s BSR and Co LLP Chartered Accountants have furnished a certificateof their eligibility as per Section 141 of the Companies Act 2013
As per the Companies Act 2013 Secretarial Audit by a practicingCompany Secretary has become mandatory for prescribed companies and they are required toannex the Secretarial Audit report with their Board Report in the Annual Report. We arepleased to inform that your Company as a voluntary practice has been getting SecretarialAudit done for the past several years and also reporting it in the Annual Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013and The Companies (Appointment and Remuneration of
Managerial Personnel) Rules 2014 the Board appointed M/s P I andAssociates Practising Company Secretaries to undertake the Secretarial Audit of theCompany. Secretarial Audit Report in the prescribed Form MR 3 is provided as Annexure Fto this Directors' Report. The Secretarial Auditors' Report is self explanatory and doesnot call for any further explanation.
The Company voluntarily adheres to the various Secretarial Standardsissue by the Institute of Companies Secretaries of India.
36. INTERNAL FINANCIAL CONTROLS
Your Company has in place adequate internal financial controls withreference to the financial statements.
M/s BSR and Co LLP the statutory auditors of the Company has auditedthe financial statements included in the Annual Report and has issued an attestationreport on our internal control over financial reporting (as defined in Section 143 ofCompanies Act 2013).
37. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Inclusive growth and sustainable development are strong pillars of yourCompany's responsible corporate citizenship and are a part of the core values and drivingforce for many of its initiatives. The Company believes that responsible investments inthis regard will generate long term value for all the stakeholders.
In accordance with requirements of The Companies Act 2013 the Companyhas a Corporate Social Responsibility Committee comprising of a majority of IndependentDirectors and chaired by an Independent Director. Prof. Trilochan Sastry is the Chairmanof the Committee Mr. Vishnu R Dusad Mr. Prithvi Haldea and Mr. S. M. Acharya are theother members. The Committee framed and recommended a CSR Policy to the Board for adoptionand instituted a transparent monitoring mechanism for ensuring implementation of theprojects / activities to be undertaken by the Company.
The CSR Policy may be accessed on the Company website link:
Your Company has set up Nucleus Software Foundation (NSF) a Trust forthe purposes of undertaking CSR activities of the Company. This Foundation established in2014 as a Section 25 Company works towards its stated mission: "Empoweringunderprivileged with essence of education and thereby better livelihood and betterlife".
During the Year the Foundation worked towards its aim to make theeducational quality standards better for the underprivileged children studying atgovernment primary schools and NGO schools. It was able to reach over 4500 studentsacross 54 schools with the help of 1140 NSF Tabs which are mapped to the syllabus fromclasses 3rd to 5th. We have seen a great positive shift in the engagement pattern ofchildren specifically in the government schools.
After establishing the engagement through NSF TAB Program the aim inthe coming years is to strengthen the impact of learning. In order to pursue this goalthe NSF team has designed a remedial program to bridge the gap identified by the baselineand end line conducted across selected schools using NSF TAB. The NSF remedial programwill bridge the gap to bring the
children closer to their class level and the NSF tab program will helpin reinforcing the learning.
At other NGO schools the Foundation is trying to make learning morefun-filled and effective by using remedial and NSF Tab program.
The other CSR initiatives undertaken by the Foundation during the yearwere:
Supporting the Meritorious: Sponsored college and hostel feesfor two students of IIT Roorkee.
Skill Development and Livelihood support: Providing tailoringtraining to the underprivileged women in Chennai.
Assisting an NGO 'Ables Charity' at Faridabad and 'Samriddhitrust' at Sadarpur Noida to run their bridge schools for out- of-school children.
During the year the Company contributed '1.11 crore as a mandatoryrequirement towards the CSR activities to the Foundation. The Foundation expended ' 1.17crore on the CSR activities during the year. The Annual Report on CSR activities isprovided as Annexure G to this Directors' Report.
38. EMPLOYEE STOCK OPTION PLAN (ESOP)
Currently there is only one ESOP scheme prevalent in the Company; ESOPscheme - 2015 (instituted in 2015). As per ESOP scheme 2015 equity shares would betransferred to eligible employees on exercise of options through Nucleus Software EmployeeWelfare Trust which is established to carry out activities for the benefit and welfare ofits Employees by launching various Schemes in accordance with the Securities and ExchangeBoard of India (Share Based Employee Benefits) Regulations 2014.
Details of ESOP as per the provisions of Companies Act 2013 and Rulesmade there under are as follows:
During the year no stock options were granted to any employee underthe above-mentioned ESOP plan and therefore no calculations are required to be made orreported regarding difference between intrinsic value and fair market value of ESOPsgranted.
39. PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel ) Rules 2014 are provided in theprescribed format and annexed as Annexure H to this Directors' Report.
Having regard to the provisions of the first provision to Section136(1) of the Companies Act 2013 and as advised the Annual Report excluding part of theaforesaid information is being sent to the members of the Company. The said information isavailable for inspection at the registered office of the Company during working hours andany member interested in obtaining such information may write to the Company Secretary andthe same will be furnished on request. The full Annual Report including the aforesaidinformation is available on the Company's website.
40. DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to as per Section 134 (5) of the Companies Act 2013 theDirectors confirm that:
(a) in the preparation of the annual accounts for the financial yearended March 31 2018 the applicable accounting standards had been followed along withproper explanation relating to material departures;
(b) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concernbasis;
(e) the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
(f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
Based on the framework of internal financial controls and compliancesystems established and maintained by the Company work performed by the internalstatutory and secretarial auditors including audit of internal financial controls overfinancial reporting by the statutory auditors and the reviews performed by themanagement the Board is of the opinion that the Company's internal financial controlswere adequate and effective during FY 2017-18.
41. EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company in the prescribed Form MGT-9is provided as Annexure I to this Directors' Report.
42. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO
The information on conservation of energy technology absorption andforeign exchange earnings and outgo as stipulated under Section 134 of the Companies Act2013 read with the Companies (Accounts) Rules 2014 is provided as Annexure J to thisDirectors' Report.
Your Directors would like to place on record their gratitude for theco-operation received from the Government of India State Governments of Delhi UttarPradesh and Rajasthan Customs and Excise Departments Department of Scientific andIndustrial Research (Ministry of Science and Technology) Software Technology Park-NoidaSoftware Technology Park- Chennai Software Technology Park-Pune Special Economic Zoneauthorities and other government agencies.
Your Directors would also like to thank the Company's customersbankers vendors partners and shareholders for their continued support to the Company. Inspecific the Board would like to put on record its sincere appreciation of the commitmentand contribution made by all employees of the Company.