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Oracle Financial Services Software Ltd.

BSE: 532466 Sector: IT
NSE: OFSS ISIN Code: INE881D01027
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NSE 00:00 | 15 Feb 3633.00 5.85
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OPEN 3639.30
PREVIOUS CLOSE 3632.80
VOLUME 8020
52-Week high 4655.00
52-Week low 3329.55
P/E 26.75
Mkt Cap.(Rs cr) 31,115
Buy Price 3628.15
Buy Qty 20.00
Sell Price 3628.15
Sell Qty 5.00
OPEN 3639.30
CLOSE 3632.80
VOLUME 8020
52-Week high 4655.00
52-Week low 3329.55
P/E 26.75
Mkt Cap.(Rs cr) 31,115
Buy Price 3628.15
Buy Qty 20.00
Sell Price 3628.15
Sell Qty 5.00

Oracle Financial Services Software Ltd. (OFSS) - Director Report

Company director report

Directors’ report

Financial year 2017-18

Dear Members

The Directors present their report on the business and operations of your Company alongwith the Annual Report and audited financial statements of the Company for the financialyear 2017-18.

Financial highlights

As per Consolidated financial statements:
(Amounts in Rs. million)
Particulars Year ended March 31 2018 Year ended March 31 2017
Revenue from operations 45274.72 44265.33
Finance income 794.84 1491.16
Other income net 112.06 72.53
Total income 46181.62 45829.02
Depreciation and amortization (614.63) (701.92)
Profit before exceptional item and tax 18404.41 18198.03
Exceptional item (628.25)
Profit before tax 18404.41 17569.78
Tax expenses (6034.00) (5715.93)
Profit for the year 12370.41 11853.85

As per Unconsolidated financial statements:

(Amounts in Rs. million)
Particulars Year ended March 31 2018 Year ended March 31 2017
Revenue from operations 38617.27 37363.12
Finance income 722.62 1420.83
Other income net 163.65 215.76
Total income 39503.54 38999.71
Depreciation and amortization (573.53) (667.99)
Profit before exceptional item and tax 14869.14 14663.34
Exceptional item 2162.59
Profit before tax 14869.14 16825.93
Tax expenses (4809.24) (3944.96)
Profit for the year 10059.90 12880.97

Performance

On consolidated basis your Company’s revenue stood at Rs. 45274.72 million thisyear an increase of 2% from Rs. 44265.33 million of the previous financial year. The netincome was Rs. 12370.41 million this year an increase of 4%. On an unconsolidated basisyour Company’s revenue grew to Rs. 38617.27 million during the financial year2017-18 an increase of 3% from Rs. 37363.12 million of the previous year. TheCompany’s net income for the financial year 2017-18 was Rs. 10059.90 million.Previous year’s figures have been re-arranged/re-classified wherever necessary asper the applicable regulations.

A detailed analysis of the financials is given in the Management’s discussion andanalysis report that forms a part of this Directors’ report.

Dividend

Your Board is pleased to recommend a final dividend of Rs. 130 per equity share of facevalue of Rs. 5 each for the financial year ended March 31 2018.

The Register of Members and Share Transfer books will remain closed from WednesdayAugust 8 2018 till Tuesday August 14 2018 both days inclusive for the purpose ofpayment of final dividend for the financial year ended March 31 2018 and the AnnualGeneral Meeting. The Annual General Meeting is scheduled to be held on Tuesday August 142018. The dividend if approved at the forthcoming Annual General Meeting will be paid tothose Members whose names appear on the Register of Members as on the close of businesshours of Tuesday August 7 2018.

Transfer to reserves

The Company does not propose to transfer any amount to the General Reserve out of theamount available for appropriation.

Particulars of loans guarantees or investments

Pursuant to Section 186 of the Companies Act 2013 ("the Act") there are nonew loans granted or investments made by the Company during the financial year 2017-18.

Share capital

During the financial year 2017-18 the Company allotted 310487 equity shares of facevalue of Rs. 5 each to its eligible employees and Directors who exercised their stockoptions under the prevailing Employee Stock Option Schemes of the Company. As a resultthe paid-up equity share capital of the Company as on March 31 2018 was Rs. 427084465divided into 85416893 equity shares of face value of Rs. 5 each.

Extract of annual return

Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014 extract of Annual Return (in form MGT-9) isannexed as Annexure 1 to this report.

Directors and key managerial personnel

Mr. Chaitanya Kamat and Mr. Harinderjit Singh Directors of the Company retire byrotation at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment.

The Board recommends to the Members the resolutions for re-appointment of Mr. ChaitanyaKamat and Mr. Harinderjit Singh as Directors of the Company liable to retire by rotation.

Mr. Robert K Weiler Director of the Company who retires by rotation at theforthcoming Annual General Meeting has informed the Company that he does not wish tooffer himself for re-appointment as a Director of the Company.

The Members of the Company at the Annual General Meeting held on September 12 2014had appointed Mr. S Venkatachalam and Mr. Richard Jackson as Independent Directors of theCompany to hold office for a term of five consecutive years till March 31 2019. Inaccordance with the provisions of Section 149 152 of the Companies Act 2013 andapplicable provisions of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 it is proposed to re-appoint Mr. SVenkatachalam and Mr. Richard Jackson for a further term of five consecutive years fromApril 1 2019 up till March 31 2024.

The Board recommends to the Members the special resolutions for re-appointment of Mr. SVenkatachalam and Mr. Richard Jackson as Independent Directors of the Company.

The Directors seeking re-appointment are not debarred from holding the office ofDirector pursuant to any SEBI order. Brief resumes of the Directors proposed to bere-appointed the nature of their expertise in specific functional areas and the names ofcompanies in which they hold directorships and Chairpersonships / Memberships of BoardCommittees etc. are provided in the

Notice to Members and Report on Corporate Governance forming part of this AnnualReport.

All the Independent Directors of the Company have given declaration under Section149(6) of the Companies Act 2013 confirming that they meet the criteria of independence.

During the year there were no changes to the Key Managerial Personnel.

Board policies

Board evaluation policy

In accordance with the requirements of the Section 178 of the Companies Act 2013 andRegulation 17(10) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") theChairperson of the Nomination and Remuneration Committee conducts the Board evaluation.The report on Board evaluation tabled at the meeting was noted by the Board.

Record retention policy

Pursuant to Regulation 9 and 30(8) of Listing Regulations the Company has framed aRecord retention policy.

Risk management policy

The Company's principles and processes have been established by Risk Management Policywith regard to identification analysis and management of applicable risks.

Remuneration policy

The Nomination and Remuneration Committee determines the remuneration payable to theDirectors within the limits approved by the Members. The Independent Non-ExecutiveDirectors are paid commission based on the Committee Chairpersonships/

Memberships.

The remuneration to Executive Directors Key Managerial Personnel and Senior Managementconsists of fixed pay and incentive pay in compliance with the policies of the Company.

The Committee reviews and approves the stock options and other share based awards /payments to Executive Directors Key Managerial Personnel and employees of the Company.The Remuneration policy is available on the website of the Company at:http://www.oracle.com/us/industries/financial-services/ofss-remuneration-policy-4492725.pdf

Policy on determination of material events and information

The Company has a policy on determination of material events and information and setsout the classes and types of material events or information which require disclosure tostock exchanges. The policy is available on the website of the Company at:http://www.oracle.com/us/industries/financial-services/policy-determination-events-2889567.pdf

Vigil mechanism / whistle blower policy

The Company has established a Code of Ethics and Business Conduct ("Code")which is applicable to its Directors and employees. The Code also extends to theCompany’s suppliers and partners. Regular dissemination of the Code and trainings areconducted to reinforce the concepts and ensure that any changes are communicated. TheCompany’s vigil mechanism deals with reporting and dealing with instances of fraudand mismanagement and forms part of the Code. The Company has in place a confidentialreporting mechanism for any whistle blower to report a matter.

In terms of Companies Act 2013 and Regulation 46 of the Listing Regulations the VigilMechanism/Whistle Blower Policy forms part of the Company’s Code of Ethics andBusiness Conduct which is available on website of the Company at:http://www.oracle.com/us/corporate/investor-relations/cebc-176732.pdf

Related party transactions policy

The Company has framed a related party transactions policy in accordance with theprovisions of the Companies Act 2013 and the Listing Regulations. All related partytransactions entered into during the financial year 2017-18 were at an arm’s lengthbasis and in the ordinary course of business. Form AOC-2 providing the details of relatedparty transactions of the Company is annexed to this report as Annexure 2. The policy isavailable on website of the Company at:http://www.oracle.com/us/industries/financial-services/ofss-party-transactions-policy-2288144.pdf

Dividend distribution policy

As per Regulation 43A of the Listing Regulations the Company has framed a dividenddistribution policy and the same is available on website of the Company at:http://www.oracle.com/us/industries/financial-services/ofss-dividend-distribution-policy-3125465.pdf

Directors’ familiarization program

The Company has formulated familiarization program for its new directors includingindependent directors. The program provides an insight into the Company’s productsmarkets competition emerging technologies etc. to gain a better understanding of thebusiness environment and also covers the regulatory landscape. The familiarization programis available on Company’s website at: http://www.oracle.com/us/industries/financial-services/financial-familarization-program-2547373.pdf

Subsidiaries

Your Company has subsidiaries in Greece India Chile China Mauritius Singapore theNetherlands and the United States of

America.

The Company has during the year sold its entire stake in an associate company LoginSA France and holds nil shares as on

March 31 2018.

Pursuant to provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the Company’s subsidiariesin Form AOC-1 is attached to the financial statements of the Company.

Further pursuant to the provisions of Section 136 of the Companies Act 2013 thefinancial statements of the Company its consolidated financial statements along withrelevant documents and separate annual accounts in respect of subsidiaries are availableon the website of the Company at www.oracle.com/financialservices

Research and development

Your Company continuously makes significant investments in research and development todevelop solutions that the global banking industry needs today and will need tomorrow.Your Company strives to be at the forefront of innovation at the same time taking thetechnology risk away from the banks. Your Company’s dedicated in-house research anddevelopment (R&D) centers have produced a number of products that are today used bybanks in more than 130 countries around the world for running their most criticaloperations. The investment your Company makes in building applications coupled with accessto Oracle’s technology provides a unique competitive edge to its offerings.

Five in-house R&D centers in India of your Company have been accorded recognitionby the Department of Scientific and Industrial Research (DSIR) from February 26 2016. Theaggregate expenditure on research and development activities in these in-houseR&D centers is as follows:

(Amounts in Rs. million)
Particulars Year ended March 31 2018 Year ended March 31 2017
Revenue Expenditure 2058.24 2100.73
Capital Expenditure 82.06 230.35

Fixed deposits

During the financial year 2017-18 the Company has not accepted any fixed depositswithin the meaning of Rule 2(c) of the Companies (Acceptance of Deposits) Rules 2014 andas such no amount of principal or interest was outstanding as of the date of the BalanceSheet.

Corporate governance

The Company has taken appropriate steps and measures to comply with all the corporategovernance regulations and related requirements as envisaged under Regulation 27 of theListing Regulations. A separate report on Corporate Governance along with a certificate ofPracticing Company Secretary with regard to compliance of conditions of CorporateGovernance as stipulated in Regulation 34(3) of the Listing Regulations forms part of thisAnnual Report.

Secretarial audit

In terms of Section 204 of the Companies Act 2013 and the Rules made thereunder theBoard has appointed Mr. Prashant Diwan Practicing Company Secretary as SecretarialAuditor of the Company for the financial year 2017-18. The Secretarial Audit report issuedby Practicing Company Secretary is annexed as Annexure 3 to this report.

Business responsibility report

Business Responsibility Report for the financial year 2017-18 that forms part of thisAnnual Report has been hosted on the website of the Company atwww.oracle.com/financialservices. The Members who wish to obtain a printed copy of thereport may write to the Company Secretary at the Registered Office of the Company.

Employee Stock Option Plan ("ESOP")

The Members at their Annual General Meeting held on August 14 2001 approved grant ofESOPs to the employees / directors of the Company and its subsidiaries up to 7.5% of theissued and paid-up capital of the Company from time to time. This said limit was enhancedand approved up to 12.5% of the issued and paid-up capital of the Company from time totime by the Members at their Annual General Meeting held on August 18 2011. Thisextended limit is an all-inclusive limit applicable to the stock options("options") granted in the past and in force and those that will be granted bythe Company under this authorization.

Pursuant to ESOP scheme approved by the Members of the Company on August 14 2001 theBoard of Directors on March 4 2002 approved the Employees Stock Option Scheme("Scheme 2002") for issue of 4753600 options to the employees and directors ofthe Company and its subsidiaries. According to the Scheme 2002 the Company has granted4548920 options prior to the IPO and 619000 options at various dates after the IPO(including the grants of options out of options forfeited earlier). On August 25 2010the Board of Directors approved the Employees Stock Option Plan 2010 Scheme ("Scheme2010") for issue of 618000 options to the employees and directors of the Company andits subsidiaries. According to the Scheme 2010 the Company has granted 638000 options(including the grants of options out of options forfeited earlier).

Pursuant to ESOP scheme approved by the Members of the Company in their meeting held onAugust 18 2011 the Board of Directors approved the Employees Stock Option Plan 2011Scheme ("Scheme 2011"). Accordingly the Company has granted 1950500 optionsunder the Scheme 2011. Nomination and Remuneration Committee in their meeting held onAugust 7 2014 approved Oracle Financial Services Software Limited Stock Plan 2014("OFSS Stock Plan 2014"). This plan enables issue of deeply discounted optionsat the face value and referred to as OFSS Stock Units ("OSUs") for convenience.Accordingly the Company granted 165795 Stock Options and 586984 OFSS Stock Units("OSUs") under OFSS Stock Plan 2014. The issuance terms of OSUs are the same asfor Stock Options employees may elect to receive 1 OSU in lieu of 4 awarded Stock Optionsat their respective exercise price.

As per the Scheme 2002 Scheme 2010 and Scheme 2011 each of 20% of the total optionsgranted will vest on completion of

12 24 36 48 and 60 months from the date of grant and is subject to continuedemployment of the employee or directorship of the director with the Company or itssubsidiaries. Options have an exercise period of 10 years from the date of grant. Theemployee pays the exercise price upon exercise of options.

In respect of the OFSS Stock Plan 2014 each of 25% of the total stock options / OSUsgranted will vest on completion of 12 24 36 and 48 months from the date of grantand is subject to continued employment of the employee with the Company or itssubsidiaries. Options / OSUs have exercise period of 10 years from the date of grant. Theemployee pays the exercise price upon exercise of options/OSUs.

All the above mentioned Schemes of the Company are in compliance with SEBI (Share BasedEmployee Benefits) Regulations 2014. Applicable disclosures relating to Employees StockOptions Schemes pursuant to SEBI (Share Based Employee Benefits) Regulations 2014 areplaced on the website of the Company at www.oracle.com/financialservices The details ofthe options / OSUs granted under the Scheme 2002 Scheme 2010 Scheme 2011 and OFSS StockPlan 2014 to eligible employees / directors from time to time are given below:

Particulars Scheme 2002 Scheme 2010 Scheme 2011 OFSS Stock Plan 2014 OFSS Stock Plan 2014 (OSUs) Total
(Stock Options)
Pricing Formula

At the market price as on the date of grant Rs. 5

Variation of terms of options/ OSUs None None None None None
Number of options/OSUs granted till March 31 2018 5167920 638000 1950500 165795 586984 8509199
Number of options/OSUs lapsed and forfeited (620725) (282032) (441530) (22138) (52939) (1419364)
Number of options/OSUs exercised (4547195) (314483) (873088) (5286) (111747) (5851799)
Total number of options in force as on March 31 2018 41485 635882 138371 422298 1238036

The details of Options / OSUs granted to Directors and Senior Managerial Personnelunder OFSS Stock Plan 2014 during the financial year ended March 31 2018 are as follows:

Particulars Number of OSUs
(OFSS Stock Plan 2014)
i. Directors:
Mr. Chaitanya Kamat 25000
ii. Senior Managerial Personnel:
Mr. Arvind Gulhati 4750
Mr. Edwin Moses 1750
Mr. Mahesh K Rao 1750
Mr. Manmath Kulkarni 2250
Mr. Makarand Padalkar 10000
Mr. Onkarnath Banerjee 500
Mr. Prajakt Deshpande 750
Mr. Surendra Shukla 500
Mr. Vikram Gupta 4750
Mr. Vinayak Hampihallikar 1250
iii. Any other employee who receives grant in any one year of option/OSUs amounting to 5% or more of option / OSUs granted during the year Nil
iv. Identified employees who were granted Options/OSUs during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil
v. Diluted Earnings Per Share (EPS) pursuant to the issue of shares on exercise of option calculated in accordance with Indian Accounting Standard 33 ‘Earnings Per Share’ issued by the Institute of Chartered Accountants of India Rs. 117.21

All stock options were granted at market price on the date of grant and OSUs weregranted at the face value of the equity shares. The compensation cost arising on accountof stock options and OSUs is calculated using the fair value method. The reported profitis after considering the cost of employee stock compensation ( Rs. 623.33 million) usingfair value method on stock options/OSUs.

A summary of the activities in the Company’s Scheme 2002 Scheme 2010 and Scheme2011 for the year ended March 31 2018 are as follows:

Particulars Year ended March 31 2018
Scheme 2002 Scheme 2010 Scheme 2011
Shares arising from options Weighted average exercise price Shares arising from options Weighted average exercise price Shares arising from options Weighted average exercise price
( Rs. ) ( Rs. ) ( Rs. )
Outstanding at beginning of year 12000 2333 56675 2050 860798 2922
Granted
Exercised (12000) 2333 (14600) 2050 (196016) 2753
Forfeited (590) 2050 (28900) 3100
Outstanding at end of the year 41485 2050 635882 2966
Vested options 41485 540332
Unvested options 95550
Options vested during the year 188000
Options forfeited / lapsed during
590 28900
the year

A summary of the activities in the Company’s OFSS Stock Plan 2014 for the yearended March 31 2018 are as follows:

Particulars Year ended March 31 2018
OFSS Stock Plan 2014
Shares arising from OSUs Weighted average exercise price ( Rs. ) Shares arising from Options Weighted average exercise price ( Rs. )
Outstanding at beginning of year 395578 5 138959 3466
Granted 129383 5 9000 3579
Exercised (83358) 5 (4513) 3330
Forfeited (19305) 5 (5075) 3391
Outstanding at end of the year 422298 5 138371 3481
Vested OSUs / Options 92910 61687
Unvested OSUs / Options 329388 76684
OSUs / Options vested during the year 101643 33427
OSUs / Options forfeited / lapsed during the
19305 5075
year

The weighted average share price for the year over which stock options/OSUs wereexercised was Rs. 3795. Money realized by exercise of options/OSUs during the financialyear 2017-18 was Rs. 588.80 million. The Company has recovered perquisite tax on theoptions/OSUs exercised by the employees during the year. The weighted average fair valueof stock options/OSUs granted during the year was Rs. 987 and Rs. 3575 respectivelycalculated as per the Black Scholes valuation model as stated in 26 (b) in the notes toaccounts of the standalone financials.

The details of options unvested and options vested and exercisable as on March 31 2018are as follows:

Exercise prices ( Rs. ) Number of options/OSUs Weighted average exercise price ( Rs. ) Weighted average remaining contractual life (Years)
Options /OSUs unvested 5 329388 5 8.4
3077 95550 3077 5.5
3241 11994 3241 7.0
3393 40901 3393 8.2
3579 9000 3579 9.2
3987 14789 3987 7.6
Options /OSUs vested and exercisable 5 92910 5 7.5
1930 73133 1930 3.7
2050 41485 2050 2.4
3077 200489 3077 5.5
3127 266710 3127 4.9
3241 34445 3241 7.0
3393 12556 3393 8.2
3987 14686 3987 7.6
1238036 1983 6.3

Employee Stock Purchase Scheme ("ESPS")

The Company had adopted the ESPS administered through a Trust with the name i-flexEmployee Stock Option Trust ("the Trust") to provide equity basedincentives to key employees of the Company. i-flex Solutions Trustee Company Limited isthe sole Trustee of this Trust.

No allocation of shares to the employees have been made through the Trust since 2005and all selected employees under the Trust have exercised their right of purchase ofshares prior to March 31 2014. In this regard the Trustee Company had filed a petitionin the Hon'ble Bombay High Court to seek directions for utilization of the remainingunallocated shares along with the other assets held by the Trust for the benefit of theemployees of the Company. As per the order of the Hon'ble Bombay High Court dated

August 1 2016 the trust funds would be utilized for the benefit of the employees.

As at March 31 2018 70600 equity shares of the Company were held by the Trust (March31 2017 - 166142 equity shares).

Human resources

Your Company maintains a healthy and productive environment and offers clean andergonomic workspace. Human Resources are key assets of your Company and your Companyinvests continuously in imparting latest technology skills together with a range of softskills to help them excel in their roles. Your Company has a strong performance managementsystem together with a formal talent management processes to nurture employee careersgroom future leaders and create a high performance workforce.

Your Company’s total employees at the end of March 31 2018 were 8818 (March31 2017 - 8818) including employees of subsidiaries.

During the financial year one complaint was filed under Section 22 of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. Thecomplaint was pending resolution as at the end of financial year and has been resolved ason date.

Corporate social responsibility

The Company has constituted a Corporate Social Responsibility Committee and hasformulated the Corporate Social Responsibility ("CSR") Policy. The CSR Policy isin line with the provisions listed in Section 135 and Schedule VII of the Companies Act2013. The policy is available on the website of the Company at:http://www.oracle.com/us/industries/financial-services/ofss-social-responsibility-2437852.pdfPursuant to Rule 8 of Companies (Corporate Social Responsibility) Rules 2014 annualreport on the CSR activities for the financial year ended March 31 2018 is annexed asAnnexure 4 to this report.

Internal financial controls

The Board has adopted adequate policies and procedures in terms of Internal FinancialControls commensurate with the size scale and complexity of the Company’soperations. Such policies and procedures ensure orderly and efficient conduct of businessincluding adherence to the Company’s policies safeguarding of its assets preventionand detection of frauds and errors accuracy and completeness of the accounting recordsand timely preparation of reliable financial information.

The scope and authority of the Business Assessment & Audit team ("BAA")function is defined in the Internal Audit Charter. The

Internal Audit function reports to the Chairperson of the Audit Committee.

The BAA monitors and evaluates the efficacy and adequacy of internal control system ofthe Company its compliance with risk management system accounting procedures andpolicies at all locations of the Company and its subsidiaries. Based on the report of BAAthe Company undertakes corrective actions in their respective areas thereby strengtheningthe controls. Significant audit observations and corrective actions thereon are presentedby the BAA to the Audit Committee.

Directors’ responsibility statement

As required under clause (c) of sub-section 3 of Section 134 of the Companies Act2013 for the financial year ended on March 31 2018 the Directors hereby confirm that:a. in the preparation of the annual accounts the applicable accounting standards had beenfollowed along with proper explanation relating to material departures; b. the directorshad selected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit of thecompany for that period; c. the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; d. the directors had prepared the annual accounts on a going concernbasis; e. the directors had laid down internal financial controls followed by the Companyand that such internal financial controls are adequate and were operating effectively; andf. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

Auditors

M/s. Mukund M Chitale & Co. Chartered Accountants (ICAI Firm Registration No.106655W) were appointed as the Statutory

Auditors of the Company by the Members at their 28th Annual General Meeting held onSeptember 20 2017 to hold office till the conclusion of the 33rd Annual General Meetingto be held in the year 2022 subject to annual ratification by Members at every AnnualGeneral Meeting. The Board recommends to the Members the resolution for ratifying theirappointment from the conclusion of the ensuing Annual General Meeting till the conclusionof the Annual General Meeting to be held in the year 2022.

The Ministry of Corporate Affairs has vide notification dated May 7 2018 omitted therequirement of annual ratification of the appointment of statutory auditors by the membersof the Company at every Annual General Meeting. Hence the annual ratification shall not berequired with effect from the Annual General Meeting to be held in the year 2019.

Auditors’ report

With regard to the Auditors’ comment in the CARO report concerning delays inpayment of some foreign taxes the Company has recorded as appropriate all material taxliabilities. The said liabilities are continuously evaluated and payments are made basedon advise of the tax experts.

Conservation of energy technology absorption and foreign exchange earnings and outgo

The particulars as prescribed under sub-section (1)(e) of Section 134 of the CompaniesAct 2013 read with Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules 1988 the relevant data pertaining to conservation of energy technologyabsorption and foreign exchange earnings and outgo are furnished hereunder:

Conservation of energy

The Company strives to conserve the energy and use energy efficient computers. TheCompany also deploys sophisticated office automation and management equipment whichoptimizes energy consumption. During the year the Company also completed the projects toinstall photovoltaic solar panels at its campus in Mumbai and Pune India in an effort toincrease the use of renewable energy. As part of an initiative to support Oracle’sglobal sustainability goal of reducing waste to landfill a wet waste compost machine hasbeen installed at the Mumbai office with excess manure provided to NGO ‘GreenYatra’ where waste is used for tree plantation projects. Green Yatra also recognizedthe Company with a certificate of appreciation for contributions to increasing local greencover.

Technology absorption

The Company regularly strives to utilize newer technologies with the view to conservethe energy and create an environmentally friendly work environment. The initiatives takenby the Company are summarized below: Network: Efficient networks are essential to supportour global business and the Company continues to invest in upgrades and modernization ofthe networks thereby increases uptime of the network infrastructure increase capacity andenable greater collaboration. Your Company has made significant changes in the Wi-Fienvironment across the organization migrating to a faster more secure Next generationwireless (Wi-Fi) network. Not only is it more secure but it is also two to four timesfaster on average than the previously used network. This also provides easy access to theinternet for employees as well as guests based on their respective access requirement.This high performance Wi-Fi with increased density of access points will eventuallybring down the need for wired ports which would correspondingly lead to significantenergy and cost savings.

Virtual presence: Your Company has made significant investments in providing a nearvirtual working environment to its employees. This enhances communication across theglobe minimizing travel increasing efficiencies from a support perspective as well bymaking self-service operations easier and effective. Your Company is also in the processof implementing a Unified Communications system across the organization to optimize onconnectivity energy and support efforts and costs.

Peripheral Devices: Your Company is upgrading its rental printers scanners etc. toMulti-functional Devices (all-in-one) thereby creating efficiencies from a space supportperspective.

Datacenter consolidation activities are also in progress in order to optimize onspace power and energy.

All these initiatives would provide a more secure and efficient operating environmentwith the utilization of innovative technology.

Foreign exchange earnings and outgo:

(Amounts in Rs. million)
Foreign exchange earnings 35943.60
Foreign exchange outgo (including capital goods and other expenditure) 9731.96
Net equity dividend remitted in foreign exchange 10718.70

Activities relating to exports; initiatives taken to increase exports; development ofnew export markets for products and services; and export plans: Your Company hasestablished an extensive global presence across leading markets through its sales andmarketing network. The Company will continue to focus on tapping various potential marketsavailable globally. Experienced sales and marketing specialists focus on building stronginternational business presence to develop new export markets for your Company.

Prospects

Financial institutions today are dedicating a larger part of their resources to makingthe customer experience as frictionless as possible. Inspiring trust ensuring speed anddelivering personalization in every financial transaction are now the key priorities.During the early stage of digital disruption financial institutions launched severaldigital initiatives. Developed in isolation these initiatives addressed specific customerrequirements largely from a transactional view point. We are now in the wave of digitaldisruption where data analytics artificial intelligence (AI) machine learning andblockchain technology will coalesce into systems that are increasingly autonomous.

Interconnected banking where banks collaborate and partner closely with the ecosystemof FinTechs and customer IT systems are gaining traction. These connected ecosystems willenable sharing of data and services to provide unprecedented value to their customersthrough innovative personalized and convenient services anywhere any time. At the sametime there is an increasing focus on maintaining privacy of customer data protecting theinstitution from cyber threats and implementing a robust governance model. Regulatorsacross the world are also aware of the risks in these areas and are framing newregulations.

In today’s marketplace open banking is becoming a necessity for financialinstitutions to effectively participate in this ecosystem and start 'consuming' and‘sharing’ information via open APIs. These priorities open up excitingopportunities for your Company. Your Company’s portfolio of solutions is wellequipped to address these very needs. Having made significant investments in machinelearning AI and blockchain technologies your Company is in a good position to helpfinancial institutions leverage these technology shifts and find new ways of deliveringvalue. Financial institutions need to transform their ageing core systems to leveragethese opportunities. Leveraging your Company’s solutions financial institutions cansecurely collaborate in this dynamic environment and adapt to this constant cycle ofinnovation.

Employee particulars

The information required under Section 197 of the Companies Act 2013 read with rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) AmendmentRules 2016 is given below: Following guidelines have been used while preparing thisstatement. For statistically relevant computation of median value of employeeremuneration employees who have served the entire 12 months in the corresponding fiscalyear were considered. The expression "median" means the numerical valueseparating the higher half of a population from the lower half and the median of a finitelist of numbers is found by arranging all the observations from lowest value to highestvalue and picking the middle one; and if there is an even number of observations themedian is the average of the two middle values. The remuneration used for the analysis inthis section excludes the (perquisite) value of the difference between the fair marketvalue and the exercise price on the date of exercise of options to make the comparisonsrelevant.

(i) Ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:

Name of the Director* Ratio to median remuneration
Non-Executive Directors
Mr. S Venkatachalam@ 3
Mr. Richard Jackson 2
Mr. Sridhar Srinivasan 2
Executive Director
Mr. Chaitanya Kamat@ 30

*The details mentioned above are of only those Directors to whom the remunerationhas been paid.

@ Excludes the (perquisite) value towards difference between the fair marketvalue and the exercise price on the date of exercise of options.

(ii) The percentage increase in remuneration of each director chief executive officerchief financial officer and company secretary in the financial year:

Name and Title Percentage increase / (decrease) of remuneration in
FY 2018 as compared to FY 2017
Mr. S Venkatachalam@ 0%
Mr. Richard Jackson 0%
Mr. Sridhar Srinivasan 0%
Mr. Chaitanya Kamat@ (30%)
Mr. Makarand Padalkar Chief Financial Officer@ 11%
Mr. Onkarnath Banerjee Company Secretary@ 14%

@ Excludes the (perquisite) value towards difference between the fair marketvalue and the exercise price on the date of exercise of options.

(iii) The percentage increase in the Median Remuneration of Employees in fiscal 2018as compared to fiscal 2017:

1%

(iv) The number of permanent employees on the rolls of the Company:

7149 as on March 31 2018

(v) Average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and point outif there are any exceptional circumstances for increase in the managerial remuneration:

During the financial year 2017-18 the average percentile change in the remuneration ofemployees other than the managerial personnel was an increase of 7%. The Averagepercentile change in the remuneration of KMP was a decrease of 21%.

(vi) Affirmation that the remuneration is as per the remuneration policy of theCompany:

The Company affirms remuneration is as per the remuneration policy of the Company.

The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Amendment Rules 2016 is provided in a separateannexure forming part of this report. Further the report and the accounts are being sentto the Members excluding the aforesaid annexure. In terms of Section 136 of the CompaniesAct 2013 the said annexure is open for inspection at the Registered

Office of the Company. Any shareholder interested in obtaining a copy of the same maywrite to the Company Secretary.

Acknowledgements

Your Directors place on record their appreciation for the excellent contribution madeby employees of the Company through their commitment co-operation and diligence.

Your Directors gratefully acknowledge the continued support received by the Companyfrom its stakeholders customers members vendors and bankers during the year.

Your Directors also wish to thank the Government of India and its various agenciesDepartment of Electronics the Software Technology Parks - Bengaluru Chennai Mumbai andPune Special Economic Zone authorities at SEEPZ and Cochin the Customs and ExciseDepartment Ministry of Commerce Ministry of Finance Ministry of External AffairsMinistry of Corporate Affairs Department of Telecommunication the Reserve Bank of Indiathe State Governments of Maharashtra Karnataka Haryana and Tamil Nadu and other localGovernment Bodies for their support and look forward to their continued support in thefuture.

For and on behalf of the Board

S Venkatachalam

Chairperson

DIN: 00257819

Date: July 3 2018