To the Members
Your Directors have pleasure in presenting the Report on the business and operations ofthe Company along with the Standalone and Consolidated Audited Financial Statements forthe financial year ended March 31 2020.
1. FINANCIAL PERFORMANCE
The Standalone and Consolidated Financial Statements (CFS) for the financial year endedMarch 31 2020 forming part of this Annual Report have been prepared in accordance withInd AS as summarized below:
|Particulars || |
Consolidated for the year ended March 31
Standalone for the year ended March 31
|Revenue ||49222.22 ||50431.12 ||41670.76 ||41467.02 |
|Profit Before Interest Depreciation and Taxes ||8808.07 ||7113.08 ||8709.21 ||6842.38 |
|Provision for Depreciation ||1115.87 ||660.52 ||993.91 ||579.22 |
|Earnings before Interest and Taxes ||7692.20 ||6452.56 ||7715.30 ||6263.16 |
|Interest ||70.50 ||- ||62.49 ||- |
|Other Income ||3574.89 ||4602.34 ||3924.18 ||5265.85 |
|Net Profit Before Tax ||11196.59 ||11054.90 ||11576.99 ||11529.01 |
|Provision for Tax ||3313.84 ||2012.61 ||3345.93 ||2124.07 |
|Net Profit After Tax ||7882.75 ||9042.29 ||8231.06 ||9404.94 |
|Other Comprehensive Income for the year ||(1972.27) ||835.26 ||(2061.39) ||747.35 |
|Total Comprehensive Income for the year ||5910.48 ||9877.55 ||6169.67 ||10152.29 |
|Balance of Profit brought forward ||65121.26 ||57822.84 ||65295.22 ||57614.29 |
|Balance available for appropriation ||73004.01 ||66865.13 ||73526.28 ||67019.23 |
|Dividend (Interim & Final) on equity shares ||(2029.21) ||(1625.46) ||(2035.82) ||(1625.46) |
|Dividend (Special) ||(7508.34) ||- ||(7524.44) ||- |
|Dividend tax ||(1868.13) ||(151.62) ||(1868.13) ||(151.62) |
|Buy back of shares ||(15932.47) ||- ||(15932.47) ||- |
|Transfer to General Reserve ||- ||(19.85) ||- ||- |
|Transfer to Retained earnings ||(794.05) ||53.07 ||(794.05) ||53.07 |
|Surplus carried to Balance Sheet ||44871.81 ||65121.26 ||45370.37 ||65295.22 |
On a consolidated basis your Company's revenues from operation for the FY 2019-20 havedecreased by 2.4% in rupee terms from Rs 50431.12 lakhs in FY 2018-19 to Rs 49222.22lakhs in FY 2019-20. The net profits decreased from Rs 9042.29 lakhs in FY 2018-19 to Rs7882.75 lakhs during the year a decrease of 12.8%. This has translated to a BasicEarnings per Share of Rs 48.57 in FY 2019-20 vs. Rs 52.92 in FY 2018-19.
2. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There have been no material changes and commitments if any affecting the financialposition of your Company which have occurred between the end of the Financial Year of theCompany to which the Financial Statements relate and the date of the Report.
During the year your Company declared an interim dividend of Rs 5 per equity share inNovember 2019 and 2nd interim dividend of Rs 15 per equity share and specialdividend of Rs 35 per equity share in March 2020. This aggregates to a total dividend ofRs 55 per equity share.
A note on transfer of shares and unclaimed dividends to Investor Education andProtection Fund has been stated in the General Shareholder Information forming part ofthis Annual Report.
4. BUYBACK OF SHARES
In FY20 your Company bought back 2059243 equity shares at Rs 825 per equity sharerepresenting 24.96% and 25% of the total paid up capital and free reserves (includingsecurities premium account) as per the audited standalone and consolidated financialstatements of the Company as on March 31 2019 respectively through Tender Offer mechanismand extinguished the same by November 8 2019. Accordingly post buyback of shares thepaid-up capital of the Company stands at 15050871 equity shares of Rs 10 each.
5. BUSINESS OUTLOOK ECONOMIC & REGULATORY SCENARIO AND OPPORTUNITIES
From the inception your Company has taken pride in having a technology DNA. Astechnology continues to evolve at a rapid pace your Company had shown the agility &ability to adapt and offer a comprehensive set of product engineering & digitalservices.
The segments in which we operate are hypercompetitive. Hence our customers strive tobuild and launch newer platforms products and services. Therefore there continues to bea robust demand for the services we offer as globally distribute product development is anorm. The advent of the COVID 19 pandemic is now prevalent in most of the geographies inwhich your Company is doing business and will have an impact on our business prospects.The contraction of global business and softening of demand due to the pandemic may resultin our customers changing their product development/enhancement road maps. Therefore ourcustomers may reduce the volume of business they outsource to companies like ours till themacroenvironment stabilizes. In the event these plausible risks become a reality we willexperience demand volatility till the effects of the pandemic play out.
The disruption caused by the restriction on work and all professional & personalfronts will also impact business in the year 202021. We have put in place measures toassess the situation and mitigate any adverse impact to the extent possible. As of dateit is uncertain to ascertain when the geographies in which our customers are situatedwould return to normalcy.
Your Directors estimate that recovery is likely to be in the second half of thefinancial year. Presently we are not able to quantify these impacts but will do all thatis possible to minimize any impact on our business. Your Company has put in place businesscontinuity measures and has assured the wellbeing of its employees. In March and April2020 we have been seamlessly delivering on customer commitments. Thus we remainconfident of being able to continue honouring our obligations and pursue newer businessopportunities from both existing and prospective customers.
Therefore we believe that the addressable market opportunities for your Company willremain significant and we are committed to making a concerted effort to thrive in thisenvironment.
Please refer to Management Discussion and Analysis Report and the Technology andMarkets section forming part of this Report for further details on this segment.
6. SHARE CAPITAL
The present authorized share capital of your Company stands at Rs 550000000comprising of 55000000 equity shares of face value Rs 10 each.
The issued subscribed and paid-up capital of the Company stands at 15050871 equityshares of Rs 10 each as at March 31 2020. Details of the amount to be carried to reserveare forming part of the financial statements.
7. Employees Stock Option Scheme (ESOS)
Your Company continues the philosophy of encouraging senior leaders in the Company tobe partners in the growth of the organization.
The Sasken Employees' Share Based Incentive Plan 2016 was implemented in compliancewith the SEBI (Share Based Employee Benefits) Regulations 2014 as amended and therequirements specified under Regulation 14 of the said Regulations are available on theCompany's website (www.sasken.com/investors).
Your Company has neither accepted nor renewed any deposit during the year. As such noamount of principal and / or interest is outstanding as on the Balance Sheet date.
9. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 (the Act) are given in the notes to the FinancialStatements.
10. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 is annexed herewith as Annexure A.
11. RISK MANAGEMENT POLICY INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives.
Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis. These are also discussed in the meetingsof the Audit Committee and the Board of your Company.
Your Company's internal control systems are commensurate with the nature of itsbusiness and the size and complexity of its operations. These are routinely tested byStatutory as well as internal Auditors. Significant audit observations and actions takenthereon are reported to the Audit Committee.
The key business risks identified by your Company and mitigation plans are detailed inthe Management Discussion and Analysis Report.
12. CORPORATE SOCIAL RESPONSIBILITY
Your Company has in place a Corporate Social Responsibility (CSR) Committee inaccordance with Section 135 of the Act. The details of the CSR Policy and the AnnualReport on CSR activities as prescribed under the Act and Companies (Corporate SocialResponsibility Policy) Rules 2014 is annexed herewith as Annexure B.
Your Company is delighted to share that two reputed organizations have recognized ourCSR efforts & commitments towards financial inclusion and community building. It is amatter of pride for us to be honoured with a 'Special Commendation' by the committee ofthe 'Golden Peacock Award' for Corporate Social Responsibility for the year 2019. Inaddition the Rotary Club of Karnataka identified your Company to be among the top 3implementers of meaningful social responsibility initiatives.
The focus of your Company's CSR includes women - centric financial inclusion educationfor the underprivileged healthcare and environmental protection among others.
A detailed and comprehensive coverage of our sustainability and Corporate SocialResponsibility initiatives is provided at www.sasken.com/sustainability and also detailedin the Annual Report.
13. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has adopted a Whistle Blower Policy and has established vigil mechanism inline with the requirements under the Act and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations) for the employees and otherstakeholders to report concerns about unethical behaviour actual or suspected fraud orviolation of the Code. The Whistle Blower Policy is available at www.sasken.com/investors.
14. SEXUAL HARASSMENT REDRESSAL COMMITTEE
Your Company has complied with the applicable provisions relating to the constitutionof Internal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 details of which is provided under theCorporate Governance Report forming part of this Report.
Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of theListing Regulations.
Prof. J. Ramachandran a Non-Executive Independent Director of the Company and Chairmanof Nomination & Remuneration Committee and Stakeholders Relationship Committee of theBoard has resigned on February 26 2020. Your Company places on record its appreciationfor the valuable services and guidance rendered by him during his tenure.
Ms. Madhu Khatri was co-opted as an Additional Director on March 27 2020 and holdsoffice up to the date of the forthcoming Annual General Meeting (AGM). A proposal for herappointment as a Non-Executive Woman Independent Director is being placed before theshareholders for approval.
In accordance with the provisions of the Act and in terms of the Articles ofAssociation of the Company Mr. Pranabh D. Mody is liable to retire by rotation at theforthcoming AGM and being eligible offers himself for re-appointment.
A detailed note profile and explanatory statement for the aforesaid appointment andre-appointment in the case of retirement by rotation is provided in the Notice of the 32ndAGM.
15.1. Board Evaluation
Pursuant to the provisions of the Act and Regulation 17 of the Listing Regulations theBoard has carried out an annual performance evaluation of its own performance thedirectors individually and its Committees.
The Nomination & Remuneration Committee has laid down the evaluation framework forassessing the performance of Directors comprising of the following key areas:
Attendance in meetings of the Board and its Committees.
Quality of contribution to Board deliberations.
Strategic perspectives or inputs regarding future growth of Company and itsperformance.
Providing perspectives and feedback going beyond information provided by themanagement.
Commitment to shareholder and other stakeholder interests.
15.2. Board independence
Definition of 'Independent Director' is referred in Section 149(6) of the Act andRegulation 16(1)(b) of the Listing Regulations. Based on the confirmation / disclosuresreceived from the Directors and on evaluation of the relationships disclosed thefollowing Directors are Independent:
Mr. Bharat V. Patel
Mr. Sanjay M. Shah
Mr. Sunirmal Talukdar
Ms. Madhu Khatri
15.3. Nomination & Remuneration Policy
Your Company has a Nomination & Remuneration policy for selection and appointmentof Directors Senior Management and fixing their remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatters provided under Section 178(4) of the Act. The said policy and the composition ofthe Nomination & Remuneration Committee have been stated in the Corporate GovernanceReport.
15.4. Meetings of the Board and its Committees
The details of (a) the meetings of the Board and its Committees held during the year;and (b) composition and terms of reference of the Committees are detailed in the CorporateGovernance Report.
15.5. Code of conduct
The Board has approved a Code of Business Conduct (Code) which is applicable to theMembers of the Board and insiders. The Code of Business has been posted on the Company'swebsite (www.sasken.com/investors). The Code lays down the standard of conduct which isexpected to be followed by the Directors and the designated employees in their businessdealings and in particular on matters relating to integrity in the workplace in businesspractices and in dealing with stakeholders.
The Board Members and the Senior Management personnel have confirmed compliance withthe Code.
16. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of our knowledge and belief and according to the information andexplanations obtained your Directors make the following statements in terms of Section134(3)(c) of the Act that:
in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;
accounting policies have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2020 and of the profit of theCompany for the year ended March 31 2020;
proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
the annual accounts have been prepared on a going concern basis;
proper internal financial controls to be followed by the Company were in placeand that such internal financial controls were adequate and were operating effectivelywith no material defects; and
systems to ensure compliance with the provisions of all applicable laws andSecretarial Standards were in place adequate and operating effectively.
17. RE-CLASSIFICATION OF CERTAIN PROMOTERS AND PROMOTER GROUP MEMBERS
Regulation 31A of Listing Regulations provides for re-classification of the status of'promoters & promoter group persons' as 'public' upon fulfilment of certain conditionsincluding approval of such request by the members of the Company through ordinaryresolution and grant of permission by Stock Exchanges on application by the listed entity.
In light of the above said provisions the Company has received requests from certainmembers of the promoters & promoter group of the Company holding 704584 shares(4.68%) as detailed in the Notice convening the AGM seeking re-classification of theirstatus from 'promoters & promoter group' category to 'public category'.
The Board is of the view that re-classification of status of the said members ofpromoters & promoter group to public shall not in any way affect the management andcontrol of the Company.
In light of the above your Board considered the request for re-classification ofstatus to public received from the said promoters & promoter group members as fit andproper and is of the view that they could be re-classified as 'Public' subject to approvalof the members and permission from the Stock Exchanges. Accordingly Board of Directorsrecommended these requests for the approval of the members in the forthcoming AGM.
18. SUBSIDIARY COMPANIES & JOINT VENTURES
There has been no change in the nature of business of the subsidiaries during the yearunder review. In accordance with Section 129(3) of the Act your Company has prepared aCFS of your Company and all its subsidiary companies which is forming part of the AnnualReport. The CFS also reflects the contribution of subsidiary companies to the overallperformance of the Company. A statement containing salient features of the FinancialStatements of the subsidiary companies is also included in the Annual Report.
Your Company has initiated the process for closure of two of the wholly ownedsubsidiaries viz. Sasken Communication Technologies (Shanghai) Co. Ltd. and SaskenCommunication Technologies Mexico S.A. de C.V. in view of no business being conducted inthe said locations.
In accordance with third proviso of Section 136(1) of the Act the Annual Report of theCompany containing therein its standalone and CFS have been placed on the Company'swebsite (www.sasken.com/investors). Further as per fourth proviso of the said sectionaudited annual accounts of each of the subsidiary companies have also been placed on theCompany's website (www.sasken.com/ investors). Members interested in obtaining a copy ofthe audited annual accounts of the subsidiary companies may write to the Company Secretaryat the Company's registered office address.
The audit committee reviews the CFS of the Company and the investments made by itsunlisted subsidiary companies. The minutes of the board meetings along with a report onsignificant developments of the unlisted subsidiary companies are periodically placedbefore the Board.
Your Company does not have any material unlisted Indian subsidiary companies. Thepolicy for determining 'material subsidiaries' has been disclosed on Company's website(www.sasken.com/investors).
19.1. Statutory Auditors and Statutory Auditors' Report
As per the provisions of Section 139 of the Act M/s. B S R & Associates LLPChartered Accountants (ICAI Firm Registration No.116231 W/W - 100024) were appointed asStatutory Auditors of your Company at the 29th AGM held on July 18 2017 to hold officeuntil the conclusion of the 34th AGM. However vide their letter dated May 15 2020 haveexpressed their inability to continue as Statutory Auditors of your Company. The Boardthus appointed M/s. MSKA & Associates Chartered Accountants (ICAI Firm RegistrationNo. 105047W) as Statutory Auditors of your Company effective June 12 2020 in the casualvacancy caused by the said resignation till the conclusion of the forthcoming AGM and havesought approval of members to appoint them for the aforesaid period.
M/s. MSKA & Associates have consented to act as statutory auditors of the Companyfor the Financial Year 2020-21 i.e. up to the 33rd AGM of the Company and given acertificate in accordance with Section 139 141 and other applicable provisions of the Actto the effect that their appointment if made shall be in accordance with the conditionsprescribed and that they are eligible to hold office as Statutory Auditors of the Company.As required under Regulation 33 of the Listing Regulations Statutory Auditors haveconfirmed that they hold a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India.
Necessary resolution and explanation thereto have been provided in the AGM noticeseeking approval of members.
There are no qualifications reservations or adverse remarks made by erstwhileStatutory Auditors in their Report.
19.2. Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and Rules Regulation 24A of theListing Regulations and other applicable provisions framed thereunder as amended yourCompany appointed Mr. G. Shanker Prasad Practicing Company Secretary to undertake theSecretarial Audit of the Company. The Practicing Company Secretary has submitted hisReport on the Secretarial Audit conducted by him which is annexed herewith as Annexure C.
There are no qualifications reservations or adverse remarks in his Report.
20. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
Your Company is committed towards maintaining high standards of Governance. The Reporton Corporate Governance as stipulated under Schedule V of the Listing RegulationsShareholders Information together with a Corporate Governance Compliance Certificate fromMr. G. Shanker Prasad Practicing Company Secretary confirming compliance forms anintegral part of this Report which is annexed herewith as Annexure D.
21. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review as stipulatedunder Schedule V of the Listing Regulations is forming part of this Annual Report.
22. BUSINESS RESPONSIBILITY REPORT
Your Company has embedded in its core business philosophy the vision of societalwelfare and environmental protection. Responsible business characterizes its policiespractices and operations.
As per Regulation 34 of the Listing Regulations a Business Responsibility Report formsan integral part of this Report which is annexed herewith as Annexure E.
The Business Responsibility Report is also available on the Company's website(www.sasken.com/investors).
23. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. None of the Directorshas any pecuniary relationships or transactions with the Company.
Your Company has in place a Related Party Transactions Policy for the purpose ofidentification and monitoring of such transactions. This policy has been approved by theBoard and is available on the Company's website (www.sasken.com/investors).
Since there have been no materially significant contracts / arrangements / transactionswith related parties disclosure under Form No. AOC - 2 is not applicable.
24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are certain on-going litigations / disputes in the normal course of business.However there are no significant and / or material orders passed by the Regulators /Courts having a material impact on the operations of the Company during the year underreview.
Your Company has always encouraged its employees to generate intellectual property interms of patents to derive benefits from innovations. Your Company has filed for onepatent in this year at Indian PTO. The patent is on a Method and System for Consensus in aPermissioned Blockchain. Your Company has filed for 3 patents at US PTO in this year. Theyare a System and Method for Internet of Things Security using Blockchain a System andMethod for channel estimation for OFDM based wireless communication systems for 4G and 5Gand a Method and Apparatus for Multiple 1-D Barcode Localization.
Your Company has received two US patents in this year. One is on a method and apparatusfor human detection in images and the other one is on a multidimensional constellationcoding and decoding method.
A total of 58 patents have been granted to your Company till now.
26. QUALITY CERTIFICATIONS ISO 14001:2015
Your Company is certified for ISO 14001:2015 (Environment Management System Standard).Your Company is committed to contribute towards environment management being aresponsible corporate member of the communities in which it operates.
This reaffirms your Company as a responsible corporate citizen.
ISO / IEC 27001:2013
Your Company is certified for ISO / IEC 27001:2013 (Information Security ManagementSystem Standard). This is important for assuring our stakeholders (like CustomersPartners Vendors Investors and Employees) of our commitment in protecting theirinformation assets and Intellectual Properties (IPs) as well as sensitizing all employeesabout importance of confidentiality integrity and availability of information assets ofour stakeholders.
Your Company is certified for ISO 9001:2015 (Quality Management System (QMS) Standard).It helps us to establish a process framework in organization based on Plan - Do - Check -Act lifecycle and provides guidance on implementation of checks and measures to helppromise quality in all our deliverables to customers (new and existing) vendorsshareholders and interested parties including regulatory bodies across various geographiesin which we operate. It also helps meet statutory regulatory and compliance requirementsapplicable to Sasken and its affiliate companies.
CMMI - Dev - V2.0 - ML3
On delivery excellence your Company leverages industry best practices and standards toestablish and continuously improve delivery systems and processes. Your Company hasestablished a delivery platform called Sasken Delivery Platform (SDP). SDP is EngineeringDelivery workbench (with support for various lifecycle stages) and an Integrated ProjectManagement platform. Your Company's QMS has been formally assessed at Maturity Level 3 ofthe CMMI - Dev - V2.0. Sasken's processes are also compliant to requirements of technologyvertical specific standards like TL9000 R5.5/5.0 Automotive SPICE v2.5 and AutomotiveFunctional Safety - ISO 26262.
Sasken is formally assessed at "CMMI - Dev - V2.0 - Maturity Level 3" in May2020.
27. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in accordance withrelevant Accounting Standards (AS) issued by the Institute of Chartered Accountants ofIndia forms part of this Annual Report.
28. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT - 9 isprovided as Annexure F and also available on the website of the Company(www.sasken.com/investors).
29. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197(12) read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedherewith as Annexure G1.
A statement containing the names of top ten employees in terms of remuneration drawnand the name of every employee employed throughout the Financial Year was in receipt ofremuneration of 102 lakhs or more or if employed for part of the year and in receipt ofRs 8.50 lakhs or more per month pursuant to Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed herewith as Annexure G2.
Your Directors thank the various Central and State Government DepartmentsOrganizations and Agencies for the continued help and co-operation. The Directors alsogratefully acknowledge all stakeholders of the Company viz. customers members dealersvendors banks and other business partners for the excellent support received from themduring the year. Your Directors place on record their sincere appreciation to allemployees of the Company for their unstinted commitment and continued contribution to theCompany.
| ||For and on behalf of the Board of Directors |
|Bengaluru ||Rajiv C. Mody |
|June 12 2020 ||Chairman & Managing Director |