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 2018.
1. FINANCIAL PERFORMANCE
Ministry of Corporate Affairs vide notification dated February 16 2015 notified theIndian Accounting Standards ("Ind AS") to be applicable to certain class ofcompanies including listed companies for the accounting periods beginning on or afterApril 1 2016 with comparatives to be provided for the period ending on March 31 2016.Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the CompaniesAct 2013. The standalone and consolidated financial statements for the financial yearended March 31 2018 forming part of this Annual Report have been prepared in accordancewith Ind AS with a transition date of April 1 2016. Explanation capturing areas ofdifferences and reconciliation from Indian GAAP to Ind AS have been provided in the notesto accounts to the standalone and consolidated financial statements.
A summary of the Company's financial performance in Financial Year 2017-2018: in lakhs
|Particulars ||Consolidated for the year ended March 31 ||Standalone for the year ended March 31 |
| ||2018 ||2017 ||2018 ||2017 |
|Revenue ||50302.47 ||46727.51 ||42139.78 ||39045.58 |
|Profit Before Interest and Depreciation ||10587.95 ||8273.83 ||10112.10 ||7295.83 |
|Gross Profit ||10587.95 ||8273.83 ||10112.10 ||7295.83 |
|Provision for Depreciation ||622.25 ||661.29 ||562.72 ||608.68 |
|Exceptional Items Income / (Expenses) ||- ||2025.00 ||- ||2025.00 |
|Net Profit Before Tax ||9965.70 ||9637.54 ||9549.38 ||8712.15 |
|Provision for Tax ||1723.39 ||1168.93 ||1249.17 ||935.82 |
|Net Profit After Tax ||8242.31 ||8468.61 ||8300.21 ||7776.33 |
|Other Comprehensive (loss) for the year ||(466.22) ||(233.97) ||(797.50) ||(3.13) |
|Total Comprehensive Income for the year ||7776.09 ||8234.64 ||7502.71 ||7773.20 |
|Balance of Profit brought forward ||51444.34 ||44232.33 ||51131.16 ||44610.57 |
|Balance available for appropriation ||59686.61 ||52700.94 ||59431.37 ||52386.90 |
|Retained Earnings Adjustment ||- ||- ||- ||- |
|Dividend (Interim & Final) on equity shares ||(1711.01) ||(444.23) ||(1711.01) ||(443.00) |
|Dividend tax ||(115.54) ||- ||(115.54) ||- |
|Transfer to General Reserve ||(46.69) ||- ||- ||- |
|Transfer to Retained earnings ||9.47 ||(812.37) ||9.47 ||(812.74) |
|Surplus carried to Balance Sheet ||57822.84 ||51444.34 ||57614.29 ||51131.16 |
On a consolidated basis your Company's revenues from operation for the FY 2017-18have increased by 7.7% in rupee terms from 46727.51 lakhs in FY 2016-17 to 50302.47lakhs in FY 2017-18. The net profits decreased from 8468.61 lakhs in FY 2016-17 to8242.31 lakhs during the year a decrease of 2.7%. This has translated to a BasicEarnings per Share of 48.17 in FY 2017-18 vs. 48.18 in FY 2016-17.
There was no change in the nature of business of the Company. Details of change insubsidiary are forming part of the report.
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 the 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.
Your Directors are pleased to recommend a final dividend of 4.50 per equity share of 10each for the year under review. During the year your Company paid an interim dividend of2.50 per equity share in October 2017 and 2nd interim dividend of 3 per equityshare paid in February 2018. This aggregates to a total dividend of 10 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. SCHEME OF AMALGAMATION
During the year National Company Law Tribunal vide its order dated August 31 2017approved the Scheme of Amalgamation of Sasken Network Engineering Limited the whollyowned subsidiary with your Company. The said order was filed with Ministry of CorporateAffairs on September 15 2017.
5. BUSINESS OUTLOOK ECONOMIC & REGULATORY SCENARIO AND OPPORTUNITIES
Your Company continues to operate in the high technology arena that is driven bycontinuous innovation due to the evolution of platforms standards and technologies thatare used to build new-to-world products. An interplay of forces including digitaltechnologies computing connectivity cybersecurity machine learning artificialintelligence mobility analytics and cloud are shaping today's enterprise. We believethat we have done creditably well in navigating the turbulence caused by constant changeand have been the first choice go-market partner for our customers.
Companies are proactively collaborating with service providers to accelerate innovationand reduce the time to market especially for introducing new products and services.Service providers with domain knowledge and core engineering skills that help builddifferentiated products and services will succeed in the market. Our stated strategycontinues to be two-fold - expand our competencies in product engineering services andwiden our capabilities in digital transformation services. The combination of our twostrengths gives us highly differentiated abilities that are hard to replicate. Ourexpertise in delivering complex engineering projects combined with knowledge of -hardware software mechanical design RF industrial design and UX makes us a partnerof choice. To achieve sustainable growth we embarked on a five-year journey and chartedout a new avenue for ourselves which we refer to as our 5 X 5 vision'. We have grownin all four quarters of FY2018. Our leadership team comprises professionals who bring withthem considerable experience coupled with industry knowledge and relationships. OurProject Management Capabilities are mature; thereby ensuring our global delivery engineprovides the best value. Our subsidiary in Finland adds highly differentiated abilities inhardware mechanical and RF design which are critical for being a full-fledged ProductEngineering Services Company. Thus we occupy the unique position of being a Chip toCognition' Company.
Global Engineering Research & Development (ER&D) spending was estimated to beapproximately 1 trillion dollars in 2017. (We are interchangeably using EngineeringResearch & Development - ER&D with Product Engineering Services - PES). TheER&D spend is driven by investments in both traditional product engineering andcontemporary digital engineering needs. The dominant industry verticals that are leadinginvestments in ER&D include automotive telecom software/internet and industrialautomation among others. Industry body NASSCOM estimates that ER&D is the fastestgrowing segment and clocks close to 11% growth year on year.
In the ER&D space we broadly see three themes that have propelled both ourinvestment and growth. The first vector has been the evolution of open systems such as theAndroid ecosystem and its pervasive adoption. The second vector has been the continuedevolution of wide area wireless communication standards 4G Long Term Evolution (LTE) andinvestments in the 5G standard. The third vector stems from the urgent need to digitizethe enterprise to bridge any remnant gap between the physical and the digital. An excitingcomplement of these vectors of change is the spurt of investments by satellitecommunication companies to launch new terminals and upgrade to higher bands as well assupport LTE. Thusthere has been significant growth in all verticals that we are presentin. For a highlight of the work carried out by your Company please refer to theTechnology and Market' section.
6. SHARE CAPITAL
During the year National Company Law Tribunal vide its order dated August 31 2017approved the Scheme of Amalgamation of Sasken Network Engineering Limited (SNEL) thewholly owned subsidiary with your Company.
As provided in the Scheme of Amalgamation the authorized share capital of 50000000of SNEL was added to the authorized share capital of your Company. The present authorizedshare capital of your Company stands at 550000000 comprising of 55000000 shares offace value 10 each.
The issued subscribed and paid-up capital of the Company stands at 17110114 equityshares of 10 each as at March 312018.
6.1. 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.
In previous Financial Year your Company had formulated a new Scheme i.e. SaskenEmployees' Share Based Incentive Plan 2016 (Incentive Plan 2016) under the SEBI (ShareBased Employee Benefits) Regulations 2014 enabling your Company to grant options up to amaximum of 885900 of Stock Appreciation Rights / Restricted Stock Units / other StockBased Instruments as may be formulated by SEBI from time to time in any combination andin accordance with the applicable provisions of law.
Your Company will seek in-principle approval of the Stock Exchanges for the IncentivePlan 2016 in Financial Year 2018-19. Therefore we have not made any disclosure at thisstage under SEBI (Share Based Employee Benefits) Regulations 2014 and the same will bemade as and when the Incentive Plan 2016 is implemented.
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.
8. 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.
9. 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".
10. 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 functionsare systematically addressed through mitigating actions on a continuing basis. These arealso discussed in the meetings of 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 by Statutory as well as internal Auditors. Significant auditobservations and actions taken thereon 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.
11. 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."
We will now provide a brief update on the progress we have made on our CSR initiativesin the FY 2017-18.
Self Employed Women's Association (SEWA)
Your Company continues to work with SEWA with a singular focus on assisting theirmembers to gain financial independence. The Sasken m-Bachat' (Sasken digitalTransaction Enablement Platform) is now operational in eight districts of Gujarat andenhances the trust amongst all stakeholders of the micro banking system. The platform hashelped process transactions amounting to 147 lakhs in FY 2017-18 by the 30370 SEWAmembers.
In the current year your Company has developed a Membership Management System (MMS)that will help SEWA efficiently manage over
2.5 lakh members in Gujarat during the coming financial year and scale up to work on apan-India basis.
Organic Waste Processing Unit
We have worked with civic bodies including the Bangalore Political Action Committee(BPAC) and Bruhat Bengaluru Mahanagara Palike (BBMP) to implement an Organic WasteProcessing Unit. This is located in Domlur Bengaluru close to your Company'sheadquarter. The plant was commissioned in February 2018 and can process 1250 kg/day ofdry & wet waste.
As reported last year your Company constituted a Trust under the name and style"Sasken Foundation" for exclusively undertaking CSR activities of your Company.The CSR committee continues to provide the direction and guidance for your Company's CSRactivities.
12. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has established a vigil mechanism / whistle blower policy for Directors andemployees to report their genuine concerns which is reviewed and updated from time totime. The said policy is available on the Company's website (www.sasken.com / investors).
All 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 theSEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (ListingRegulations).
In accordance with the provisions of the Act and in terms of the Articles ofAssociation of the Company Ms. Neeta S. Revankar and Mr. Pranabh D. Mody are liable toretire by rotation at the forthcoming Annual General Meeting (AGM) and being eligibleoffer themselves for re-appointment.
13.1. 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:
a) Attendance in meetings of the Board and its Committees.
b) Quality of contribution to Board deliberations.
c) Strategic perspectives or inputs regarding future growth of Company and itsperformance.
d) Providing perspectives and feedback going beyond information provided by themanagement.
e) Commitment to shareholder and other stakeholder interests.
13.2. 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:
a) Mr. Bansi S. Mehta
b) Mr. Bharat V. Patel
c) Prof. J. Ramachandran
d) Mr. Sanjay M. Shah
e) Mr. Sunirmal Talukdar
13.3. 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 and Remuneration Committee have been stated in the Corporate GovernanceReport.
13.4. 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.
13.5. Code of conduct
The Board has approved a Code of Business Conduct (Code) which is applicable to theMembers of the Board and designated employees. The Code of Business has been posted on theCompany's website (www.sasken.com / investors). The Code lays down the standard of conductwhich is expected to be followed by the Directors and the designated employees in theirbusiness dealings and in particular on matters relating to integrity in the work place inbusiness practices and in dealing with stakeholders.
All the Board Members and the Senior Management personnel have confirmed compliancewith the Code.
14. 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:
a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
b) accounting policies have been selected and applied consistently and judgments andestimates 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 2018 and of the profit of theCompany for the year ended March 31 2018;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) proper internal financial controls to be followed by the Company were in place andthat such internal financial controls were adequate and were operating effectively with nomaterial defects; and
f) systems to ensure compliance with the provisions of all applicable laws were inplace adequate and operating effectively.
15. SUBSIDIARY COMPANIES & JOINT VENTURES
National Company Law Tribunal vide its order dated August 31 2017 approved the Schemeof Amalgamation of Sasken Network Engineering Limited the wholly owned subsidiary withyour Company. As on March 31 2018 your Company has four wholly owned subsidiariesoverseas.
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 aConsolidated Financial Statement (CFS) of your Company and all its subsidiary companieswhich is forming part of the Annual Report. The CFS also reflects the contribution ofsubsidiary companies to the overall performance of the Company. A statement containingsalient features of the Financial Statements of the subsidiary Companies is also includedin the Annual Report.
In accordance with third proviso of Section 136(1) of the Act the Annual Report of theCompany containing therein its standalone and consolidated financial statements will beplaced on the Company's website (www.sasken.com / investors). Further as per fourthproviso of the said section audited annual accounts of each of the subsidiary Companieshave been placed on the Company's website (www. sasken.com / investors). Membersinterested in obtaining a copy of the audited annual accounts of the subsidiary Companiesmay write to the Company Secretary at the Company's registered office address.
The audit committee reviews the consolidated Financial Statements of the Company andthe investments made by its unlisted subsidiary companies. The minutes of the boardmeetings along with a report on significant developments of the unlisted subsidiaryCompanies are periodically placed before the Board.
Your Company does not have any material unlisted Indian subsidiary companies. Thepolicy for determining material subsidiaries' has been disclosed on Company'swebsite (www.sasken.com / investors).
16.1. Statutory Auditors and Statutory Auditors' Report
Your Company's Auditors M/s. B S R & Associates LLP Charted Accountants (ICAIFirm Registration No. 116231 W / W 100024) were appointed at the last AGM to hold officeuntil the conclusion of the 34th AGM.
As per the provisions of Section 139 of the Act the appointment of the StatutoryAuditors is required to be ratified by the members at every AGM of the Company.Accordingly the ratification of appointment of M/s. B S R & Associates LLPChartered Accountants as Statutory Auditors of the Company is being placed before themembers in the ensuing AGM.
In terms of provisions of Section 139 of the Act M/s. B S R & Associates LLP havefurnished a certificate that their appointment is within the limits prescribed. Asrequired under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 they have also confirmed that they hold a valid certificate issued bythe Peer Review Board of the Institute of Chartered Accountants of India.
There are no qualifications reservations or adverse remarks made by Statutory Auditorsin their Report.
16.2. Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Act and Rules framed thereunder asamended your Company appointed Mr. Ranganatha Rao Vittal Practicing Company Secretary toundertake the Secretarial Audit of the Company. The Practicing Company Secretary hassubmitted his Report on the Secretarial Audit conducted by him which is annexed herewithas "Annexure C".
There are no qualifications reservations or adverse remarks in his Report.
17. 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. Ranganatha Rao Vittal Practicing Company Secretary confirming compliance forms anintegral part of this Report which is annexed herewith as "Annexure D".
18. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
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.
19. 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 inplace a Related Party Transactions Policy for the purpose of identification and monitoringof such transactions. This policy has been approved by the Board and is available on theCompany's website (www.sasken.com / investors). Since there have been no materiallysignificant contracts / arrangements / transactions with related parties disclosure underForm No. AOC-2 is not applicable.
20. 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 benefit from innovation.
Your Company has filed for a patent on a method for human detection in this year at USpatent office and another patent on a multidimensional constellation coding and decodingmethod at Indian Patent office and at US Patent Office.
A total of 56 patents have been granted to your Company till now.
22. QUALITY CERTIFICATIONS
Your Company is certified for ISO 14001:20154 [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 yourCompany 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 9001:20158 Quality Management System (QMS)requirements. It helps us to deliver quality deliverables to our customers with scheduleand cost predictability through established organization systems and processes.
CMMI - Dev - V1.3 - 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 anintegrated project management platform for project managers team members and otherstakeholders. Your Company's QMS has been formally assessed at Maturity Level 3 of theCMMI-Dev-V1.3. Sasken's processes are also compliant to requirements of technologyvertical specific standards like TL9000 R5.5/5.0 and Automotive SPICE v2.5.
23. 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.
24. EXTRACT OF ANNUAL RETURN
The details forming part of the ext\ract of the Annual Return in Form MGT-9 is annexedherewith as "Annexure E".
25. 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 F1".
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 of8.50 lakhs or more per month pursuant to Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed herewith as "AnnexureF2".
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 |
|April 20 2018 ||Chairman & Managing Director |