To The Members
Your Directors have pleasure in presenting the Thirty Fourth AnnualReport on the business and operations of the Company together with the audited financialstatements for the year ended March 31 2018.
The Company's operations during the year ended March 31 2018 aresummarized in the table below:
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|Net Revenue || |
|Revenue Growth % || |
|Earnings before financial charges depreciation & amortisation and taxes (EBITDA) || |
|Depreciation & Amortisation || |
|Financial charges || |
|Earnings/Profit before taxes || |
|(PBT) || || || || |
|Provision for taxes || |
|Net Earnings/Profit after tax || |
|(PAT) || || || || |
The Company's revenues at ` 21350.52 million during the yearunder review increased by 33.3% over the previous year. EBITDA and profit after tax at `1475.94 million and ` 730.11 million increased by 50.2% and 35.3% respectively ascompared to the previous year. Your Company continues to grow at a rapid pace and itsrevenue growth over the last 5 years (CAGR) has averaged 27.5% and is clearly the fastestgrowing company in security services in India. On a consolidated basis the SIS Group(consisting of SIS and all its subsidiaries associates and joint ventures) earned netrevenues of ` 58333.73 million (previous year - ` 43871.96 million) an EBITDA of `3119.62 million (previous year - ` 2203.63 million) and Profit after taxes of ` 1630.28million (previous year -
` 1097.10 million). The SIS Group is amongst the largest security andfacility management services companies in the Asia-Pacific region with revenues continuingto grow at a rate far in excess of the industry growth rate.
OPERATIONS AND BUSINESS PERFORMANCE
Security Services a. Security services India
The Indian economy continues to grow steadily and strongly. The lastquarter of FY17 saw a change in the classification of security workers from unskilled toskilled under the Central Government notifications. This led to a significant change inthe wages for a section of our workforce and in FY18 we have been successful in gettingour clients to move to the new commercial arrangements under the new wage guidelines. Thiswas one of the contributory factors behind the significant growth of 33.3% witnessedduring the year.
The revenues of the India security business crossed the
` 20000 million landmark to end the year at ` 21350 million revenues.The growth in the Indian security business was underpinned by a strong growth in thenumber of staff deployed by 14.4% from March 2017 to March 2018. Significant operationalimprovements leveraging technology based solutions have contributed to growth inproductivity and operating profits during the year under review. These improvements led toa significantly lower growth in indirect staff in comparison with the growth in directmanpower.
. Security services Australia
The company provides security services in Australia throughitswhollyownedsubsidiaryMSSSecurityPtyLtd.EffectiveJuly
1 2017 the Company through its 100% subsidiary SIS Australia GroupPty Ltd. ("SIS Australia Group") acquired 51% equity in Andwills Pty Limited("Andwills") the ultimate holding company of Southern Cross Protection Pty Ltd.("SXP") one of our current Associates in which 10% of the equity share capitaland voting rights were directly held by SIS Australia Group. This acquisition resulted inthe Company indirectly and directly controlling 51% of the equity share capital andvoting rights in SXP which is an increase from the existing 10% of the equity sharecapital and voting rights in SXP directly held by it through its 100% subsidiary SISAustralia Group. Further the share purchase agreement provides a right to SIS to increaseits shareholding in Andwills to 100% after three years and as a result indirectly anddirectly control 100% of the equity share capital and voting rights in SXP at a price tobe calculated in accordance with an agreed valuation formula.
The acquisition of SXP is a significant milestone in our Australianbusiness making us the clear leader in Australia with over 21% market share. SXP bringsmobile patrol offering to our security solutions thus providing us a wider bouquet ofservices for the clients to choose from. MSS and SXP will explore mutual synergies overthe coming year and also further expand their footprint by capitalizing on mutualstrengths. On a consolidated basis the Australia security business comprising both MSSand SXP recorded revenues of AUD 603.46 million during the year under review against AUD477.02 million in the previous year. This is a growth of 26.0% which is noteworthyconsidering that the Australian industry is a fairly developed and stable market and itseconomy grew at 2.4% in calendar year 2017. New permanent contracts of AUD 45 million werewon during the year and an overall retention rate of 96% was achieved which is a strongindicator of the high levels of operational excellence in our Australia business. Staffattrition was also kept steady at 20%.
. Electronic Security Solutions
The electronic security business of Tech SIS recorded a revenue of `149.60 million during the year under review over the revenues of ` 191.58 million in theprevious year. The business has seen a decline due to a slowdown in the projects businessand a change in the policy of revenue recognition arising from transition to IndianAccounting Standards.
d. Alarm Monitoring and Response
Our Alarm Monitoring and Response business was started in the lastquarter of FY17 under the brand VProtect and saw its first full year of operations inFY18. The business is a JV with Prosegur of Spain. Prosegur is one of the internationalleaders in the alarms business and brings rich knowledge and technology to the table. Thebusiness continues to add customers steadily though it operates only in the micro marketof Gurgaon. The business ended FY18 with a customer base of 371 customers. VProtect is thepioneer in providing Alarm Monitoring and Response service to the Indian consumers and weare confident of using our early mover advantage to expand our presence.
The Group's facility management business comprises a) ServiceMaster Clean Limited and Dusters Total Solutions Services Private Limited which are in thebusiness of housekeeping and cleaning services; and b) Terminix SIS a joint venture withTerminix which is engaged in the pest control business The year saw a stellar increase inthe scale of our facility management vertical going from a combined ` 3965.89 millionrevenue base in FY17 to ` 6707.41 million in FY18 an increase of 69.1%. This was led bya 24.1% increase in the Service Master business from ` 1426.50 million in FY17 to
` 1770.49 million in FY18 and a 83.8% increase in revenues in Dustersfrom ` 2638.43 million in FY17 to ` 4850.39 million in FY18. The facility managementbusiness was able to showcase its strengths in the healthcare business by aggressivelytargeting the segment. The business will continue to focus on building such specializedcapabilities while also aiming for greater government business which is quite low rightnow. The combined EBITDA also went up from ` 134.93 million in FY17 to ` 343.46 million inFY18 an increase of 154.5% and the EBITDA margin also went up from 3.4% in FY17 to 5.1%in FY18. Both Service Master and Dusters saw a healthy increase in margins in theirrespective entities. Terminix SIS continues to show strong growth albeit on a smallerbase and the Directors are pleased to report that the business has recorded another yearof high growth in revenues of 64.2%
Cash Logistics (a joint venture with Prosegur)
On a consolidated basis the cash logistics business' revenuesdeclined by 1.6% over the previous year as a result of portfolio rationalisation resultingfrom a critical review of each contract in the business. We now operate over 2072 cashvans and 58 vaults and strong rooms across the country. The cash in circulation in theeconomy steadily came back on track and reached levels similar to the levels seen beforedemonetization. The first few months of the year however continued to su er from theeffects of limited cash in the ATMs.
Taking into account the 49% held by SIS in the cash logistics businessand the other joint venture partnership terms the cash logistics business is accountedfor as an associate company and accordingly we have adopted equity accounting for thisinvestments in our consolidated financial statements.
Acquisition of Southern Cross Protection Pty Ltd by way of increase inthe shareholding and voting rights
Effective July 1 2017 the Company through its 100% subsidiary SISAustralia Group Pty Ltd. ("SIS Australia Group") acquired 51% equity inAndwills Pty Limited ("Andwills") the ultimate holding company of SouthernCross Protection Pty Ltd. ("SXP") one of our current Associates in which 10%of the equity share capital and voting rights were directly held by SIS Australia Group.This acquisition resulted in the Company indirectly and directly controlling 51% of theequity share capital and voting rights in SXP which is an increase from the existing 10%of the equity share capital and voting rights in SXP directly held by it through its 100%subsidiary SIS Australia Group. Further the share purchase agreement provides a right toSIS to increase its shareholding in Andwills to 100% after three years and as a resultindirectly and directly control 100% of the equity share capital and voting rights in SXPat a price to be calculated in accordance with an agreed valuation formula.
Initial Public O ering ("IPO")
During the year under review the Company has completed an InitialPublic O ering ("IPO") of its shares consisting of a fresh offer of 4444785equity shares of ` 10 each at a premium of ` 805 per share and an offer for sale of5120619 equity shares of
` 10 each by the selling shareholders. The proceeds of the fresh offercomponent from the IPO amounted to ` 3410.47 million (net of issue expenses). The equityshares of the Company were listed on National Stock Exchange of India Limited and BSELimited effective August 10 2017. Details of the utilization of IPO proceeds are asfollows:
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|Particulars || |
Net proceeds as per prospectus
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|Gross proceeds of the Issue || |
|Less: Estimated offer related expenses in relation to the Issue || |
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|Net proceeds || |
|Add: saving in offer related expenses || |
|Total || |
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|Particulars || |
Projected utilization of funds as per
Utilization of funds upto March 31 2018
Un-utilized amount as at March 31 2018
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|A Repayment and pre-payment of Debts of the Company || |
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|B Funding working capital requirements of the Company || |
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|C General corporate purposes || |
|Add: saving in offer related expenses || |
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|Total || |
The unutilised amounts of the issue as at December 31 2017 have beentemporarily deployed in the cash credit accounts of the company with banks which is inaccordance with objects of the issue. The same needs to be utilised by 2019.
The Board of Directors of the Company at their meeting held onSeptember 20 2016 and pursuant to an order of the National Company Law Tribunal KolkataBench ("NCLT") consequent to an application filed before it for sanctioning thescheme the shareholders and creditors of the Company at their respective meetings held onJuly 24 2017 had approved a proposed composite scheme of arrangement under sections 230to 232 of the Companies Act 2013 between the Company Service Master Clean Limited("SMC") a subsidiary of the Company and SIS Asset Management Private Limited("SIS Asset Management") and their respective shareholders and creditors witheffect from July 1 2016 the appointed date ("the Scheme") to demerge certainbusinesses of the Company and SMC into SIS Asset Management.
The NCLT has approved the Scheme by an order dated December 22 2017and the same has been filed with the Registrar of Companies Patna on January 18 2018.Thus the Scheme is effective on the date of filing of the order with the Registrar ofCompanies. Upon the Demerger Scheme becoming effective on January 18 2018 the demergedbusinesses stand transferred to and vested with SIS Asset Management Private Limited.
The industries we operate in are closely linked to the overall economicgrowth of the country. India is currently one of the fastest growing major economies inthe world according to IMF/ World Bank.
Strong underlying GDP growth coupled with sound demand drivers augurwell for the Indian security services industry in the near future. Frost & Sullivanhas forecast the Indian security services industry to grow at a CAGR of 20% over theperiod 2015-2020 as compared to a CAGR of 18% over the period 2010-2015. We havehistorically grown at over 1.5 times the industry growth and we believe that we are wellplaced to continue to outperform the industry in the future too. This growth comes on theback of continued urbanization higher threat perception inadequate police force andshift from noncompliant local players to compliant national players. All this is supportedby good growth for all the underlying sectors that we service. Recent events and changeslike demonetization implementation of GST better enforcement of PSARA are all going toaccelerate the formalization of this industry. We have significantly increased oursecurity services branch network over the past few years to reach 153 branches and withthis vast reach we believe that we are well placed to capitalize on this demandexpansion. Our Australian operations through MSS continue to be the leader in Australiawith strong YoY growth that is consistently higher than competition. This has beenachieved on the back of consistent margins. Freedonia has estimated the market to grow at5.4% over the next 5 years and with our strong brand name and continuous investments inpeople and technology we will strive to continue to maintain our market leadershipposition. The facility management and pest control industry is still largely dominated byunorganised players with localized operations. There continues to be a steady shift fromthe unorganized to the organized players and this market is expected to grow at around20%. While IT/ITES have been the first users we see an increasing shift towardsoutsourcing by hotels hospitals retail airports metros commercial outlets and smallretail or F&B outlets as well. The trend towards outsourcing non-critical operations(FMS being prime among them) continues to be strong and as the market and industryexpands the scope of service offerings will expand bringing in more revenue for theindustry. The "Swachh Bharat" initiative by Government of India is expected toprovide a major boost to facility management and cleaning services. The cash logisticsindustry has seen slower growth over the past years due to slowdown in ATM expansion andalso poor contracting practices adopted by the managed service providers. Postdemonetization the industry has got better recognition from the regulators who realizethe criticality of the cash logistics industry in keeping the wheels of the economymoving. We believe that the ecosystem for cash logistics is likely to undergo asignificant shift with the increasingly active involvement of banks and regulators and newregulations and guidelines being announced recently. We are seeing increasing requirementsfrom customers who intend to invest in electronic security systems. At the same timethere is an increasing segment of consumers who are adopting electronic security as aservice ("ESAS"). This presents a huge opportunity for players such as SIS whohave the ability to provide man-tech solutions which provide integrated security solutionto the customers.
Our focus remains to drive strong organic growth and at the same timecontinuously look to expand on our service offerings by acquiring businesses. We believethat by continuously investing in systems processes training and recruiting the bestpersonnel and managers we would be able to continue to deliver superior services tocustomers.
MATERIAL CHANGES & COMMITMENTS IF ANY AFFECTING THE FINANCIALPOSITION OF THE COMPANY FROM THE END OF FINANCIAL YEAR TILL THE DATE OF THE REPORT.
Other significant matters from the end of financial year
On April 13 2018 the Company had allotted 1500 secured ratedlisted redeemable non-convertible debentures of face value of ` 1000000 (rupees tenlakh only) each aggregating up to
` 1500000000/- (rupees one hundred and fifty crore only) on aprivate placement basis to eligible investors.
DIVIDEND AND TRANSFER TO RESERVES
The Board in its meeting held on January 29 2018 declared an interimdividend of ` 2.00 per equity share which resulted in a cash outflow of ` 176.16 millionincluding dividend distribution tax. The Board in its meeting held on May 9 2018 hasrecommended a final dividend of ` 1.50 per equity share for the financial year ended March31 2018. The proposal is subject to the approval of the shareholders at the AnnualGeneral Meeting to be held on June 28 2018 and if approved would result in a cashoutflow of approximately ` 109.77 million.
In terms of the provisions of Regulation 43A of SEBI (ListingObligations and Disclosure Requirements) 2015 ("SEBI Listing Regulations")your Company has formulated a Dividend Distribution Policy. This Policy is provided asAnnexure I to this Report and is also available on the Company's websitewww.sisindia.com.
As on March 31 2018 the authorised capital of the Company is `1350000000 divided into 135000000 equity shares of
` 10 each.
During the year under review the Company has allotted: a. 36014equity shares of ` 10 each pursuant to exercise of stock options; b. 22 Equity Shares of `10 each pursuant to conversion of compulsorily convertible debentures; and c. 4444785equity shares of ` 10 each pursuant to an initial public offering of the Company As onMarch 31 2018 the paid-up equity share capital of the Company stood at ` 731.80 millionconsisting of 73183785 equity shares of ` 10 each.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Pursuant to Section 186 of the Companies Act 2013 ("theAct") disclosures on particulars of loans guarantees and investments are providedas part of the financial statements.
During the year under review your Company has not accepted or renewedany deposit within the meaning of Section 73 of the Act read with the Companies(Acceptance of Deposits) Rules 2014 and as such no amount of principal or interest wasoutstanding as on the date of the Balance Sheet.
The SIS Group's business and operations are managed by aprofessional team of managers led by the Group Managing Director under the supervision andcontrol of the Board of Directors. The Company is committed to maintain the higheststandards of Corporate Governance and adheres to the Corporate Governance requirements asstipulated by Securities and Exchange Board of India (SEBI).
In terms of Regulation 34 of SEBI Listing Regulations a separatereport on Corporate Governance along with a certificate from a Practicing CompanySecretary on its compliance forms an integral part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
The SIS Group comprising Security and Intelligence Services (India)limited and its subsidiaries associates and joint ventures ("SIS Group") hasbeen at the forefront of bringing social change in the lives of thousands of people inIndia. It employs more than 150000 people of which a large majority come from the lessprivileged sections of society with limited means for education development andlivelihood. The SIS Group has been instrumental in improving lives of these people throughtraining development and providing them employment opportunities. Our Board of Directorsour Management and all of our employees subscribe to the philosophy of compassionate care.We believe that a business has to give back to society and to the environment andcommunity in which they operate in such a manner that helps in building a secure healthyknowledgeable and a sustainable society and business. Corporate Social Responsibility(CSR) has been an integral part of the way that the SIS Group conducts its business sinceits inception. The SIS Group set up the SEWA trust for the betterment of lives of theemployees. The SIS Group has engaged in various activities in the communities that ouremployees live in which has benefited thousands of people over the years. The company hasalso been at the forefront in imparting and encouraging skills based training to peoplefrom backward and less developed communities across the country. The Policy on CSR hasbeen formalized based on the vision and principles of the SIS Group. The main objective ofthis CSR Policy is to lay down guidelines to make CSR a key business process forsustainable and beneficial engagement with the society and the environment in which theGroup operates. It aims at enhancing welfare measures of the society based on theimmediate and long term social and environment consequences of the SIS Group'sactivities. This Policy specifies the projects and programmes that can be undertakendirectly or indirectly the modalities of execution and the monitoring thereof.
The scope of the Policy has been kept as wide as possible so as toallow the SIS Group to respond to changing and immediate societal needs and maintainflexibility but at the same time focus on a specific set of activities that bring longterm benefit to society.
One of the internal objectives of the CSR Policy is to seek an activeparticipation of employees of the Company at all the locations. Employees will beencouraged to volunteer their time and effort in respect of SIS Group sponsored programmeor on their initiatives. The Company will recognize the efforts put in by employees in CSRactivities. A widespread awareness of the CSR initiatives of the SIS Group will beconducted and the SIS Group seeks an active and wide participation from employees andencourages any suggestions and project ideas from them. The Annual Report on CorporateSocial Responsibility (CSR) Activities is enclosed as Annexure - II.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE PREVENTIONPROHIBITION & REDRESSAL ACT 2013
The Company is committed to provide a safe and conducive workenvironment to its employees and has adopted a policy on prevention prohibition andredressal of sexual harassment at workplace in line with the provisions of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theRules thereunder. During the year under review no complaints were reported as per theSexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act2013. As on March 31 2018 investigation process of one complaint is under way.
NOMINATION AND REMUNERATION POLICY
Directors and their Appointment
The Nomination and Remuneration Committee of the Board has approved thecriteria for determining qualifications positive attributes and independence of Directorsin terms of the Act and the rules made thereunder both in respect of IndependentDirectors and other Directors as applicable. This policy inter alia requires thatNon-Executive Directors including Independent Directors be drawn from amongst eminentprofessionals with experience in business/ finance/ law/ public administration andenterprises. It endeavors to create a broad-basing in the composition of the Board to makeavailable the right balance of skills experience and diversity of perspectivesappropriate to the Company. The Articles of Association of the Company provide that thestrength of the Board shall not be fewer than three nor more than fifteen. Directors aregenerally appointed/ re-appointed with the approval of the members for a period of threeto five years or a shorter duration in accordance with any arrangements and/or guidelinesas determined by the Board from time to time. The Policy relating to remuneration ofDirectors Key Managerial Personnel and other employees is provided in Annexure III.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2) (f) of SEBI Listing Regulations aseparate section of Business Responsibility Report describing the initiatives taken bythe Company from environmental social and governance perspective forms an integral partof this Report.
RELATED PARTY TRANSACTIONS
During the year under review all contracts/arrangements entered intoby your Company with related parties were on an arm's length basis and in theordinary course of business. There are no material transactions with any related party asdefined in the Act. All related party transactions entered into during the year havebeen approved by the Audit Committee. Since all the contracts/arrangements/transactionswith related parties during the year under review were in the ordinary course ofbusiness and at arm's length and were not considered material disclosure in FormAOC-2 under Section 134(3)(h) of the Act read with the Companies (Accounts of Companies)Rules 2014 is not applicable. The details of contracts and arrangements with relatedparties for the financial year ended March 31 2018 are given in the standalone financialstatements forming part of this Annual Report. The Policy on related party transactions isavailable on Company's website www.sisindia.com.
Risk management is the process of identification assessment andprioritization of risks followed by coordinated efforts to minimize monitor andmitigate/control the probability and/or impact of unfortunate events to of maximize therealization of opportunities. The company has initiated a process of preparing acomprehensive risk assessment and minimization procedure. These procedures are meant toensure that executive management controls risk through means of a properly definedframework. The major risks are being identified by the Company and its mitigationprocess/measures being formulated in areas of operations recruitment financial processesand reporting human resources and statutory compliance.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under reviewas stipulated in SEBI Listing Regulations is presented in a separate section forming partof this Annual Report.
INTERNAL FINANCIAL CONTROLS
Our rapid growth while a matter of great satisfaction continues toput pressure on our internal systems and processes. It is important that we work to ensurethat these continue to keep pace with the business growth and that our policies remaincurrent and relevant in the rapidly changing business landscape. Information systems arebeing continuously evaluated and revamped in order to deliver timely and relevantinformation to various stakeholders so as to arm them with the necessary information andtools to enable them to compete in a tough market and environment. We believe that IT andinformation systems are critical in today's world and we have several dedicatedgroups of people constantly working to continuously evolve and improve these systems tokeep abreast of the fast changing environment.
The Company's system of continuous internal audits ensures thatlaid down processes and practices are followed and complied with and that qualityprocesses are strictly adhered to. Financial discipline is emphasised at all levels of thebusiness and adherence to quality systems and focus on customer satisfaction are criticalfor the Company to retain and attract customers and business and these are followedrigorously. An Audit Committee comprising independent members of the Board has beenconstituted which plans and monitors the various Internal Audit programmes and reviews thereports and action plans arising therefrom. The Managing Director Chief ExecutiveOfficer Director Finance and the Chief Financial Officer are invitees to themeetings of the Committee.
The Internal Auditors who are an independent function within theGroup reporting to the Audit Committee review the adequacy and e cacy of the keyinternal controls. The scope of the audit activity is guided by the annual audit planwhich is approved by the Audit Committee of the Board. We also appoint professional andreputed audit firms from time to time to conduct internal audits of the larger and morecritical operations of the Group. Besides the financial audits quality management systemprocedures are continuously audited by internal and external auditors to ensure thatcompany's business practices conform to requirements of customers.
The Directors believe that the Company has in place adequate internalfinancial controls with reference to financial statements. The Company's internalcontrol systems are commensurate with the nature size and complexity of its business andensure proper safeguarding of assets maintaining proper accounting records and providingreliable financial information. Internal Audit team of the company evaluates thefunctioning and quality of internal controls and reports its adequacy and effectivenessthrough periodic reporting. During the year under review such controls were tested and noreportable material weakness in the design or operation were observed.
SUBSIDIARIES/ ASSOCIATES AND JOINT VENTURES
As on March 31 2018 the Company has 7 subsidiaries 21 step-downsubsidiaries and 5 Joint Ventures.
With effect from July 3 2017 Andwills Pty. Limited SX ProtectiveServices Pty. Ltd. Southern Cross Protection Pty. Ltd. Southern Cross FLM Pty Ltd.Southern Cross Loss Prevention Pty Ltd. Cage Security Alarms Pty. Ltd. Cage SecurityGuard Services Pty Ltd. Eymet Security Consultants Pty Ltd. Askara Pty Ltd. CharterCustomer Services Pty Ltd. Charter Security Protective Services Pty Ltd. and CharterSecurity (NZ) Pty Ltd. have become subsidiaries of the Company.
Effective January 18 2018 Sunrays Overseas Private Limited VardanOverseas Private Limited and Lotus Learning Private Limited have ceased to becomestep-down subsidiaries of the Company as a result of demerger of certain businesses of theCompany and one of its subsidiaries Service Master Clean Limited.
Pursuant to the provisions of Section 129 (3) of the Companies Act2013 a report on the performance and financial position of each of the subsidiariesassociates and joint venture companies is provided in Annexure IV to this Report.
The Policy for determining material subsidiaries is available on theCompany's website - www.sisindia.com.
PEOPLE AND TRAINING
Your Company's foundation and core of its philosophy is itscommitment to its Human Resources. We continue to improve and develop tools and processesto recognise and reward employees at all levels and we value their contribution to theCompany's financial performance over the years. We continue to invest in the trainingand development of all our employees and launched a fresh round of leadership developmentprogrammes across the group during the year under review which is expected to continuewell into the next financial year. Our competency-based systems have recently undergone atransformational change and we implemented a new Performance Management Process("PMP") in the Company. We have now rolled out the new PMP to othersubsidiaries associates and joint ventures in the Group. The new PMP is designed toscientifically measure and track the performance of employees at all levels and we believethis will help us to recognise and reward performance and also retain reward attractand sustain talent and to have a common platform of performance management across theGroup. The total employees in the SIS Group at the end of the year under review were170159.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in Annexure V tothis Report.
EMPLOYEE STOCK OPTION PLAN ESOP
The Company has adopted an Employee Stock Option Plan 2016 whichprovides for grant of options to eligible employees of the Company.
The details of stock options granted and other disclosures as requiredunder SEBI (Share Based Employee Benefits) Regulations 2014 are available on theCompany's website www.sisindia.com. A certificate from Saxena and Saxena CharteredAccountants Statutory Auditors on the implementation of Company's Employee StockOption Scheme will be placed at the ensuing Annual General Meeting for inspection by theMembers.
DIRECTORS AND KEY MANAGERIAL PERSONNEL "KMP"
In accordance with the provisions of Section 152 of the Companies Act2013 and the Articles of Association of the Company Mr. Jayanta Kumar Basu and Mr.Rituraj Kishore Sinha retire by rotation at the ensuing Annual General Meeting and beingeligible offer themselves for reappointment. Mr. Ashok Kumar Mattoo ceased to be aDirector of the Company owing to his sad demise on December 27 2017. The Board places onrecord its sincere appreciation and gratitude for the valuable contribution made by LateMr. Mattoo during his tenure as Director of the Company. Mr. Rajan Krishnanath Medhekarwas appointed as an Additional Director (Independent) of the Company effective September25 2017 to hold office up to the date of the ensuing Annual General Meeting.
Mrs. Renu Mattoo was appointed as an Additional Director (Independent)of the Company effective January 29 2018 to hold office up to the date of the ensuingAnnual General Meeting. Mr. Uday Singh stepped down as CEO and Whole-time Directoreffective April 24 2018. He however continues to be a Non-executive Director of theCompany.
The Company has received a notice under Section 160 of the CompaniesAct 2013 from its members signifying an intention to propose Mr. Rajan KrishnanathMedhekar and Mrs. Renu Mattoo as candidates for the office of Director at the ensuingAnnual General Meeting. Mr. Medhekar and Mrs. Mattoo have confirmed that they meet thecriteria of Independence as prescribed under the Act and SEBI Listing Regulations.
A brief profile of the Directors seeking appointment/reappointmentforms part of the Notice of the ensuing Annual General Meeting.
Mr. Devdas Apte Mr. Arun Kumar Batra Mr. Amrendra Prasad Verma andMr. TCA Ranganathan Independent Directors have confirmed that they meet the criteria ofIndependence as prescribed under the Act and SEBI Listing Regulations.
Mr. Brajesh Kumar was appointed as Chief Financial Officer (IndiaSecurity and Facility Management) and designated as a KMP pursuant to Section 203 of theAct effective September 25 2017.
COMMITTEES OF THE BOARD
As on March 31 2018 the Board has 4 committees: the audit committeethe nomination and remuneration committee the corporate social responsibility committeethe stakeholders' relationship committee. A detailed note on the composition of theBoard and its committees is provided in the Corporate Governance Report. In addition theBoard constitutes other committees to perform specific roles and responsibilities as maybe specified by the Board from time to time.
MEETINGS OF THE BOARD
During the year ended March 31 2018 fifteen meetings were held onApril 24 2017 May 31 2017 June 20 2017 July 4 2017 (2 meetings) July 8 2017 July17 2017 July 19 2017 August 4 2017 August 8 2017 (2 meetings) September 25 2017November 22 2017 January 29 2018 and February 9 2018.
The evaluation of all the Directors and the Board as a whole wasconducted and the evaluation process has been explained in the Corporate GovernanceReport.
AUDITORS AND AUDIT REPORTS
The members of the Company at the 33rd annual general meeting held onSeptember 25 2017 have approved the appointment of M/s. Saxena and Saxena CharteredAccountants (Firm Registration No. 006103N) as Statutory Auditors of the Company for aperiod of 5 years from the conclusion of Thirty Third Annual General Meeting until theconclusion of the Thirty Eighth Annual General Meeting of the Company (subject toratification of the appointment at every Annual General Meeting). The ratification ofappointment of auditors at every subsequent annual general meeting as such was required interms of earlier provisions of Section 139 (1) of the Companies Act 2013. Pursuant toamendments made to Section 139 of the Act by the Companies (Amendment) Act 2017 andwhich was brought into effect from May 7 2018 this requirement of ratification has beendone away with. In view of this statutory modification the resolution for ratification ofappointment Auditors for their remaining period until the conclusion of Thirty EighthAnnual General Meeting is placed in the notice of annual general meeting for approval ofthe members.
The Auditors' Report does not contain any qualificationreservation or adverse remark and the auditors have issued an unmodified opinion on boththe standalone and consolidated financial statements.
Pursuant to the provisions of Section 204 of the Companies Act 2013read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the Company had appointed Mr. Sudhir V Hulyalkar Company Secretary in PracticeBangalore to conduct the secretarial audit of the Company for the financial year 2017-18.The Secretarial Audit Report issued by Mr. Sudhir V Hulyalkar forms part of this Reportand is set out in Annexure VI. There are no observations reservations or adverseremarks in the Secretarial Audit Report.
COMPLIANCE WITH THE ICSI SECRETARIAL STANDARDS
The relevant Secretarial Standards issued by the Institute of CompanySecretaries of India (ICSI) related to the Board Meetings and General Meeting have beencomplied with by the Company.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION
Considering the nature of activities of the Company the provisions ofSection 134(m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts)Rules 2014 relating to conservation of energy Research and Development TechnologyAbsorption are not applicable to the Company.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of the foreign exchange earnings and expenditure are asunder
Foreign exchange earnings Nil Foreign exchange expenditure 76.29
EXTRACT OF ANNUAL RETURN
In accordance with the provisions of Section 134 of the Act an extractof the Annual Return of the Company for the financial year ended March 31 2018 isprovided in Annexure VII.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS IFANY
During the year under review no significant or material orders werepassed by the Regulators or Courts or Tribunals which impact the going concern status andthe Company's operations in the future.
The Company has established a Vigil Mechanism for reporting concernsthrough the Whistle Blower Policy of the Company. The Policy provides for a framework andprocess for the employees and directors to report genuine concerns or grievances aboutillegal and unethical behavior. During the year no personnel has been denied access tothe Chairman of the Audit Committee. The Whistle Blower Policy is available on the websiteof the Company www.sisindia.com.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of the provisions of Section 134 (5) of the Companies Act2013 the Directors of your Company confirm that: In the preparation of the accounts forthe year ended March 31
2018 the applicable Accounting Standards have been followed along withproper explanation relating to material departures.
The Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the Profit and Loss of the Company for the year.
The Directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
The Directors have prepared the Annual Accounts on a going concernbasis.
The Directors have laid down internal financial controls to be followedby your Company and that such internal financial controls were adequate and operatingeffectively.
The Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
The Company sends the Annual Report to its members in electronic formwhose email addresses are registered with the Company/Depository Participants(s). Formembers who have not registered email addresses physical copies are sent in the permittedmode.
In case of any change in your email address you are requested toplease inform the same to your Depository (in case you hold the shares in dematerialisedform) or to the Company/RTA (in case you hold the shares in physical form).
Your Directors place on record their gratitude to the CentralGovernment various State Governments and Company's Bankers and advisors for thevaluable advice guidance assistance cooperation and encouragement they have extended tothe SIS Group from time to time. The Directors also take this opportunity to thank theCompany's customers suppliers and shareholders for their consistent support to theCompany. Last but not the least the Directors also sincerely acknowledge the significantcontributions made by all the employees for their dedicated services to the Company.
Statements in this Board's Report describing the Company'sobjectives projections estimates and expectations may be forward lookingstatements' within the meaning of applicable laws and regulations. Actual resultsmight differ substantially or materially from those expressed or implied.
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For and on behalf of the Board of Directors
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Ravindra Kishore Sinha
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|New Delhi || |
|May 9 2018 || |
DIVIDEND DISTRIBUTION POLICY
This Dividend Distribution Policy is framed in terms of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015.
This Policy sets out the parameters and circumstances that will betaken into account by the Board of Directors of the Company in determining thedistribution of dividend to its shareholders and/or retaining profits earned by theCompany. The Board of Directors may in extraordinary circumstances deviate from theparameters listed in this policy.
The Company shall comply with the relevant statutory requirements thatare applicable to the Company in declaring dividend or retained earnings. Generally theBoard shall determine the dividend for a particular period after taking into considerationthe financial performance of the Company the advice of executive management and otherparameters described in this policy.
The Board of Directors of the Company shall take into account thefollowing parameters while declaring dividend or recommending dividend to shareholders:The distributable surplus available under law; Funding requirements of the Company'sbusinesses including those of its subsidiaries and associates for their growth plansorganic and inorganic; The financial capacity that needs to be conserved to addresscontingencies that may arise; Funds required to service any outstanding loans; Liquidityand return ratios and financial covenants stipulated in connection with the Company'sborrowings; Any other significant developments that require cash investments The Board ofDirectors of the Company shall also consider the following external parameters whiledeclaring dividend or recommending dividend to shareholders:
Any significant macro-economic environment political tax andregulatory changes affecting the geographies in which the Company operates; Anysignificant changes in the business technological or competitive environment resulting inthe Company making or requiring to make significant investments to effect the necessarychanges to its business model; Any foreseeable opportunities and threats in the globalisedcompetitive context The surplus so determined after factoring for these requirementsshall be distributed to shareholders over the long term. Consistent with the above theCompany will strive to declare a steady stream of dividend to its shareholders of at least10% of the profits after tax for a financial year. However the actual quantum of dividendpay-out each year will be guided by the Company's financial performance and cash flowposition and will take into account the requirements of funds to sustain the business andgrowth plans of the Company as well as the economic and market conditions then prevailingand the capital requirements and other parameters as mentioned elsewhere in this policy.The Board of Directors of the Company (hereinafter referred to as the Board')may declare interim dividend(s) at their discretion. The Board's recommendation tothe shareholders on the final dividend may include special dividend(s) as consideredappropriate.
The provisions contained in this policy shall apply to all classes ofShares of the Company. It may be noted that currently the Company has only one class ofshares namely Equity Shares. This policy will be reviewed and amended as and whenrequired by the Board.