To the Members
Your Directors have pleasure in presenting before you the Twenty-Third Annual Report ofyour Company together with the Audited Financial Statements for the Financial Year ended31st March 2018.
(Rs. in Lakhs)
|Description ||Standalone ||Consolidated |
| ||Financial Year ended ||Financial Year ended ||Financial Year ended ||Financial Year ended |
| ||31.03.2018 ||31.03.2017 ||31.03.2018 ||31.03.2017 |
|Total Income ||73047 ||62494 ||249939 ||241789 |
|Total Expenditure ||52755 ||44341 ||222296 ||217923 |
|EBITDA ||20292 ||18153 ||27643 ||23866 |
|Depreciation and Amortization Expense ||500 ||401 ||1241 ||1088 |
|Finance Cost ||17 ||399 ||480 ||928 |
|Profit before Tax & Exceptional Items ||19775 ||17353 ||25922 ||21850 |
|Exceptional (Income)/Expenses ||(49) ||(565) ||(115) ||(772) |
|Provision for Tax (Net) ||4696 ||4589 ||6824 ||6930 |
|PAT before Non - Controlling Interest ||15128 ||13329 ||19213 ||15692 |
|Non - Controlling Interest ||- ||- ||40 ||(62) |
|PAT after Non - Controlling Interest ||- ||- ||19253 ||15630 |
|Earnings Per Share (in Rs. ) ||14.57 ||12.85 ||18.54 ||15.07 |
Your Company is primarily engaged in the business of delivering IT services andsoftware solutions to its customers across the globe including the US EuropeMiddle-East Asia- Pacific Australia and New Zealand. Besides the Company alsodistributes and re-sells products from global technology companies present in India. TheCompany's consolidated results comprises operations of Indian and Overseas Subsidiariesand operates under two distinct heads International IT services (IITS) and DomesticProducts and Services (DPS).
The Financial Year 2017-18 witnessed the results of recent internal improvementprograms and also reflected the positivity of the macro environment. The Company tooksignificant strides in creating enhanced value for shareholders. During the financialyear the Company explored new growth opportunities and performed significantly well inboth the domestic as well as international markets. It was reflected in PAT with growth of28% in IITS and 6% in DPS business respectively.
During the Financial Year your Company continued to provide business solutions wrappedwith IPs. The revenues through this strategy has resulted in a quicker growth and marginexpansions. This is a major differentiator for Sonata and forms the base of ourPlatformation strategy. The term Platformation' is now Offcially owned by yourCompany as it has been trademark registered in Singapore and applied for in the USA andIndia. Besides your Company continued to invest in differentiated IP and platforms acrossindustry verticals of Travel Retail Distribution and software solutions.
There are several other notable achievements during the financial year. These include:
Registered and trademarked the enterprise digital platform for retail-Brick andClick in India for retail vertical
Acquired the copyright of TRANSIT software in India for the travel vertical
Acquired copyright registration for RETINA software in India
Added fourth industry solution HALOSYS on Microsoft Appsourceplatform YourCompanyfurtherorganisedfirstSonataHackathonHackAata 2017 that saw aparticipation of over 50 teams across Bengaluru Hyderabad and UK offices. As a part ofmarketing initiative your Company partnered with NASSCOM India Leadership Forum 2018 as aGold Sponsor hosting a panel discussion on Platforms as a driver of digital success andconducted client leadership summit in USA-Sonata Spark 2017. The performance reflectsSonata's journey to reposition itself as a unique technology solutions provider that iscommitted to develop an emerging breed of platforms thus enabling its customers to gaincompetitive advantage through the Company's future-ready digital transformationinitiatives. Sonata's differentiated Platformation solutions better alignment withalliance partners and stronger investments in sales and marketing will lead to strongernew business development.
Coming to the results both on a Standalone and Consolidated basis your Company hasshown growth and placed itself well to handle its increasing scale of operation.
A detailed analysis of Company's operations in terms of performance in marketsmanufacturing activities business outlook risks and concerns forms part of theManagement Discussion and Analysis a separate section of this Annual Report.
Total Income has shown a growth of 17%. The Earnings before Interest taxesDepreciation and Amortization (EBITDA) stood at 28% of total income and Net Profit at 21%of total income with Earnings per Share at Rs. 14.57.
Total income has shown a growth of 3%. The Earnings before Interest taxesDepreciation and Amortization (EBITDA) stood at 11% of total income and Net Profit at 8%of total income with Earnings per Share at Rs. 18.54.
Analyzing your Company's consolidated results by the two segments it operates inInternational IT services contributed 38% of total revenues and 81% of PAT while Domesticproducts and services contributed to 62% of the total revenues and 19% of PAT.International IT Services total revenue is Rs. 92850 lakhs growth of 13% and $ 144million in US$ terms with a growth of 18% in revenues. Your Company has achieved goodresults consistently because of its focus on serving and growing its existing customersnew customer additions of 32 throughout the Financial Year and maintaining resourceutilization at levels in excess of 85% over the Financial Year under review.
Domestic products and services has showed growth of 6% in PAT. The focus in thisbusiness has always been to manage Return on Capital Employed (ROCE) which wasapproximately 24% for the year under review.
Your Company during the Financial Year under review had a stronger consolidated BalanceSheet and has approximately Rs. 50931 lakhs of cash and cash equivalents (net ofborrowing) showing Return on Capital employed (ROCE) of 30% and Earnings per share at Rs.18.54 per share.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report as required under Schedule V of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 is disclosed separately in this Annual Report.
DIVIDEND / TRANSFER TO RESERVES
Considering the better liquidity position of the Company your Directors are pleased torecommend payment of a final dividend of Rs. 6.75/- per equity share @675% on par value ofRs. 1/- each subject to the approval of the shareholders at the forthcoming AnnualGeneral Meeting which along with the interim dividend of Rs. 3.75/- per Equity Share addsup to a total dividend of Rs. 10.50/- per equity share for Financial Year 2017-18.
Your Company has not transferred any amount to reserve for the Financial Year ended 31stMarch 2018.
The paid up Share Capital of your Company isRs. 105159306 divided into 105159306equity shares of Rs. 1/- each. Your Company has not come out with any issue (publicrights or preferential) during the Financial Year under review.
During the Financial Year under review the Board of Directors met 4 times. TheMeetings were held on 29th May 2017 14th August 2017 13thNovember 2017 and 7th February 2018.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. S B Ghia (DIN: 00005264) Director retires by rotation and being eligibleoffers himself for re-appointment at the ensuing Annual General Meeting (AGM). Briefprofile of Mr. S B Ghia is provided in the notes to the Notice of the ensuing AGM.
Your Company has laid down procedures to be followed for familiarizing the IndependentDirectors with your Company their roles rights responsibilities in your Company and toimpart the required information and training to enable to them contribute significantly toyour Company.
Your Company has received necessary declarations from the Independent Directors underSection 149(7) of the Companies Act 2013 that they meet the criteria of theirIndependence laid down in Section 149(6) of the Companies Act 2013.
DIRECTOR'S RESPONSIBILITY STATEMENT
In pursuance of Section 134(3)(c)read with 134(5) of the Companies Act 2013 theDirectors hereby confirm that: a) in the preparation of the Annual Accounts theapplicable Accounting Standards had been followed along with proper explanation relatingto material departures; b) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the profit and loss of the Company for that period; c) the Directorshad taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act 2013 for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; d) the Directorshad prepared the Annual Accounts on a going concern basis; e) the Directors had laid downInternal Financial Controls to be followed by the Company and that such Internal FinancialControls are adequate and were operating effectively; and f) the Directors had devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems were adequate and operating effectively.
MATERIAL CHANGES AND COMMITMENTS
There has been no material change and commitment affecting the financial position ofyour Company between the end of the Financial Year under review and date of this Report.
The Audit Committee comprises of Mr. B K Syngal (Chairman) and Mr. Pradip P Shah Mr. SB Ghia Mr. S N Talwar and Ms. Radhika Rajan as its members. The Committee met 4 timesduring the year under review and all its recommendations were accepted by the Board. YourCompany has established Vigil Mechanism which provides for direct access to theChairperson of the Audit Committee in cases that require reporting about the unethicalbehaviour actual or suspended fraud or violation of code of conduct laid down by yourCompany. This mechanism is governed by Vigil Mechanism Policy which covers unethicalbehaviour actual or suspected fraud theft bribery misappropriation of Company fundsfinancial reporting violations misuse of intellectual property mismanagementsignificant environmental safety or product quality issues discrimination or harassmentincluding sexual harassment Insider Trading actual or potential conflicts of interestviolation of Company's rules Company's Policies or violation of Code of Conduct of theCompany.
NOMINATION AND REMUNERATION COMMITTEE & STAKEHOLDERS RELATIONSHIP COMMITTEE
The Nomination and Remuneration Committee comprises of Mr. S N Talwar (Chairman) andMr. Viren Raheja Mr. B K Syngal and Mr. S B Ghia as its members. The Committee has laiddown a Policy for remuneration of Directors KMP and other Employees. A copy of the Policyforms part of this Report as ANNEXURE I.
The Stakeholders Relationship Committee comprises of Mr. S B Ghia (Chairman) and Mr. PSrikar Reddy and Ms. Radhika Rajan as its members.
DIVIDEND DISTRIBUTION POLICY
As required under SEBI (LODR) Regulations 2015 your Company has established DividendDistribution Policy with effect from 3rd February 2017. The DividendDistribution Policy is available on the website of the Companyhttps://www.sonata-software.com/sites/default/files/reports/DIVIDEND%20DISTRIBUTION%20POLICY.pdf
The Consolidated Accounts of your Company and its Subsidiaries viz. Sonata InformationTechnology Limited Sonata Software North Amercia Inc. USA (formerly known as OFFshoreDigital Services Inc) Sonata Software GmbH Germany Sonata Europe Limited UK SonataSoftware FZ LLC Dubai Sonata Software (Qatar) LLC and Rezopia Inc. USA HalosysTechnologies Inc. USA and Interactive Business Information Systems Inc. USA (I.B.I.S)duly audited are presented as part of this Report in accordance with the Companies Act2013 Ind AS 110 and the Listing Agreement with the Stock Exchanges wherever applicable.The statement pursuant to the proviso 129(3) of the Companies Act 2013 containingsalient features of the Financial Statement of the Company's Subsidiaries in Form AOC-1 isprovided in
The Accounts of the Subsidiaries audited for the purpose of consolidation shall beplaced on your Company's website and made available for inspection by any shareholder atthe Company's Registered Office and at the respective registered offices of the Subsidiarycompanies. Copies can be made available on request to the shareholders of the Company.Your Company has a "Policy for determining Material Subsidiaries" so that yourCompany could identify such Subsidiaries and set out a governance framework for them. ThePolicy is put up on the website athttps://www.sonata-software.com/corporate-governance-policies.
EMPLOYEE STOCK OPTION PLAN "ESOP"
Your Company has an Employee Stock Option Plan 2013 (Plan) in accordance with the SEBI(Share Based Employee Benefits) Regulations 2014. The principal objectives of this Planare to:
Attract retain and motivate talented and critical Employees;
Encourage Employees to align individual performance with the Group's objectives;
Reward Employee performance with ownership in proportion to their contribution;and
Align Employee interest with those of the Group.
Mr. P Srikar Reddy Managing Director & CEO who was granted Options to purchaseequivalent shares under the Plan had during the Financial Year under review exercised75000 Options of your Company at an exercise price of Rs. 18.10 per Share which werevested on him as on 31st March 2017. Further Mr. Prasanna Oke Chief FinancialOfficer was granted Options to purchase equivalent shares under the Plan had during theFinancial Year under review exercised 30000 Options of your Company at an Exercise Priceof
Rs. 165.75 per share which were vested in him as on 19th May 2016.
During the Financial Year under review Mr. P Srikar Reddy Managing Director & CEOof the Company was granted an Option to purchase 60000 ESOP Shares of the Company to bevested equally over a period of the contract period subject to terms and conditions asset forth in the ESOP Plan 2013 of the Company. Accordingly the first tranche of 20000Options shall vest on him for exercise on 28th May 2018.
Also during the Financial Year under review Mr. Vikas Gurugunti Chief OperatingOfficer of the Company was granted an Option to purchase 75000 ESOP Shares of the Companyto be vested equally over a period of 4 years subject to terms and conditions as setforth in the ESOP Plan 2013 of the Company. Accordingly the first tranche of 18750Options shall vest in him for exercise on 12th November 2018. Pursuant to therequirements of the Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 a Certificate has been issued by the Statutory Auditors of the Companyconfirming that the Plan has been implemented in accordance with the said Regulations andin accordance with the resolution of the Company in the General Meeting. A copy of theCertificate shall be placed before the shareholders for inspection at the ensuing AnnualGeneral Meeting.
As required under the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 the applicable disclosures as on 31st March 2018are uploaded on the website of the Company at www.sonata-software.com.
The Board had appointed Mr. Vijayakrishna K T Practising Company Secretary as theSecretarial Auditor for the Financial Year 2017-18. The Secretarial Audit Report for theFinancial Year ended 31st March 2018 is annexed to this Report as ANNEXUREIII.
The provisions of Companies (Cost Records and Audit) Rules 2014 are not applicable toyour Company.
QUALIFICATIONS IN AUDIT REPORTS
Your Company confirms that there are no qualifications in the Statutory Auditor'sReport and the Secretarial Audit Report for the year under review.
M/s Deloitte Haskins & Sells LLP Chartered Accountants Bengaluru (FirmRegistration No. 117366W) were appointed as Statutory Auditors of the Company from theconclusion of Twenty Second (22nd) Annual General Meeting (AGM) till theconclusion of Twenty Seventh (27th) AGM subject to rati_cation of theirappointment at every Annual General Meeting by the members. However the members may notethat pursuant to The Companies (Amendment) Act 2017 the requirement of rati_cation of theappointment of the Statutory Auditors in every Annual General Meeting has been omittedand therefore the Company is not seeking rati_cation.
Your Company has complied with the provisions of the Secretarial Standard 1 & 2issued by the Institute of Company Secretaries of India.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92(3) of the Companies Act 2013 read with Rule12 (1) of the Companies (Management and Administration) Rules 2014 an extract of AnnualReturn in form MGT 9 is annexed to this Report as ANNEXURE IV.
Your Company continues to enhance customer satisfaction by aligning its processes toindustry standards and best practices. During the year under review your Companysuccessfully underwent surveillance audits for ISO 9001-2015 (Overall Quality ManagementSystem) ISO 20000-1 (IT Service Management) and ISO 27001 (Information Security).
Your Company continues to enhance the effectiveness of its delivery to all thecustomers. After successful CMMI re-appraisal towards the end of last year your Companyformally received the CMMI-DEV v1.3 Level 5 Re-certification in April of this FinancialYear. Your Company continues to drive Processes to maintain adherence to this Industrygold standard.
In terms of Customer Satisfaction your Company has been able to achieve an OverallAggregated Score of 4.1 out of a possible Top Score of 5 this year.
The Financial Year under review achieved the targeted renewed approach to CustomerValue Delivery using defined Process-based methodology. There was a greater focus on Toolsand Automation in order to enhance the effectiveness and efficiency of delivery to ourcustomers.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO
(A) Conservation of energy
Though your Company does not have energy intensive operations being in the servicessector the Company is always on the lookout for energy efficient measures for operationand values conservation of energy through usage of latest technologies & innovationfor improving productivity and quality of products and services. Every endeavour has beenmade to ensure the optimal usage of energy avoid wastage and conserve energy. As anongoing process the Company continued to undertake the following energy conservationmeasures to minimize the usage of energy
Deployment of energy-efficient computers and sophisticated office automation andmanagement equipment with the latest technologies which optimizes conservation of energy.
Installing LED lights which reduces electricity consumption.
Installation of sensors at work space area resulting in lights automaticallygetting switched off in areas not in use.
Continuous monitoring of floor areas after normal working hours and switchingoff lights
Turning off air conditioners during non-peak hours and on weekends
Installing of Energy Meters for closed monitoring of AHU run hours on dailybasis.
Regular UPS and AC plant maintenance to ensure efficient working of theequipment.
During the year under review some of the steps taken and practices followed by yourCompany and its employees towards energy conservation include the following:
Installation of new technology air conditioners with built in inverter optionwhich has better air circulation and reduces energy consumption up to 20% compared to thenormal air conditioners
Replacing the CFL based lighting to LED based lighting in phases which will giveimmense savings in Electricity consumption.
Air-conditioning staggered mode of operation resulting in reduction in fuelconsumption As the cost of energy consumed by your Company forms a very small portion ofthe total costs the financial impact of these measures is not material.
(B) Technology absorption
During the Financial Year under review your Company focused its efforts and builtcompetencies in areas of Mobility Omni Channel
Commerce Analytics and Cloud. Dedicated Competency teams were setup for each of these.Your Company has progressed well with its proprietary model of achieving digitaltransformation called Platformation. Your Company continued to invest in differentiated IPand platforms across industry verticals of Travel Retail Distribution and softwaresolutions.
(C) Foreign exchange earnings and Outgo
During the Financial Year under review 91% of the revenue was generated from exportsof developed software and related services to clients in USA UK Australia Germany UAEJapan Singapore Denmark and Europe.
Foreign Exchange outgo on account of travelling professional and legal chargessubsistence/living costs overseas salaries capital goods etc was Rs. 8713 Lakhs andForeign Exchange inflow on account of export of software services (net) goods and otheroperating revenues was Rs. 62635 Lakhs.
Customers today seek more efficient and effective operations along with technologybased innovation and business transformation before they make any technology investments.Your Company has been successful in growing the size of existing teams as well as branchinto newer divisions within these customers.
Your Company has not accepted any deposits from the public which falls under Chapter Vof the Companies Act 2013 during the year under review.
HUMAN RESOURCES MANAGEMENT
During the financial year under review your Company and its employees were part of thefollowing activities:
Senior Leadership Development through customised programs on BusinessLeadership Design Thinking & sponsoring leaders to Strategic Leadership Programs withB-schools.
Renewed focus on culture change by imbibing Design Thinking principles andmindset in all customer facing and managerial roles. Trained 250 Sonatians on DesignThinking. Management has been able to conduct workshops with customers and reap hugebenefits from this exercise. Clients came forward with their testimonials of the benefitsof Design Thinking approach used by the Company.
With a belief that charity begins at home your Company has digitized its campushiring through a Platform.
Organized several employee engagement & CSR events across our facilitiesenabling employees to engage participate contribute and do their bit to the society:Partnership with IIIT Bangalore for evangelization of Technology for DigitalTransformation and Research creating the e-commerce platform for Industree CraftsFoundation promoted education to the vision and hearing impaired contributed toSense International India a Centre for Deaf and Blind in Bengaluru; partnered withWildlife Conservation Trust to provide advanced level of education for children studyingin the bu_er zones of Bandipur Tiger Reserve by creating a digital learning platform tohold the lesson repository and provide collaboration tools between all stakeholders of theproject; created Digital enabled Learning Platform for River Foundation; Supportedtraditional Handloom through IT expertise Developed an ecommerce online portal forHandloom students to popularise traditional weaving techniques and sell their products;Supported CEDI NIT Trichy and Chitrika in creating a new website with better UI/UXfunctionalities for their existing websites and lastly supported CUPA to help sustain andextend animal welfare activities with increasing degrees of excellence.
Your Company was one among the Top 3 Finalists in the CSR Category of the Heroesof Bengaluru Competition. There were 50 nominations for the CSR Category & yourCompany's CSR program (River Foundation - Digital enabled Learning Platform) was in theTop 3 for 2018 competition. Further every year your Company organizes an AnnualCommunications Meet "ACM" where:
Your Managing Director along with his Leadership Team shared the Companystrategy plans & key focus areas. The telecast this Financial Year was widely viewedacross the locations. The Platformation concept took a new meaning for the Company withthe crystallization of the concept through a video launched by your Company. the ACMenabled employees to develop a sense of purpose vision and helped them align and give adeep sense of belonging to the organization's strategy plans & objectives.
DISCLOSURES AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE_PREVENTION PROHIBITION AND REDRESSAL_ ACT 2013
Your Company is committed to provide a healthy environment to all employees thatenables them to work without the fear of prejudice and gender bias. Your Company has inplace a Prevention of Sexual Harassment (POSH) Policy in line with the requirements ofSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Your Company through this Policy has constituted a Committee and has established agrievance procedure for protection against victimization. The Policy is available onintranet for the employees to access as and when required. No complaints were receivedunder this Policy during the Financial Year 2017-18
DETAILS OF ADEQUACY OF INTERNAL CONTROL SYSTEM
Sonata Internal Control Systems (ICS) are commensurate with its size and the nature ofits operations. The ICS have been designed to provide reasonable assurance with regard torecording and providing reliable financial and operational information complying with theapplicable statutes safeguarding assets from unauthorized use executing transactionswith proper authorization and ensuring compliance with corporate policies. The processesand the systems are reviewed constantly and changed to address the changing regulatory andbusiness environment.
The existing ICS and their adequacy have been reviewed during the year by InternalAuditors and Statutory Auditors. They have expressed their satisfaction with regard to theadequacy and effectiveness of the financial control systems in place to address riskmanagement and mitigation strategies.
The Audit Committee reviews the reports submitted by Internal Auditors and StatutoryAuditors. Suggestions for improvement on ICS are considered and the corrective actions areundertaken.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL
During the year under review there were no significant and material orders passed bythe Regulators or Courts or Tribunals impacting the going concern status of your Companyand its future operations.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the Financial Year under review your Company had given Inter Corporate Depositsat prevailing bank lending rate to its Wholly Owned Subsidiary Sonata InformationTechnology Limited for meeting its working capital requirements. The balance outstandingas on 31st March 2018 is (NIL). The maximum amount outstanding at any point oftime during the Financial Year has been Rs. 12105 Lakhs.
Also your Company has given Corporate Guarantees on behalf of Subsidiaries forfacilitating its business needs. The outstanding amount as on 31st March 2018is as below:
|Name of the Subsidiary ||Amount in Rs. Lakhs |
|Sonata Software North America Inc. USA ||5865 |
|Sonata Information Technology Limited India ||10276 |
Your Company's Risk Management practice seeks to sustain the long term vision andmission of your Company. It continuously evaluates the various risks surrounding thebusiness and seeks to review and upgrade its risk management process. To further theendeavour your Board constantly formulates strategies directed at mitigating these riskswhich get implemented at the Executive Management level and a regular update is providedto the Board.
CORPORATE SOCIAL RESPONSIBILTY _CSR_
During the Financial Year your Company has spent Rs. 210 Lakhs towards CSR activities.
Your Company has a Policy on CSR and as part of its implementation program identifiedand participated in the following initiatives:
Remained committed to NIT Trichy CEDI to promote entrepreneurship and innovationamongst students. Company currently has six Projects incubated which have completed 3years and have also identified two more new Projects that have been selected for seed fundfor this Year.
Developed a Back-End Invoicing Module for the e-commerce platform"Hastti" to facilitate direct interaction between craftspeople and theircustomers for the Industry's Crafts Foundation. Currently Industree Crafts Foundation areusing the Platform to Beta test with a limited audience and will Go live once they get theProducer units on boarded with Inventory and Products to sell through the Platform. Theoverall objective is to be able to build sustainable livelihoods for creative producers& improve livelihood of artisans by providing access to Markets with the latesttechnologies.
Partnered with the Indian Institute of Science Bengaluru to help students topursue new research initiatives at the Department & to effectively transmit theexcitement of computer science research through targeted student outreach programs and tomaterially upgrade the pedagogical infrastructure resulting in potent learningenvironments.
Your Company is supporting a programme with RIVER Foundation that addressestoday's educational challenges with a unique "School in a box" - a multi-grademulti-level (MGML) methodology kit & Digital learning with an integrated curriculumthat is made relevant to the local needs. The current platform is deployed by RIVERfoundation and has been rolled out by RIVER in the Schools in Chittoor & Telangana
Your Company is supporting CEDI NITT and Chitrika in creating a new website withbetter UI/UX functionality for their existing websites.
Your Company is supporting CUPA to help sustain and extend animal welfareactivities with increasing degrees of excellence.
The Annual Report on CSR in the prescribed format is enclosed to this Report as ANNEXUREV.
BUSINESS RESPONSIBILITY REPORT
The SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandatesinclusion of the Business Responsibility Report (BRR) as part of the Annual Report for top500 Listed entities based on market capitalization. In compliance with the Regulation BRRforms part of the Annual Report and is available on the Company's website atwww.sonata-software.com. The BRR contains a detailed report on Business Responsibilitiesvis--vis the nine principles of the National Voluntary Guidelines on SocialEnvironmental and Economic Responsibilities of Business framed by the Union Ministry ofCorporate Affairs. Any shareholder interested in obtaining a copy may write to the CompanySecretary at the Registered Office of the Company.
RELATED PARTY TRANSACTIONS
The Policy on related party transactions is available on the Company's website athttp://www.sonata-software.com/sites/default/files/Policy_on_Related_party_Transactions.pdf Particulars of the Contracts orArrangements with related parties referred to in Section 188(1) in the format specified asForm AOC-2 forms part of this Report as ANNEXURE VI.
JUSTIFICATION FOR ENTERING INTO RELATED PARTY TRANSACTIONS
All the Related Party Transactions entered into by your Company with the RelatedParties including rendering of services sharing of expenses providing of inter-corporateloans and guarantees to its subsidiaries are in the ordinary course of business and arecarried out at arm's length pricing.
FORMAL ANNUAL EVALUATION
During the Financial Year under review as mandated by the Companies Act 2013 yourCompany conducted an exercise to evaluate the performance of the Board Committees of theBoard Chairman of the Board Individual Directors and the Independent Directors. As partof the evaluation process individual criteria for each of the exercise was formulated.From these formal questionnaire listing various parameters on which each of thecategories were required to be evaluated was shared with each member of the Board /Committee / Director. They were then required to rate individually on each of theparameters on a performance scale of 1-4. The average scores were then arrived at toconclude the performance/ contributions of the relevant evaluation.
The outcome of the process was used to list out areas and categorize them as exemplarysatisfactory or areas that required improvement. Thereafter corrective measures wererecommended for implementation with immediate effect.
REMUNERATION TO DIRECTORS AND EMPLOYEES
Details / Disclosures of ratio of Remuneration to each Director to the medianemployee's remuneration and details of remuneration paid to employees is given as ANNEXURE VII.
A statement comprising the names of top 10 employees in terms of remuneration drawn andevery person employed throughout the year who were in receipt of remuneration in terms ofRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 forms an integral part of this report. However the same is not being sent along withthis annual report to the members of the company in line with the provision of Section 136of the Companies Act 2013. Members who are interested in obtaining these particulars maywrite to the Company Secretary at the Registered Office of the Company. The aforesaidannexure is also available for inspection by the Members at the Registered Office of theCompany 21 days before and upto the date of the ensuing Annual General Meeting during thebusiness hours on working days.
LISTING WITH STOCK EXCHANGES
Your Company confirms that it has paid the Annual Listing Fees for the Financial Year2017-18 to NSE and BSE where your Company's shares are listed.
Your Company has taken adequate steps to adhere to all the stipulations laid down inSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A report onCorporate Governance is provided in this Annual Report.
A Certificate from Mr. Parameshwar G. Bhat a practising Company Secretary confirmingthe compliance with the conditions of Corporate Governance as stipulated under the saidRegulations is attached to this report.
Your Directors would like to place on record their gratitude for all the guidance andco-operation received from all its clients vendors bankers financial institutionsbusiness associates advisors regulatory and government authorities. Your Directors alsotake this opportunity to thank all its shareholders and stakeholders for their continuedsupport and all the Sonatians for their valuable contribution and dedicated service.
| ||FOR AND ON BEHALF OF THE BOARD |
| ||SONATA SOFTWARE LIMITED |
|Place: Mumbai ||PRADIP P SHAH |
|Date: 22nd May 2018 ||CHAIRMAN |