To the Members
Your Directors have pleasure in presenting before you the Twenty-Fifth (25th)Annual Report of your Company together with the Audited Standalone and ConsolidatedFinancial Statements for the Financial Year ended 31st March 2020.
|FINANCIAL RESULTS || || || ||(Rs. in Lakhs) |
|Description || |
| ||Financial Year ended 31.03.2020 ||Financial Year ended 31.03.2019 ||Financial Year ended 31.03.2020 ||Financial Year ended 31.03.2019 |
|Total Income ||97397 ||84701 ||380166 ||298815 |
|Total Expenditure ||67372 ||60192 ||337045 ||262529 |
|EBITDA ||30025 ||24509 ||43121 ||36286 |
|Depreciation and Amortization Expense ||2060 ||613 ||3654 ||1274 |
|Finance Cost ||1090 ||8 ||1518 ||339 |
|Profit before Tax & Exceptional Items ||26875 ||23888 ||37949 ||34673 |
|Exceptional (Income)/Expenses ||- ||(49) ||- ||(276) |
|Provision for Tax (Net) ||5749 ||6694 ||10256 ||10061 |
|PAT before non-controlling interest ||21126 ||17243 ||27693 ||24888 |
|Non-controlling interest || || ||- ||38 |
|PAT after non-controlling interest || || ||27693 ||24926 |
|Basic Earnings Per Share (in Rs.) ||20.33 ||16.59 ||26.66 ||23.99 |
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).
During the Financial Year your Company continued to focus on Platformation ledsolutions for its customers across its focus verticals of Retail Travel Distribution andISVs. This has enabled the Company to continue to demonstrate steady growth in bothrevenues as well as margins. Revenues of the Company grew 27% over the previous year andPAT was 11% higher than previous year.
Your Company continued its investments in IP technology people and process Theacquisitions made in the previous year Scalable and Sopris has given access to newindustries like services and commodities which should stand the Company in good stead.
Your Company continued to strengthen its alliance with Microsoft and focused ondelivering high quality services to its clients which increased the stickiness of thebusiness. Investments made in IP and creating new technology competencies aligned toPlatformationTM has helped the Company's position itself better in the digitaltransformation opportunity space.
A key component of Sonata's Platformation strategy is IF! Your Company continuedits sharp focus on acquiring and improving its IP Towards the end of the financial yearthe Company signed definitive agreements for the acquisition of GAPbuster Limited (GBW) aCompany with very strong IP led solutions in the exciting and growing customer experiencespace. The IP will add a significant platform led customer experience offering to Sonata'scurrent solutions creating substantial value for its customers in providing a morecomprehensive suite of solutions that enable digital transformation. This makes Sonataquite unique in its ability to offer such a unified experience across the customer lifecycle. The acquisition also helps
Sonata further penetrate markets in Australia in addition to gaining a foothold innewer markets in Japan and South East Asia while consolidating in Europe and US.
These acquisitions and investments further consolidate our position of being digitaltransformation partners of choice for our customers.
Here are some of the key achievements of the year summarized:
Acquired Melbourne headquartered GBW strengthening Sonata's footprint inAustralia and opening up new geographies in South East Asia & Europe.
Sonata is positioned as a Major Player in the IDC MarketScape for"Microsoft Dynamics 365 implementation services for Asia/ Pacific (excludingJapan)".
Zinnov Zones 2019 rates Sonata Software as a Leader in Engineering R&DServices in enterprise software and consumer software categories.
Highlighted and positioned as an Aspirant by Everest Group in its recentlyreleased report titled "Application Transformation Services PEAK MatrixAssessment 2020'.
As per Microsoft Sonata's platform Rezopia is among the first 15 TransactableApplications on the Azure Marketplace.
Commodity Trade and Risk Management as an IP/solution and Platformation asa service is co-sell ready in Microsoft OCP Catalog which enables Sonata to reach out tonewer markets and prospects.
Sonata's thought leadership continued in the form of whitepapers and articlespublished with the World Economic Forum.
Partnered with NASSCOM for Tech-series event - "Data is the new Oil".
Your Company further strengthened its Senior Leadership with rich talent. Mr RajatSinha joined Sonata as Sr Vice President - Platform Monetisation. Mr Jagannathan CN joinedthe Company as the Chief Financial Officer (CFO). Your Company also made key additions toits Sales teams in the US and UK.
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.
In the wake of COVID-19 outbreak across globe and lockdowns your Company acted veryfast and took various precautionary measures to ensure the safety and health of Sonatiansacross offices in India and overseas we operate. 100% of Sonatians are working remotelyand delivering several services to customers more effectively without any disruption. Thepandemic has unprecedented impacts on our personal and professional lives. This situationis forcing organisations across the globe to rethink their business strategies. Therapidly evolving situation is forcing organisations to speed up and implement new digitaltransformation initiatives. With our Platformation led solutions recentacquisitions and investment Sonata is well positioned to come out strongly through theseunprecedented times to take advantage of newer rising opportunities post Covid-19 crisis.
Total Income has shown a growth of 15%. The Earnings before Interest taxesDepreciation and Amortization (EBITDA) stood at 31% of total income and Net Profit at 22%of total income with Earnings per share at T 20.33.
Total income has shown a growth of 27%. The Earnings before Interest taxesDepreciation and Amortization (EBITDA) stood at 11% of total income and Net Profit at 7%of total income with Earnings per share at T 26.66.
Analyzing your Company's consolidated results by the two segments it operates inInternational IT services contributed 34% of total revenues and 77% of PAT while Domesticproducts and services contributed to 66% of the total revenues and 23% of PAT.
International IT Services total revenue is Rs. 127233 lakhs growth of 14% and $ 181million in US $ terms with a growth of 12% in revenues. Your Company has managed todeclare good results consistently because of its focus on serving and growing its existingcustomers new customer additions of 29 throughout the Financial Year and maintainingresource utilization at 87% over the Financial Year under review.
Domestic products and services has showed growth of 39% in PAT. The focus in thisbusiness has always been to manage Return on Capital Employed (ROCE) which wasapproximately 33% for the year under review.
Your Company during the Financial Year under review had a stronger consolidated BalanceSheet and has approximately Rs. 31149 Lakhs of cash and cash equivalents showing Returnon Capital employed (ROCE) of its 38% and Earnings per share at T 26.66 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 (Listing Regulations) is disclosed separately in this Annual Report.
DIVIDEND / TRANSFER TO RESERVES
Considering the better liquidity position of your Company the Board of Directors ofyour Company had declared interim dividend of Rs. 5.75/- per equity share and secondinterim dividend of Rs. 14.5/- per equity share adds upto a total dividend of Rs. 20.25/-per equity share for Financial Year 2019-20.
Your Company has not transferred any amounts to reserve for the Financial Year ended 31stMarch 2020.
The paid up share capital of your Company is T 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 year under review the Board of Directors met five times. The Meetings wereheld on 30th May 2019 7th August 2019 30th October2019 24th January 2020 and 26th February 2020.
DIRECTORS AND KEY MANANGERIAL PERSONNEL
Mr. S B Ghia (DIN: 00005264) Director retires by rotation and being eligible offershimself for re-appointment at the ensuing Annual General Meeting (AGM). Brief profile ofMr. S B Ghia is provided in the notes to the Notice of the ensuing AGM.
During the Financial Year under review Mr. Prasanna Oke Chief Financial Officerresigned from the services of the Company with effect from 30th June 2019.
During the year under review Mr. B K Syngal and Mr. S N Talwar ceased to be theDirectors with effect from August 11 2019 upon completion of their term as IndependentDirectors. The Board places on record its appreciation for their invaluable contributionand guidance.
During the Financial Year under review Ms. Mangal Kulkarni was appointed as a CompanySecretary and Compliance Officer was designated as a Key Managerial Personnel of yourCompany with effect from 7th August 2019. Ms. Mangal Kulkarni is a B.Com LLBgraduate and a member of the Institute of Company Secretaries of India New Delhi and is aqualified member of ICSA UK with over 24 years of rich experience in ComplianceCorporate Governance Secretarial and Legal functions. Her last assignment was withHinduja Global Solutions Limited as Associate Vice-President in Secretarial and Legaldivision. Over the span of 24 years she has served in India's biggest private sectorconglomerate and other organizations engaged in manufacturing infrastructure ITessector.
During the Financial Year under review Mr. Sanjay K Asher was appointed as anAdditional Director designated as an Independent Director effective from 8thAugust 2019 for a period of 5 (Five) years subject to the approval of shareholders atensuing Annual General Meeting. Mr. Asher is a qualified Chartered Accountant a Commerceand a Law Graduate. He is a Solicitor admitted to Bombay Incorporated Law Society. He is aSenior Partner at the law firm M/s. Crawford Bayley & Company. He specializes incorporate and commercial law mergers and acquisitions private equity and capitalmarkets.
During the Financial Year under review Mr. Jagannathan Chakravarthi was appointed asthe Chief Financial Officer of the Company w.e.f. 30th October 2019. Mr.Jagannathan is a graduate from University of Madras. He is a qualified CharteredAccountant and a Cost Accountant and has 23 years of rich experience in the field offinance. In his previous role Mr. Jagannathan was the Chief Financial Officer ofCarborundum Universal Limited a listed manufacturing company part of the Murugappa Group.He was responsible for Finance Business strategy Business Finance Global TaxationTreasury Investor Relations Internal Audit and was also responsible for the IT function.Prior to Carborundum Universal Limited Mr. Jagannathan has served as the Chief FinancialOfficer at Mindtree Ltd for three years. He was responsible for Finance Business CompanySecretarial compliances Enterprise Risk Management Procurement Travel & Immigrationoperations and compliance Global Regulatory Compliance. Apart from this he was alsoassociated with HCL Technologies Limited Hindustan Powerplus Limited and Ashok LeylandLimited.
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 them contribute significantly toyour Company.
All the Independent Directors of the Company have given declarations that they meet thecriteria of independence as laid down in section 149(6) of the Act and Regulation 16(1)(b)of Listing Regulations. The Independent Directors have also confirmed that they havecomplied with the Company's Code of Conduct.
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 the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the Financial Year and ofthe profit and loss of the Company for that period;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act 2013 for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the Annual Accounts on a going concern basis;
e) the Directors have laid down Internal Financial Controls to be followed by theCompany and that such Internal Financial Controls are adequate and were operatingeffectively; and
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
MATERIAL CHANGES AND COMMITMENTS
There has been no material change and commitment affecting financial position of yourCompany between the end of the Financial Year under review and date of this Report.
The Audit Committee of the Board has been reconstituted at the Board Meeting held on 7thAugust 2019 by appointing Mr. Sanjay Asher as a member of the Committee. Further Mr. B KSyngal and Mr. S N Talwar ceased to be Chairman and member respectively of this Committeeconsequent to the completion of their term as Independent Directors. The Audit Committeecurrently comprises of Mr. Pradip P Shah (Chairman) Mr. S B Ghia Ms. Radhika Rajan andMr. Sanjay Asher as its Members. The Committee met four times during the year under reviewand all its recommendations were accepted by the Board.
Your Company 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 suspected 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's 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 of the Board has been reconstituted at theBoard Meeting held on 7th August 2019 by appointing Mr. Sanjay Asher as aChairman of the Committee and Mr. Pradip P Shah as a member of the Committee. Further Mr.B K Syngal and Mr. S N Talwar ceased to be a member and Chairman respectively of saidCommittee consequent to the completion of their term as Independent Directors.
The Nomination and Remuneration Committee currently comprises of Mr. Sanjay Asher(Chairman) Mr. Viren Raheja Mr. S B Ghia and Mr. Pradip P Shah as its members. TheCommittee has laid down a policy for remuneration of Directors KMP and other Employees. Acopy of the Policy forms part of this Report and is available on the website of theCompany https://www.sonata-software.com/about- us/investor-relations/corporate-governance.
The Stakeholders Relationship Committee comprises of Mr. S B Ghia (Chairman) Mr. PSrikar Reddy and Ms. Radhika Rajan as its members.
DIVIDEND DISTRIBUTION POLICY
As required under Listing Regulations 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/ about-us/investor-relations/corporate-governance.
The Consolidated Financial Statements of your Company and its Subsidiaries viz. SonataInformation Technology Limited India Sonata Software Solutions Limited India SonataSoftware North America Inc. USA (formerly known as Offshore Digital Services Inc) SonataSoftware GmbH Germany Sonata Europe Limited UK Sonata Software FZ LLC Dubai SonataSoftware (Qatar) LLC Interactive Business Information Systems Inc. USA Scalable DataSystems Pty Ltd. Australia and Sopris Systems LLC. USA duly audited are presented aspart of this Report in accordance with the Companies Act 2013 Ind AS 110 and the ListingRegulations wherever applicable. The statement pursuant to the section 129(3) of theCompanies Act 2013 containing salient features of the Financial Statements of theCompany's Subsidiaries in Form AOC-1 is given in ANNEXURE I.
During the Financial Year under review your Company incorporated an wholly-ownedsubsidiary company named Sonata Software Solutions Limited in India. The Company alsoentered into an agreement with SemiCab Inc. a US based Company to acquire upto 17% stakethrough Sonata Software North America Inc. a wholly-owned Subsidiary of the Company. TheCompany also acquired GAPbuster Ltd a UK registered Company through Sonata EuropeLimited a wholly-owned Subsidiary of the Company. The Financial Statements of theSubsidiaries shall be placed on your Company's website at www.sonata-software.com .
Your Company has a "Policy for determining Material Subsidiaries" so thatyour Company could identify such Subsidiaries and set out a governance framework for them.The Policy is put up on the website at https://www.sonata-software.com/about-us/investor-relations/corporate-governance .
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 Prasanna Oke Ex-CFO was granted Options to purchase equivalent shares under thePlan had during the Financial Year under review exercised 30000 Options of your Companyat an Exercise Price of 3 165.75 per share which were vested on him as on 19thMay 2019 Further Mr Vikas Gurugunti Ex-Chief Operating Officer was granted Options topurchase equivalent shares under the Plan had during the Financial Year under reviewexercised 18750 Options of your Company at an Exercise Price of 3 191.95 per share whichwere vested on him as on 12th November 2018.
Pursuant to the requirements of the Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014 a certificate has been issued by the StatutoryAuditors of the Company confirming that the Plan has been implemented in accordance withthe said Regulations and in accordance with the resolution of the Company in the GeneralMeeting.
As required under the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 the applicable disclosures as on 31st March 2020are uploaded on the website of the Company www.sonata-software.com .
The Board had appointed Mr. Vijayakrishna K T Practising Company Secretary as theSecretarial Auditor for the Financial Year 2019-20. The Secretarial Audit Report for theFinancial Year ended 31st March 2020 is annexed to this Report as ANNEXURE II.The report does not contain any qualification reservation or adverse remark.
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.
Messrs Deloitte Haskins & Sells LLP Chartered Accountants Bengaluru (FirmRegistration No. 117366W/W-100018) were appointed as Statutory Auditors of the Companyfrom the conclusion of Twenty Second (22nd) Annual General Meeting (AGM) tillconclusion of Twenty Seventh (27th) AGM subject to ratification 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 ratification ofthe appointment of the Statutory Auditors in every Annual General Meeting has beenomitted and therefore the Company is not seeking ratification.
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
As required pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of Annual Return in formMGT 9 is annexed to this Report as ANNEXURE III.
During the year under review your Company was felicitated with following recognitions:
Zinnov Zones 2019 rates Sonata Software as a Leader in Engineering R&DServices in enterprise software and consumer software categories.
Sonata Software has been highlighted and positioned as an Aspirant by EverestGroup in its recently released report titled "Application Transformation ServicesPEAK Matrix Assessment 2020".
ISO 9001-2015 annual surveillance audit for SSL was also successfully completedin the first quarter.
Your Company continues to focus on customer satisfaction and operational effectivenessthrough world class processes.
During the year under review your Company successfully completed recertificationaudits of its Quality Management System aligning to ISO 27001 (information security) andalso the annual surveillance audit for ISO 9001-2015 (overall quality management system)ISO 20000-1 (IT service management). Your Company is also in the process of completing there-appraisal for CMMI Level 5 for Development v1.3 by end April 2020.
Your Company continues to enhance the effectiveness of its delivery to all customers.We continue to drive towards achieving world class practices and processes for world classdelivery.
In terms of customer satisfaction your Company has been able to achieve an overallaggregated score of 4.2 out of a possible top score of 5 this year from key deliveryproject customers.
The year under review saw continued focus on the Platformation framework andmethodology to leverage this framework for all our existing as well as new clients.Platformation is Sonata's unique approach to digital transformation with the overallobjective of transforming our client's businesses through this framework.
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 your Company has always been on the lookout for energy efficient measures foroperation and value conservation of energy through utilization of newer technologies& innovation for improving productivity and quality of products and services. Everyendeavour has been made to ensure the optimal usage of energy avoid wastage and conserveenergy. As an ongoing process your Company continued to undertake the following energyconservation measures 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 energyand create an environmentally friendly work environment;
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:
Replacing the CFL based lighting in our Bengaluru Global Village facility to LEDbased lighting in phases which has given immense savings in Electricity consumption;
Air-conditioning staggered mode of operation resulting in reduction in fuelconsumption;
Replacing old monitors with energy efficient monitors which leads to significantreduction in energy consumption;
Migration of in-house computing infrastructure to cloud lead to significantenergy and cost savings;
As the cost of energy consumed by your Company forms a very small portion of the totalcosts 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 new technologies like RPA Chatbots Machine learning &strengthened other competencies like Mobility Omni Channel Commerce Analytics and Cloud.Dedicated Competency teams were setup for each of these. Your Company has progressed wellwith its proprietary model of achieving digital transformation called PlatformationTM.Your Company continued to invest in differentiated IP and platforms across industryverticals of Travel Retail Distribution and software solutions.
(C) Foreign exchange earnings and Outgo
During the Financial Year under review 91% of the revenue came from exports ofdeveloped 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. 13265 Lakhs andForeign Exchange inflow on account of export of software services (net) goods and otheroperating revenues was Rs. 80824 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 under Chapter V of theCompanies 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:
Sonatians participated in the TechGig Code Gladiator Coding contest putting uptheir coding prowess and problem-solving skills to test and benchmarking themselvesagainst the best coders in India. We are happy to announce that 15 Sonatians qualified forthe Semi-finals. 3 Sonatians faced off with some of the best at the Finale in Mumbai. 1Sonatian was adjudged one of the top 10 in the Finals that happened in Mumbai in June2019.
Session on "Having Development Conversations" were conducted fromJune-August'19 for all managers in the organization.
Swagatham is an outreach program intended to create awareness about highereducation and research among the top undergraduate students in India at the IIScBangalore. The 4th Swagatham was organized by CSA department IISc in April2019 with an inaugural session which was attended by executives from Sonata Software alongwith CSA faculty as part of our commitment to IISc.
Sonata's Industry-Academia partnership with IIIT-B has facilitated students fromIIIT-B to take up their internships on Industry Problems and Current Technologies andBusiness Trends. This year Sonata has offered a dedicated internship program starting inJune in areas of Application Building for Platforms & Application Development andenhanced Code Generation Platforms. This internship program will help the students tolearn problem solving skills and exposure to cutting edge research.
To engage Sonatians in the managerial cadre an initiative called The Leader'sIdeation Forum was launched during the year. The Leaders Ideation Forum was conductedstarting August in Sonata locations in India. Participants of these include Middle &Senior Managers. These monthly sessions are designed to help enhance communication ideateon solutions and innovations solve problems locally and make consensus-based decisions.
Over 100 Sonatians got a chance to visit the Customer Experience Center (CEC) atour Global Village facility in Bangalore in the last quarter. The objective was to enhancethe Sonatian experience for them. A greater sense of belonging and a deeper understandingof what we stand for goes a long way in building trust and pride in the organization.This is what we believe was achieved through these initiatives.
Representing an internationally shared global agenda for sustainabilitySustainable Development Goals (SDGs) are a collection of 17 global goals set by the UnitedNations General Assembly in 2015 for the year 2030. Globally businesses are in theprocess of aligning themselves and their activities to these goals and at this time indifferent stages of their sustainability journeys. With many of our initiatives andongoing programs under CSR we have been working towards many of these goals ourselves.Industry Innovation and Infrastructure reducing inequalities responsible consumptionand production meaningful partnerships to attain these goals gender equality are some ofthe SDGs we are already working for at Sonata and will consciously continue to do. We tookup this topic of 'Sustainability - Business Impact and Rol" for our latest session ofSonata Cafe. We had the most passionate insightful and uniquely different views fromSonatians. Our invited guest Mr. Ashok Pamidi CEO NASSCOM Foundation presented abird's eye view of the various sustainability related statistics from around the worldalong with prevalent practices from inside the IT industry in India.
'Bring your Child to Work 2019' was organized for various Sonata locations inthe quarter. It was wonderful to see the enthusiasm with which Sonatians participated inthe event. No stone was unturned to make the event lively and entertaining both by theorganizers and the audience.
SJBIT Engineering Student's Industrial visit to Sonata's facility in November2019 was part of a new initiative to foster better engagement between Sonata and theeducation institutions we are associated with. Students found the experience at Sonata as"excellent informative and one of the best in their academic program tilldate".
As part of our on-going partnership with Agastya International Foundation wefunded the Agastya Summer camp in April 2019 at GHPS Kuragall which sought to explainbasic principles of science through puzzles games and low-cost model making to children.The Camp engaged 800 rural children and 21 teachers in 25 day's time. Sonata's work withAgastya Foundation in bringing hands-on science education to underprivileged ruralchildren has benefited over 12 different communities in the last three months. Hundredsof children and adults participate in activities like meditation craft-work andstory-writing - exploring and having fun! Glad to report that we have been able topositively impact 8 schools in 26 sessions 895 children and 18 teachers in all. TheFirst Mobile Science Lab was launched in August 2019 in Kuppam and we inaugurated thesecond one in December in GHPS Shivalli Dharwad.
Sonata Software partners with Smt. Kamala & Sri. Venkappa M Agadi College ofEngineering & Technology (SKSVMA) Gadag to provide scholarships to economicallychallenged girl students enabling them to gain technical knowledge skill and capabilityto pursue a career in Industry. Six girl students from the departments of InformationScience Computer Science and Electronics & Communication from the 5th and7th semesters were selected for their outstanding scholastic performance aswell as achievements in extracurricular activities last quarter for the scholarships.
Further every year your Company organizes an Annual Communications Meet"ACM" where:
Your Managing Director along with his Leadership team shared the Companystrategy plans & key focus areas. Like all years the telecast this year too waswidely viewed across the locations.
The ACM enabled employees to develop a sense of purpose vision and helped themalign and give a deep 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 gender neutral Prevention of Sexual Harassment (POSH) Policy in line with therequirements of Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) 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 2019-20.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
Internal Financial Controls are an integrated part of the risk management processaddressing financial and financial reporting risks. It is commensurate with its size andthe nature of its operations. The internal financial controls have been embedded in thebusiness processes.
Assurance on the effectiveness of internal financial controls is done throughmanagement reviews and review by internal auditors during the course of their audits. Webelieve that these systems provide reasonable assurance that our internal financialcontrols are designed effectively. The Audit Committee reviews the reports submitted byinternal auditors. Suggestions for improvement are considered and the corrective actionare undertaken.
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 Ltd. Scalable Data Systems Pty. Ltd. and Sonata Software Solutions Limited formeeting its working capital requirements. The balance outstanding as on 31stMarch 2020 is Rs. 220 Lakhs. The maximum amount outstanding at any point of time duringthe Financial Year has been Rs. 23465 Lakhs.
Also your Company has given Corporate Guarantees on behalf of Subsidiaries forfacilitating its business needs. The outstanding amount as on 31st March 2020is as below:
|Name of the Subsidiary ||Rs. in Lakhs |
|Sonata Software North America Inc. USA ||8323 |
|Sonata Information Technology Limited India ||11849 |
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 furtherendeavour 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. 335 lakhs towards CSR activities.
Your Company has a Policy on CSR and as part of its implementation program identifiedand participated in the following initiatives:
Sonata Software in partnership with Agastya International Foundation issupporting them to take Science and Mathematical experiments to the Rural schools in theCountry. We have supported them with the Program Lab On Tab which help Rural students toget access to Science and Maths experiments at their doorstep in Rural schools. Sonataalso developed the App based learning platform for Agastya's -Lab on Tab.
The partnership with Kriti Social Initiatives is to help empower the Women inslums with skill development. This Partnership supports various women empowerment programsto empower women through skills training and capacity building promote livelihoods forwomen and ensuring education of children in slums of Hyderabad. Sonata has also created aTechnology Platform for Kriti to market the Products manufactured by the Women artisans.
Sonata's partnership with IIIT-B encompasses research internships and knowledgesharing between academia and industry to foster innovation at IIIT-B. The program fundsresearch fellowships advocating technology for digital transformation throughworkshops/structured courses framework & course content creation for a Course on
Platformation talks training sessions.
Sonata Software in partnership with Industree Crafts Foundation is developing aCo Create app for Artisans. The app would have a Master Bank to capture the details ofArtisans and their artworks across India. This app will also help Artisans across thecountry to register themselves and display their crafts.
Sonata Software in partnership with Women Weave has designed a customer facingplatform with multi-currency functionality that allows weavers to showcase their designcollections to prospective customers. This platform also enables weavers to receive ordersand customization requests with regards to colors design themes and yardage.
Sonata Software with Wildlife Conservation Trust (WCT) has leveraged ourtechnology expertise and created a digital learning platform which provides collaborationtools between the Teachers and Students in and around Primary and Secondary schools aroundthe Forest buffer zones.
Sonata partnered with The Kishkinda Trust (TKT) to develop an E-Commerceplatform to co-exist with their existing website with Multi-Functionality so that theretail and wholesale buyers will be able to place orders online from artisans.
Scholarships for economically challenged engineering students - We partner withSKSVMA Trust to support technical education for economically challenged students in thebackward districts of Karnataka. We are also supporting them with grant for infrastructuresupport to create Project labs.
Sonata's commitment to sustainability is not recent & we have been workingon a number of Initiatives in the Company to create a safe Planet for all of us. SonataSoftware in association with Grow Trees planted trees on behalf of the Sonata Employeeswhich allows individuals and companies to contribute to the environment leaving ahabitable and hospitable world for future generations.
Sonata Software in partnership with Sense International India (SII) hasleveraged technical expertise from Sonata in revamping their existing website with newfunctionalities and fund-raising module to help their Programs.
Sonata Software in association with Compassion Unlimited Plus Action (CUPA) hassupported Animal Welfare as part of CSR. We have supported CUPA in their project todevelop the Second Chance Adoption Center for relief to thousands of injured ill andneedy street animals in Bangalore.
The Annual Report on CSR in the prescribed format is enclosed to this Report asANNEXURE IV.
BUSINESS RESPONSIBILITY REPORT
The SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 mandatesinclusion of the Business Responsibility Report (BRR) as part of the Annual Report for top1000 listed entities based on market capitalization. In compliance with the RegulationsBRR forms part of the Annual Report and it is available on the Company's website atwww.sonata-software.com . The BRR contains a detailed report on Business Responsibilitiesvis-a-vis the nine principles of the National Voluntary Guidelines on SocialEnvironmental and Economic Responsibilities of Business framed by the Union Ministry ofCorporate Affairs.
RELATED PARTY TRANSACTIONS
The policy on related party transactions is available on the Company's website athttps://www.sonata-software.com/about-us/ investor-relations/corporate-governance.
Particulars of the Contracts or Arrangements with related parties referred to inSection 188(1) in the format specified as Form AOC- 2 forms part of this Report asANNEXURE - V.
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 pursuant to provision of Companies Act 2013 and Listing Regulations.
REMUNERATION TO DIRECTOR 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- VI.
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 email@example.com and these documents will be made available forinspection electronically from the date of circulation of this Annual Report upto the dateof AGM i.e 11th August 2020.
LISTING WITH STOCK EXCHANGES
Your Company confirms that it has paid the Annual Listing Fees for the year 2019-20 toNSE 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 |
|Place: Mumbai ||PRADIP P SHAH |
|Date: 11 May 2020 ||CHAIRMAN |