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Subex Ltd.

BSE: 532348 Sector: IT
NSE: SUBEX ISIN Code: INE754A01014
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VOLUME 128374
52-Week high 8.55
52-Week low 4.40
P/E
Mkt Cap.(Rs cr) 333
Buy Price 5.93
Buy Qty 507.00
Sell Price 5.95
Sell Qty 4279.00
OPEN 5.87
CLOSE 5.86
VOLUME 128374
52-Week high 8.55
52-Week low 4.40
P/E
Mkt Cap.(Rs cr) 333
Buy Price 5.93
Buy Qty 507.00
Sell Price 5.95
Sell Qty 4279.00

Subex Ltd. (SUBEX) - Director Report

Company director report

Your Directors have pleasure in presenting the 24th Annual Report ofthe Company on the business and operations together with the audited results for the yearended March 31 2018.

1. FINANCIAL RESULTS

(Rs in Lakhs)

Particulars

Consolidated

Standalone*

2017-18

2016-17

2017-18

2016-17

Total Revenue

32432

35733

17993

32441

Share of profit/(loss) net

-

-

37

-

Other Income

140

1154

66

1253

Finance Cost

775

2040

547

1505

Profit/ (loss) before exceptional items and tax expense

2275

7528

(200)

4162

Exceptional Items

1166

(10890)

389

(4591)

Profit/ (loss) before tax

3441

(3362)

189

(429)

Tax expenses

1373

961

157

254

Profit/ (loss) after tax

2068

(4323)

32

(683)

Other comprehensive income

(240)

(1376)

(8)

(33)

i. to be reclassified to profit or loss in subsequent periods

(210)

(1344)

-

-

ii. not to be reclassified to profit or loss in subsequent periods

(30)

(32)

(8)

(33)

Total comprehensive income for the year

1828

(5699)

24

(716)

*Pursuant to the restructuring the current year's standalone figuresare not comparable to the previous year's standalone figures. (Also refer note 31 of thestandalone financial statements).

2. RESULTS OF OPERATIONS

During the financial year ended March 31 2018 the total revenue on astandalone basis was H17993 Lakhs as against the revenue for the previous year which wasH32441 Lakhs. The Company has during the year under review earned a profit H32 Lakhs asagainst a loss of H683 Lakhs in the previous year.

On a consolidated basis the total revenue stood at H32432 Lakhs asagainst H35733 Lakhs during thepreviousyear.Theprofitfor the financial year 2017-18isH2068 Lakhs as against loss of H4323 Lakhs in the previous year.

3. DIVIDEND

The Directors have not proposed any dividend for the financial year

2017-18.

4. TRANFER TO RESERVES of

There is no transfer to general reserves during the year 2017-18.Pursuant to restructuring the difference between net assets transferred and the capitalcontribution of H2776 Lakhs has been transferred to Capital reserve. Also refer note 31of the standalone financial statements.

5. SHARE CAPITAL

As at March 31 2018 and as at the date of this report the authorisedissued subscribed and paid- up capital of the Company is as below: (Amount in H)

Share Capital

As on April 01 2017

Increase during the year

As on March 31 2018

Authorised
At the beginning of the year
Equity Shares @ H10 each

5450400000

430000000

5880400000

Preference Shares @ H98 each

19600000

Nil

19600000

Issued
Equity Shares @ H10 each

5069079360

550949990#

5620029350

Preference Shares @ H98 each

Nil

Nil

Nil

Subscribed
Equity Shares @ H10 each

5069079360

550949990

5620029350

Preference Shares @ H98 each

Nil

Nil

Nil

Fully Paid- up
Equity Shares @ H10 each

5069079360

550949990

5620029350

Preference Shares @ H98 each

Nil

Nil

Nil

# On May 15 2017 the Company made an allotment of 55094999 equityshares of the Company on a preferential basis at an issue price of H14 per equity share(Face value of H10 per equity share). (The proceeds of the equity shares issued onpreferential basis has been utilized for the acquisition of Intellectual Property Rightsviz. DIM from Subex Americas Inc. and to strengthen the long term capital structure of theCompany.)

Investors

No. of shares

i. QVT Singapore Fund Pte. Ltd

27531428

ii. Tonbridge (Mauritius) Limited

17916321

iii. Leeds (Mauritius) Limited

9647250

Total

55094999

6. BUSINESS

Subex is a leading telecom analytics solutions provider enabling adigital future for global telcos. Founded in 1994 Subex has spent over two decades inenabling 3/4th of the largest 50 Communication

Service Providers (CSPs) globally achieve competitive advantage. Byleveraging data which is gathered across networks customers and systems coupled with itsdomain knowledge and the capabilities of its core solutions Subex helps CSPs to drive newbusiness models enhance customer experience and optimise enterprises. Subex leverages itsaward-winning analytics solutions in areas such as Revenue Assurance Fraud ManagementAsset Assurance and Partner Management "Revenue Management Services/RMSbusiness" and complements them through its newer solutions such as IoT Security"Digital Business". Subex also offers scalable Managed Services and BusinessConsulting services.

It has more than 300 installations across 90+ countries.

Subex has received numerous awards jointly with its customers. Therecent awards include: Aegis Graham Bell Award 2017 for Innovation in ROC Insights under"Data Science" Category Global Telecoms Business Innovation Award 2017 withSaudi

Telecom Company

Pipeline Innovation Awards under "Managed Services" category& "Innovations in Security & Assurance" As part of the businessrestructuring efforts of the Company the Company invested in two Limited LiabilityPartnership (LLP) entities. Pursuant to this two LLPs- Subex Digital LLP and SubexAssurance LLP were incorporated on April 05 2017. Pursuant to: (i) the in-principleapproval accorded by the Board of Directors of the Company ("Board") at itsmeeting No. 2/2017-18 held on May 25 2017; (ii) the final approval accorded by the Boardat its meeting No. 5/ 2017-18 held on August 21 2017; and (iii) the approval accorded bythe members of the Company vide postal ballot on September 23 2017;

(i) The Revenue Maximization Solutions and related businesses carriedout by the Company was contributed to its subsidiary Subex Assurance LLP for aconsideration of H6156456051/-

(Rupees Six Hundred Fifteen Crores Sixty Four Lakhs Fifty Sixthousand and Fifty one only) in the form of credit to the Company's capital account withSubex Assurance LLP

(ii) The Subex Secure and Analytics solutions and related businessescarried out by the Company was contributed to its subsidiary Subex Digital LLP for aconsideration of H186884750/- (Rupees Eighteen Crores Sixty Eight Lakhs Eighty FourThousand Seven Hundred and Fifty only) in the form of credit to the Company's capitalaccount with Subex

Digital LLP.

The purpose of the Restructuring was to achieve the followingcommercial reasons inter alia:

(i) Segregate the Company's business into separate verticalsfacilitating greater focus on each business vertical and higher operational efficiencies;(ii) enhance the ability of the Company to enter into business specificpartnerships and toattract strategic investors at respective business levels; (iii) improve organizationalcapabilities arising from the segregation of human capital and focus the diverse skillstalent and experience in specialized fields to compete successfully in an increasinglycompetitive industry; (iv) de-risk various business verticals from each other; and (v)enhance value for the shareholders of the Company. The Board at its meeting held onOctober 04 2017 approved November 01 2017 as the effective date for the restructuringof the business of the Company.

SEZ I and II

The Company transferred SEZ units I & II to its subsidiary SubexAssurance LLP with effect from November 01 2017 i.e. the effective date of the businessRestructuring.

SEZ III

During the year the Company completed all its statutory formalities /compliances under SEZ Act/Rules in respect of this new unit and commenced operations fromthis unit.

Further details on the business of the Company is provided in theManagement Discussion and Analysis section of the Annual

Report.

7. SUBSIDIARIES (WHOLLY OWNED AND OTHER SUBSIDIARIES)

SUBEX ASSURANCE LLP AND ITS SUBSIDIARIES

For the year ended March 31 2018 Subex Assurance LLP earned a netincome of H12818 Lakhs and a net profit ofH635 Lakhs. As at March 31 2018 Subex Limitedheld more than 99.99 % of the capital in Subex Assurance LLP and the balance is held bySubex

Digital LLP.

Pursuant to the business restructuring of the Company Subex (UK)Limited became a wholly owned subsidiary of Subex Assurance LLP with effect from November01 2017.

For the year ended March 31 2018 the Standalone income of Subex (UK)Limited was H16398 Lakhs as against H17619

Lakhs last year and the net loss was H5308 Lakhs as against a netgain of H1859 Lakhs last year.

Subex (Asia Pacific) Pte. Limited is a wholly owned subsidiary of Subex(UK) Limited. For the year ended March 31 2018 the Standalone income of Subex (AsiaPacific) Pte. Limited was H2992 Lakhs as against H2555 Lakhs last year and the net losswas H655 Lakhs as against a net gain of H892 Lakhs last year.

During the year Subex (Asia Pacific) shares at SG$1 per share to itsholding Company Subex (UK) Limited to meet its fund requirements.

Subex Inc.is a wholly owned subsidiary of Subex (UK) Limited. For theyear ended March 31 2018 the Standalone income of Subex Inc. was H9353 Lakhs as againstH10694 Lakhs last year and the net gain was H86 Lakhs as against a net gain of H117Lakhs last year.

Pursuant to the business restructuring of the Company Subex MiddleEast (FZE) became a wholly owned subsidiary of Subex Assurance LLP with effect fromNovember 01 2017. For the year ended March 31 2018 the standalone income of SubexMiddle East (FZE) is H1132 Lakhs as against H1706 Lakhs last year and loss of H14 Lakhsas against a gain of H35 lakhs last year.

SUBEX DIGITAL LLP

For the year ended March 31 2018 Subex Digital LLP earned a netincome of H33 Lakhs and incurred a net loss of H598 Lakhs. As at March 31 2018 SubexLimited held more than 99.99 % of the capital in Subex Digital LLP and the balance is heldby Subex Assurance LLP.

SUBEX TECHNOLOGIES LIMITED

Subex Technologies Limited is a wholly owned subsidiary of SubexLimited. For the year ended March 31 2018 Subex Technologies Limited incurred a net lossof H4 Lakhs as against a net profit of H54 Lakhs last year. There are no businessoperations at present.

SUBEX AMERICAS INC.

For the year ended March 31 2018 the standalone income of SubexAmericas Inc. was H851 Lakhs as against H3186 Lakhs last year and net profit was H6264Lakhs as against a profit of H3012 Lakhs last year.

Subex Azure Holding Inc. is a wholly owned subsidiary of Subex AmericasInc. There were no transactions during the year under review.

As on March 31 2018 Subex Limited holds 100 common shares (92.59%) inthe capital of Subex Americas Inc. and Subex (UK) Limited holds 8 common shares (7.41%) inthe capital of Subex Americas Inc.

8. FINANCE

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB's)

The details of the FCCB's of the Company are summarized below :

(amount in US$ million)

Particulars

US$ 180000000

US$ 98700000

US$ 127721000

2.00% coupon convertible bonds

5.00% convertible unsecured bonds

5.70% secured convertible bonds

"FCCB I"

"FCCB II"

"FCCB III"

Issue of FCCB I on March 08 2007

180.00

-

-

Restructuring of bonds during 2009-10

(141.00)

141.00

-

Discount @ 30%

-

(42.30)

-

Balance as on November 02 2009

39.00

98.70

-

Conversion to equity in 2009-10 and 2010-11

-

(43.90)

-

Balance March 31 2011

39.00

54.80

-

Restructuring of bonds during 2012-13

(38.00)

(53.40)

91.40

Premium

-

-

36.32

Balance on July 06 2012

1.00

1.40

127.72

Mandatory conversion to equity shares on July 17 2012

-

-

(36.32)

Balance after mandatory conversion

1.00

1.40

91.40

Conversion to equity up to March 31 2016

-

-

(86.85)

Balance as on March 31 2016

1.00

1.40

4.55

Conversion during 2016-17

-

-

(0.95)

Redemption on March 06 2017

(1.00)

(1.40)

-

Balance as on March 31 2017

-

-

3.60

Redemption on July 07 2017

-

-

(3.60)

Balance as on March 31 2018

Nil

Nil

Nil

As on March 31 2018 the Company did not have any outstanding FCCB's.

9. DEPOSITS

Your Company has not accepted any deposits from the public.

10. EMPLOYEE STOCK OPTION SCHEMES

Details of the Company's Employee Stock Option Plans are given below:

a. EMPLOYEE STOCK OPTION PLAN-2005 (ESOP-III)

Under this scheme an initial corpus of 500000 options was createdfor grant to the eligible employees with each option convertible into one fully paid-upequity share of H10/-. This scheme was formulated in accordance with the Securities andExchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines 1999. The corpus of the scheme was further enhanced by 1500000 optionsduring the financial year 2007-08. The Company has obtained the requisite in-principleapprovals from the stock exchanges for the listing of equity shares arising out ofexercise of options granted under the scheme.

The Compensation Committee granted options to the eligible employees inaccordance with the provisions of the scheme. The options were granted at a price whichwas not less than 85% of the average of the closing price of the equity shares during the15 trading days preceding the date of grant on the stock exchange where there was highesttrading volume during this period. Unless otherwise resolved the options granted vestover a period of 1 to 4 years and could be exercised over a period of 3 years from thedate of vesting.

The tenure for grant of stock options under ESOP 2005 scheme hasexpired in 2015 and the Company is only administering the outstanding stock options issuedunder the scheme. b. EMPLOYEE STOCK OPTION PLAN-2008 (ESOP-IV)

During 2008-09 your Company instituted the Employee Stock OptionPlan-2008. A corpus of 2000000 options were created for grant to the eligible employeesunder the scheme. The Scheme was formulated in accordance with the Securities and ExchangeBoard of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines 1999. The Company has obtained the requisite in-principle approvals from thestock exchanges for the listing of equity shares arising out of exercise of optionsgranted under the scheme.

The Compensation Committee granted options to the eligible employees inaccordance with the provisions of the scheme. The options were granted at a price whichis not less than 85% of the average of the closing price of the equity shares during the15 trading days preceding the date of grant on the stock exchange where there was highesttrading volume during this period. Unless otherwise resolved the options granted vestover a period of 1 to

4 years and can be exercised over a period of 3 years from the date ofvesting.

As on March 31 2018 there are no outstanding options under the

ESOP 2008 Scheme.

Additional information regarding the employee stock options as at March31 2018 is given in "Annexure A" to this report.

11. PARTICULARS OF GUARANTEES UNDER SECTION 186

Details of guarantees covered under Section 186 of the Companies Act2013 are given in note number 35 (b) (iv) of the Standalone

Financial Statements.

12. MATERIAL CHANGES AND COMMITMENTS BETWEEN THE END OF FINANCIAL YEARAND DATE OF THE REPORT

Mr. Ashwin Chalapathy Non-Independent Non-Executive Directorresigned from the Board with effect from May 04 2018.

13. CORPORATE GOVERNANCE

Your Company strongly believes that the spirit of Corporate Governancegoes beyond the statutory form. Sound Corporate Governance is a key driver of sustainablecorporate growth and long-term value creation for the stakeholders and protection of theirinterests. It endeavors to meet the growing aspirations of all stakeholders includingshareholders employees and customers and is committed to maintaining the highest level oftransparency accountability and equity in its operations. It always strives to follow thepath of good governance through a broad framework of various processes.

Your Company has complied with the conditions of Corporate Governanceas stipulated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time. The Auditor's certificate on compliance with respect tothe same is annexed herewith in "Annexure B". In addition it hasdocumented its internal policies in line with the Corporate Governance guidelines. TheManagement Discussion & Analysis of the financial position of the Company has beenprovided as a part of this report.

14. DIRECTORS

As per Section 152 of the Companies Act 2013 at least two-third ofthe Directors shall be subject to retirement by rotation. One-third of such Directors mustretire from office at each Annual General Meeting of the shareholders and a retiringDirector is eligible for re-election. Accordingly Mr. Vinod Kumar Padmanabhan retires byrotation and being eligible has offered to be re-appointed at the ensuing Annual GeneralMeeting.

The Board at its meeting held on May 25 2017 appointed Mr. AnilSinghvi Independent Director as the Chairman of the Company.

Mr. Vinod Kumar Padmanabhan Chief Operating Officer of the Company andMr. Ashwin Chalapathy Chief Technology Officer and Head of Service Delivery of theCompany were appointed as Additional Directors and Whole-Time Directors at the samemeeting. The shareholders approved the appointments of Mr. Vinod Kumar Padmanabhanand Mr. Ashwin Chalapathy at the 23rd Annual General Meeting of the Company held on July28 2017. Pursuant to the restructuring of the business of the Company the RevenueMaximisation Solutions business was contributed to Subex Assurance LLP and the SubexSecure and Analytics solutions and related businesses was contributed to Subex DigitalLLP. Consequent to such business restructuring Mr. Vinod Kumar Padmanabhan and Mr. AshwinChalapathy were appointed in Subex Assurance LLP and they continued as Non- Executive andNon-Independent Directors on the Board of the Company with effect from November 01 2017being the effective date of such business restructuring.

Mr. Surjeet Singh was re-appointed as the Managing Director & CEOof the Company at the Board Meeting held on October 04 2017 for the period from October05 2017 to March 31 2018. The said reappointment is being placed before the Members ofthe Company at the ensuing Annual General Meeting for their approval. The Board at itsmeeting held on March 21 2018 took note that pursuant to the terms of the employmentagreement of Mr. Surjeet Singh with the Company his tenure as Managing Director & CEOof the Company concluded on March 31 2018.

In view of the conclusion of tenure of Mr. Surjeet Singh as theManaging Director & CEO of the Company and pursuant to the recommendation of theNomination and Remuneration Committee the Board at its meeting held on March 21 2018appointed Mr. Vinod Kumar Padmanabhan as the Managing Director & CEO of the Companyeffective from April 01 2018 for a tenure of three years. The said appointment is beingplaced before the Members of the Company at the ensuing Annual General Meeting for theirapproval.

Mr. Ashwin Chalapathy Non-Independent Non-Executive Directorresigned from the Board with effect from May 04 2018. The details regarding thefamiliarization program for Independent Directors is available on the website of yourCompany under the link https://www.subex.com/shareholder-services/.

15. BOARD MEETINGS

During the year 10 Board Meetings were convened and held. Theintervening gap between the meetings was within the period prescribed under the CompaniesAct 2013 and the SEBI (LODR) Regulations 2015. The Board meeting number and the dateson which the meetings were held are as follows:

Board Meeting Number Date of Meeting
1/2017-18 May 25 2017
2/2017-18 May 25 2017
3/2017-18 June 05 2017
4/2017-18 July 28 2017
5/2017-18 August 21 2017
6/2017-18 October 04 2017
7/2017-18 November 10 2017
8/2017-18 December 21 2017
9/2017-18 January 29 2018
10/2017-18 March 21 2018

The details of the attendance of the Directors is provided in theCorporate Governance Report.

16. PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act 2013 and

Regulation 17 (10) of the SEBI (LODR) Regulations 2015 the

Board at its meeting held on January 29 2018 carried out an annualperformance evaluation of its own performance the Directors individually as well as theevaluation of the working of its Committees. The manner in which the evaluation has beencarried out has been explained in the Corporate Governance Report.

17. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION POLICY OF THECOMPANY

The Policy on Appointment of Directors and the Remuneration

Policy of the Company forms a part of this report in "AnnexureF". and the Details / Disclosures of Ratio of Remuneration to each Director tothe median employee's remuneration in "Annexure H".

18. AUDIT COMMITTEE

As on March 31 2018 the Audit Committee had 4 Directors as itsmembers viz. Mr. Anil Singhvi Chairman Ms. Nisha Dutt Independent Director Ms.Poornima Prabhu Independent Director and Mr. Surjeet Singh Managing Director & CEO.The role terms of reference the authority and power of the Audit Committee are inconformity with the provisions of the Companies Act 2013 and Regulation 18 of the SEBI(LODR) Regulations 2015. Further details of the Audit Committee have been provided in thereport on Corporate Governance forming part of this Annual Report. Mr. Surjeet Singhceased to be the member of the Audit Committee as on March 31 2018. Mr. Vinod KumarPadmanabhan has been appointed as a member of the Committee with effect from April

01 2018.

19. AUDITORS STATUTORY AUDITORS

M/s. S. R. Batliboi & Associates LLP Chartered AccountantsBengaluru (Firm Registration Number 101049W/E300004) the Statutory Auditors of theCompany were appointed for a term of 5 years at the AGM held on June 19 2015.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act 2013 andthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed M/s. V Sreedharan & Associates a firm of Company Secretaries inpractice to undertake the Secretarial Audit of the Company. The report of the SecretarialAudit is annexed herewith in "Annexure C". The Secretarial Auditors havein their report for the financial year 2017-18 mentioned that while the Company hasappointed an Acting Company Secretary the same does not comply with the provisions ofSection 203 (4) of the Companies Act 2013 wherein the Company is required to appoint aCompany Secretary as whole time Key Managerial Person. The Board have noted the same andtakes this opportunity to assure the Members and other stakeholders of the Company that itis looking out for a suitable candidate for the position of Company Secretary and tillsuch time Mr. Arjun Makhecha a member of the Institute of Company Secretaries of Indiawould continue as the Acting Company

Secretary of the Company.

20. PARTICULARS OF EMPLOYEES

The particulars of employees required under Section 197 of theCompanies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is enclosed hereto in "Annexure D".

21. CONSERVATION OF ENERGY

Your Company is committed to the continual development of its productsin a sustained environment helping its customers to operate their businesses moreefficiently and enabling them to reduce their use of scarce resources and minimize waste.As a software product Company the impact that Subex has on the environment from its ownoperations is relatively low when compared to companies in other industries. HoweverSubex recognizes that it still has a role to play in reducing the impact that globalbusiness has on the environment. Subex is committed and targets towards following the bestpractices to reduce utilization of power natural resources like water and limited E-Wastedisposal executed through government recognized agencies. Though Subex does not fallunder the category of manufacturing products and services impacting the environment weimplement few of the best practices with minimal investments through a five-year plan

- agreement with an industry stalwart having expertise in energyconservation. This investment thereby results in monetary benefits / savings month onmonth helping us recover the invested amount in few months ensuing continued savingsthrough this initiative. Suppliers delivering the products to Subex with regard tolighting diesel generators etc abide by the guidelines laid out by the government.

Subex aims to reduce its impact on the environment by: i. Monitoringthe level of water and energy used along with the waste produced. ii. Targeting areduction in the use of water and energy reduction in waste along with an increase inamount of waste that is recycled/ reused etc. iii. Increasing the awareness on environmentsafety and engagement of employees. iv. Adopting sustainable practices designed to ensurethe health and safety of Subex's employees stakeholders and the environment. v. Operatingits business in compliance of environmental laws and regulations.

22. TECHNOLOGY ABSORPTION ADOPTION AND INNOVATION

Your Company has a strong Research & Development Divisionresponsible for developing technologies for its products in the telecom domain. Thetelecommunications domain in which your Company operates is subject to rapidtechnological changes introduction of new services and intense competition. Your Companyhas developed inherent skills to keep pace with these changes. Since software products arethe significant line of business of your Company the Company incurs expenditure onproduct related Research & Development on a continuous basis. These expenses arecharged to revenue under the respective heads and are not segregated and accountedseparately.

23. FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

During the year 2017-18 total foreign exchange earnings and expenditureis as follows: i) Foreign Exchange earnings H16240 Lakhs (Previous Year

H29930 Lakhs) ii) Foreign Exchange expenditure H9592 Lakhs (PreviousYear

H18231 Lakhs)

Note: The foreign exchange expenditure is inclusive of theinter-Company charges and the Previous Year's restated accordingly.

24. CORPORATE SOCIAL RESPONSIBILITY

To enable the Company to take required measures to make a meaningfulcontribution to society and other stakeholders it has constituted the Corporate SocialResponsibility Committee (CSR Committee) comprising of the following Directors.

Composition Category
Mr. Anil Singhvi (Chairman) Independent Director
Mr. Surjeet Singh Managing Director & CEO
Ms. Nisha Dutt Independent Director

Mr. Surjeet Singh ceased to be the member of the Committee as on March31 2018. Mr. Vinod Kumar Padmanabhan has been appointed as a member of the Committee witheffect from April 01 2018.

Pursuant to the CSR Policy adopted by the Board the Company proposesto undertake such activities as may be useful and contributive in nature.

SUBEX CHARITABLE TRUST

Subex Charitable Trust (SCT) extends the outlook of Subex as acorporate entity into community service. SCT was set up to provide for welfare activitiesfor the under privileged and the needy in the society. SCT is managed by trustees electedamongst the employees of the Company. During the year it has provided active support forthe education of economically challenged meritorious students as part of the Nurture MeritProgramme conducted blood and stem donation camps donated clothes and other essentialsto Government schools. SCT has tied up with the Prerana Resource Centre for providingVocational Training to visually impaired and disabled orphan teenage girls. As part ofthis program 25 blind and disabled girls were provided vocational training and employmentand 22 of them have been successfully attained jobs across various industries. A gist ofactivities undertaken by the Trust has been provided as a separate section in this AnnualReport in "Annexure I "

25. IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Company has developed and adopted a Risk Management Policy. Thispolicy identifies all perceived risks which might impact the operations and on a moreserious level also threaten the existence of the Company. Risks are assessed departmentwise such as financial risks information technology related risks legal risksaccounting fraud etc. The Management also ensures that the Company is taking appropriatemeasures to achieve prudent balance between risk and reward in both ongoing and newbusiness activities.

26. HUMAN RESOURCE MANAGEMENT

Detailed report on Human Resource management is given in the ManagementDiscussion and Analysis section of the annual report.

27. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

In accordance with the provision of Section 134(5) of the CompaniesAct 2013 and as per the provisions of the SEBI (LODR)

Regulations 2015 the Company has an Internal Control Systemcommensurate with the size scale and complexity of its operations. Such internalfinancialcontrols were found to be adequate for a Company of this size. The controls arelargely operating effectively since there has not been identification of any materialweakness in the Company. The Directors have in the Directors Responsibility Statementunder paragraph (e) confirmed the same to this effect. The Company has policies andprocedures in place for ensuring proper and efficient conduct of its business thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and timely preparations reliablefinancialinformation. The Company has adopted accounting policies which are in line withIndian Accounting Standards("Ind AS").

Pursuant to the provisions of the Section 134(5)(f) of the Act theCompany during the year devised proper systems to ensure compliance with the provisions ofall applicable laws. Each department of the organization ensured that it had complied withthe applicable laws and furnished its report to the Head of department who then along withthe Chief Financial Officer discussed on the compliance status of the department. Anymatter that required attention was immediately dealt with. The Chief Financial Officerreported to the Audit Committee and the Board on the overall compliance status of theCompany. In effect such compliance system was largely found to be adequate and operatingeffectively. The Directors have in the Directors Responsibility Statement under paragraph(f) also confirmed the same to this effect.

The Internal Auditors monitor and evaluate the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company and its subsidiaries. Based on thereport of Internal Auditors process owners undertake corrective action in theirrespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee of the Board.

Subex is certified for ISO 9001:2008 (Quality Management System) andISO 27001:2013 (Information Security Management System). Internal audits are conductedperiodically for projects and support functions to adhere to these internationalstandards. These audits are conducted across Bengaluru UK and US locations to ensureprocesses are followed to provide a better customer experience. Summary of the audits areshared across organization to help understand strengths and weaknesses in the system.People involvement in organization process initiatives is one that approaches towardsachieving better compliance standardizing activities to consistently achieve bettercustomer satisfaction. This year the emphasis was more towards information securityincluding the privacy aspects of customer data where applicable. Focused effort on dataprivacy align with customer's strategy towards compliance to Global Data PrivacyRegulations (GDPR). Information security practices is the base to implement privacyorganization and technological measures in terms of physical and logical access controlsare built in to the system. Awareness to employees on the work environment and bestpractices are imparted through trainings periodically.

28. VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has implemented a vigil mechanism policy to deal withinstance of fraud and mismanagement if any. The policy also provides for adequatesafeguards against victimization of persons who use such mechanism and makes provision fordirect access to the chairperson of the Audit Committee in all cases. The details of thepolicy are posted on the website of the Company under the linkhttps://www.subex.com/shareholder-services/. There were no complaints during the year2017-18.

29. POLICY ON SEXUAL HARRASSMENT OF WOMEN AT WORK PLACE

The Company has zero tolerance towards sexual harassment at theworkplace and towards this end has adopted a policy in line with the provisions of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theRules thereunder. All employees (permanent contractual temporary trainees) are coveredunder the said policy. An Internal Complaints Committee has also been set up to redresscomplaints received on sexual harassment.

During the financial year under review the Company has received onecomplaint of sexual harassment from a women employee of the Company. The matter wasconsidered and resolved within the timelines stipulated under the said Act.

30. DECLARATION FROM INDEPENDENT DIRECTORS

All Independent Directors have given declarations under Section 149 (7)to the effect that they meet the criteria of independence as laid down under Section149(6) of the Companies Act 2013.

31. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during thefinancial year were on an arm's length basis and were in the ordinary course of business.There were no materially significant related party transactions made by the Company withits Promoters Directors Key Managerial Personnel or other designated persons which mayhave a potential conflict with the interest of the

Company at large. Further none of the Directors had any pecuniaryrelationships of transactions vis--vis the Company.

All related party transactions are placed before the Audit Committeeand the Board for approval. Prior omnibus approval of the Audit Committee is obtained fortransactions which are of a foreseen and repetitive nature. A statement giving details ofall related party transactions entered into pursuant to the omnibus approval so grantedare placed before the Audit Committee and the Board of Directors for their review on aquarterly basis. The Company has entered into sub-contracting arrangements with itssubsidiaries based on transfer pricing methodology for development and enhancement ofits products as well as marketing of its products by the subsidiaries across locations.The Company has also entered into marketing arrangements with its subsidiaries whereinthere is a cross charge done by the subsidiaries towards its efforts for the same.

The Policy on Related party transactions as approved by the Board isuploaded on the Company's website under the link https://www.subex.com/shareholder-services/ Particulars of Contracts or Arrangements with Relatedparties referred to in Section 188(1) in Form AOC-2 is enclosed to this report in "AnnexureG".

32. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

Therearenosignificant orders passed the Regulators/

Courts which would impact the going concern status of the Company andits future operations.

33. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in formMGT 9 is annexed herewith in "Annexure E".

34. LISTING WITH STOCK EXCHANGES

The Company has paid the Annual Listing Fees for the year 2017-18 tothe National Stock Exchange of India Ltd (‘NSE') and BSE Ltd (‘BSE') where theCompany's shares are listed.

35. DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provision of Section 134(3)(c) of the CompaniesAct 2013 the Board of Directors affirm: a) In the preparation of the annual accounts forthe financial year ended March 31 2018 the applicable accounting standards have beenfollowed and there are no material departures;

b) That the accounting policies have been selected and appliedconsistently and it has 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 as at March 31 2018and of the profit of the Company for the year ended on that date; c) That proper andsufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities.; d) That theaccounts for the year ended March 31 2018 have been prepared on a going concern basis; e)That internal financial controls have been laid down to be followed by the Company andsuch internal financial controls were adequate and were operating effectively. f) Thatsystems to ensure compliance with the provisions of all applicable laws were in place andsuch systems were adequate and operating effectively.

36. APPRECIATION/ACKNOWLEDGEMENTS

Your Directors thank the clients vendors investors and bankers fortheir continued support during the year. We place on record our appreciation for theco-operation and assistance provided by the Central and State Government authoritiesparticularly SEZ authorities Customs authorities Registrar of Companies Karnataka theIncome Tax department Reserve Bank of India and various authorities under the Governmentof Karnataka. Your Directors also wish to place on record their deep appreciation toSubexians at all levels for their hard work solidarity cooperation and support as theyare instrumental in your Company scaling new heights year after year.

For Subex Limited

Anil Singhvi

Chairman & Independent Director

DIN 00239589

Vinod Kumar Padmanabhan

Managing Director & CEO

DIN 06563872

Place: Bengaluru India Date: May 04 2018