Your Directors take pleasure in presenting the 27th AnnualReport of the Company on the business and operations together with the audited results forthe year ended March 31 2021.
1. FINANCIAL RESULTS
|The Company's financial performance for the year ended March 31 2021 is summarized as below || || || ||(Rs. in lakhs) |
|Particulars ||Consolidated ||Standalone |
| ||2020-21 ||2019-20 ||2020-21 ||2019-20 |
|Total Revenue ||37203 ||36498 ||2916 ||1079 |
|Share of Profit/ (Loss) before exceptional items net ||- ||- ||2585 ||1889 |
|Other Income ||474 ||563 ||9 ||202 |
|Finance Cost ||296 ||477 ||14 ||28 |
|Profit/ (Loss) before exceptional items and tax expense ||8650 ||7996 ||2882 ||891 |
|Exceptional Items ||287 ||(31766) ||(231) ||(21361) |
|Profit/ (Loss) before tax ||8937 ||(23770) ||2651 ||(20470) |
|Tax expenses ||3765 ||3145 ||29 ||118 |
|Profit/ (Loss) after tax ||5172 ||(26915) ||2622 ||(20588) |
|Other comprehensive income/(Loss) ||624 ||(29) ||- ||(21) |
|a) to be reclassified to profit or loss in subsequent periods ||636 ||5 ||- ||- |
|b) not to be reclassified to profit or loss in subsequent periods ||(12) ||(34) ||- ||(21) |
|Total comprehensive income/(Loss) for the year ||5796 ||(26944) ||2622 ||(20609) |
2. OVERVIEW AND RESULTS OF OPERATIONS
The outbreak of the COVID-19 pandemic was an unprecedented shock to theIndian Economy resulting in a sweeping slowdown in the overall economy. Phasedlock-downs disruptions in transportation travel bans quarantines social distancing andother emergency measures along with the growing uncertainty has led to the hampering ofregular business operations.
The Company has considered internal and certain external sources ofinformation including economic forecasts budgets required to meet performance obligationsand likely delays on contractual commitments up to the date of approval of thesefinancial statements in determining the possible impact from the COVID-19 pandemic. TheCompany has taken immediate steps to navigate through the crisis and its pro-activenessand business continuity processes ensured that the Company provided uninterrupted servicesto the customers while maintaining the health and safety of our employees.
The impact of the global pandemic may be different from that estimatedas at the date of approval of it's financial statements and the Company will continue toclosely monitor any material changes to its assessment of economic impact of the COVID- 19pandemic. We have received multiple customer accolades for the smooth and seamlessbusiness continuity. Our customers were delighted with the way the Company steered throughthe current pandemic situation to ensure business continuity while keeping the health andsafety of the employees a priority.
During the financial year ended March 31 2021 the total income on astandalone basis was ' 5510 lakhs as against the total income for the previous year whichwas ' 3170 lakhs. The Company has during the year under review earned a profit of ' 2622lakhs as against a loss of ' 20588 lakhs in the previous year. On a consolidated basisthe total income stood at ' 37677 lakhs as against ' 37061 lakhs during the previousyear. The profit earned for the financial year 2020-21 is ' 5172 lakhs as against a lossof ' 26915 lakhs in the previous year.
The details of dividend declared/recommended for the FY 202021 were asfollows:
i) The Board at its meeting held on February 01 2021 declared aninterim dividend of ' 0.50 (10%) per share. The dividend was paid to the shareholders onFebruary 25 2021.
ii) The Board at its meeting held on May 17 2021 recommended a finaldividend of ' 0.25 (5%) per share subject to the approval of the members at the 27thAnnual General Meeting to be held on July 09 2021.
Pursuant to Regulation 43A of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ('SEBI ListingRegulations') the dividend distribution policy of the Company was approved and adopted bythe Board of Directors at their meeting held on May 17 2021 and is available under thefollowing link https //www.subex. com/investors/shareholder-services/.
The Company does not propose to transfer any amounts to the generalreserve out of the amount available for appropriation. The total profit of ' 5796 lakhsavailable with the Company on a consolidated basis is proposed to be retained in theprofit and loss account.
5. SHARE CAPITAL
As at March 31 2021 the authorized share capital of the Company was '5900000000 (Rupees Five hundred and ninety crores only) divided into 1176080000(One hundred and seventeen crores sixty lakhs and eighty thousand only) equity shares of' 5 (Rupees Five only) each and 200000 (Two lakhs only) preference shares of ' 98(Rupees Ninety-eight only) each.
As at March 31 2021 the issued subscribed and paid-up share capitalof the Company was ' 2810014675 (Rupees Two hundred and eighty one crores fourteenthousand six hundred and seventy five only) divided into 562002935 (Fifty six crorestwenty lakhs two thousand nine hundred and thirty five only) equity shares of ' 5 (RupeesFive only) each.
The Board of Directors at their meeting held on February 07 2020approved the Scheme for Reduction of Capital under Section 66 & Section 52 of theCompanies Act 2013. The Scheme was subject to approval of the shareholders the Hon'bleNational Company Law Tribunal ("NCLT") Bengaluru Bench and all otherregulatory approvals.
Considering the future prospects of growth and value addition to theCompany and its shareholders it was proposed to re-align the relationship between itscapital and assets in accordance with Section 52 & Section 66 of the Companies Act2013 read with the National Company Law Tribunal (Procedure for reduction of share capitalof Company) Rules 2016 and other applicable provisions of the Companies Act 2013 (to theextent applicable) and subject to the consent of the shareholders the NCLT and otherstatutory authorities as applicable by writing- off the accumulated losses of '3840109702 reflecting in the unaudited financial statements of the Company as onDecember 31 2019 against the paid-up share capital and securities premium accountbalance of the Company to have a rational structure which was commensurate with itsremaining business and assets.
Hence the proposed Scheme which was approved by the Board of Directorsof the Company provided for Reduction of equity share capital and securities premiumaccount of the Company in accordance with Section 66 & 52 of the Companies Act 2013.
6. SCHEME OF REDUCTION OF SHARE CAPITAL
The capital structure of the Company pre and post-scheme is reflectedin the table below
|Pre-reduction || || ||Post-reduction || || |
|Particulars ||No. of shares ||Amount (Rs.) ||Particulars ||No. of shares ||Amount (Rs.) |
|Authorised Share Capital || || || || || |
|Equity shares of face value ' 10 each ||588040000 ||5880400000 ||Equity shares of face value ' 5 each ||1176080000 ||5880400000 |
|Preference shares of face value '98 each ||200000 ||19600000 ||Preference shares of face value ' 98 each ||200000 ||19600000 |
|Issued subscribed and paid-up Share Capital || || || || || |
|Equity shares of face value '10 each ||562002935 ||5620029350 ||Equity shares of face value ' 5 each ||562002935 ||2810014675 |
The below table reflects the pre-capital reduction and post-capitalreduction balances of Securities premium account and accumulated loss of the Company as atDecember 31 2019
|Particulars ||Pre-reduction (Rs.) ||Proposed reduction (Rs.) ||Post-reduction (Rs.) |
|Securities Premium Account ||2670428364 ||1030095027 ||1640333337 |
|Profit and Loss (Dr) i.e. Accumulated Losses ||3840109702 ||3840109702 ||NIL |
In terms of the MCA General Circular No 14/2020 dated April 08 2020and 17/2020 dated April 13 2020 ('MCA Circulars") in view of the extraordinarycircumstances due to the COVID-19 pandemic requiring social distancing Companies wereadvised to take all decisions requiring members' approval other than items of ordinarybusiness or business where any person has a right to be heard through the mechanism ofPostal Ballot/ e-voting in accordance with the provisions of the Act and Rules madethereunder without holding a general meeting that required the physical presence ofmembers at a common venue.
Pursuant to Section 110 of the Companies Act 2013 and the Rulesprovided thereunder the Company proposed to obtain the consent of the shareholders forthe Scheme for reduction of Capital by passing of the resolutions by Postal Ballot.
In accordance with the requirements of the Companies Act and the MCACirculars the Company sent the Postal Ballot Notice dated May 22 2020 by email to allits members who had registered their email addresses with the Company or depository/depository participants and the communication of assent/ dissent of the members took placethrough remote e-voting system only.
The e-voting period for the Postal Ballot commenced on Wednesday May27 2020 from 9.00 a.m. (IST) and ended on Thursday June 25 2020 at 5.00 p.m. (IST). TheCompany appointed Mr. Pramod S.M. (Membership No. 7834 and Certificate of Practice No.13784) Partner BMP & Co. LLP Practicing Company Secretaries as the Scrutinizer andMr. Biswajit Ghosh (FCS Membership No. 8750 and Certificate of Practice No. 8239)Partner BMP & Co. LLP Practicing Company Secretaries as an alternate scrutinizer toMr. Pramod S.M. for conducting the meeting only through the electronic voting process ina fair and transparent manner. Please refer the following link https//www.subex.com/investors/capital- reduction/ for the Postal Ballot notice and relateddocuments.
The Resolution for reduction of the share capital of the Company wasapproved with requisite majority and the results were displayed on the website of theCompany under the following link https //www.subex.com/investors/capital-reduction/ andnecessary disclosures were made to the Stock Exchanges. Subsequently the Company had madean application before the Hon'ble National Company Law Tribunal 'NCLT' Bengaluru BenchBengaluru seeking their approval to the Scheme and the NCLT vide its Order datedSeptember 23 2020 approved the Scheme of Reduction of Equity share capital of theCompany from ' 562 Crores to ' 281 Crores by reducing the face value of the equity sharesfrom ' 10 to ' 5 per share. The certified copy of the Scheme was filed with the Registrarof Companies Bengaluru Karnataka on September 29 2020 (effective date of the Scheme).Post the receipt of the approval from the NCLT the Company filed listing applicationsbefore the BSE Ltd and the National Stock Exchange of India Ltd and the trading approvalfor equity shares bearing face value of ' 5/- each was received effective November 052020.
7. SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards asamended from time to time.
Subex is a pioneer in the space of Digital Trust providing solutionsfor 75% of the world's top 50 telcos. Founded around the time when video telephony waslaunched Subex has been witnessing the evolution of mobile technology ever since. Todaywe are consultants to global telecom carriers for operational excellence and businesstransformation by driving new revenue models enhancing the customer experience andoptimizing the enterprise. Subex leverages its award-winning analytics solutions in areassuch as Revenue Assurance Fraud Management Network Asset Management Capacity ManagementPartner Management and Analytics (Revenue Management Services/ RMS business) andcomplements them through its newer solutions such as IoT Security Digital IdentityManagement and Anomaly Detection (Digital Business). Subex also offers scalable ManagedServices and Business Consulting services.
Through HyperSense an end-to-end augmented analytics platform Subexempowers communications service providers and enterprise customers to make faster betterdecisions by leveraging Artificial Intelligence (AI) analytics across the data valuechain. The solution allows users without a knowledge of coding to easily aggregate datafrom disparate sources turn data into insights by building interpreting and tuning AImodels and effortlessly share their findings across the organisation all on a no-codeplatform.
Being truly a global company it has more than 300 installations across90+ countries. There has been no change in the nature of business in FY21.
Key Announcements in FY20-21
Telefonica partners with Subex for next-gen fraud prevention
Subex announced a partnership with Telefonica one of the largestmobile network providers in the world to provide the latest version of Subex FraudManagement Solution. As part of the engagement the operator will be deploying Subex'sFraud Management to all opcos in Telefonica's Hispam unit Argentina Chile VenezuelaEcuador Mexico Peru Uruguay and Colombia.
Subex selected by stc for its integrated Revenue Assurance and FraudManagement solution
Subex announced that it has been selected by Saudi Telecom Company('stc') to deploy an integrated Revenue Assurance and Fraud Management (iRAFM) solution.This deal marks another chapter in the long-standing partnership between Subex and stcthrough the earlier deployments of Subex's Revenue Assurance and an award-winning FraudManagement engagement which began in 2003. By virtue of this decision stc will be aimingto consolidate their technology stack with the latest solution from Subex includingreplacement of other legacy systems.
Subex and SkyLab team up to secure the shipping industry
Subex and SkyLab a leader in 5G Multi-Access Edge Computing (MEC) andIndustrial IoT have announced a partnership to offer IoT and OT cybersecurity solutionsand services to the maritime sector. These solutions offered jointly by Subex and SkyLabhave been successfully deployed and are already securing ships and maritime infrastructureacross oceans. The industry can look up to this partnership to protect their criticalassets from cyberattacks and cybercrime.
Subex joins O-RAN Alliance to help accelerate the adoption of openradio access networks
Subex announced that it has become a member of the O-RAN Alliance tosupport the development and standardisation of Open RAN (radio access networks). With itsexpertise in advanced network analytics based on machine learning Subex joins thealliance to help drive innovation in the radio access network domain - ultimatelyfacilitating Open RAN that leverages embedded artificial intelligence (AI) to maximisenetwork performance.
Tech Mahindra and Subex Partner to Drive Scale Adoption ofBlockchain-based Solutions for Telecom Operators Globally
Tech Mahindra a leading provider of digital transformationconsulting business re-engineering services and solutions and Subex an industry leaderin providing services based on Digital Trust have announced strategic partnership toroll-out blockchain based solutions for telecom operators globally. These solutions willenable fraud mitigation and drive operational efficiencies for Communication ServiceProviders (CSP) by reducing compliance complexities and faster time-to-market.
Subex launched Partner Ecosystem Management platform
Subex announced the launch of its Partner Ecosystem Management platformthat will allow CSPs to accelerate their digital services portfolio expansion. Theplatform will allow CSPs to create a value driven partner ecosystem and significantlyimprove time to market for new services by identifying and quickly onboarding diversepartners. It will also enable digital trust among CSPs and their partners by creating atransparent partner ecosystem.
9. SUBSIDIARIES (WHOLLY OWNED AND OTHER SUBSIDIARIES)
As on March 31 2021 the Company has 10 subsidiaries.
SUBEX ASSURANCE LLP AND ITS SUBSIDIARIES
For the year ended March 31 2021 Subex Assurance LLP earned a netincome of ' 33268 lakhs as against net income of ' 33006 lakhs in the previous year anda net profit of ' 4628 lakhs as against a net loss of ' 12930 lakhs in the previousyear.
As at March 31 2021 Subex Limited held 99.99 % of the capital inSubex Assurance LLP and the balance is held by Subex Digital LLP
Subex (UK) Limited is a wholly owned subsidiary of SubexAssurance LLP For the year ended March 31 2021 the Standalone net income of Subex (UK)Limited was ' 20974 lakhs as against ' 21309 lakhs in the previous year and a netprofit of ' 2487 lakhs as against ' 1113 lakhs in the previous year.
Subex (Asia Pacific) Pte. Limited is a wholly owned subsidiaryof Subex (UK) Limited. For the year ended March 31 2021 the Standalone net income ofSubex (Asia Pacific) Pte. Limited was' 3898 lakhs as against ' 3064 lakhs in theprevious year and a net loss of ' 347 lakhs as against a net profit of ' 19 lakhs in theprevious year.
Subex Inc. is a wholly owned subsidiary of Subex (UK) Limited.For the year ended March 31 2021 the Standalone net income of Subex Inc. was ' 9547lakhs as against ' 10290 lakhs in the previous year and the net profit of ' 534 lakhs asagainst a net gain of ' 1074 lakhs in the previous year.
As on March 31 2021 Subex (UK) Limited holds 8 common shares(7.41%) in the capital of Subex Americas Inc.
Subex Middle East (FZE) is a wholly owned subsidiary of SubexAssurance LLP For the year ended March 31 2021 the standalone net income of Subex MiddleEast (FZE) was ' 2374 lakhs as against ' 2433 lakhs in the previous year and net loss of' 67 lakhs as against a net profit of ' 15 lakhs in the previous year.
Subex Bangladesh Private Limited is a wholly owned subsidiaryof Subex Assurance LLP For the year ended March 31 2021 the standalone net income ofSubex Bangladesh Private Limited was ' 266 lakhs as against ' 382 lakhs and a net loss of' 57 lakhs as against a net profit of ' 11 lakhs.
SUBEX DIGITAL LLP
For the year ended March 31 2021 Subex Digital LLP earned a netincome of ' 1429 lakhs as against ' 882 lakhs in the previous year and a net loss of '2043 lakhs as against a net loss of ' 1989 lakhs in the previous year.
As at March 31 2021 Subex Limited held more than 99.99% of thecapital in Subex Digital LLP and the balance is held by Subex Assurance LLP
SUBEX TECHNOLOGIES LIMITED
Subex Technologies Limited is a wholly owned subsidiary of SubexLimited. For the year ended March 31 2021 Subex Technologies Limited incurred a net lossof ' 4 lakhs similar to net loss of ' 4 lakhs in the previous year.
SUBEX AMERICAS INC.
For the year ended March 31 2021 the standalone net income of SubexAmericas Inc. was ' 1024 lakhs as against ' 2459 lakhs in the previous year and a netloss was ' 10 lakhs as against a net profit of ' 664 lakhs in the previous year.
Subex Azure Holding Inc. is a wholly owned subsidiary of SubexAmericas Inc. There were no transactions during the year under review.
As on March 31 2021 Subex Limited holds 100 common shares (92.59%) inthe capital of Subex Americas Inc.
The above-mentioned numbers are as per the audited financial statementsof respective subsidiaries.
In accordance with Section 129(3) of the Companies Act 2013 theCompany has prepared consolidated financial statements of the Company and all itssubsidiary companies which forms part of the Annual Report. A statement containingsalient features of the financial statements of the subsidiaries of the Company in FormAOC 1 forms part of the annexure to the Standalone Financial Statements.
In accordance with third proviso of Section 136(1) of the CompaniesAct 2013 the Annual Report of the Company containing therein its standalone and theconsolidated financial statements has been placed on the website of the Company under thefollowing link https://www.subex.com/investors/ shareholder-services/.
Further as per the fourth proviso to the said Section audited AnnualAccounts of each of the subsidiary companies have also been placed on the website of theCompany under the following link https://www.subex.com/investors/shareholder- services/.Owing to the restrictions placed due to COVID-19 members are encouraged to inspect thesame electronically.
Your Company has not accepted any deposits from the public during theyear and there are no deposits which are remaining unclaimed or unpaid as at the end ofthe year and as such no amount of principal or interest was outstanding as on the dateof the Balance sheet.
11. EMPLOYEE STOCK OPTIONS SCHEMES
The Employee Stock Option schemes of the Company endeavor to provideincentives and retain employees who contribute to the growth of the Company. During theyear under review there has been no variation in the terms of the existing ESOP schemes.Additional details have also been disclosed under Note 33 to the standalone financialstatements which forms part of the Annual Report.
Details of the Company's Employee Stock Option Plans and a summarydisclosure in compliance with Companies (Share Capital and Debentures) Rules 2014 formspart of this report as "Annexure A". The details as required under theSecurities & Exchange Board of India (Share Based Employee Benefits) Regulations2014 are available on the Company's website under the following link https//www.subex.com/investors/ announcement-filing/ (click on Other Intimations).
EMPLOYEE STOCK OPTION PLAN-2018
The Company pursuant to resolutions passed by the Board and theShareholders dated June 26 2018 and July 31 2018 respectively had adopted the SubexEmployees Stock Option Scheme-2018 ("ESOP - 2018" or "Plan"). Thisscheme was formulated in accordance with the Securities & Exchange Board of India(Share Based Employee Benefits) Regulations 2014.
The Board authorized the Nomination & Remuneration Committee orsuch other person(s) as may be authorized by the Nomination & Remuneration Committeefor the superintendence and administration of the Plan. The ESOP Plan has been implementedthrough the Subex Employee Welfare & ESOP Benefit Trust "ESOP Trust" whichis authorized to acquire shares of the Company through secondary market for providing suchshare based payments to its employees. Total number of Options granted/to be granted underthe Scheme shall not exceed 5% (Five percent) of the paid- up equity capital as on March31 2018. The Nomination & Remuneration Committee of the Company in their meeting heldon February 01 2021 granted 1240500 options approved under ESOP - 2018 scheme to theeligible employees.
12. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
Details of Loans Guarantees or Investments covered under Section 186of the Companies Act 2013 are given in note numbers 30 & 31 to the StandaloneFinancial Statements.
13. MATERIAL CHANGES AND COMMITMENTS EFFECTING THE FINANCIAL POSITIONOF THE COMPANY BETWEEN THE END OF FINANCIAL YEAR AND DATE OF THE REPORT
There have been no material changes for the period between end of thefinancial year 2020-21 and the date of this report affecting the financial position ofthe Company.
14. CORPORATE GOVERNANCE
Your Company strongly believes that the spirit of Corporate Governancegoes beyond the statutory form. Sound Corporate Governance is a key driver of continuouscorporate 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 customers vendors and is committed to maintaining the highestlevel of transparency accountability and equity in its operations. It always strives tofollow the path of good governance through a broad framework of various processes.
Your Company has complied with the conditions of Corporate Governanceas stipulated under the SEBI (LODR) Regulations 2015 as amended from time to time. TheAuditor's certificate on compliance with respect to the same is annexed herewith as"Annexure B". In addition it has documented its internal policies in line withthe Corporate Governance guidelines.
15. MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion & Analysis as stipulated under Regulation34 of the SEBI (LODR) Regulations 2015 is presented in a separate section forming part ofthis Annual Report.
16. DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per Section 152 of the Companies Act 2013 at least two- thirds ofthe Directors shall be subject to retirement by rotation. One-third of such Directors mustretire from office at each Annual General Meeting "AGM" of the shareholders anda retiring Director is eligible for re-election. Accordingly Mr. Shiva Shankar NagaRoddam Whole-Time Director & COO retires by rotation and being eligible has offeredto be re-appointed at the 27th AGM.
Pursuant to the recommendations of the Nomination & RemunerationCommittee the Board
a) At its meeting held on May 11 2020 approved the re-appointment ofMr. Anil Singhvi in the capacity of a Non-Executive & Non-Independent Director witheffect from June 18 2020. His re-appointment was approved by the members at the 26thAGM of the Company held on September 25 2020. Mr. Singhvi continues to be the Chairman ofthe Company in the capacity of a Non-Executive & Non-Independent Director.
b) At its meeting held on February 07 2020 appointed Mr. ShivaShankar Naga Roddam as the Whole-Time Director & Chief Operating Officer for a term ofthree years subject to the approval of the members at the 26th AGM and themembers approved the said appointment at the 26th AGM of the Company . Furtherthe Board at its meeting held on Februa ry 01 2021 changed the employment agreement ofMr. Shiva Shankar Naga Roddam from Subex Assurance LLP to Subex Limited and subject to theapproval of the members at the 27th AGM revised the remuneration of Mr. ShivaShankar Naga Roddam with effect from April 01 2021.
c) At its meeting held on March 01 2021 subject to the approval ofthe members at the 27th AGM approved the re-appointment of Mr. Vinod KumarPadmanabhan as the Managing Director & CEO of the Company for a period of 3 years witheffect from April 01 2021.
The details regarding the familiarization program for IndependentDirectors is available on the website of the Company under the link https//www.subex.com/investors/shareholder-services/.
17. BOARD MEETINGS
During the year seven 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 dates on which meetings were heldare as follows:
|Board Meeting Number ||Date of Meeting |
|1/2020-21 ||May 11 2020 |
|2/2020-21 ||July 15 2020 |
|3/2020-21 ||August 10 2020 |
|4/2020-21 ||September 24 2020 |
|5/2020-21 ||November 09 2020 |
|6/2020-21 ||February 01 2021 |
|7/2020-21 ||March 01 2021 |
The details of the attendance of the Directors are provided in theReport on Corporate Governance.
18. 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 February 012021 carried out an annual performance evaluation of its own performance the Chairman andthe Directors individually as well as the evaluation of the working of its committees.The manner of evaluation has been explained in the Report on Corporate Governance.
19. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION POLICY OF THECOMPANY
The Policy on Appointment of Directors and the Remuneration Policy ofthe Company has been uploaded on the website of the Company https//www.subex.com/investors/shareholder- services/. The Details/Disclosures of Ratio ofRemuneration to each Director to the median employee's remuneration is enclosed herewithas "Annexure F".
20. AUDIT COMMITTEE
As on March 31 2021 the Audit Committee consisted of 4 (four)Directors as its members.
|Composition ||Category |
|Ms. Nisha Dutt (Chairperson) ||Independent Director |
|Mr. Anil Singhvi ||Non-Executive & Non-Independent Director |
|Ms. Poornima Prabhu ||Independent Director |
|Mr. George Zacharias ||Independent Director |
* Mr. Vinod Kumar Padmanabhan stepped down as a member of the Committeew.e.f. June 18 2020.
The role terms of reference authority and power of the AuditCommittee are in conformity with the provisions of the Companies Act 2013 and Regulation18 of the SEBI (LODR) Regulations 2015 (including amendments thereto). Further details ofthe Audit Committee including its reconstitution post the re-appointment of Mr. AnilSinghvi as a Non-Executive & Non-Independent Director have been provided in thereport on Corporate Governance.
There are no instances of frauds reported by auditors pursuant tosub-section (12) of Section 143 which are reportable to the Central Government.
M/s. S. R. Batliboi & Associates LLP Chartered AccountantsBengaluru (FRN 101049W/E300004) were appointed as the Statutory Auditors of the Companyfor a term of 5 years at the 21st AGM of the Company held on June 19 2015.Based on the recommendations of the Audit Committee the Board at its meeting held on May11 2020 approved the re-appointment of M/s. S. R. Batliboi & Associates LLP for aterm of 5 years from the conclusion of the 26th AGM upto the conclusion of the31st AGM and the said appointment was approved by the members at the 26thAGM of the Company.
There are no qualifications reservations adverse remarks ordisclaimers made by Statutory Auditors of the Company in the Audit Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013and the 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 Secretarial Audit Reportand the Annual Secretarial Compliance Report are annexed herewith as "AnnexureC".
The Secretarial Audit Report for the year ended March 31 2021 does notcontain any qualifications reservations or adverse remarks.
22. PARTICULARS OF EMPLOYEES
The particulars of employees required under Section 197 of theCompanies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is enclosed as "Annexure D" to this report.
23. BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as stipulated under Regulation 34 ofthe SEBI (LODR) Regulations 2015 is presented in a separate section forming part of thisAnnual Report.
24. 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 sparse resources and minimize waste.
As a software product Company the impact that the Company has on theenvironment from its own operations is relatively low when compared to companies in otherindustries. However the Company recognizes that it still has a role to play in reducingthe impact that global business has on the environment. Subex is committed to followingthe best practices to reduce utilization of power natural resources like water andlimited E-Waste disposal executed through government recognized agencies. Though Subexdoes not fall under the category of manufacturing products and services impacting theenvironment we implement few of the best practices with minimal investments through afive-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 ensuring continued savingsthrough this initiative.
As a result of the change in the address of the Registered office ofthe Company (addressed in point 39 of this report) the Company has reduced its energyconsumption and has added to its efforts of being eco-friendly. Suppliers delivering theproducts to Subex like lighting diesel generators etc abide by the guidelines laid outby the government.
Subex aims to reduce its impact on the environment by
i. Monitoring the level of water and energy used along with the wasteproduced.
ii. Targeting a reduction in the use of plastics electricity andwater along with an increase in amount of waste that is recycled/ reused etc.
iii. Increasing the awareness on environment safety and engagement ofemployees in such measures.
iv. Adopting sustainable practices designed to ensure the health andsafety of Subex's employees stakeholders and the environment.
v. Operating its business in compliance of applicable environmentallaws and regulations.
25. TECHNOLOGY ABSORPTION ADOPTION INNOVATION AND PRODUCT DEVELOPMENT
Subex is one of the first Product companies from India and is the firstProduct company from India in the Telecom domain.
The portfolio of products has contributed to the success in this domainand has also built a strong foundation to add value to our Customers independent of theeconomic and market conditions. The last few years have seen a rapid change intechnologies being leveraged and this has been further influenced by the DigitalTransformation of services and portfolio within our Customer base. Subex has a dedicatedteam to explore these new technologies which then contribute to innovations on theexisting Portfolio as well as creation of new Product Intellectual Property. The Productsdeveloped and released by this team influence our ability to compete and win while alsodelivering value to our Customers. Please refer the Management Discussion & Analysisfor further details on our products.
26. FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year 2020-21 total foreign exchange inflow and outflow ofthe Company is as follows
i) Foreign Exchange inflow ' 1482 lakhs (Previous Year ' 1082 lakhs)
ii) Foreign Exchange outflow ' 576 lakhs (Previous Year ' 366 lakhs)
27. CORPORATE SOCIAL RESPONSIBILITY
To enable contribution to the society and other stakeholders theCompany has constituted the Corporate Social Responsibility Committee (CSR Committee). Ason March 31 2021 the CSR Committee comprises of the following Directors as it members
|Composition ||Category |
|Mr. Anil Singhvi (Chairman) ||Non-Executive & Non-Independent Director |
|Ms. Nisha Dutt ||Independent Director |
|Mr. Vinod Kumar Padmanabhan ||Managing Director & CEO |
|Mr. Shiva Shankar Naga Roddam ||Whole-Time Director & COO |
Pursuant to the CSR Policy adopted by the Board the Company proposes to undertake suchactivities as may be useful and contributive in nature.
Particulars required to be disclosed pursuant to the Companies(Corporate Social Responsibility Policy) Rules 2014 (including amendments if any) aregiven in "Annexure G" to this report.
The CSR Committee charter and the CSR Policy of the Company areavailable on the website at the below link https//www.subex.com/investors/shareholder-services/.
SUBEX CHARITABLE TRUST
The Subex Charitable Trust ("SCT") extends the outlook ofSubex as a corporate entity into community service. SCT was set up to provide for welfareactivities for the under privileged and the needy in the society. SCT is managed bytrustees elected from among the employees of the Company. Please refer page 31 of theAnnual Report for details of the activities conducted during the year.
28. RISK MANAGEMENT POLICY & IMPLEMENTATION
The Risk Management Committee as required under Regulation 21 of theSEBI (LODR) Regulations 2015 has been constituted voluntarily by the Company. Accordingto Regulation 21 (5) of the said Regulations as on March 31 2021 the provisions of RiskManagement Committee shall be applicable to top 500 listed entities determined based onmarket capitalization.
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.
29. HUMAN RESOURCE MANAGEMENT
Detailed report on Human Resource management is given in the ManagementDiscussion and Analysis forming part of the Annual Report.
30. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
In accordance with the provision of Section 134(5)(e) of the CompaniesAct 2013 and as per the provisions of the SEBI (LODR) Regulations 2015 the Company hasan Internal Control System commensurate with the size scale and complexity of itsoperations.
Such Internal Financial Controls were found to be adequate for aCompany of this size. The controls are largely operating effectively since there has notbeen identification of any material weakness in the Company. The Directors have in theDirectors Responsibility Statement under paragraph (e) of the Section confirmed the sameto this effect. The Company has policies and procedures in place for ensuring proper andefficient conduct of its business the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand timely preparations reliable financial information. The Company has adoptedaccounting policies which are in line with Indian 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. In effect such compliance system was largely found to be adequateand operating effectively. The Directors have in the Directors Responsibility Statementunder paragraph (f) of the Section also confirmed the same to this effect.
The Internal Auditors monitor and evaluate the effectiveness andadequacy of internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company and its subsidiaries.Based on the report of Internal Auditors process owners undertake corrective action intheir respective areas and thereby strengthen the controls. Significant audit observationsand corrective actions thereon are presented to the Audit Committee of the Board .
Subex is certified for ISO 9001 2015 (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 Subex focused on additional security awareness programs andimprove the existing business continuity controls owing to the pandemic. Additionally wecontinued to identify and involve relevant stakeholders to review and align the processesto Subex's Business objectives.
31. VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has implemented a vigil mechanism policy to deal withinstances of fraud leakage of unpublished price sensitive information and mismanagementif any. The policy also provides for adequate safeguards against victimization of personswho use such mechanism and makes provision for direct access to the Chairperson of theAudit Committee in all cases. The details of the policy are posted on the website of theCompany under the link https //www.subex.com/investors/ shareholder-services/. There wereno complaints received during the year 2020-21.
32. POLICY ON SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE
The Company has zero tolerance towards sexual harassment at theworkplace and towards this end has adopted a policy in line with the provisions of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013and the Rules thereunder. All employees (permanent contractual temporary trainees) arecovered under the said policy. An Internal Complaints Committee (ICC) chaired by a seniorfemale employee of the Company has been set up to redress complaints received under thisAct.
During the financial year under review under review no complaints havebeen received by the Company.
33. 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.
34. 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 theDirectors had any pecuniary relationships of transactions vis-a-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 pursuant to the omnibus approval so granted isplaced 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. Thecompany has also entered into an arrangement with its Indian group entities wherein commoncosts pertaining to sales and business support functions are cross charged.
The Policy on Related party transactions as approved by the Board isuploaded on the Company's website under the link https//www.subex.com/investors/shareholder-services/.
Particulars of Contracts or Arrangements with Related parties referredto in Section 188(1) in Form AOC 2 is enclosed to this report as "Annexure E".
35. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
a) Pursuant to the approval of the Board of Directors at their meetingheld on February 07 2020 and the approval of the shareholders through Postal Ballot datedJune 25 2020 the NCLT Bengaluru Bench vide its Order dated September 23 2020approved the Scheme of Reduction of Capital of the Company by reducing the Face Value perequity share from ' 10 to ' 5.
b) Registrar of Companies 'ROC'- vide its Order dated August 10 2020imposed a penalty of ' 400000 under Section 203 (5) of the Companies Act 2013 on theCompany (' 200000) and the officers in default (CEO & MD - ' 100000 erstwhile CFO- ' 100000) for delay in appointment of Company Secretary for the period from June 152017- July 09 2018 (resulting in a delay in appointment by 216 days). The Company filedits adjudication application before the ROC Bengaluru Karnataka on October 09 2019pleading that the delay was purely by inadvertence and without any malafide intention. Thepenalty was paid by the Company and the officers and the details of the same were filedwith the ROC in Form INC-28 on September 25 2020 vide SRN R60492253. Apart from theaforesaid there were no significant and material orders passed by the Regulators/ Courtswhich would impact the going concern status of the Company and its future operations.
36. ANNUAL RETURN
A copy of the Annual Return of the Company for the Financial year2020-21 as required under Section 92 (3) of the Companies Act 2013 and Rule 12 of theCompanies (Management and Administration) Rules 2014 shall be placed on the Company'swebsitehttps //www.subex.com/investors/announcement-filing/ (click on Disclosures).
37. LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the year 2020-21 tothe Exchanges' where the Company's shares are listed i.e. the National Stock Exchange ofIndia Ltd ('NSE') and the BSE Ltd ('BSE').
38. MAINTENANCE OF COST RECORDS
Maintenance of cost records as specified by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013 is not applicable to theCompany as the Company operates out of a Special Economic Zone (SEZ).
39. SIGNIFICANT DEVELOPMENTS DURING THE YEAR
a) Change in address of Registered Office within local limits ofBengaluru City
The Board of Directors had on December 30 2020 approved the change inaddress of the Registered Office of the Company within local limits of Bengaluru City i.e.from RMZ Ecoworld Outer Ring Road Devarabisanahalli Bengaluru-560103 to PritechPark-SEZ Block-09 4th floor B Wing Survey No. 51 to 64/4 Outer Ring RoadBellandur Village Varthur Hobli Bengaluru-560 103. This change was with effect fromJanuary 04 2021.
b) Receipt of request letters from persons belonging to thePromoter/Promoter Group for reclassification of the category of their shareholding from'Promoter/Promoter Group' to 'Public'
The Board at its meeting held on February 01 2021 took note of therequest letters cum undertakings received from the below persons and approved the samesubject to the approval of the members of the Company and the regulatory authorities
|Sl. No ||Particulars ||Request for reclassification |
|1 ||Subash Menon (Promoter) ||Reclassification to the category of 'Public' |
|2 ||Sudeesh Yezhuvath (Promoter Group) || |
|3 ||Kivar Holdings Private Limited (Promoter Group) || |
Pursuant to the amendment in Regulation 31A of the SEBI (LODR)Regulations 2015 owing to the SEBI (LODR) (Second Amendment) Regulations 2021 dated May05 2021 the Company has to receive revised request letters from the members of the'Promoter/Promoter Group' for considering the request for re-classification.
40. DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provision of Section 134(3)(c) of the CompaniesAct 2013 the Board of Directors affirms
a) In the preparation of the annual accounts for the financial yearended March 31 2021 the applicable accounting standards have been followed along withproper explanation relating to 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 2021and of the profit of the Company for the year ended on that date
c) That proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d) That the accounts for the year ended March 31 2021 have beenprepared on a going concern basis;
e) That internal financial controls have been laid down to be followedby the Company and such internal financial controls were adequate and were operatingeffectively;
f) That systems to ensure compliance with the provisions of allapplicable laws were in place and such systems were adequate and operating effectively;
Your Directors thank the customers vendors investors shareholders'and bankers for their continued support during the year. We place on record ourappreciation for the support / co-operation extended by the various departments ofGovernment of India Government of Karnataka Central and State Government authoritiesparticularly SEZ authorities Ministry of Corporate Affairs Central Board of DirectTaxes Central Board of Indirect Taxes and Customs Banks the Ministry of Commerce andIndustry Ministry of Labour and Employment Reserve Bank of India the Securities andExchange Board of India the BSE Limited the National Stock Exchange of India Ltd theNational Securities Depository Limited the Central Depository Services (India) Limitedthe National Company Law Tribunal Bengaluru Bench and other State Government authoritiesand look forward to their support in all future endeavors.
Your Directors also wish to place on record their deep appreciation toSubexians at all levels for their hard work solidarity co-operation and support asthey are instrumental in your Company scaling new heights year after year.