Your Directors take pleasure in presenting the 26th Annual Report of theCompany on the business and operations together with the audited results for the yearended March 31 2020.
1. FINANCIAL RESULTS
The Company's financial performance for the year ended March 31 2020 is summarized asbelow:
(Rs in Lakhs)
|Particulars ||Consolidated || ||Standalone || |
| ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Total Revenue ||36498 ||34812 ||1079 ||1916 |
|Share of Profit/ (Loss) before exceptional items net ||- ||- ||1889 ||(1600) |
|Other Income ||563 ||101 ||202 ||10 |
|Finance Cost ||564 ||216 ||32 ||4 |
|Profit/ (Loss) before exceptional items and tax expense ||7996 ||4708 ||891 ||(2455) |
|Exceptional Items ||(31766) ||- ||(21361) ||- |
|Profit/ (Loss) before tax ||(23770) ||4708 ||(20470) ||(2455) |
|Tax expenses ||3145 ||2186 ||118 ||(2) |
|Profit/ (Loss) after tax ||(26915) ||2522 ||(20588) ||(2453) |
|Other comprehensive income ||(29) ||(428) ||(21) ||(3) |
|a) to be reclassified to profit or loss in subsequent periods ||5 ||(390) ||- ||- |
|b) not to be reclassified to profit or loss in subsequent periods ||(34) ||(38) ||(21) ||(3) |
|Total comprehensive income for the year ||(26944) ||2094 ||(20609) ||(2456) |
2. OVERVIEW AND RESULTS OF OPERATIONS
The spread of COVID-19 has severely impacted businesses around the globe. In manycountries including India there has been severe disruption to regular businessoperations due to lock-downs disruptions in transportation travel bans quarantinessocial distancing and other emergency measures.
The Company has considered internal and certain external sources of informationincluding economic forecasts budgets required to meet performance obligations and likelydelays on contractual commitments up to the date of approval of these financialstatements in determining the possible impact from the COVID-19 pandemic. The Company hasused the principles of prudence in applying judgements estimates and assumptions andbased on the current estimates the Company expects to fully recover the carrying amountof its assets. The impact of the global health pandemic may be different from thatestimated as at the date of approval of it's financial statements and the Company willcontinue to closely monitor any material changes to its assessment of economic impact ofthe COVID- 19 pandemic.
During the financial year ended March 31 2020 the total revenue on a standalone basiswas Rs 1079 lakhs as against the revenue for the previous year which was Rs 1916 lakhs.The Company has during the year under review incurred a loss of Rs 20588 lakhs as againsta loss of Rs 2453 lakhs in the previous year.
On a consolidated basis the total revenue stood at Rs 36498 lakhs as against Rs34812 lakhs during the previous year. The loss incurred for the financial year 2019-20 isRs 26915 lakhs as against a profit of Rs 2522 lakhs in the previous year.
The Directors have not proposed any dividend to be paid for the financial year 2019-20.
The Company does not propose to transfer amounts to the general reserve out of theamount available for appropriation. The total loss of Rs 26944 lakhs available with theCompany on a consolidated basis is proposed to be retained in the profit and loss account.
5. SHARE CAPITAL
As at March 31 2020 the authorized share capital of the Company was Rs 5900000000(Rupees Five hundred and ninety crores only) divided into 588040000 (Fifty-eight croreseighty lakhs and forty thousand only) equity shares of Rs 10 (Rupees Ten only) each and200000 (Two lakhs only) preference shares of Rs 98 (Rupees Ninety-eight only)each.
As at March 31 2020 the issued subscribed and paid-up share capital of the Companywas Rs 5620029350 (Rupees Five hundred and sixty two crores twenty nine thousand andthree hundred and fifty only) divided into 562002935 (Fifty six crores twenty lakhstwo thousand nine hundred and thirty five only) equity shares of Rs 10 (Rupees Ten only)each.
6. SCHEME OF REDUCTION OF SHARE CAPITAL
The Board of Directors at their meeting held on February 07 2020 approved the Schemefor Reduction of Capital under Section 66 & Section 52 of the Companies Act 2013. TheScheme is subject to approval of the shareholders Hon'ble National Company Law Tribunal("NCLT") Bengaluru and all other regulatory approvals.
Considering the future prospects of growth and value addition to the Company and itsShareholders it was proposed to re-align the relationship between its capital and assetsin accordance with Section 52 & Section 66 of the Companies Act 2013 read with theNational Company Law Tribunal (Procedure for reduction of share capital of Company) Rules
2016 and other applicable provisions of the Companies Act 2013 (to the extentapplicable) and subject to the consent of the Shareholders NCLT and other statutoryauthorities as and where applicable by writing-off the accumulated losses of Rs 3840109702reflecting in the unaudited financial statements of the Company as on December 31 2019against the paid-up share capital and Securities Premium Account balance of the Companyto have a rational structure which is commensurate with its remaining business and assets.
Hence the proposed Scheme which was approved by the Board of Directors of the Companyprovided for Reduction of equity share capital and securities premium account of theCompany in accordance with Section 52 & 66 of the Companies Act 2013.
The capital structure of the Company pre and post-scheme is reflected in the tablebelow:
| ||Pre-reduction || || ||Post-reduction || |
|Particulars ||No. of shares ||Amount (`) ||Particulars ||No. of shares ||Amount (`) |
|Authorised Share Capital || || || || || |
|Equity shares of face value Rs 10 each ||588040000 ||5880400000 ||Equity shares of face value Rs 5 each ||1176080000 ||5880400000 |
|Preference shares of face value `98 each ||200000 ||19600000 ||Preference shares of face value Rs 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 Rs 5 each ||562002935 ||2810014675 |
The below table reflects the pre-capital reduction and post-capital reduction balancesof Securities premium account and accumulated loss of the Company as at December 31 2019:
|Particulars ||Pre-reduction (`) ||Proposed reduction(`) ||Post-reduction (`) |
|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 2020 and 17/2020 datedApril 13 2020 ("MCA Circulars") in view of the current extraordinarycircumstances due to the COVID-19 pandemic requiring social distancing Companies areadvised to take all decisions requiring members' approval other than items of ordinarybusiness or business where any person has a right to be heard through themechanism of Postal Ballot/ e-voting in accordance with the provisions of the Act andRules made thereunder without holding a general meeting that requires physical presenceof members at a common venue.
Pursuant to Section 110 of the Companies Act 2013 and the Rules provided thereunderthe Company proposed passing of resolutions by Postal Ballot for obtaining the consent ofthe shareholders for the Scheme for reduction of Capital.
The MCA clarified that for Companies that are required to provide e-voting facilityunder the Act while they are transacting any business(es) only by Postal Ballot upto June30 2020 or till further orders whichever is earlier the requirements provided in Rule20 of the Rules as well as the framework provided in the MCA Circulars will be applicablemutatis mutandis. In connection with this the Company had sent the Postal Ballot
Notice dated May 22 2020 by email to all its members who have registered their emailaddresses with the Company or depository/ depository participants and the communication ofassent/ dissent of the members took place through remote e-voting system.
The e-voting period for the Postal Ballot commenced on Wednesday May 27 2020 from9.00 a.m. (IST) and ended on Thursday June 25 2020 at 5.00 p.m (IST). The Companyappointed Mr. Pramod S.M. (Membership No. 7834 and Certificate of Practice No.13784)Partner BMP & Co. LLP Practicing Company Secretaries as the Scrutinizer and Mr.Biswajit Ghosh (FCS Membership No. 8750 and Certificate of Practice No. 8239) PartnerBMP & Co. LLP Practicing Company Secretaries as an alternate scrutinizer to Mr.Pramod S.M. for conducting the meeting only through the electronic voting process in afair and transparent manner. Please referhttps://www.subex.com/investors/capital-reduction/ for the Postal Ballot notice and theprocedure for e-voting.
The Resolution for reduction of the share capital of the Company was approved withrequisite majority and the results were displayed on the website of the Company athttps://www.subex.com/investors/capital-reduction/ and necessary disclosures were made tothe Stock Exchanges. Subsequently the Company has made an application before the Hon'bleNational Company Law Tribunal Bengaluru Bench Bengaluru seeking their approval to theScheme.
7. SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards as amended from timeto time.
Subex is a pioneer in the space of Digital Trust providing solutions for 75% of theworld's top 50 telcos. Founded around the time when video telephony was launched Subexhas been witnessing the evolution of mobile technology ever since. Today we areconsultants 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"and complements them through its newer solutions such as IoT Security Digital IdentityManagement and Anomaly Detection "Digital Business". Subex also offers scalableManaged Services and Business Consulting services. Being truly a global company it hasmore than 300 installations across 90+ countries.
During the year Subex Secure' was ranked as the "Top Security Platform ofthe Year" by Compass Intelligence.
Compass Intelligence a market acceleration research and consulting firm awards honorto top companies products and technology solutions in mobile IoT and emergingtechnology industries. Subex Secure the IoT security solution of choice for a range ofindustries from smart cities oil and gas plants and critical infrastructure entities totelecom operators and connected cars and has been at the forefront of IoT securityinnovation.
9. SUBSIDIARIES (WHOLLY OWNED AND OTHER SUBSIDIARIES)
As on March 31 2020 the Company has 10 subsidiaries.
SUBEX ASSURANCE LLP AND ITS SUBSIDIARIES
For the year ended March 31 2020 Subex Assurance LLP earned a net income of Rs 33006lakhs as against net income of Rs 30144 lakhs in the previous year and a net loss of Rs12930 lakhs (including exceptional loss of Rs 16808 lakhs) as against a net profit of Rs165 lakhs in the previous year.
As at March 31 2020 Subex Limited held 99.99 % of the capital in Subex Assurance LLPand the balance is held by Subex Digital LLP.
Subex (UK) Limited is a wholly owned subsidiary of Subex Assurance LLP. For the yearended March 31 2020 the Standalone net income of Subex (UK) Limited was Rs 21309 lakhsas against Rs 19390 lakhs in the previous year and a net gain of Rs 1113 lakhs asagainst Rs 1370 lakhs in the previous year.
Subex (Asia Pacific) Pte. Limited is a wholly owned subsidiary of Subex (UK) Limited.For the year ended March 31 2020 the Standalone net income of Subex (Asia Pacific) Pte.Limited was Rs 3064 lakhs as against Rs 3952 lakhs in the previous year and a net gainof Rs 19 lakhs as against a net gain was Rs 18 lakhs in the previous year.
Subex Inc. is a wholly owned subsidiary of Subex (UK) Limited. For the year ended March31 2020 the Standalone net income of Subex Inc. was Rs 10290 lakhs as against Rs 9854lakhs in the previous year and the net gain of Rs 1074 lakhs as against a net gain of Rs117 lakhs in the previous year.
As on March 31 2020 Subex (UK) Limited holds 8 common shares (7.41%) in the capitalof Subex Americas Inc.
Subex Middle East (FZE) is a wholly owned subsidiary of Subex Assurance LLP. For theyear ended March 31 2020 the standalone net income of Subex Middle East (FZE) is Rs 2433lakhs as against Rs 1391 lakhs in the previous year and net gain of Rs 15 lakhs asagainst a net gain of Rs 60 lakhs in the previous year.
Subex Bangladesh Private Limited a wholly owned subsidiary of Subex Assurance LLP wasincorporated on February 13 2020. For the year ended March 31 2020 the standalone netincome of Subex Bangladesh Private Limited is Rs 382 Lakhs and net gain of Rs 11 lakhs.
SUBEX DIGITAL LLP
For the year ended March 31 2020 Subex Digital LLP earned a net income of Rs 882lakhs as against Rs 438 lakhs in the previous year and a net loss of Rs 1989 lakhs asagainst Rs 1765 lakhs in the previous year.
As at March 31 2020 Subex Limited held more than 99.99% of the capital in SubexDigital LLP and the balance is held by Subex Assurance LLP.
SUBEX TECHNOLOGIES LIMITED
Subex Technologies Limited is a wholly owned subsidiary of Subex Limited. For the yearended March 31 2020 Subex Technologies Limited earned a net loss of Rs 4 lakhs asagainst a net loss of Rs 4 lakhs in the previous year.
SUBEX AMERICAS INC.
For the year ended March 31 2020 the standalone net income of Subex Americas Inc. isRs 2459 lakhs as against Rs 970 lakhs in the previous year and a net profit was Rs 664lakhs as against a net profit of Rs 96 lakhs in the previous year.
Subex Azure Holding Inc. is a wholly owned subsidiary of Subex Americas Inc. Therewere no transactions during the year under review.
As on March 31 2020 Subex Limited holds 100 common shares (92.59%) in the capital ofSubex Americas Inc.
The above-mentioned numbers are as per the audited financial statements of respectivesubsidiaries.
In accordance with Section 129(3) of the Companies Act 2013 the Company has preparedconsolidated financial statements of the Company and all its subsidiary companies whichforms part of the Annual Report. A statement containing salient features of the financialstatements of the subsidiaries of the Company in Form AOC 1 forms part of the annexure tothe Standalone Financial Statements.
In accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial statements has been placed on the website of the Company under the followinglink https://www.subex.com/investors/ shareholder-services/.
Further as per the fourth proviso to the said Section audited Annual Accounts of eachof the subsidiary companies have also been placed on the website of the Company under thefollowing link https://www.subex.com/investors/shareholder-services/. Owing to therestrictions placed due to COVID-19 members are encouraged to inspect the sameelectronically.
Your Company has not accepted any deposits from the public during the year and thereare no deposits which are remaining unclaimed or unpaid as at the end of the year and assuch no amount of principal or interest was outstanding as on the date of the Balancesheet.
11. EMPLOYEE STOCK OPTIONS SCHEMES
All the schemes endeavor to provide incentives and retain employees who contribute tothe growth of the Company. During the year under review there has been no variation inthe terms of ESOP schemes. Additional details have also been disclosed under Note 34 tothe standalone financial statements which forms part of the Annual Report.
Details of the Company's Employee Stock Option Plans and a summary disclosure incompliance with Companies (Share Capital and Debentures) Rules 2014 forms part of thisreport as "Annexure A". The details as required under the Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014 are available onthe Company's website at https://www.subex.com/ (click oninvestors/announcement-filing/other-intimations).
a. EMPLOYEE STOCK OPTION PLAN-2005
Under this scheme an initial corpus of 500000 options was created for grant to theeligible employees with each option convertible into one fully paid-up equity share of Rs10/-. This scheme was formulated in accordance with the Securities and Exchange Board ofIndia (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999.The corpus of the scheme was further enhanced by 1500000 options during the financialyear 2007-08. The Company obtained the requisite in-principle approvals from the stockexchanges for the listing of equity shares arising out of exercise of options grantedunder the scheme.
As on March 31 2020 there are no outstanding options under the Scheme.
b. EMPLOYEE STOCK OPTION PLAN-2018
The Company pursuant to resolutions passed by the Board and the Shareholders dated June26 2018 and July 31 2018 respectively had adopted the Subex Employees Stock OptionScheme-2018 ("ESOP 2018" or "Plan"). This scheme was formulatedin accordance with the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014.
The Board authorized the Nomination & Remuneration Committee or such otherperson(s) as maybe authorised by the Nomination & Remuneration Committee for thesuperintendence and administration of the Plan. The ESOP Plan has been implemented throughthe ESOP Trust which is authorized to acquire shares of the Company through secondarymarket for providing such share based payments to its employees. Total number of Optionsgranted/to be granted under the Scheme shall not exceed 5% (Five percent) of the paid- upequity capital as on March 31 2018.
The Nomination & Remuneration Committee of the Company in their meeting held onFebruary 07 2020 granted 12800000 options approved under ESOP 2018 scheme to theeligible employees. Total options granted till March 31 2020 under the said Plan are23450000.
12. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
Details of Loans Guarantees or Investments covered under Section 186 of the CompaniesAct 2013 are given in note number 33 (iv) to the Standalone Financial Statements.
13. MATERIAL CHANGES AND COMMITMENTS EFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN THE END OF FINANCIAL YEAR AND DATE OF THE REPORT.
Pursuant to the Company's application under Regulation 37 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 ("SEBI (LODR)Regulations 2015") seeking observation letters of the Stock Exchanges on theproposed scheme of Reduction of Share Capital BSE Ltd (Designated Stock Exchange) andNational Stock Exchange of India Ltd issued observation letters dated May 20 2020 and May21 2020 respectively to the proposed scheme of Reduction as stated under point 6 ofthis Report. Pursuant to the provisions of Section 110 of the Companies Act 2013 readwith the Companies (Management and Administration) Rules 2014 and in terms of theMinistry of Corporate Affairs "MCA" General Circular No's 14/2020 dated April08 2020 and 17/2020 dated April 13 2020 the Notice of Postal Ballot dated May 22 2020was made available to all members through emails only. The period for voting on theSpecial Resolution pertaining to the Reduction of Share Capital of the Company commencedon May 27 2020 and ended on June 25 2020. Apart from the aforestated there have been nomaterial changes for the period between end of the financial year 2019-20 and the date ofthis report affecting the financial position of the Company.
14. CORPORATE GOVERNANCE
Your Company strongly believes that the spirit of Corporate Governance goes beyond thestatutory form. Sound Corporate Governance is a key driver of sustainable corporate growthand long-term value creation for the stakeholders and protection of their interests. Itendeavors to meet the growing aspirations of all stakeholders including shareholdersemployees and customers and is committed to maintaining the highest level of transparencyaccountability and equity in its operations. It always strives to follow the path of goodgovernance through a broad framework of various processes.
Your Company has complied with the conditions of Corporate Governance as stipulatedunder the SEBI (LODR) Regulations 2015 as amended from time to time. The Auditor'scertificate on compliance with respect to the same is annexed herewith as "AnnexureB". In addition it has documented its internal policies in line with the CorporateGovernance guidelines.
15. MANAGEMENT DISCUSSION & ANALYSIS
The Management Discussion & Analysis as stipulated under Regulation 34 of the SEBI(LODR) Regulations 2015 is presented in a separate section forming part of this AnnualReport.
16. DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per Section 152 of the Companies Act 2013 at least two-third of the Directorsshall be subject to retirement by rotation. One-third of such Directors must retire fromOffice at each Annual General Meeting "AGM" of the shareholders and a retiringDirector is eligible for re-election. Accordingly Mr. Vinod Kumar Padmanabhan ManagingDirector & CEO retires by rotation and being eligible has offered to be re-appointedat the 26th AGM.
Pursuant to the recommendations of the Nomination & Remuneration Committee theBoard at its meeting held on May 13 2019 appointed Mr. George Zacharias as an AdditionalIndependent Director of the Company to hold Office until the date of the 25thAGM. His appointment for a period of five years was approved by the members at the 25thAGM of the Company held on July 04 2019. Mr. George Zacharias has over 30 years ofdiverse and successful work experience. He has worked at Grindwell Norton Madura CoatsThreads Madura Garments Sify Ltd and Yahoo! India. He was also the co-founder and CEO of7Strata Inc. and Chief Strategy Officer Mindtree. He has been on the Board of InternetCompanies including CricInfo and Refco-Sify Securities. Having served on the Board ofseveral Companies he was exempted from taking the online proficiency self-assessment testconducted by the Indian Institute of Corporate Affairs (IICA) as specified under Section150 of the Companies Act 2013.
Pursuant to the recommendations of the Nomination & Remuneration Committee theBoard
a) At its meeting held on February 07 2020 appointed Mr. Shiva Shankar NagaRoddam as the Whole-Time Director & Chief Operating Officer for a term of three yearssubject to the approval of the members at the 26th AGM.
b) At its meeting held on February 07 2020 approved the re-appointment of Ms.Nisha Dutt as an Independent Directors for a further period of 5 years with effect fromMarch 25 2020. Her re-appointment is being placed before the members for their approvalat the 26th AGM.
c) At its meeting held on May 11 2020 approved the re-appointment of Mr. AnilSinghvi in the capacity of a Non-Executive & Non-Independent Director with effectfrom June 18 2020. His re-appointment is being placed before the members for theirapproval at the 26th AGM.
Mr. Singhvi will continue as the Chairman of the Company in the capacity of aNon-Executive & Non-Independent Director.
The details regarding the familiarization program for Independent Directors isavailable on the website of your Company under the linkhttps://www.subex.com/investors/shareholder-services/.
17. BOARD MEETINGS
During the year six Board Meetings were convened and held. The intervening gap betweenthe meetings was within the period prescribed under the Companies Act 2013 and the SEBI(LODR) Regulations 2015. The dates on which meetings were held are as follows:
|Board Meeting Number ||Date of Meeting |
|1/2019-20 ||May 13 2019 |
|2/2019-20 ||August 12 2019 |
|3/2019-20 ||October 11 2019 |
|4/2019-20 ||November 08 2019 |
|5/2019-20 ||January 06 2020 |
|6/2019-20 ||February 07 2020 |
The details of the attendance of the Directors are provided in the Report on CorporateGovernance.
18. PERFORMANCE EVALUATION
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (LODR) Regulations 2015 the Board at its meeting held on February 07 2020 carriedout an annual performance evaluation of its own performance Chairman and the Directorsindividually as well as the evaluation of the working of its committees. The manner ofevaluation has been explained in the Report on Corporate Governance.
19. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION POLICY OF THE COMPANY
The Policy on Appointment of Directors and the Remuneration Policy of the Company hasbeen uploaded on the website of the Companyhttps://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 2020 the Audit Committee consisted of 5 (five) Directors as itsmembers.
|Composition ||Category |
|Mr. Anil Singhvi (Chairman) ||Independent Director |
|Ms. Nisha Dutt ||Independent Director |
|Ms. Poornima Prabhu ||Independent Director |
|Mr. Vinod Kumar Padmanabhan ||Managing Director & CEO |
|Mr. George Zacharias * ||Independent Director |
* Mr. George Zacharias was inducted into the Committee w.e.f February 07 2020.
The role terms of reference 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 including amendments thereon. Further details of the AuditCommittee including its reconstitution post the re-appointment of Mr. Anil Singhvi as aNon-Executive & Non-Independent Director have been provided in the report onCorporate Governance.
There are no instances of frauds reported by auditors pursuant to sub-section (12)of_Section 143 which are reportable to the Central Government.
M/s. S. R. Batliboi & Associates LLP Chartered Accountants Bengaluru (FRN101049W/E300004) were appointed as the Statutory Auditors of the Company for a term of 5years at the 21st AGM of the Company held on June 19 2015. Based on therecommendations of the Audit Committee the Board at its meeting held on May 11 2020approved the re-appointment of M/s. S. R. Batliboi & Associates LLP for a term of 5years from the conclusion of the ensuing 26th AGM to be held on September 252020 upto the conclusion of the 31st AGM.
There are no qualifications reservations adverse remarks or disclaimers made byStatutory Auditors of the Company in the Audit Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. V Sreedharan & Associates a firm of Company Secretaries in practice toundertake the Secretarial Audit of the Company. The Secretarial Audit Report and theAnnual Secretarial Compliance Report are annexed herewith as "Annexure C".
The Secretarial Audit Report for the year ended March 31 2020 does not contain anyqualifications reservations or adverse remarks.
22. PARTICULARS OF EMPLOYEES
The particulars of employees required under Section 197 of the
Companies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 have not been provided as none of the employees of the Companydraw remuneration in accordance with the limits prescribed under the said Rules. Hence thedetails of the top 10 (ten) employees under the said Rules have not been stated.
23. BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as stipulated under Regulation 34 of the SEBI (LODR)Regulations 2015 is presented in a separate section forming part of this Annual Report.
24. CONSERVATION OF ENERGY
Your Company is committed to the continual development of its products in a sustainedenvironment helping its customers to operate their businesses more efficiently andenabling them to reduce their use of scarce resources and minimize waste.
As a software product Company the impact that the Company has on the environment fromits own operations is relatively low when compared to companies in other industries.However the Company recognizes that it still has a role to play in reducing the impactthat global business has on the environment. Subex is committed and targets towardsfollowing the best practices to reduce utilization of power natural resources like waterand limited E-Waste disposal executed through government recognized agencies. ThoughSubex does not fall under the category of manufacturing products and services impactingthe environment 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.
Suppliers delivering the products to Subex regarding lighting diesel generators etcabide by the guidelines laid out by the government.
Subex aims to reduce its impact on the environment by:
i. Monitoring the level of water and energy used along with the waste produced.
ii. Targeting a reduction in the use of water and energy reduction in waste along withan increase in amount of waste that is recycled/ reused etc.
iii. Increasing the awareness on environment safety and engagement of employees.
iv. Adopting sustainable practices designed to ensure the health and safety of Subex'semployees stakeholders and the environment.
v. Operating its business in compliance of environmental laws and regulations.
25. TECHNOLOGY ABSORPTION ADOPTION INNOVATION AND PRODUCT DEVELOPMENT
Subex is one of the first Product companies from India and is the first Product companyfrom India in the Telecom domain.
The portfolio of products has contributed to the success in this domain and has alsobuilt a strong foundation to add value to our Customers independent of the economic andmarket conditions. The last few years have seen a rapid change in technologies beingleveraged and this has been further influenced by the Digital Transformation of servicesand portfolio within our Customer base. Subex has a dedicated team to explore these newtechnologies which then contribute to innovations on the existing Portfolio as well ascreation of new Product Intellectual Property. The Products developed and released by thisteam influence our ability to compete and win while also delivering value to ourCustomers.
26. FOREIGN EXCHANGE EARNINGS AND OUTGO
During the year 2019-20 total foreign exchange inflow and outflow of the Company is asfollows:
i) Foreign Exchange earnings Rs 1082 lakhs (Previous Year Rs 2178 lakhs) ii)Foreign Exchange outgo Rs 366 lakhs (Previous Year Rs 678 lakhs)
27. CORPORATE SOCIAL RESPONSIBILITY
To enable contribution to society and other stakeholders the Company has constitutedthe Corporate Social Responsibility Committee (CSR Committee) comprising of the followingDirectors as on March 31 2020:
|Composition ||Category |
|Mr. Anil Singhvi (Chairman) ||Independent Director |
|Mr. Vinod Kumar Padmanabhan ||Managing Director & CEO |
|Ms. Nisha Dutt ||Independent Director |
|Mr. Shiva Shankar Naga Roddam^ ||Whole-Time Director & COO |
^Mr. Shiva Shankar Naga Roddam was inducted into the Committee w.e.f February 07 2020.
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 SocialResponsibility Policy) Rules 2014 are given in "Annexure G" to the Board'sreport.
The CSR Committee charter and the CSR Policy of the Company are available on thewebsite at the below link https://www. subex.com/investors/shareholder-services/.
SUBEX CHARITABLE TRUST
Subex Charitable Trust ("SCT") extends the outlook of Subex as a corporateentity into community service. SCT was set up to provide for welfare activities for theunder privileged and the needy in the society. SCT is managed by trustees elected amongstthe employees of the Company. The details of the activities conducted during the yearhave been provided in a separate section in this Annual Report as "Annexure G "
28. RISK MANAGEMENT POLICY & IMPLEMENTATION
The Risk Management Committee as required under Regulation 21 of the SEBI (LODR)Regulations 2015 has been constituted voluntarily by the Company. According to Regulation21 (5) of the said Regulations the provisions of Risk Management Committee shall beapplicable to top 500 listed entities determined on the basis of market capitalization.
The Company has developed and adopted a Risk Management Policy. This policy identifiesall perceived risks which might impact the operations and on a more serious level alsothreaten the existence of the Company. Risks are assessed department wise such asfinancial risks information technology related risks legal risks accounting fraud etc.The Management also ensures that the Company is taking appropriate measures to achieveprudent balance between risk and reward in both ongoing and new business activities.
29. HUMAN RESOURCE MANAGEMENT
Detailed report on Human Resource management is given in the Management Discussion andAnalysis 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 Companies Act 2013 and asper the provisions of the SEBI (LODR) Regulations 2015 the Company has an InternalControl System commensurate with the size scale and complexity of its operations. SuchInternal Financial Controls were found to be adequate for a Company of this size. Thecontrols are largely operating effectively since there has not been identification of anymaterial weakness in the Company. The Directors have in the Directors ResponsibilityStatement under paragraph (e) of the Section confirmed the same to this effect. TheCompany has policies and procedures in place for ensuring proper and efficient conduct ofits business the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and timely preparationsreliable financial information. The Company has adopted accounting policies which are inline with Indian Accounting Standards ("Ind AS").
Pursuant to the provisions of the Section 134(5)(f) of the Act the Company during theyear devised proper systems to ensure compliance with the provisions of all applicablelaws. In effect such compliance system was largely found to be adequate and operatingeffectively. The Directors have in the Directors Responsibility Statement under paragraph(f) of the Section also confirmed the same to this effect.
The Internal Auditors monitor and evaluate the efficacy and adequacy of internalcontrol 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 9001:2015 (Quality Management System) and ISO 27001:2013(Information Security Management System). Internal audits are conducted periodically forprojects and support functions to adhere to these international standards. These auditsare conducted across Bengaluru UK and US locations to ensure processes are followed toprovide a better customer experience. Summary of the audits are shared across organizationto help understand strengths and weaknesses in the system. People involvement inorganization process initiatives is one that approaches towards achieving bettercompliance standardizing activities to consistently achieve better customer satisfaction.
This year Subex continued to focus on reviews and updates on processes thereby aligningthe projects to the current organization structure. Identification and Involvement ofprocess owners to review processes and make it relevant and align it to the organization.Some of the requirements which were specific to customer were customised with auditsconducted for some of the accounts.
31. VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has implemented a vigil mechanism policy to deal with instances of fraudleakage of unpublished price sensitive information and mismanagement if any. The policyalso provides for adequate safeguards against victimization of persons who use suchmechanism and makes provision for direct access to the chairperson of the Audit Committeein all cases. The details of the policy are posted on the website of the Company under thelink https://www.subex.com/investors/ shareholder-services/. There was 1 (one) complaintreceived during the year 2019-20 and the same was investigated and resolved within thetimelines stipulated under the policy.
32. POLICY ON SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE
The Company has zero tolerance towards sexual harassment at the workplace and towardsthis end has adopted a policy in line with the provisions of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rulesthereunder. All employees (permanent contractual temporary trainees) are covered underthe said policy. An Internal Complaints Committee (ICC) chaired by a senior femaleemployee of the Company has been set up to redress complaints received under this Act.
During the financial year under review no complaints have been received by theCompany.
33. DECLARATION FROM INDEPENDENT DIRECTORS
All Independent Directors have given declarations under Section 149 (7) to the effectthat they meet the criteria of Independence as laid down under Section 149(6) of theCompanies Act 2013.
34. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with its PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large. Further none of the Directors had anypecuniary relationships of transactions vis--vis the Company.
All related party transactions are placed before the Audit Committee and the Board forapproval. Prior omnibus approval of the Audit committee is obtained for transactions whichare of a foreseen and repetitive nature. A statement giving details of all related partytransactions entered pursuant to the omnibus approval so granted is placed before theAudit Committee and the Board of Directors for their review on a quarterly basis.
The Company has entered into sub-contracting arrangements with its subsidiaries basedon transfer pricing methodology for development and enhancement of its products as wellas marketing of its products by the subsidiaries across locations._ The Company has alsoentered into marketing arrangements with its subsidiaries wherein there is a cross-chargedone by the subsidiaries towards its efforts for the same.
The Policy on Related party transactions as approved by the Board is uploaded on theCompany's website under the link https://www.subex.com/investors/shareholder-services/
Particulars of Contracts or Arrangements with Related parties referred to in Section188(1) in Form AOC 2 is enclosed to this report as "Annexure E".
35. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
During the year the Company entered into settlement agreements with the former MD& CEO and former COO of the Company in respect of long drawn litigations whereincertain claims were made against the Company. The Company had also made counter claims onthe ex-Directors including recovery of excess managerial remuneration and other advances.The Company contested these litigations vigorously during the arbitrations and filedchallenge petitions against the Arbitration Awards before the Hon'ble City Civil Courts.As the litigations were ongoing for a period of more than six years and keeping in viewthe mounting litigation costs accumulating interest charges (on the Arbitrations Awards)and management bandwidth spent on this matter the Company consented to settle andconclude the ongoing litigations. In terms of the settlement agreements theCompany paid an amount of Rs 820 lakhs (net of Rs 234 lakhs recoverable from such ex-employees).Accordingly the aforesaid litigation was amicably settled. Apart from the aforesaidthere were no significant and material orders passed by the Regulators/ Courts which wouldimpact the going concern status of the Company and its future operations.
36. EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in form MGT-9 required under Section 92 (3) of theCompanies Act 2013 and Rule 12 of the Companies (Management and Administration) Rules2014 is enclosed as "Annexure D" and shall be placed along with the AnnualReturn on the Company's website https://www.subex. com/investors/shareholder-services/.
37. LISTING WITH STOCK EXCHANGES
The Company has paid the Annual Listing Fees for the year 2019-20 to the Exchanges'where the Company's shares are listed i.e. the National Stock Exchange of India Ltd(NSE') and BSE Ltd (BSE').
38. MAINTENANCE OF COST RECORDS
Maintenance of cost records as specified by the Central Government under sub-section(1) of Section 148 of the Companies Act 2013 is not applicable to the Company as theCompany operates out of a Special Economic Zone (SEZ) .
39. DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provision of Section 134(3)(c) of the Companies Act 2013 theBoard of Directors affirms:
a) In the preparation of the annual accounts for the financial year ended March 312020 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) That the accounting policies have been selected and applied consistently and it hasmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of Affairs of the Company as at March 31 2020 and of the loss of theCompany for the year ended on that date;
c) That proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) That the accounts for the year ended March 31 2020 have been prepared on a goingconcern basis;
e) That internal financial controls have been laid down to be followed by the Companyand such internal financial controls were adequate and were operating effectively;
f) That systems to ensure compliance with the provisions of all applicable laws were inplace and such systems were adequate and operating effectively;
Your Directors thank the customers vendors investors shareholders' and bankers fortheir continued support during the year. We place on record our appreciation for thesupport / co-operation extended by the various departments of Government of IndiaGovernment of Karnataka Central and State Government authorities particularly SEZauthorities Ministry of Corporate Affairs Central Board of Direct Taxes Central Boardof Indirect Taxes and Customs the Ministry of Commerce and Industry Ministry of Labourand Employment Reserve Bank of India the Securities and Exchange Board of India BSELimited National Stock Exchange of India Ltd National Securities Depository LimitedCentral Depository Services (India) Limited and other State Govertment authorities andlook forward to their support in all future endeavors.
Your Directors also wish to place on record their deep appreciation to Subexians at alllevels for their hard work solidarity co-operation and support as they areinstrumental in your Company scaling new heights year after year.
|For Subex Limited ||For Subex Limited |
|Anil Singhvi ||Vinod Kumar Padmanabhan |
|Chairman Non-Executive & Non-Independent Director ||Managing Director & CEO |
|DIN:00239589 ||DIN:06563872 |
|Place: Mumbai ||Place: Bengaluru |
|August 10 2020. ||August 10 2020. |