The Board of Directors ("Board") is pleased to present the Nineteenth AnnualReport and the Audited Financial Statement of the Xchanging Solutions Limited("Company") for the financial year ended March 31 2020.
A. FINANCIAL RESULTS
The highlights of standalone and consolidated financial results of the Company for thefinancial year ended March 31 2020 and March 31 2019 are as under:
(INR in Lakhs)
|PARTICULARS ||STANDALONE ||CONSOLIDATED |
| ||For the Financial year ended Mar 31 2020 ||For the Financial year ended Mar 31 2019 ||For the Financial year ended Mar 31 2020 ||For the Financial year ended Mar 31 2019 |
|Total Income ||5838 ||6405 ||19494 ||19865 |
|Total Expenditure ||3205 ||3974 ||13565 ||14185 |
|Profit before Interest Depreciation and Tax ||2710 ||2469 ||6073 ||5728 |
|Depreciation & Amortization ||77 ||37 ||144 ||47 |
|Finance Costs ||11 ||1 ||13 ||1 |
|Profit / (Loss) before Tax ||2633 ||2431 ||5929 ||5680 |
|Income Tax (including deferred tax) ||364 ||784 ||459 ||1009 |
|Net Profit / (Loss) after Tax ||2269 ||1647 ||5470 ||4671 |
|Other Comprehensive Income/(Expenditure) ||3 ||25 ||818 ||293 |
|Total Comprehensive Income/(Expenditure) ||2272 ||1672 ||6288 ||4964 |
|Earnings/(Loss) per share Rs. ||2.04 ||1.48 ||4.91 ||4.19 |
B. REVIEW OF OPERATIONS
During the financial year ended March 31 2020 the consolidated income of the Companywas Rs.19494/- Lakhs as against Rs. 19865/- Lakhs during the previous year ended March31 2019. At a standalone level the total income of the Company for the financial yearended March 31 2020 amounted to Rs.5838/- Lakhs compared to Rs. 6405/- Lakhs during theprevious year ended March 31 2019.
C. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report for the financial year ended March 31 2020as stipulated under Regulation 34(2)(e) of the SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 ("Listing Regulations") is presented in aseparate section and forms an integral part of this Report.
The Board does not recommend a dividend.
E. TRANSFER TO RESERVES
During the financial year under review the Company has not transferred any amount tothe General Reserve.
F. SUBSIDIARY COMPANIES
Your Company has 3 (three) direct subsidiaries and 2 (two) step down subsidiaries forthe financial year ended March 31 2020.
During the period under review the Board of the Company had approved reduction ofshare capital of the Xchanging Solutions (Europe) Limited ("XSEL") wholly ownedsubsidiary from 2664278 divided into 2664278 shares of 1 each to 1 divided into1 share of 1 each. Pursuant to Company's approval XSEL reduced its share capital to 1share of 1 each on May 15 2019.
On May 20 2019 XSEL declared and paid dividend to the Company. The Board of Directorsof the Company approved liquidation of XSEL on May 23 2019 and the liquidation is stillunder process.
Except as mentioned above during the financial year ended March 31 2020 under reviewthere have been no material changes in the business of the subsidiaries. In terms ofSection 129(3) of the Companies Act 2013 (Act') the Company has prepared astatement containing the salient features of the Financial Statement of subsidiaries inthe prescribed Form AOC-1 which is attached to the Financial Statements of the Company.
The Financial Statements of Subsidiary Companies are being uploaded on website of theCompany http:// www.xchanging.com/investor-relations/xsl-content for inspection by theshareholders. Any member desirous of obtaining a copy of the said financial statements maywrite to the Company at its Registered Office. The financial statement including theconsolidated financial statement and all other documents required to be attached with thisreport have been uploaded on to the website of your Company viz.http://www.xchanging.com/investor-relations/xsl-content.
G. RELATED PARTY TRANSACTIONS
All Related Party Transactions are placed before the Audit Committee for approval asper the Related Party Transactions Policy of the Company as approved by the Board. Thepolicy is also uploaded on the website of the Company and can be accessed through the linkhttp://www.xchanging.com/investor-relations/xsl-content. All related party transactionsthat were entered into during the financial year were on an arm's length basis' andwere in the ordinary course of business. The disclosure of transactions with the relatedparties are provided in the notes to the Standalone Financial Statements forming part ofthe Annual Report.
Particulars of contracts or arrangements with related parties in the prescribed FormAOC-2 is provided as Annexure I to this Boards' Report.
(i) Statutory Auditors and Auditors' Report
The Shareholders of the Company in the 16th AGM of the Company had appointedM/s. Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No.117366W/W-100018) ("Deloitte") as the Statutory Auditors of the Company to holdoffice from the conclusion of the 16th AGM till the conclusion of the 20th
AGM of the Company subject to ratification of their appointment at every AGM by theshareholders if required pursuant to the provisions of the Companies Act 2013. CentralGovernment vide Companies (Amendment) Act 2017 has amended the provisions of Section 139of the Act and ratification of appointment of Statutory Auditors in every AGM is no longerrequired. Therefore matter relating to ratification of appointment of Deloitte is notrequired to be placed before the members at the ensuing 19th Annual General Meeting. TheStatutory Auditors had carried out audit of financial statements of the Company for thefinancial year ended March 31 2020 pursuant to the provisions of the Act. The reports ofStatutory Auditors forms part of the Annual Report. The reports are self-explanatory anddoes not contain any qualifications reservations or adverse remarks.
(ii) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed Mr. AnkushAgarwal (M/s. Ankush Agarwal & Associates Company Secretaries) to undertake theSecretarial Audit of the Company. Accordingly in terms of provisions of Section 204(1) ofthe Act a Secretarial Audit Report for the financial year ended March 31 2020 given bythe Secretarial Auditor of the Company in prescribed Form MR-3 is provided as Annexure-II. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.
(iii) Reporting of Frauds by Auditors
During the year under review the Statutory Auditors and the Secretarial Auditor havenot reported any instances of frauds committed in the Company by its Officers orEmployees to the Audit Committee under Section 143(12) of the Act therefore no detail isrequired to be disclosed under Section 134(3)(ca) of the Act.
I. PARTICULARS OF LOANS GUARANTEES INVESTMENTS AND SECURITIES
Details of loans Guarantees and Investments covered under Section 186 of the Act areprovided in the notes to financial statements.
J. PUBLIC DEPOSITS
Your Company has neither invited nor accepted any deposits from public within themeaning of Section 73 of the Act read with Companies (Acceptance of Deposits) Rules 2014during the period under review.
(i) Key Managerial Personnel (KMP)
The following have been designated as the Key Managerial Personnel of the Companypursuant to Sections 2(51) and 203 of the Act read with the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014:
a) Mr. Chandrasekhara Rao Boddoju Managing Director and Chief Executive Officer
b) Mr. Shrenik Kumar Champalal Whole Time Director and Chief Financial Officer
c) Mr. Mayank Jain Company Secretary (resigned w.e.f. October 31 2019)
d) Ms. Aruna Mohandoss Company Secretary (appointed w.e.f. November 13 2019)
(ii) Employees' Stock Option Plan (ESOP)
During the period under review no ESOP scheme exists in the Company.
(iii) Particulars of Employees and Related Disclosures
In accordance with the provisions of Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementcontaining the disclosures pertaining to remuneration and other details as required underthe Act and the above Rules are appended to this Report as Annexure III
As per the provisions of Section 136(1) of the Act the reports and accounts are beingsent to the Members of the Company excluding the information regarding employeeremuneration as required pursuant to Rule 5(2) and Rule 5(3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014. None of the employees listed in thesaid information is related to any Director of the Company. Any Member interested inobtaining such information may write an email to the Company Secretary firstname.lastname@example.org and the same will be furnished on such request.
The Board of Directors affirm that the remuneration paid to employees of the Company isas per the Remuneration Policy of the Company.
L. BOARD AND COMMITTEES
As on March 31 2020 the Board of Directors comprises of six directors out of which 2are Executive Directors 3 are Independent Directors and 1 is Non-Executive-Non-Independent Director.
Based on the recommendation of the Nomination and Remuneration Committee Mr. VenkateshShastry and Mrs. Rama NS were appointed as the Independent Directors in the last AnnualGeneral Meeting.
Mr. Henry D'Souza has been appointed as an Independent Director of the Company for 5(five) years w.e.f. May 25 2015. Accordingly first term of his office gets expired onMay 24 2020. Based on the recommendation of Nomination and Remuneration Committeere-appointment of Mr. Henry D'Souza as Independent Director for five years w.e.f. May 252020 was approved in the last Annual General Meeting. Independent Directors are not liableto retire by rotation. Pursuant to the provision of Section 152(6) of the Companies Act2013. Mrs. Kalpana Tatavarti Non-
Executive Director being longest in the office retire by rotation at the ensuingAnnual General Meeting and being eligible offer herself for the re-appointment. Your Boardof Directors recommend her re -appointment. All Independent Directors have givendeclarations that they meet the criteria of independence as laid down under Section 149 ofthe Act and applicable Regulations of Listing Regulations. Further they have declaredthat they are not aware of any circumstance or situation which exist or may be reasonablyanticipated that could impair or impact their ability to discharge their duties with anobjective independent judgment and without any external influence.
All Directors have affirmed that they are not debarred from holding the office of aDirector by virtue of any SEBI order or any other such Authority.
Company has taken the certificate from Mr. Ankush Agarwal (M/s. Ankush Agarwal &Associates Company Secretaries) that none of the directors on the Board of the Companyhave been debarred or disqualified from being appointed or continuing as directors ofcompanies by the Board/Ministry of Corporate Affairs or any such statutory authority. TheCertificate is annexed to this Report as Annexure - IV
Further in the opinion of the Board the independent directors fulfill the conditionsspecified in Listing Regulations and they are independent of the management.
(ii) Board Evaluation
Pursuant to the provisions of Section 134(3)(p) of the Act and Regulation 4 of ListingRegulations the Board has carried out an annual performance evaluation of its ownperformance and the evaluation of the working of its Committees. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
(iii) Remuneration Policy
The remuneration paid to the Directors is in line with the Nomination and RemunerationPolicy formulated in accordance with Section 178 of the Act and Regulation 19 of theListing Regulations (including any statutory modification(s) or re-enactment(s) thereoffor the time being in force).
The relevant Policy(ies) have been uploaded on the website of the Company and can beaccessed through the link http://www.xchanging.com/investor-relations/xsl-content.
(iv) Board/Committee Composition and Meetings
A calendar of meetings is prepared and circulated in advance to the Directors. Thedetails of composition of Board and Committee and their meetings held during the year aregiven in the Corporate Governance Report. The intervening gap between the meetings waswithin the period prescribed under the Act and the Listing Regulations.
(v) Familiarization Programme and Separate Meeting of Independent Director's
During the financial year ended March 31 2020 a separate meeting of the IndependentDirectors of the Company was held on May 23 2019 without the attendance ofNon-Independent Directors and the Management team.
During their meeting held on May 23 2019 the Independent Directors discussed thematters specified in Schedule IV of the Act and Regulation 25 of the Listing Regulations.
The Nomination and Remuneration Committee of the Company at its meeting held onFebruary 27 2015 had approved a familiarization programme for Independent Directors ofthe Company. The Familiarization programme for Independent Directors is available athttp:// www.xchanging.com/investor-relations/xsl-content.
(vi) Audit Committee
This Committee comprises the following Directors viz. Mr. Henry D'Souza (Chairman ofthe Committee) Mr. Venkatesh Shastry Mrs. Rama NS and Mr. Shrenik Kumar Champalal. TheCompany Secretary acts as the Secretary to the Committee. Details of the Audit Committeehave been provided in Corporate Governance Report.
All the recommendations of the Audit Committee were accepted by the Board.
(vii)Directors' Responsibility Statement
Pursuant to section 134(5) of the Act your Directors based on the representationsreceived from the Management and after due enquiry confirm that: (a) in the preparation ofthe annual accounts for the financial year ended March 31 2020 the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures; (b) the Directors have selected accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2020 andof the profit of the Company for the financial year ended on that date; (c) the Directorshave taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting fraud and irregularities; (d) the Directors have preparedthe annual accounts on a going concern basis; (e) the Directors have laid down adequateInternal Financial Controls to be followed by the Company and such Internal FinancialControls were adequate and operating effectively during the financial year ended March 312020; and (f) the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively throughout the financial year ended March 31 2020.
(i) Corporate Governance
The Company is committed to uphold the highest standards of Corporate Governance and toadhere to the requirements set out by the Securities and Exchange Board of India. Adetailed report on Corporate Governance along with the Certificate of Mr. Ankush Agarwal(M/s. Ankush Agarwal & Associates Company Secretaries) confirming compliance withconditions of Corporate Governance as stipulated under Schedule V of the ListingRegulations forms an integral part of this Report.
(ii) Vigil Mechanism / Whistle Blower Policy
The Company has established a whistle-blower policy and also established a mechanismfor directors and employees to report their concerns. The details of the same areexplained in the Corporate Governance Report. During the year under review the Board ofDirectors based on the recommendation of the Audit Committee has amended the WhistleBlower Policy to inter alia enable employees to report incidents of leak or suspectedleak of unpublished price sensitive information in line with the changes made in the SEBI(Prohibition of Insider Trading) Regulations 2015. As per the Whistle Blower Policyimplemented by the Company the Employees Directors customers dealers vendorssuppliers or any Stakeholders associated with the Company are free to report illegal orunethical behaviour actual or suspected fraud or violation of the Company's Codes ofConduct or Corporate Governance Policies or any improper activity to the Chairman of theAudit Committee of the Company. During the year under review no complaint pertaining tothe Company was received under the Whistle Blower Policy. The Vigil Mechanism/WhistleBlower Policy is available at http://www.xchanging.com/investor-relations/ xsl-content.
(iii) Risk Management
The Company has a Risk Management process which provides an integrated approach formanaging the risks in various aspects of the business. The detailed framework is providedin the Management Discussion and Analysis Report.
(iv) Internal Financial Controls
Your Company has in place adequate internal financial controls with reference to thefinancial statements. The internal financial control system of the Company is supplementedwith internal audits regular reviews by the management and checks by external auditors.The Audit Committee ensures adequacy of the system. The Statutory Auditors of the Companyalso provide their opinion on the internal financial control framework of the Company.
During the year under review no material or serious observation has been highlightedfor inefficiency or inadequacy of such controls.
(v) Disclosure under the Sexual Harassment of Women at the Work Place (PreventionProhibition and Redressal) Act 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. The Internal Complaints Committee ("ICC") has been set up to redressthe complaints received regarding sexual harassment. All employees are covered under thispolicy.
The following is the summary of the complaints received and disposed-off during thefinancial year ended March 31 2020: a) No. of complaints filed during the financial year:Nil b) No. of complaints disposed of during the financial year: Nil c) Number ofcomplaints pending as on end of the financial year: Nil The Company has complied withprovisions relating to the constitution of Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
N. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Corporate Social Responsibility Committee had formulated and recommended aCorporate Social Responsibility Policy to the Board of the Company which was subsequentlyadopted and implemented by the Company. The web-link to the CSR Policy is available athttp:// www.xchanging.com/investor-relations/xsl-content.
The detailed Annual Report on CSR activities is annexed herewith and marked as AnnexureV.
O. CONSERVATION OF ENERGY RESEARCH AND
DEVELOPMENTTECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information as per Section 134(3)(m) of the Act read with Rule 8 of the Companies(Accounts) Rules 2014 regarding Conservation of Energy Research & DevelopmentTechnology Absorption and Foreign Exchange Earning and Outgo is annexed herewith as AnnexureVI.
P. BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2) of the Listing Regulations read with SEBI Circular No.CIR/CFD/CMD/10/2015 dated November 4 2015 the Business Responsibility Report describingthe initiatives taken by the Company from an environmental social and governanceperspective forms part of this Annual Report.
The Business Responsibility Report forms part of the Annual Report and can also beaccessed on the Company's website athttp://www.xchanging.com/investor-relations/xsl-content
Q. OTHER DISCLOSURES
(i) Share Capital
There was no change in the paid- up share capital of the Company. As on March 31 2020the paid -up capital of the Company was Rs. 1114037160/-. This comprises 111403716equity shares of Rs. 10/- each fully paid-up.
The Company has not issued any sweat equity shares or equity shares with differentialrights during the financial year.
(ii) Promoter holding and Minimum Public shareholding
The promoter holding in the Company was 90.80% as at the year end March 31 2019 due toopen offers in prior years.
During the period under review Xchanging Technology Services India Private Limited("XTSI") one of the Promoter Group Company sold 17599461 equity shares(15839515 Equity Shares sold on June 10 2019 and 1759946 Equity Shares sold on June11 2019) of the Company through offer for sale. With the conclusion of the offer forsale the shareholding of the Promoter and Promoter Group has been brought down to 75%maintaining minimum public shareholding to 25% as required under Regulation 38 of SEBI(LODR) Regulations 2015.
(iii) Statutory Disclosures
None of the Directors of your Company are disqualified as per provision of Section164(2) of the Act. The Directors of the Company have made necessary disclosures asrequired under various provisions of the Act and the Listing Regulations.
(iv) Extract of Annual Return
Pursuant to Sub-section 3(a) of Section 134 and Subsection (3) of Section 92 of the Actread with Rule 12(1) of the Companies (Management and Administration) Rules 2014 anextract of the Annual Return as on March 31 2020 in Form MGT - 9 is attached herewith as AnnexureVII and forms part of this Report and can also be accessed on the Company'swebsite at http:// www.xchanging.com/investor-relations/xsl-content
(v) Compliance of Secretarial Standards
During the financial year under review the Company has complied with applicableSecretarial Standards on Board and General Meetings specified by the Institute of CompanySecretaries of India pursuant to Section 118 of the Act.
(vi) Appointment of Independent Director in an unlisted material Subsidiary
Pursuant to Regulation 24 of the Listing Regulations Mr. Henry D'Souza IndependentDirector of the Company has been appointed as Independent Director w.e.f. April 1 2019 onthe Board of Director of Company's unlisted material subsidiary i.e. Xchanging Solutions(USA) Inc and Xchanging Solutions Singapore Pte Limited.
(vii) Change of Registered Office
The Registered Office of the Company has been changed from "SJR I-Park Plot No.13 14 15 EPIP Industrial Area Phase I Whitefield Bangalore 560066" to"Kalyani Tech Park - Survey No 1 6 & 24 Kundanhalli Village K R Puram HobliBangalore - 560 066" w.e.f. August 1 2019.
(viii) Responsibility For Standalone:
The Company's Board of Directors is responsible for the information included in theBoards' Report including Annexures to Board's Report Management Discussion and Analysisand Corporate Governance Report including annexures thereon
The Parent Company's (Xchanging Solutions Limited) Board of Directors is responsiblefor the information included in the Boards' Report including Annexures to the Board'sReport Management Discussion and Analysis and Corporate Governance Report includingannexures thereon
(ix) Material changes and commitments affecting the financial position of the Company
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year to which thefinancial statements relate and the date of this Report.
(x) Significant and material orders
During the Financial Year 2019-20 there were no significant and material orders passedby the Regulators or Courts or Tribunals impacting the going concern status and theCompany's operations in future. Further no penalties have been levied by the SEBI or anyother regulator during the year under review.
Equity Shares of your Company are listed on National Stock Exchange of India Ltd. andBSE Ltd. Your Company has paid required listing fees to Stock Exchanges for FY 2020-21.
(xii) Maintenance of Cost Records
The maintenance of cost records for the services rendered by the Company is notrequired pursuant to Section 148 (1) of the Act read with Rule 3 of the Companies (CostRecords and Audit) Rules 2014.
(xiii) Chief Executive Officer (CEO) and Chief Financial Officer (CFO) Certificate
In terms of the Listing Regulations the certificate as prescribed in Part B ofSchedule II of the said Regulations has been obtained from Mr. Chandrasekhara RaoBoddoju Managing Director & Chief Executive Officer and Mr. Shrenik Kumar ChampalalWhole Time Director & Chief Financial Officer for the Financial Year 2019-20 withregard to the Financial Statements and other matters. The said
Certificate is attached herewith as Annexure B and forms part ofCorporate Governance Report.
Your Directors would like to express their sincere appreciation for the co-operationand assistance received from the Company's Bankers Regulatory Bodies and Stakeholdersincluding other business associates who have extended their valuable sustained support andencouragement during the year under review. Your Directors also wish to place on recordtheir deep sense of gratitude and appreciation for the commitment displayed by executivesofficers and staff at all levels of the Company resulting in the successful performanceof the Company during the year under review. We look forward to your continued support inthe future.
|For and on behalf of the Board of Directors || |
|Chandrasekhara Rao Boddoju ||Shrenik Kumar Champalal |
|Managing Director & Chief ||Whole Time Director & |
|Executive Officer ||Chief Financial Officer |
|Place: Bangalore || |
|Date: May 22 2020 || |