Your Directors are pleased to present 57th Annual Reporttogether with the Audited Financial Statements for the Financial Year ended March 312020.
1. FINANCIAL PERFORMANCE AND STATE OF AFFAIRS
(INR In Lakhs)
|Particulars || |
|FY 2019-20 ||FY 2018-19 ||FY 2019-20 ||FY 2018-19 |
| || || || || |
|Income from operations ||137030 ||137008 ||418168 ||396633 |
|Miscellaneous Income ||9093 ||8499 ||8842 ||9268 |
|Total Income ||146123 ||145507 ||427010 ||405901 |
|Profit Before Taxation ||30410 ||33351 ||37579 ||44538 |
|Profit After Taxation ||23104 ||25800 ||27160 ||31865 |
|Proposed Dividend ||- ||4053 ||- ||4053 |
|Transfer to General Reserves ||- ||12000 ||- ||12000 |
On standalone basis during FY 2019-20 the Company recorded totalincome of INR 146123 Lakhs comprising income from software development and alliedservices of INR 137030 Lakhs and other income of INR 9093 Lakhs. The Company recorded anet profit of INR 23104 Lakhs reflecting a decrease of about 10.45% Y-o-Y.
On consolidated basis the Company has maintained growth with totalincome of INR 427010 Lakhs comprising income from Software Development and AlliedServices of INR 418168 Lakhs and other income of INR 8842 Lakhs. The Consolidated netprofit was INR 27160 Lakhs reflecting decrease of about 14.77% Y-o-Y.
In the preparation of financial statements no treatment different fromthat prescribed in Indian Accounting Standards (IND-AS) has been followed.
Based on profits during FY 2019-20 and continuing the tradition ofrewarding the members the Company declared dividend(s) as under:
|Dividend declared during FY 2019-20 ||Dividend per share (INR) ||Total Payout (INR Lakhs) |
|1. 1st Interim Dividend ||1.00 ||2253.50 |
|2. 2nd Interim Dividend ||1.80 ||4056.78 |
The 2nd Interim Dividend was remitted on March 27 2020through the approved electronic mode to those shareholders whose bank account detailswere available constituting about 99% of dividend amount. However in view of nation-widelockdown announced by the Government of India to contain the spread of COVID-19 diseasedispatch of physical dividend instruments to balance shareholders is on hold and thearrangements for payment of the same will be made after the normalcy is restored.
The said dividends were declared in accordance with the DividendDistribution Policy of the Company formulated pursuant to SEBI Regulations which isavailable on website of the Company at https://www.zensar.com/sites/default/files/investor/policies-reportsfillings/dividend destribution policy.pdf
Investor Education and Protection Fund (IEPF)
Pursuant to the Act and IEPF Authority (Accounting Audit Transfer andRefund) Rules 2016 as amended from time to time during the year under review theCompany has transferred the following dividend(s) and corresponding shares to IEPF uponcompletion of period of seven years:
|Date of Declaration ||Type of Dividend ||Amount of Dividend transferred (INR) ||No. of shares transferred |
|July 24 2012 ||Final ||1242832 ||25670 |
|January 212013 ||Interim ||1133668 ||69807 |
The total amount lying in the Unpaid Dividend Account of the Company upto the year under review and the corresponding shares which are liable to be transferredto the IEPF as per records of RTA are as follows:
|Sr. No. ||FY to which dividend relates ||Type of Dividend ||Amount lying in the Unpaid Dividend Account (INR) (as on March 312020) ||Due date for transfer to IEPF |
|1. ||2019-20 ||1st Interim ||912106 ||March 24 2027 |
|2. ||2018-19 ||Final ||1768905 ||October 5 2026 |
|Interim ||1079002 ||March 22 2026 |
|3. ||2017-18 ||Final ||1665524 ||October 7 2025 |
|Interim ||1180230 ||March 20 2025 |
|4. ||2016-17 ||Final ||2540685 ||September 17 2024 |
|Interim ||1938085 ||March 24 2024 |
|5. ||2015-16 ||2nd Interim ||2420775 ||May 13 2023 |
|1st Interim ||1682190 ||March 20 2023 |
|6. ||2014-15 ||Final ||2098850 ||September 12 2022 |
|Interim ||1562603 ||March 20 2022 |
|7. ||2013-14 ||Final ||1899882 ||September 212021 |
|Interim ||1333428 ||March 22 2021 |
|8. ||2012-13 ||Final ||1412640 ||September 14 2020 |
Particulars of Loans Guarantees and Investments pursuant to Section186 of the Act
|Particulars ||Amount (INR in Lakhs) |
|Loan(s) ||Please refer Note No. 6(d) and 37 of Notes to Financial Statements |
|Guarantee(s) ||Please refer Note No. 28 of Notes to Financial Statements |
|Investment(s) ||Please refer Note No. 6(a) of Notes to Financial Statements |
Related Party Transactions
All related party transactions that were entered into during FY2019-20 were on arm's length basis and in the ordinary course of business. Therequisite approval of the Audit Committee is obtained on periodic basis for thetransactions which are repetitive in nature or otherwise. The actual transactions enteredinto pursuant to the approval so granted are placed periodically before the AuditCommittee.
During FY 2019-20 no materially significant related party transactionswere entered into by the Company that may have potential conflict with the interests ofCompany at large. The policy on related party transactions formulated by the Company isavailable on the website of the Company at https://www.zensar.com/sites/default/files/investor/policies-reports-fillings/Policv%20on%20RPT%20%281%29.PDF.
Further the Company has not entered in to any material transactionwith related parties during the year under review which requires reporting in Form AOC-2in terms of the Act read with Companies (Accounts) Rules 2014. However the requisitedisclosures under IND-AS form part of Notes to Financial Statements.
The information on Company's affairs and related aspects isprovided under Management Discussion and Analysis Report which has been prepared inter-aiain compliance with Regulation 34 of SEBI Regulations and forms part of this report.
Internal Financial Controls
Details in respect of adequacy of internal financial controls withreference to the Financial Statements are stated in Management Discussion and AnalysisReport which forms part of this Report.
During the year under review the Company has not accepted Depositsunder Chapter V of the Act.
Change in the Nature of the Business
During the year under review there was no change in the nature of thebusiness of the Company or its subsidiaries pursuant to inter-aia Section 134 ofthe Act and Companies (Accounts) Rules 2014 as amended from time to time.
Material Changes and Commitments if any affectingthe Financial Position of the Company
There are no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the Financial Year on March312020 to which the Financial Statements relate and the date of this report.
Significant and Material Orders passed by the Regulators or Courts orTribunals impacting the Going Concern Status
There are no significant and material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and Company's operations infuture.
Extract of Annual Return
Pursuant to Section 92 of the Act and related rules the Extract ofAnnual Return in Form MGT-9 forms part of this report.
Your Company along with subsidiaries provides digital solutions andtechnology services globally. As of March 31 2020 the Company has 24 Subsidiaries as perdetails set out in Extract of Annual Return which forms part of this Report.
The highlights of performance of subsidiaries and their contribution tothe overall performance of the Company are included in Form AOC - 1 forming part ofConsolidated Financial Statements section in this Annual Report in accordance with theprovisions inter- alia of Section 129 of the Act read with Rule 5 of theCompanies (Accounts) Rules 2014.
Policy for determining material subsidiaries framed by the Company isavailable on https://www.zensar.com/sites/default/files/investor/policies-reports-fillings/Policv%20for%20determining%20material%20subsidiaries%20%281%29.pdf.
2. CORPORATE GOVERNANCE
Formal Annual Evaluation of Board and itsCommittees
Pursuant to provisions of Section 134 of the Act and Regulation 17 ofthe SEBI Regulations the Nomination and Remuneration Committee has laid down criteria forevaluating Board effectiveness by assessing performance of the Board as a wholeperformance of individual Director and permanent Committees of the Board details of whichare available in the Corporate Governance Report.
Further the Nomination and Remuneration Committee had laid downstructure for evaluating Board effectiveness and engaged a third-party agency to conductBoard Effectiveness Survey during the year under review. The survey findings and feedbackswere then considered while conducting the requisite evaluations inter- alia underthe provisions of the Act and SEBI Regulations.
Directors' Responsibility Statement
The Directors confirm that:
a) in the preparation of the annual accounts for the Financial Yearended March 31 2020 the applicable accounting standards had been followed and there wereno material departures;
b) the Directors had selected such 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 at the end of theFinancial Year as at March 312020 and of the profit of the Company for that period;
c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d) the Directors had prepared the annual accounts on a going concernbasis;
e) the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively.
f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
Director(s) and KMP(s)
|Appointment(s) / Re-appointment(s) ||Resignation(s) |
| H. V. Goenka (DIN: 00026726) Non-Executive Director retires by rotation and being eligible offers himself for re-appointment. A resolution seeking Members' approval for his re-appointment forms part of the Notice. The Board recommends his re-appointment. || Tanuja Randery (DIN: 08014909) and Sudip Nandy (DIN: 07199187) Non-Executive Independent Directors tendered their resignations from the Board of the Company effective May 31 2019 and August 7 2019 respectively. |
| The Board appointed Radha Rajappa (DIN: 08530439) as an Additional Director in the capacity of Independent Director with effect from August 6 2019 up to August 5 2024 subject to approval of Members at the 57th Annual General Meeting. The Board is of the opinion that Radha Rajappa holds all the requisite qualities including integrity expertise experience and independence to be on the Board of your Company. A resolution seeking Members' approval for her appointment forms part of the Notice. || Both the Directors conveyed that considering professional commitments they were unable to devote sufficient time required of an Independent Director of the Company and therefore willingly tendered the resignation. They further confirmed that there was no other material reason for their resignation. |
| A brief resume of the Director(s) proposed to be appointed at the 57th Annual General Meeting along with nature of expertise in specific functional areas names of companies in which they hold directorship(s) membership(s) of the Board's Committees shareholding in the Company and relationships with the directors inter-se forms part of the Notice. || |
During the year under review there were no change(s) in the KeyManagerial Personnel(s) of the Company.
Number of Meetings of the Board
During the year under review 5 (Five) meetings of the Board were helddetails of which are set out in the Corporate Governance Report which forms part of thisreport.
Detailed composition of the following permanent Committees of theBoard number of meetings held during the year under review and other related details areset out in the Corporate Governance Report which forms part of this report:
The Audit Committee stood reconstituted on May 1 2019 with theinduction of Arvind Agrawal as a member thereof.
With the resignation of Sudip Nandy effective August 7 2019 the AuditCommittee Nomination and Remuneration Committee and Risk Management Committee stoodreconstituted to that extent at the meeting of Board of Directors dated August 6 2019.The Risk Management Committee was also reconstituted by induction of Arvind Agrawal as amember of the said Committee.
Details of terms of reference of the Committees membership(s) andattendance of members are provided in the Corporate Governance Report. There had been noinstances during FY 2019-20 where the Board had not accepted any recommendation of any ofthe Committees of the Board.
Statement on Declaration of Independent Directors
The Company has received Declaration of Independence from theIndependent Directors inter-alia pursuant to Section 149 of the Act and under SEBIRegulations confirming and certifying that they have complied with all the requirementsof being an Independent Director of the Company as on the date. The said certificate(s)were taken on record by the Board at its meeting held on May 14 2020 after dueassessment of the veracity of the same.
Pecuniary Relationship or Transactions of Non-Executive Directors andDisclosures about Remuneration of Directors
All pecuniary relationship or transactions of Non-Executive Directors vis-a-visthe Company along with criteria for such payments and disclosures on the remuneration ofthe Directors along with their shareholding are disclosed in Corporate Governance Reportwhich forms part of this Report and/or available on the website of the Company pursuantto relevant regulations.
InterSe Relationships between the Directors
There are no relationships between the Directors inter-seexcept between Anant Goenka and H. V Goenka. Anant Goenka NonExecutive Non-IndependentDirector is son of H. V. Goenka Chairman.
A detailed report on Risk Management is included in ManagementDiscussion and Analysis Report which forms part of this report.
Your Company complies with the applicable mandatory SecretarialStandards.
3. HUMAN RESOURCE MANAGEMENT
Disclosure under Sexual Harassment of Women at theWorkplace (Prevention Prohibition and Redressal) Act 2013
The Company has in place an Internal Complaints Committee and anAnti-Sexual Harassment Policy inter-alia in line with the requirements of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013and rules made thereunder to redress all the sexual harassment complaints reported bywomen employee(s).
The following is the summary of complaints received and disposed- offduring the year under review:
|Number of complaints received ||4 |
|Number of complaints disposed off ||4 |
|Number of complaints pending ||0 |
Employees Stock Option Plan
The Company currently has three Employees Stock Option Schemes inforce namely 2002 Employees Stock Option Scheme (2002 ESOS) 2006Employees Stock Option Scheme (2006 ESOS) and Employee Performance Award Unit Plan2016 (2016 EPAP) and these schemes are being implemented as per SEBI Regulations in thisregard.
In FY 2019-20 22000 equity shares and 210050 equity shares wereallotted under 2002 ESOS and 2006 ESOS respectively. No equity shares were allotted under2016 EPAP
As required under SEBI (Share Based Employee Benefits) Regulations2014 the Auditor's certificate on the implementation of share-based schemes inaccordance with these regulations will be made available at the AGM.
The disclosure pursuant to SEBI (Share Based Employee Benefits)Regulations 2014 is available on the website of the Company at https://www.zensar.com/investor/financials.
Information pursuant to Section 197 of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014
|1. The ratio of the remuneration of each director to the median remuneration of the employees of the Company excluding Managing Director for the Financial Year. ||Please refer Annexure to this Report for details. |
|2. Percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the Financial Year. |
|3. The percentage increase in the median remuneration of employees. ||The percentage increase in the median remuneration in FY 2019-20 of employees on India Payroll was 5.05%. |
|4. The number of permanent employees on the rolls of Company (in India). ||6943 |
|5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last Financial Year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point ||Average percentage increase made in the salaries of the employees other than the managerial personnel in the last Financial Year is 5.96% for India based associates. |
|out if there are any exceptional circumstances for increase in the managerial remuneration. ||Considering nil increment employees average percentile increase is 45.7 percentile. |
The remuneration to employees is as per the remuneration policy of theCompany. The percentage increase in the median remuneration of employees has beencalculated after excluding Managing Director's remuneration. Sandeep KishoreManaging Director and Chief Executive Officer has not received any directors'commission during the year from the Company nor from any of its subsidiary(ies).Particulars of employees pursuant to Section 197 of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexedwith this report.
4. REPORTS AND POLICIES
A detailed report on the same for FY 2019-20 along with the practicingCompany Secretary's certification thereon is provided in the corporate governancesection of this report.
Management Discussion and Analysis
A detailed Management Discussion and Analysis Report is annexed to thisreport.
Business Responsibility Report
As stipulated under the SEBI Regulations the Business ResponsibilityReport under Regulation 34(2)(f) forms part of this report and annexed herewith.
Nomination and Remuneration Policy
The Company has a Nomination and Remuneration Policy (Policy) onnomination and remuneration of Directors Key Managerial Personnel (KMP) SeniorManagement Personnel (SMP) and other employees in terms of provisions of the Act and SEBIRegulations as amended from time to time.
The salient features of the Policy are:
1. appointment and remuneration of Directors KMP and SMP
2. determination of qualifications positive attributes andindependence for appointment of a Director (Executive/ Non- Executive/Independent) andrecommendation to the Board matters relating to the remuneration for the Directors KMPand SMP
3. formulating the criteria for performance evaluation of allDirectors.
4. Board Diversity
The said Policy is available on the website of Company at https://www.zensar.com/sites/default/files/investor/policies-reports- fillings/NRC%20policv%20%281%29.pdf
Vigil Mechanism/Whistle Blower Policy
Pursuant to the Section 177(9) of the Act and Regulation 22 of SEBIRegulations the Company has established a Vigil Mechanism/ Whistle Blower Policy forDirectors and employees to report their genuine concerns. The Policy provides forDirectors and employees to report concerns about unethical behavior actual or suspectedfraud or violation of Company's Code of Governance and Ethics. The policy isavailable on the website of the Company at https:// www.zensar.com/sites/default/files/investor/policies-reports- fil linas/Whistle-Blower-Policy. pdf
The Company has in place robust measures to safeguard whistle blowersagainst victimisation. Directors and employees are duly sensitised about mechanisms andguidelines for direct access to the Chairman of the Audit Committee in appropriate cases.
Further during FY 2019-20 no personnel has been denied access to theAudit Committee.
5. AUDITORS AND AUDIT REPORTS
M/s. Deloitte Haskins and Sells LLP the Statutory Auditors of theCompany has been appointed to conduct the audit of the Financial Statements of theCompany from FY 2017-18 till FY 2021-22.
Pursuant to the Companies (Amendment) Act 2017 which came into forceon May 7 2018 appointment of Statutory Auditors is not subject to annual ratification atthe Annual General Meeting and accordingly not being placed at the 57th AnnualGeneral Meeting for approval of Members.
Further there was no instance of fraud reported by the StatutoryAuditors during FY 2019-20 as required under Section 134 of the Act and rules thereunder.
Pursuant to the provisions of Section 204 of the Act and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed M/s. SVD & Associates Company Secretaries in Practice to undertake theSecretarial Audit of the Company. The Report of the Secretarial Audit in Form MR - 3 isannexed herewith.
Further pursuant to SEBI circular CIR/CFD/CMD1/27/2019 dated February8 2019 the Annual Secretarial Compliance Report submitted by M/s SVD & Associatesalso forms part of the Board's Report. The said report(s) does not contain anyqualification reservation or adverse remarks.
The appointment of M/s SVD & Associates as Secretarial Auditorscontinues for FY 2020-21.
Further during FY 2019-20 and two previous Financial Years nopenalties strictures were imposed on the Company by stock exchange(s) or SEBI or anystatutory authority on any matter related to capital markets.
The Board had appointed Ernst & Young LLP Pune as InternalAuditors for FY 2019-20 under Section 138 of the Act. The appointment of Ernst & YoungLLP Pune as Internal Auditors continues for FY 2020-21.
Explanations on Qualification Reservation orAdverse Remark or Disclaimer made by Auditors
There are no qualifications reservations or adverse remarks made bythe Statutory Auditors/Secretarial Auditors in their respective Reports.
6. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR activities at the Company were undertaken through RPGFoundation which in turn is committed towards undertaking CSR activities across all groupcompanies of RPG. The composition of the CSR Committee of the Company in accordance withSection 135 of the Act is covered under the Corporate Governance Report which forms partof this report. A detailed report on CSR activities along with CSR Policy is attached tothis report.
The CSR Policy of the Company is available at: https://www.zensar.com/sites/defau lt/fi les/investor/policies-reports-fillings/CSR%20 Policy Final.pdf
7. CONSERVATION OF ENERGY
TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The provisions relating to disclosure of details regarding energyconsumption both total and per unit of production are not applicable as the Company isengaged in the services sector and provides IT and IT related services.
Particulars prescribed under Section 134(3)(m) of the Act read withthe Companies (Accounts) Rules 2014 in respect of Technology Absorption Foreign Exchangeearnings and outgo as on March 31 2020 and R & D expenditure during the year are setout as Annexure to this report.
8. OTHER DISCLOSURES
i. The Company is not required to maintain cost records as specifiedby the Central Government under section 148 of the Act.
ii. Key initiatives with respect to stakeholder relationship customerrelationship environment sustainability health and safety have been disclosed underrespective heads of Corporate Governance Report and Business Responsibility Report.
The Board places on record its appreciation for the contribution ofassociates at all levels customers business and technology partners vendors investorsGovernment Authorities and all other stakeholders towards the performance of the Companyduring the year under review.
| ||For and on behalf of the Board of Directors |
|Place: Mumbai ||H. V. Goenka |
|Dated: July 23 2020 ||Chairman |