Directors' Report The Directors take pleasure in presenting to you the 17th Annual Report of the company covering the financial year ended 31st March 2016 Business Outlook HR BpO division is a vertical which has been growing organically for us and this will continue in the coming years too. Our plans to expand HR BpO to new geographies have yielded results and we have added more clients in philippines as well as in the Middle East during 2015-16. Marketing efforts will be increased for business development in destinations like philippines, Asia, Middle East, UK and in the US in the coming year. We believe HR BpO business will be a significant revenue generator for your Company in the next few years. Your Company has also progressed well in the Domestic business during the year. pricing in the market has been increasing gradually. We now have good capacity utilization in this business at rates which are much higher than what we were getting 2 years back. The plan is to keep looking for strategic contracts where we can command higher rates and improve margins. Exports revenue has remained as in previous year. The International outsourcing division continues to be affected by the global slowdown and we are actively pursuing targets both by increasing the sales force as well as increase the marketing efforts by doing more targeted marketing. Through increased marketing efforts and focus in additional geographies we believe we will have growth in this business. Overall financial performance of your Company has improved substantially during this year. profit before Interest, Depreciation and Tax (EBIDTA) has increased from INR 486 lakhs last year to INR 1525 Lakhs (214%). Your company has reported Net profit after tax for the current year at INR 948 lakhs as compared to Net loss after tax of INR 174 lakhs for the previous year. Detailed analysis of the Standalone results forms part of the Management Discussion and Analysis (MDNA) report provided in Annexure C of the Directors Report. Consolidated results of your Company have shown growth due to improved performance of all the entities during the year. There has been an increase in Standalone profits in India & Manila and substantial increase in US Operations resulting in a much improved performance. Consolidated Revenues has increased to INR 23338 lakhs from INR 15086 lakhs in the previous year. Consolidated profit before Interest, Depreciation and Tax (EBIDTA) was at INR 4192 lakhs as against a loss of INR 41 lakhs last year. Your company has reported Net profit after tax for the current year at INR 3094 lakhs as compared to Net loss after tax of INR 1406 lakhs for the previous year. The company is continuing to pursue growth through the Organic route and sees very good traction for growth in all the entities. The company has delivery centers in India, Manila and in US for the international segment and has Domestic delivery centers in three major cities in India. The Board of Directors of your Company cannot recommend any dividend for the Financial Year 201516 in view of the accumulated losses. Deposits Your company has not accepted any deposit from the public during the period under review and did not have any outstanding deposits. Directors Mr. S. prem Kumar, a Director on the Board of the Company has resigned on 20th May 2016. The Board wishes to place on record its sincere appreciation for the valuable services rendered by him. Mr. C. Jayaram was appointed as an Additional Director on 20th May 2016 and who holds office up to the date of Seventeenth Annual General Meeting of the Company and in respect of whom Notice under section 149(6) of Companies Act, 2013 has been received from members signifying their intention to propose Mr. C. Jayaram as a candidate for the office of Director and accordingly a resolution is placed before the members at the forthcoming Annual General Meeting. Mr. D. padmanabhan was appointed as an Additional Director on 20th May 2016 and who holds office up to the date of Seventeenth Annual General Meeting of the Company and in respect of whom Notice under section 149(6) of Companies Act, 2013 has been received from members signifying their intention to propose Mr. D. padmanabhan as a candidate for the office of Director and accordingly a resolution is placed before the members at the forthcoming Annual General Meeting. Mr. A. Saravanan, who was originally appointed as Whole time Director for 3 years by the shareholders through postal Ballot on 15th March 2013, was deputed to your Company's subsidiary Retreat Capital Management Inc, USA with effect from 1st April 2014and has been rendering his services predominantly from USA. As per the Companies Act 2013, a Whole Time Director needs to be a resident in India; hence Mr. A. Saravanan is being re-designated as promoter Director. Mr. R. Jagadish, Director retires at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Key Managerial Personnel The Key Managerial personnel of Allsec Technologies Limited are: 1. Mr. R. Jagadish - Chief Executive Director 2. Mr. A. Mohan Kumar - Company Secretary 3. Mr. K. Narasimhan - Chief Financial Qfficer Employees As per the provision of Section 136 of the companies Act 2013, the Report of Accounts are being sent to all members of the company excluding the Information relating to Employees to be given under Section 197(12) of the Companies Act, 2013. The said information would be filed with the Registrar of Companies and also would be available for inspection by the members at the Corporate Qffice of the Company. Any member interested in obtaining such particulars may also write to the Company Secretary, Allsec Technologies Limited, 46B, Velachery Main Road, Velachery, Chennai-600042. Corporate Governance Your Company is fully compliant with the requirements under SEBI (LQDR) Regulations 2015. The report on Corporate Governance is given in Annexure A. Certificate from Auditors confirming the compliance of conditions of Corporate Governance is included in Annexure B. CEQ/CFQ certification is attached in Annexure H. In terms of regulation 34 of Securities and Exchange Board of India (Listing obligations and disclosure requirements) regulations 2015, the Management Discussion and Analysis report is given in Annexure - C. Subsidiary Companies The Company has three subsidiaries as at year end namely Allsectech Inc USA, Allsectech Manila Inc. philippines and Retreat Capital Management Inc USA. The Consolidated Financial statements of the company and its subsidiaries prepared in accordance with Accounting Standards AS 21 and forms part of this Annual Report and accounts. The Annual Accounts of the said subsidiaries and the related detailed information will be made available to the investors of the Company seeking such information at any point of time. The copies of the Annual accounts of the subsidiaries will also be kept for inspection by any investor at the corporate office of the Company. The Company monitors performance of subsidiary companies (list of subsidiary companies has been provided in the financial statements), inter-alia, by the following means: a) The Company does not have any material unlisted Indian subsidiary, and hence, is not required to nominate an Independent Director of the Company on the Board of any subsidiary. b) The Audit Committee reviews the financial statements, in particular, the investments made by the subsidiary companies. c) Your Company has formulated a policy on Material Subsidiary as required under Regulation SEBI (LQDR) and the policy is hosted on the website of the Company under the web link <http://www>. allsectech.com/Allsec/investor-information.aspx Compliance under Companies Act, 2013 Pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, your Company complied with the compliance requirements and the details of compliances under Companies Act, 2013 are enumerated below: Extract of Annual Return An Extract of the Annual Return as of 31st March 2016, pursuant to the sub section (3) of Section 92 of the Companies Act 2013 and forming part of the report is attached in Annexure D. Board Meetings held during the year During the year, 4 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached as Annexure-A to this Report. Directors' responsibility Statement The Board of Directors acknowledges the responsibility of ensuring compliance with the provisions of Section 134(3)(c) of the 2013 Act. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements: Your Directors confirm the following that: (i) In preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period; (iii) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (iv) The directors had prepared the annual accounts on a going concern basis. (v) proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. (vi) proper systems were in place so as to ensure compliance with the provisions of all applicable laws and were adequate and operating effectively Independent Directors and Board Evaluation The Independent Directors of the Company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013. Independent Directors, considered / evaluated the performance of the non-independent Directors at a meeting without anyone from the non-independent Directors and Management. The Board subsequently evaluated performance of the Board, the Committees and Independent Directors (without participation of the relevant director) Familiarisation Programme Your company follows an orientation and familiarization programme through various reports/codes/internal policies for all the Directors with a view to update them on the company's policies and procedures on a regular basis.periodic presentations are made at the Board Meetings on business and performance,long term strategy initiatives and risks involved.The detail about the familiarization programme have been posted in the website of the Company under the web link <http://www.allsectech.com/Allsec/investor-information>. aspxwww.Allsectech.com . Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Company's policy on appointment and remuneration including criteria for determining qualifications, positive attributes, and independence are provided in the Corporate Governance Report forming part as an Annexure-A to this Report. Related Party Transactions The Company has formulated a policy on Related party Transactions as approved by the Board and the same is uploaded on the Company's website <http://www>. allsectech.com/Allsec/investor-information.aspx All the Related party Transactions that were entered into by the Company during the financial year 2015-16, were on an arm's length basis and were in the ordinary course of business. All Related party Transactions are placed before the Audit Committee for their prior approval in accordance with the requirements of the SEBI (LQDR) Regulation 2015. The transactions entered into pursuant to such approval are placed periodically before the Audit Committee. There are no materially significant related party transactions made by the Company with promoters, Directors, Key Managerial personnel which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company otherwise than disclosed in the Corporate Governance Report, forming part of this report. Details of the transaction are provided in Form AQC-2 which is attached as Annexure-F to this Report. Your Company recognizes that Risk Management is an integral part of good management practice. Risk Management is an essential element in achieving business goals and deriving benefits from market opportunities. Accordingly the Board have approved and adopted a Risk management policy. The company has constituted a risk Management Committee with the functional heads as its members. The purpose of the policy is to achieve the Company's objectives in a dynamic environment as well as to effectively manage the risks arising and associated with its business. A Structured Risk Management framework has been put in place covering various risks involved, and to ensure that the risks attributed to the Company are identified, analyzed, and mitigated. Vigil Mechanism / Whistle Blower Policy In accordance with the requirements of the Companies Act 2013, your Company has established a Vigil Mechanism / Whistle Blower policy for Directors and Employees to report genuine concerns. The said policy meets the requirement of the Vigil Mechanism framework under the 2013 Act, and the members can view the details of the policy on <http://www.allsectech.com/Allsec/> investor-information.aspxwww.Allsectech.com >. Corporate Social Responsibility The Board of Directors of your Company has constituted the CSR Committee to help the Company to frame, monitor and execute the CSR activities. As per Sec. 135 of the Companies Act 2013, the Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least 2% of the average net profits of the company made during the three immediately preceding financial years. Due to past losses, contribution to Corporate Social responsibility activity will not be applicable to the Company this year. Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013 Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the financial statements. Internal Financial Control and Adequacy The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures. Auditors The office of M/s. S.R. Batliboi & Associates the Statutory Auditors of the Company will expire at the conclusion of the ensuing Annual General Meeting and the Company has to appoint auditors for the Financial Year 2016-2017. In the last Annual General Meeting held on 7th August, 2015, M/s. S.R. Batliboi & Associates was appointed for a period of one year. As per Sec. 139 (2), listed Companies and other specified Companies can appoint Audit firms as their statutory auditors for two terms of five Consecutive years. If at the Commencement of the Act (ie: 1.4.2014), the said audit firm has already completed 10 years, then the Company shall appoint a new Audit firm to comply with the requirement of Sec 139 within a period of 3 years (on or before 31st March 2017). The Management felt that it is prudent to make a change of audit firm in this year itself and the Board recommends the appointment of M/s. Walker Chandiok & Co LLp as the Statutory Auditors of the Company for a period of 5 years from the conclusion of this Annual General Meeting. The Company has received necessary certificate from M/S. Walker Chandiok & Co LLp under Sections 139 and 141 of the 2013 Act, to the effect that they satisfy the conditions under the 2013 Act and the rules made thereunder for the above appointment. As required under the SEBI (LQDR) Regulations 2015, the Statutory Auditors have also confirmed that they hold a valid certificate issued by the peer Review Board of the Institute of Chartered Accountants of India. Comments on Auditors' report There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors and Company Secretary in practice in their reports respectively. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review. Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2016 and May 20, 2016 (date of the Report) There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2016) and the date of the Report (May 20, 2016). Secretarial Audit 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 has appointed Mr. p. Sriram, a Company Secretary in practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is given as an Annexure - E and forms part of this Report. Names of Companies which have ceased / become Subsidiaries / Joint Ventures / Associates During the year there is no change in the status of any subsidiary. Quality & Information Security The vision of Quality and Information security at Allsec is to institutionalize excellence in quality of services and security of data of Clients, customers and Qrganization by developing and deploying simple, efficient and effective processes using the latest Quality models in accordance with ISQ 9001:2008 interlined with data security controls prescribed by International standards such as ISQ 27001:2013. ISQ 9001:2008 (Quality Management System) & ISQ 27001:2013 (Information Security Management) have been renewed at Chennai location and ISQ 27001:2013 has been renewed for the Manila location. pCI DSS compliance certifications are renewed at Chennai and Manila locations during the year. Also this year we have got certified for ISQ 27001:2013 at the Dallas Location. Further, existing ISAE 3402 which is a graduated version of SAS 70 Type II certification for the HRQ business has been renewed. Disclosure as per Securities and Exchange Board of India (Employees Stock option Scheme and Employee Stock Purchase Scheme) Guidelines, 2011 The details are given in Annexure -G to Directors Report Conservation of energy, technology absorption, foreign exchange earnings and outgo Since your Company is in the Information Technology Enabled Services (ITES) business, the provisions relating to conservation of energy and technology absorptions are not applicable. The details of the earnings and expenditure in foreign currency are given below: Investor Services Your company will constantly endeavor to give the best possible services to the investors. Towards this end, the following are some of the initiatives taken by the Company: The investor Information section of the Website of the Company (www.allsectech.com ), furnishes important financial details and other data of frequent reference by the investors. The Company also has a Shareholders / Investors Relation Committee to address shareholders grievances if any and resolve them as & when they are reported. The Company has provided an exclusive email id: investorcontact@allsectech.com for the investors to facilitate the redressal of the queries and complaints of the investors. The Company has appointed M/s Karvy Computershare pvt Ltd as Registrars & Share Transfer Agents for attending to issues relating to physical shares and routine services requests. Shareholders can also address any unresolved issues or information requests by postal mail to - Company Secretary, Allsec Technologies Ltd, 46B, Velachery Main Road, Chennai 600042. Shareholders are requested to update their email addresses with their respective depository participants so that the Company can provide better services at all times. Acknowledgement Your Directors wish to place on record their appreciation for the excellent support and co-operation given by customers, shareholders, service providers and Government Agencies. Your Directors also record their appreciation and gratitude to Financial Institution and Bankers for their continued support and timely assistance in meeting the Company's resource requirements. Your Directors acknowledge the dedicated services rendered by all the employees of the company. For and on behalf of the Board of Directors A. Saravanan Director R. Jagadish Director Place: Chennai Date : 20th May 2016 |