Report of the Board of Directors Dear Members, Your Directors have pleasure in presenting the seventeenth Annual report together with the Audited Accounts of the Company for the financial year ended 31st March 2016. 2. Results of operation Standalone Accounts • Total income for the year 2015-16 was Rs.551.11 mn as against Rs.480.32 mn during the year 2014-15, registering an increase of 14.74%. • Profit after tax was Rs.104.74 mn during the year 2015-16 as compared to Rs.57.22 mn during 2014-15, resulting a growth of 83.05% • Basic earnings per share was Rs.10.67 for the financial year 2015-16 as compared to earnings per share of H5.86 for the financial year 2014-15. Operating and other expenses during the year were at Rs.363.23 mn as compared to Rs.351.67 mn in the previous year. Consolidated Accounts • Consolidated total income for the year 2015-16 was Rs.2458.97 mn as against Rs.2335.22 mn during the year 2014-15, registering a growth of 5.30%. • Profit after taxes was Rs.184.67 mn during the year 2015-16 as compared to Rs.167.05 mn during 2014-15, a growth of 10.55%. • Basic earnings per share was Rs.18.82 for the financial year 2015-16 as compared to earnings per share of Rs.17.12 for the financial year 2014-15. 3. Business operations Digital transformation refers to the changes associated with the application of digital technology in all aspects of human society. Enterprises are leveraging disruptive technologies like Cloud, Applications (web or mobile), Big Data and Analytics to understand their customers better and offer customized services for them. Successful Digital Transformation comes not from implementing new technologies but by understanding its need and use and deriving maximum value out of it. Saksoft is empowering enterprises with the digital transformation journey. We strive to create engaging and reliable digital experiences across every touch point, providing fresh opportunities for progress. Our services encompass 4 key areas which fuel growth for organizations including Information Management Solutions, Application Services, Testing and Cloud, helps customers to digitally transform their businesses. We help enterprises with cohesive Data & processes, Analytical competence & Predictive insights, Process digitization, Custom based Applications, Business & IT Integration, Data driven decision-making and better solution delivery. Information Management Saksoft offers full range of business consulting and technology services to successfully align any enterprise's Information Management objectives. We consult, design, implement, train and support on all major IM platforms such as Cognos, Datastage, Business Objects, Hyperion, Microsoft, SAS and Informatica. Saksoft with its partners will provide predictive insights for data driven decision-making. Application Services Building custom applications has been another core area for Saksoft and we have been developing and managing large custom build applications for customers across verticals. Whether it is a web application or mobile application, Saksoft proprietary tools and frameworks will help enterprise achieve its goals with ease. Independent testing Threesixty logica (testing arm of Saksoft) is a strong contender in independent software testing. With a plethora of testing services being offered, Saksoft will be able to bring down the overall cost, increase dependability, mitigate security risks, and enhance performance and scalability. Cloud Services Your digital transformation story is not complete without cloud. Enterprises need a robust and scalable architecture to meet their growing information storage demands. Together with our partner, we are consulting, deploying and migrating infrastructure on cloud. We provide more agile and flexible IT infrastructure ensuring that the data is always available and more secured. During the year under review, there is no significant material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operation in future. 4. Dividend Based on Company's performance, the Directors are pleased to recommend for approval of the members a Final dividend of Rs.3.00 per share (30% on the face value of Rs.10) for the financial year 2015-16. The final dividend on the equity shares, if declared as above would involve an outflow of Rs.31.19 mn towards dividend and Rs.0.16 mn towards dividend tax, thereby resulting in total outflow of Rs.31.35 mn. 5. Share Capital The paid up equity Capital as on March 31, 2016 was Rs.103,950,000/-. During the year under review, the Board of Directors have allotted 35,000 equity shares consequent to the exercise of options by certain eligible employees under ESOP 2009 plan of the Company. 6. Transfer to Reserve During the year under review, there were no transfer to General reserves. 7. Subsidiary Companies Subsidiaries of the company are engaged in the business of providing IT Services or business solutions or consulting services. The details of Subsidiary Companies are given in Form No. MGT - 9 annexure to this report. There has been no material change in the nature of the business of the subsidiaries. There are no associate Companies within the meaning Section 2(6) of the Companies Act, 2013. The Company's wholly owned subsidiary Saksoft Inc and its subsidiaries earned revenue of $17.49 mn (equivalent to H1142.45 mn) during financial year 2015-16 compared to $14.96 mn (equivalent to H912.91mn) during financial year 2014-15 registering a growth of 16.91% in dollar terms over the previous financial year. The profits after tax of Saksoft Inc grew by 37.25% on consolidated basis and increased to $0.70 mn equivalent to H45.72 mn) during financial year 2015-16 compared to $0.51mn (equivalent to H30.91 mn) during financial year 2014-15. The Company's wholly owned subsidiary Saksoft Pte Ltd. earned revenue of S$ 1.71 mn (equivalent to Rs.80.56 mn) during financial year 2015-16 compared to S$1.92mn (equivalent to Rs.90.99 mn) during financial year 2014-15 registering a decline of 10.94% in Sing dollar terms over the previous financial year. The profits before tax of Saksoft Pte Ltd declined by 28.57% on consolidated basis and decreased to S$0.25 mn (equivalent to Rs.10.83 mn) during financial year 2015-16 compared to S$0.35 mn (equivalent to H16.59 mn) during financial year 2014-15. The Company's wholly owned subsidiary Saksoft Solutions Ltd together with its subsidiaries earned revenue of GBP 8.11 mn (equivalent to Rs.798.35 mn) during financial year 2015-16 compared to GBP 11.15 mn (equivalent to Rs.1097.27 mn) during financial year 2014 - 15 registering a decline of 27.27% in Pound Sterling terms over the previous financial year. The losses of Saksoft Solutions Ltd before tax and amortisations increased by 100% on consolidated basis and decreased to GBP 0.76 mn (equivalent to Rs.70.87 mn) during financial year 2015 - 16 compared to GBP 0.38 mn (equivalent to Rs.56.09 mn) during financial year 2014-15. The Company's subsidiary Three Sixty Logica Testing Services Private Limited together with its subsidiary earned revenue of H296.77 mn during financial year 2015-16 compared to H275.58mn during financial year 2014-15 registering a growth of 7.68% in rupee terms over the previous financial year.The profits before tax of Three Sixty Logica Testing Services Private Limited grew by 31.19% on consolidated basis and increased to Rs.99.18 mn during financial year 2015-16 compared to 75.60 mn during financial year 2014-15. Saksoft GmbH, Germany and Saksoft FR, SARL, France wholly owned subsidiaries were not in operations during the year under review. Saksoft GmbH, Germany is under liquidation under applicable German Laws. Pursuant to provisions of Section 129(3) of the Companies Act, 2013, a Statement containing salient features of the financial statement of subsidiaries is attached to the consolidated financial statements in Form AOC-1. Pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statement of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of Subsidiaries, are available on the website of the Company. Also these documents will be available for inspection during business hours at the registered office of the Company. 8. Related Party Transactions The transactions with related parties entered into by the Company are periodically placed before the Audit Committee for its Approval. All related party transactions that were entered during the financial year were on arm's length basis and were in the ordinary course of the business. No transaction with the related party is material in nature in accordance with the Company's "Related Party Transaction Policy" and Regulation 23 of SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015, hence Form AOC-2 is not required to be annexed with this report. In accordance with Accounting Standard 18, the details of the transactions with the related parties are set out in Note No. 22.e forming part of Standalone financial statements. The policy on related party transactions and material subsidiary as approved by the Board of Directors are available on the company's website. Web link of the same is given under point 17 of the Corporate governance report. 9. Particulars of Loans, Guarantees or Investments During the year under review, the Company has not given any Loans, Guarantees or Investments. The Particulars of the existing loans, Guarantees or Investments are provided under Note No. 10 & 12 forming part of Standalone financial statements. 10. Public Deposits There are no deposits covered under Chapter V of the Companies Act, 2013 ("the Act") during the year 2015-16, the details of which are required to be furnished. 11. Material Changes after 31st March, 2016 There have been no material changes and commitments between 31st March 2016 and the date of this report having an adverse bearing on the financial position of the Company. 12. Policy on sexual harassment of women at workplace (prevention, prohibition and redressal) Act, 2013 The Company has zero tolerance for Sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of Sexual Harassment at work place in line with the requirements of the Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules framed thereunder. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The constitution of the ICC is displayed at conspicuous place at Delivery centers in Chennai and Noida. The following is the summary of the complaints received and disposed off during the financial year 2015-16: a) No. of SH Complaints received: 0 b) No. of SH Complaints disposed off: 0 13. Corporate Social Responsibility (CSR) During the financial year under review, consequent to the sad demise of Mr. Autar Krishna, the Board of Directors have reconstituted the CSR committee by inducting Ms. Kanika Krishna, Director in place of Mr. Autar Krishna. The Reconstituted CSR committee is as follows: 1. Mr. Aditya Krishna, Chairman & Managing Director 2. Mr. Amitava Mukherjee, Independent Director and 3. Ms. Kanika Krishna, Non-executive Director The Committee's responsibilities are as stipulated under Section 135 of the Companies Act, inter-alia which includes formulating the CSR policy in compliance to Section 135 of the Companies Act 2013 and identifying activities to be undertaken as per Schedule VII of the Companies Act 2013. Weblink of the adopted CSR policy of the company is given under point 17 of the Corporate Governance report. CSR Committee met on February 01, 2016 and recommended to the Board of Directors to contribute not less than 2% of the average net profit of the last three financial years toward CSR fund for the financial year 2015-16 to aid NGO's undertaking projects in the field of promoting gender equality, empowering women, and providing healthcare to women and children. The report on CSR activities is annexed to and forms part of, this report as "Annexure -1" 14. Internal Control Systems and their Adequacy In accordance with Section 134(5)(e) of the Companies Act, 2013, the Company has Internal Financial Controls Policy by means of Policies and procedures commensurate with the Size and nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of Companies (Accounts) Rules, 2014, the Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed by the Audit Committee of the Board, for identification of deficiencies and necessary time bound actions are taken to improve efficiency at all the levels. The Committee also reviews the internal auditors' report, key issues, significant processes and accounting policies. 15. Internal Auditors M/s. RGN Price & Co., Chartered Accountants, Chennai are the Independent Internal auditors of the Company. The Audit Committee determines the scope of internal Audit in line with regulatory and business requirements. 16. Board Meetings, Board of Directors & Key managerial personnel Disclosures with respect to the Board composition, Directors and Board meetings held during the financial year are covered under the Corporate Governance report forming part of this report. As per the Provisions of the Companies Act, 2013, Ms.Kanika Krishna retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. Mr. V.V.R. Babu (DIN 07234186) has been appointed on 27th May, 2016 as an Additional Director under Independent Director Category. A notice in writing has been received from a Member signifying his intention to propose the appointment of Mr. V.V.R. Babu as a Director under Independent Director category at the ensuing Annual General meeting to hold office for 5 consecutive years with effect from 27th May, 2016 without being subject to retirement by rotation. The brief resume and other details relating to Ms. Kanika Krishna and Mr. V.V.R. Babu, as stipulated under Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, are furnished in the Notice of Annual General Meeting being sent to the Members along with this Annual Report. During the year under review, there are no changes in the Key Managerial personnel appointed under Section 203 of the Companies Act, 2013. As per disclosures made by the Directors, none of the Directors are disqualified pursuant to Section 164 of the Companies Act, 2013 and the disclosures have been taken on record by the Board of Directors. The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Act, that they meet the criteria of Independence as laid down in Section 149(6) of the Act. The disclosures required under Section 197(12) of the Companies Act 2013, is given in "Annexure 2". 17. Board Committees The Company has the following Committees of the Board: 1. Audit Committee; 2. Nomination and Remuneration Committee; 3. Stakeholders Relationship Committee and 4. Corporate Social responsibility Committee (CSR) The Composition of each of the above Committees 1 to 3, its respective roles and responsibilities are detailed in the Corporate Governance Report forming part of this Annual report. Composition of CSR and its role and responsibility is detailed in this report. 18. Board diversity The Company recognizes that building a Board of diverse and inclusive culture is integral to its success. Ethnicity, age and gender diversity are areas of strategic focus to the composition of our Board. The Board considers that its diversity, including gender diversity, is a vital asset to the business. The Board has adopted the Board Diversity policy which sets out the approach to diversity of the Board of Directors. Web link of the Board Diversity Policy is given under point 17 of the Corporate Governance report. 19. Board Evaluation The Board on recommendation of the Nomination and Remuneration Committee has structured a framework for evaluation of the Individual Directors, Chairman, Board as a whole and its Committees. The Independent Directors at their Meeting held during February 2016 evaluated the performance of Non Executive Directors, Chairman and assessing the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The evaluation of the Directors and the Board as a whole and its Committees were done through circulation of questionnaires, which assessed the performance on select parameters related to roles, responsibilities and obligations of the Board and functioning of the Committees. The evaluation criterion was based on the participation, contribution and offering guidance to and understanding of the areas which are relevant to the Directors in their capacity as Members of the Board/Committees. 20. Nomination and Remuneration Policy The Company has a Nomination and Remuneration Policy for appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, Independence of a Director and other related matters as required under Section 178(3) of the Act and SEBI (listing obligations and disclosure requirements) Regulation, 2015. The details of the Policy are given in Annexure-3 to this Report. 21. Directors' Responsibility Statement In terms of Section 134(5) of the Companies Act, 2013, the Directors' hereby confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (b) The Directors have 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 and loss of the Company for the year under review; (c) The Directors have 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; (d) The directors have prepared the annual accounts on a going concern basis; (e) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (f) The Directors have devised proper systems to ensure compliance with the provisions of applicable laws and that such systems were adequate and operating effectively. 22. Vigil Mechanism/ whistle Blower Policy: Details of the Vigil Mechanism are covered under the Corporate Governance report forming part of this Annual report. 23. Auditors At the Annual General Meeting held on September 26, 2014, M/s. Suri & Co., Chartered Accountants, Chennai, were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the Calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Suri & Co., Chartered Accountants, as statutory Auditors of the Company, is placed for ratification by the Shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. As required under Regulation 33 of SEBI (Listing Obligations and Disclosure requirements), Regulations, 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. 24. Secretarial Auditor 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 M/s. Lakshmmi Subramanian & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure- 4". 25. Auditor's Report and Secretarial Audit Report There are no qualifications or adverse remarks in the Auditors and Secretarial Auditors Report. 26. Conservation of Energy The Company is a software company and hence the operations of the Company are not energy intensive. The Company employs energy efficient computers and office equipment. The company strives to evolve new technologies to see to that the infrastructure is more energy efficient. The Chennai delivery centre is situated in the LEED pre certified gold rated green building. 27. Technology Absorption The Company adopts "continuous process improvement and is constantly in touch with the developments in the emerging technologies in relation to Business Intelligence (BI) and the Information Management (IM). The thought leaders within the Company interact regularly with the leading technology and market leaders in BI tools (both open source and licensed). This ensures your Company is not only able to adopt evolving technologies at an early stage and package these as services to the customers, enhancing value for them but also ensures the readiness of a trained employee base for undertaking projects in disruptive technologies. The Company's operations do not require significant import of technology. 28. Research and development (R&D) As mentioned above the Company is constantly involved in developing solutions for its customers using the emerging technologies which involves considerable research and development efforts on the part of the employees. The efforts and costs incurred in such research is integral to the operations of the Company and are not segregated and identified separately. 30. Extract of Annual Return The details forming part of the Annual Return in form of MGT 9 is annexed herewith as "Annexure - 5". 31. Risk Management Risk Management is an integral part of the business process. Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Company has developed and implemented a Risk Management Policy. The Policy envisages identification of risk and procedures for assessment and minimization of risk. The Statement of Risk indicating development and implementation of risk management policy is annexed to and forms part of this Report as Annexure 10. At present the Company has not identified any element of risk which may threaten the existence of the company. 32. Particulars of Employees During the financial year under review, none of the employees drew remuneration of H6 mn or more per annum or H0.5 mn or more per month, hence the information required pursuant to Section 197 of the Companies Act, 2013 read with Rule, 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is not applicable. 33. Employees Stock Option Scheme The Company currently administers two stock option schemes, Viz., ESOP 2006 and ESOP 2009. During the year under review, there are no changes in the above said schemes. Summary information of these stock option schemes, grant and allotments under these schemes are provided under Note No. 22.h forming part of standalone financial statements. In addition, the following details are disclosed in Annexure - 6 to this report. a. Relevant disclosures in terms of the 'Guidance note on accounting for employee share-based payments' issued by ICAI and b. Diluted EPS on issue of shares pursuant to all the schemes covered under the regulations shall be disclosed in accordance with 'Accounting Standard 20 - Earnings Per Share' issued by ICAI. The above information forms part of the Annual report. The weblink to access the Annual report is given under point no. 17 of the Corporate governance report. 34. Corporate Governance The Company is committed to maintaining high standards of Corporate Governance, protecting the Customers', Shareholders' and other Stakeholders' interests. Towards this, the Company has adopted high standards of governance Principles, Practices and disclosure levels. Pursuant to Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed Corporate Governance Report, Compliance Certificate regarding compliance of conditions of Corporate Governance and Management Discussion and Analysis Report are annexed to and forms part of, this report as Annexure 7, 8 and 9. 35. Policy on Insider Trading The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees and connected persons of the Company in line with SEBI (Prohibition of Insider Trading) Regulations, 2015. 36. Acknowledgement The Company takes this opportunity to thank its customers, vendors, investors, business associates and bankers for their support extended during the year to the Company. The Management also likes to thank the Government of India, the Governments of various countries, the concerned State Governments, Government Departments and Governmental Agencies for their co-operation. The Management would also wish to place their appreciation to the employees of the Company for the excellent contributions extended at all levels in achieving growth and results. For and on behalf of the Board Aditya Krishna Chairman & Managing Director Place: Chennai Date: 27th May, 2016 |