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Directors Report of Accelya Kale Solutions Ltd.

Jun 30, 2014

The Members,

The Directors are pleased to present the Twenty Eighth report on the business and operations of the Company for the year ended June 30, 2014.

Financial Results Rs. in Million

Particulars 2013-14 2012-13

Total Revenue

- Revenue from Services 2,832.06 2,623.84

- Other Income 193.49 47.21

Total 3,025.55 2,671.05

Total Expenditure 1,740.62 1,626.33

Profit before Tax and Exceptional Items 1,284.93 1,044.72

Exceptional Items - -

Profit Before Tax and After Exceptional Items 1,284.93 1,044.72

Provision for Tax

- Current Tax 387.93 343.70 Deferred Tax Charge

- Current Tax 23.73 (11.42)

Dividend Distribution Tax Credit (22.66) -

Profit After Tax 895.93 712.44

Profit brought forward from previous year 137.58 507.48

Accumulated balance of Zero Octa Selective Sourcing India Private Limited, brought forward incorporated pursuant to the Scheme of Amalgamation - 211.83

Accumulated balance of Zero Octa Recruitment and Training (India) Private Limited, brought forward incorporated pursuant to the Scheme of Amalgamation - (0.51)

Profit available for appropriation 1,033.51 1,431.24

Appropriations:

- Transferred to General Reserves 89.59 71.24

- Interim Dividend 403.00 447.79

- Proposed Dividend 328.38 597.05

- Dividend Distribution Tax 124.30 177.57

- Balance Carried Forward to Balance Sheet 88.24 137.58

Dividend

The Company had declared and paid an interim dividend of Rs.27 per equity share during the year.

Your Directors are pleased to recommend a final dividend of Rs.22 per equity share for the financial year ended June 30, 2014.

Operating Results

Considering the current economic scenario where the GDP growth in the country has been less than 5% for the second consecutive year, your Company''s performance has shown a steady growth.

During the year under review, your Company''s total revenues have increased by 13.27% from Rs. 2,671.05 million to Rs.3,025.55 million. The total expenditure for the year 2013-14 stood at Rs. 1,740.62 million as against Rs. 1,626.33 million in the previous year, a marginal increase of 7.03%.

The Profit before tax for 2013-14 increased to Rs. 1,284.93 million from Rs. 1,044.72 million in the previous year, an upsurge of 22.99%.

The Company has registered profit after tax of Rs. 895.93 million in the current year as against Rs. 712.44 million in the previous year, an impressive growth of 25.76%.

Business Operations

Accelya Kale continued with its focus on innovation, increased productivity and quality by launching some key solutions during the year:

- The Company accomplished a major technology refresh to its flagship product- REVERA®. The enhanced version of REVERA sets new benchmarks in Revenue Accounting on accuracy, speed and intelligence – across passenger, cargo and airmail.

Accelya Kale''s Finesse suite of products has been well received by the Airline industry. On the back of excellent traction to miscellaneous billing solution- FinesseMBS™; the Company launched FinesseCost ™ to help airlines prevent overpayments to suppliers and efficiently manage their Direct Operating Costs (DOC).

- In a bid to help airlines easily evaluate their interline performance, the Company launched eSpin™. Web-based and easy to use, eSpin helps airlines evaluate interline billing and bring greater efficiency into their operations.

Accelya Kale further consolidated its position as the leading and preferred solution provider to the Airline industry and added leading global airlines to its growing customer list. Some of these were:

- Hawaiian Airlines, the largest carrier in Hawaii, USA, selected Accelya Kale''s passenger revenue accounting solution, REVERA PRA, to re-engineer their passenger revenue accounting process.

- Bangkok Airways, Asia''s boutique airline, selected Accelya Kale to provide services including the complete Book-to- Cash cycle including passenger revenue accounting, cargo revenue accounting, sales audit, card billing and miscellaneous billing.

- Go Air, a leading budget carrier from India, chose Accelya''s REVERA NEXT to automate its revenue accounting process, build in better audit controls and be future-ready to accommodate any changes in business model.

- Flybe, Europe''s largest independent regional airline selected FinesseMBS™ solution to automate and standardise the entire miscellaneous billing process.

- Garuda Indonesia, national carrier of Indonesia outsourced its fare filing to Accelya Kale.

The Company was conferred with some prestigious awards during the year. Accelya Kale was once again featured in the prestigious Forbes Asia''s 200 List of ''Best Under a Billion''. This is the second time the Company has featured in the elite list after having featured in 2011 for the first time. Accelya Kale was also voted as ''IT Company of the year 2014'' by leading global media awards viz. Air Transport News Awards and Air Cargo Week World Air Cargo Awards.

Subsidiaries

The Central Government has, vide General Circular No: 2 / 2011 dated February 8, 2011, granted general exemption to companies from attaching a copy of the Balance sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors of subsidiary companies, subject to the fulfillment of certain conditions mentioned therein. As a result, the Balance sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors of the following subsidiary companies:

a) Kale Softech Inc.

b) Kale Revenue Assurance Services Limited

c) Zero Octa UK Limited

do not form part of this Annual Report. The annual accounts of the subsidiary companies and related detailed information shall be made available to shareholders of the Company and of subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be available for inspection by any shareholders at the registered office of the Company and of the subsidiary companies concerned. These documents can be requested by any shareholder of the Company. Further, in line with the Listing Agreement and in accordance with the Accounting standard 21 (AS-21), the Consolidated Financial Statements prepared by the Company include financial information of its subsidiaries.

Directors

Mr. Philippe Lesueur retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

Mr. Lesueur is also the Chairman of Accelya Holding World S.L. headquartered in Barcelona, Spain. Mr. Lesueur is well known and highly respected in the airline industry where he has spent more than 30 years. Under his leadership, the business of Accelya has grown from BSP (billing and settlement plan) processing in one country in 1982 to cover more than 108 countries and volumes that exceed 180 million tickets per year.

Companies in which Mr. Philippe Lesueur is a director

Accelya Holding World S.L. Kale Softech Inc.

Accelya World S.L.U. Zero Octa UK Limited

Accelya UK Limited Kale Revenue Assurance

Services Limited

Accelya France SAS Accelya Portugal

Unipessoal, Ltda.

Accelya Luxembourg S.A. Accelya Holding

(Luxembourg) S.A.

Mr. Lesueur does not hold any shares in the Company.

As per section 149(4) of the Companies Act, 2013, every listed public company is required to have at least one-third of the total number of directors as Independent Directors.

In accordance with the provisions of section 149 of the Act, Mr. K. K. Nohria, Mr. Sekhar Natarajan and Mr. Nani Javeri are being appointed as independent directors to hold office for a period of five years from the date of the forthcoming Annual General Meeting (AGM) of the Company. Mr. K. K. Nohria, Mr. Sekhar Natarajan and Mr. Nani Javeri shall not be liable to retire by rotation.

Ms. Sangeeta Singh was appointed as an additional director by the Board of Directors on 18th July, 2014. She is an independent director. The term of Ms. Singh as an additional director expires at the forthcoming AGM. If appointed at the forthcoming AGM, she will be an independent director from the date of forthcoming AGM till 17th July, 2019. Ms. Sangeeta Singh shall not be liable to retire by rotation.

Auditors

Pursuant to section 139 of the Companies Act, 2013 and the Rules made thereunder, it is proposed to appoint M/s. B S R & Co. LLP, Chartered Accountants as statutory Auditors of the Company for a period of two years from the conclusion of the ensuing Annual General Meeting until the conclusion of the 30th Annual General Meeting and to fix their remuneration for the year 2014-15.

Directors'' Responsibility Statement

Your Directors confirm that –

- in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

- 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 Directors'' Report 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.

- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- the directors had prepared the annual accounts on a going concern basis.

Human Resource

The Board has not granted any stock options during the year under review. During the year the Company also did not have any options in force. Therefore the details required to be given under the SEBI (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999 are not being given.

During the year, the Company had cordial relations with its employees.

Corporate Governance

A report on Corporate Governance is set out separately, which forms part of this report.

Fixed Deposits

During the year your Company has not accepted fixed deposits from the public.

Particulars of Employees

In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars are required to be attached to this Report. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report of your Company sent to the shareholders do not contain the said annexure. Any member desirous of obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars prescribed under clause (e) of subsection (1) of section 217 of the Companies Act, 1956 read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the annexure which forms part of this report.

Acknowledgment

Your directors extend their gratitude to all investors, clients, vendors, banks, financial institutions, regulatory and governmental authorities and stock exchanges for their continued support during the year. The directors place on record their appreciation of contribution made by the employees at all levels for their dedicated and committed efforts during the year.

For and on behalf of the Board of Directors

Philippe Lesueur Vipul Jain Chairman Managing Director

Place : Thane Date : 6 August, 2014


Jun 30, 2013

To, The Members,

The Directors are pleased to present the Twenty Seventh report on the business and operations of the Company for the year ended June 30, 2013.

Financial Results Rs. in Million

Particulars 2012-13 2011-12

Total Revenue

-Revenue from Services 2,623.84 1,814.06

- Other Income 47.21 50.87

Total 2,671.05 1,864.93

Total Expenditure 1,626.33 1,406.42

Profit before Tax and Exceptional

Items 1,044.72 458.51

Exceptional Items - 7.77

Profit Before Tax and Exceptional

Items 1,044.72 466.28

Provision for Tax

-Current Tax 343.70 161.29

Deferred Tax Charge

-Current Tax (11.42) (9.16)

Profit After Tax 712.44 314.15

Profit brought forward from previous year 507.48 647.37

Accumulated balance of Zero Octa Selective Sourcing India Private Limited, brought forward incorporated pursuant to the Scheme of Amalgamation 211.83 -

Accumulated balance of Zero Octa Recruitment and Training (India) Private Limited, brought forward incorporated pursuant to the Scheme of Amalgamation (0.51) -

Profit available for appropriation 1,432.26 961.52

Appropriations:

- Transferred to General Reserves 71.24 31.41

- Interim Dividend 447.79 214.38

- Proposed Dividend 597.05 149.26

- Dividend Distribution Tax 177.57 58.99

- Balance Carried Forward to Balance Sheet 137.59 507.48

Dividend

The Company had declared and paid an interim dividend of Rs. 30 per equity share during the year.

Your Directors are pleased to recommend a final dividend of Rs.40 per equity share for the financial year ended June 30, 2013.

Operating Results

The Company has shown robust growth in the financial year 2012-13. During the year under review, the total revenues of the Company grew by Rs. 806.12 million from 1,864.93 million to Rs.2,671.05 million, an increase of 43.23% over the previous year. The Company''s total expenditure for the year ended June 30, 2013 stood at Rs. 1,626.33 million compared to Rs. 1,406.42 million in the previous year, an increase of 15.64%.

The Profit before tax increased from Rs. 466.28 million in the previous year to Rs. 1,044.72 for the current year, an increase of 124.05%.

The Profit after tax for the year ended increased to Rs. 712.44 million from Rs. 314.15 million of the previous year, a steep increase of 126.78%.

Business Operations

During the year, Kale Consultants Limited was renamed as Accelya Kale Solutions Limited. This was a step in making it easier for our customers to have access to the entire solution portfolio and do business with the Accelya Group. Accelya Group redefined a new Vision and Mission and launched the new logo in line with the same.

During the year, the Company launched REVERA Airmail revenue accounting solution for airlines to manage their airmail business. REVERA Airmail is part of Accelya Kale''s leading REVERA Revenue Accounting Suite, which includes REVERA PRA, REVERA CRA, REVERA Interline and APEX Proration.

The Company added many leading global airlines to our customer list. Some of these included:

- Biman Bangladesh Airlines Limited, the flag carrier airline of Bangladesh selected FinesseMBS™ solution to streamline its miscellaneous billing processes.

- Royal Air Maroc, the flag carrier airline of Morocco selected its FinesseMBS™ to automate and standardize the entire Miscellaneous billing process.

- Air India, the flag carrier airline of India outsourced its passenger, cargo revenue accounting to Accelya Kale.

- Thai Airways, the national carrier of Thailand selected Accelya Kale''s passenger revenue accounting solution, REVERA* PRA, to streamline their passenger revenue accounting process.

- bmi regional, the British regional airline, outsourced its passenger revenue accounting, sales audit, refunds, card billing and chargeback processing to Accelya Kale.

- Air Seychelles, the national carrier of Seychelles, outsourced its Passenger Revenue Accounting, Cargo Revenue Accounting, Airmail Revenue Accounting and Miscellaneous (Non-Transport) Billing to Accelya Kale.

Subsidiaries

The Central Government has, vide General Circular No: 2 / 2011 dated February 8, 2011, granted general exemption to companies from attaching a copy of the Balance sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors of subsidiary companies, subject to the fulfillment of certain conditions mentioned therein. As a result, the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and the Report of the Auditors of the following subsidiary companies:

a) Kale Softech Inc.

b) Kale Revenue Assurance Services Limited

c) Zero Octa UK Limited

do not form part of this Annual Report. The annual accounts of the subsidiary companies and related detailed information shall be made available to shareholders of the Company and of subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be available for inspection by any shareholders at the registered office of the Company and of the subsidiary companies concerned. These documents can be requested by any shareholder of the Company. Further, in line with the Listing Agreement and in accordance with the Accounting standard 21 (AS-21), the Consolidated Financial Statements prepared by the Company include financial information of its subsidiaries.

During the year, Kale Softech Inc. repurchased 450,000, 5% Redeemable Preferred Stock of USD 1 each held by your Company at a price of USD 1.58 per stock.

Amalgamation

With a view to enable pooling and more efficient utilization of resources, greater economies of scale, reduction in operating and other overheads and improvement in various operating parameters, it was decided to amalgamate Zero Octa Selective Sourcing India Pvt. Ltd. ("ZOSS") and Zero Octa Recruitment and Training (India) Pvt. Ltd. ("ZORT"), (the indirect subsidiaries of the Company) with Accelya Kale.

The Hon''ble Bombay High Court has passed an order on 05 July, 2013, approving the amalgamation with effect from 01 April, 2013 (Appointed date). Accordingly, ZOSS and ZORT have been dissolved.

Directors Mr. Sekhar Natarajan

Mr. Sekhar Natarajan retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

Mr. Sekhar Natarajan is a well-known industry professional. Known for his integrity and passion for results, Mr. Natarajan has led and built Monsanto India as an organization that is a growth leader in Indian agriculture. He is a strategic thinker with rich global experience in business development and mergers and acquisitions. He is a great people leader who has developed and nurtured talent for Monsanto and the Agri sector in India. He has taken early retirement from Monsanto after 30 years of working for the company.

Mr. Natarajan is currently the managing partner at S N Consultants where he provides advice and strategic direction to several local and international companies. He also holds the position of Chairman and Director at Monsanto India Ltd. Additionally, he serves as a Director at Maharashtra Hybrid Seed Company Ltd. and Wyeth Ltd.

Companies in which Mr. Sekhar Natarajan is a director

Accelya Kale Solutions Limited Monsanto India Limited

Maharashtra Hybrid Seeds Wyeth Limited Company Limited

Mr. Natarajan does not hold any shares in the Company.

Mr. Bahram Vakil

Mr. Bahram Vakil, who was an independent director of the Company has resigned due to personal commitments with effect from 01 July, 2013.

Mr. Nani Javeri

Mr. Nani Javeri was appointed as an additional director by the Board of Directors on 08 July, 2013. The term of Mr. Javeri as an additional director expires at the ensuing Annual General Meeting. It is proposed to appoint him as a director liable to retire by rotation.

Mr. Javeri has extensive experience of 42 years in the financial services industry. He is the former CEO of Bank of Sohar, Oman and Birla Sun Life Insurance. Under his leadership, Birla Sun Life Insurance ("BSLI") emerged as one of the leading private sector life insurance companies in India. Mr. Javeri, prior to BSLI, spent 32 years with Grindlays Bank in various capacities in India, London and Melbourne. He had also been associated with Oman International Bank in Oman and Times Bank Limited in India.

Companies in which Mr. Nani Javeri is a director:

Accelya Kale Solutions Ltd. Inarco Limited

Ari Consolidated Investments Union KBC Asset Ltd. Management Co. Pvt. Ltd.

Voltas Ltd. Hannover Re Consulting Services (I) Pvt. Ltd.

Universal Comfort Products Ltd.

Mr. Javeri does not hold any shares in the Company.

Reappointment of Mr. Vipul Jain as Managing Director

The term of Mr. Vipul Jain as Managing Director expired on 31 May, 2013. The Board of Directors, at its meeting held on 7 August, 2013, re-appointed Mr. Vipul Jain as Managing Director from 1 June, 2013 to 30 June, 2016. The appointment is subject to the approval of the members in general meeting. Members are requested to approve the resolution for reappointment of and remuneration payable to Mr. Jain as Managing Director.

Mr. Vipul Jain, 55, is a B.Tech. from IIT, Kanpur and a Post Graduate in Management from IIM Ahmedabad. He was responsible for development and implementation of the country''s first on-line Hotel Management System in 1982. In 1986, he, alongwith Mr. Narendra Kale, promoted the Company and took on marketing responsibility for the Company. He also led the Company''s efforts in building the Hospital Management System, a pioneering effort that won him the Young Consultants Award from the Government of India. In 1992, he took on the responsibility of Managing Director. The setting up of the airlines line of business has been at his initiative and he has personally been responsible for the Company''s success in marketing products in the fiercely competitive international market.

Companies in which Mr. Vipul Jain is a director

Accelya Kale Solutions Limited Zero Octa UK Limited, UK

Kale Revenue Assurance Kale Softech Inc., USA Services Limited, UK

Kale Logistics Solutions Private Virtual Wizards Private Limited Limited

Baaya Ventures Limited Fight Hunger Foundation

Mr. Vipul Jain does not hold any equity shares in the Company. Auditors

M/s. B S R & Co., Chartered Accountants, Auditors of the Company, retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Directors'' Responsibility Statement

Your Directors confirm that -

- in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

- 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 Directors'' Report 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.

- the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- the directors had prepared the annual accounts on a going concern basis.

Human Resource

The Board has not granted any stock options during the year under review. During the year the Company also did not have any options in force. Therefore the details required to be given under the SEBI (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999 are not being given.

During the year, the Company had cordial relations with its employees.

Corporate Governance

A report on Corporate Governance is set out separately, which forms part of this report.

Fixed Deposits

During the year your Company has not accepted fixed deposits from the public.

Particulars of Employees

In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars are required to be attached to this Report. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report of your Company sent to the shareholders do not contain the said annexure. Any member desirous of obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

Conservation Of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars prescribed under clause (e) of subsection (1) of section 217 of the Companies Act, 1956 read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are set out in the annexure which forms part of this report.

Acknowledgment

Your directors extend their gratitude to all investors, clients, vendors, banks, financial institutions, regulatory and governmental authorities and stock exchanges for their continued support during the year. The directors place on record their appreciation of contribution made by the employees at all levels for their dedicated and committed efforts during the year.

For and on behalf of the Board of Directors

Philippe Lesueur Vipul Jain

Chairman Managing Director

Place: Mumbai

Date: 7 August, 2013

 
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