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Directors Report of Cigniti Technologies Ltd.

Mar 31, 2015

The Directors have pleasure in presenting before you the 17th Annual Report of the Company together with the Audited Statements of Accounts on standalone & consolidated basis for the year ended 31st March, 2015.

Financial Summary/Highlights, Operations, State of Affairs:

The performance during the period ended 31st March, 2015 has been as under:

(Rs,In Lakhs)

Particulars 2014-2015 2013-2014

Consolidated Standalone Consolidated Standalone

Total Income 38,043.32 11,582.44 25,909.98 5,552.12

Total 34,918.76 11,013.94 22,714.94 4,373.29

Expenditure

Profit Before Tax 3,124.56 568.50 3,284.97 1,189.69

Provision for Tax 554.43 174.52 730.47 385.73

Profit after Tax 2,570.13 393.98 2,554.50 803.96

Transfer - - - -

to General

Reserves

Profit 2,570.13 393.98 2,554.50 803.96

available for

appropriation Provision for - - - -

Proposed Dividend

Provision for - - - - Corporate Tax

Balance Carried 2,535.08 358.92 2,554.50 803.96 to Balance Sheet

Review of Operations:

The total revenue of the Company for the financial year under review on consolidated basis was Rs. 38,043.32 Lakhs as against Rs. 25,909.98 lakhs. The net Profit was Rs. 2,570.13 for the financial year as against the net Profit of Rs. 2,254.50 lakhs for the previous year.

Dividend

The Board of Directors are striving hard to maximise the shareholders returns in the long run by proposing inorganic acquisitions globally and placing the Company at No.1 position in the world. Hence the Directors express their inability to declare the dividend.

Qualified Institutional Placement

For global expansion of the Company, the Board of Directors are looking forward for huge investments in the Company. Hence recommended for approval of members, issue of such number of equity shares or the global depositary receipts ("GDR"), the American depositary receipts ("ADR"), the foreign currency convertible bonds ("FCCBS"), fully convertible debentures/partly convertible debentures, preference shares convertible in to equity shares, non-convertible debentures with warrants and / or any other financial instruments or securities convertible in to equity shares by way of Qualified Institutional placement for an amount of Rs. 150 crores (including premium).

Share Capital

During the year, your Company has allotted 21,06,245 equity shares of Rs. 10/- each at a premium of Rs. 208.40/- each and 18,17,974 equity shares of Rs. 10/- each at a premium of Rs. 346/- per share by way of preferential allotment to promoters and others. Consequently the paid up share capital of the Company has increased to Rs. 24,73,92,190/- divided into 2,47,39,219 equity shares of Rs. 10/- each.

Utilization of Proceeds

During the year Company has allotted 39,24,219 equity shares of Rs. 10/- for cash to the promoters and the others. The Company raised about Rs. 110.72 crores from the above issue and spent the same towards purposes as mentioned in the respective explanatory statements. i.e. Capital expenditure, working Capital requirements etc.

Information about the Financial Performance / Financial Position of the Subsidiaries / Associates/ Joint Ventures

Your Company has two Indian wholly owned subsidiary companies (WOS) and six wholly owned foreign subsidiary company (woS) in USA. The performance of the subsidiaries have been included in the consolidated financials and published in the report.

The names of the subsidiaries are furnished below:

Gallop Solutions Private Limited (Indian WOS)

Cigniti Software Solutions Private Limited (Indian WOS)

Cigniti Inc, USA (Foreign WOS)

Gallop Solution Inc., USA (Foreign WOS)

Cigniti Technologies Inc, USA (Foreign WOS)

Cigniti Technologies Canada Inc, Canada (Foreign WOS)

Cigniti Technologies UK Limited, UK (Foreign WOS)

Cigniti Technologies Australia PTY Limited, Australia (Foreign WOS)

Management Discussion and Analysis Report

The Management Discussion and Analysis as required under clause 49 (VIII) (D) of the Listing Agreement forms a part of this Report.

Corporate Governance

A Separate section titled "Report on Corporate Governance" along with the Auditors' Certificate on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms a part of this report.

Extract of Annual Return

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report.

Directors And Key Manangerial Personnel

During the year, Ms. M. Amala was appointed as Additional Director in the category of Independent Director. However she resigned from office of directorship w.e.f. to 29.08.2015 and the Board accordingly relieved her while placing on the records its sincere appreciation for the valuable services rendered by her tenure as a director.

Mr. P. Sudhakar will retire by rotation at the ensuing Annual General Meeting in terms of Section 152 and any other applicable provisions of the Companies act, 2013 and being eligible offers himself for re-appointment. The Company has appointed Mr. v. Krishanan as Chief Financial officer w.e.f. 08th June, 2015.

Details of re-appointment /appointment of the director:

Name of the Director Mr. P. Sudhakar

Date of Appointment 12.02.2015

Qualifications B. Tech in Electrical Engineering

No. of Shares held in the 7,70,027 Company

Directorships held in other 1. Tvarita Capital Private Limited

companies (excluding foreign 2. Eaama Estates Private Limited companies)

Positions held in mandatory Nil committees of other companies

Declaration from Independent Directors on Annual Basis

The Company has received a declaration from Mr. K. Ch. Subba Rao, Mr. Mani Subramani and Mr.K. Nageswer Rao Independent directors of the company to the effect that they are meeting the criteria of independence as provided in Sub-section (6) of Section 149 of the Companies Act, 2013 and are annexed herewith.

Vigil Mechanism

Vigil Mechanism Policy has been established by the Company for directors and employees to report genuine concerns pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013. The same has been placed on the website of the Company.

Director's Responsibility Statement

In pursuance 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 had been followed along with proper explanation relating to material departures;

(b) 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 and loss of the company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis; and

(e) The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Auditors and Auditors Report

In the previous Annual General Meeting (16th AGM), the Company appointed M/s. P. Murali & Co, Chartered accountants as statutory Auditors to hold office until the conclusion of the 17th annual General Meeting. The Company has already received letter from them to the effect that their ratification, if made by the shareholders, would be within the prescribed limits and that they are not disqualified for re-appointment within the meaning of the Companies act 2013. The Board of Directors recommend their re-appointment ratification for the financial year 2015-16.

Internal Audit

The company has adequate Internal audit system and internal control process in place commensurate with the size of the business.

However keeping in with the global expansion and aggressive volume the company is on the look out for appointing an independent practicing chartered accountant firm as internal auditors of the company.

The Board has took note of the same and has approved the same for completing the task this financial year.

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, Mr. Vivek Surana, Practicing Company Secretary has conducted Secretarial Audit of the Company for the FY 2014-15. The Secretarial Audit Report for the FY 2014-15 is annexed hereto and forms part of this Annual report. The Company has shortlisted two firms and will appoint one of them as Internal Auditor shortly. It is further stated that the delay in appointment of CFo was occurred for identifying a right candidate with appropriate exposure to meet both domestic & global business practices.

Disclosure of Particulars with Respect to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

A. Conservation of Energy:

Your Company's operations are not energy intensive. Adequate measures have been taken to conserve energy wherever possible by using energy efficient computers and purchase of energy efficient equipment.

B. Technology Absorption:

Your Company has not undertaken any research and development activity for any manufacturing activity nor was any specific technology obtained from any external sources which needs to be absorbed or adapted.

C. Foreign Exchange Earnings and Out Go:

Foreign Exchange Earnings: Rs. 1,11,65,11,350/-

Foreign Exchange outgo: Rs. 23,33,18,068/-

Public Deposits

Your Company has not accepted any deposits falling within the meaning of Sec. 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules 2014, during the financial year under review.

Details of Adequacy of Internal Financial Controls

Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations. The organization is adequately staffed with Qualified and experienced personnel for implementing and monitoring the internal control environment. The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

Insurance

The properties and assets of your Company are adequately insured.

Particulars of Loans, Guarantees or Investments

Details of loans, guarantees or investments made under section 186 of the companies Act, 2013 are given in the note to the financial statements.

Risk Management Policy

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well-structured risk management process.

Corporate Social Responsibility

With the mission to discover once again the social responsibility of developing economic, social and environmental capital towards sustainability, Cigniti crafted CSR projects in achieving the mission. Your Company believes and strives hard in sustainable development of society in which the enterprise draws economic and natural resources by enriching its capacity in contributing to the significant positive change in the economy. The CSR committee has been formed to achieve the mission and implement the CSR objectives.

The Company has adopted the CSR policy and budgeted outlay of Rs. 20 lacs has been approved by the Board of Directors. As per the programme, the Company has started implementation of CSR activity. However, during the year it was practical to spend only Rs. 18,44,890. The residual amount shall be spent as per the CSR policy. The details on CSR corpus and amount spent, projects for which funds are utilized have been disclosed as part of Corporate Governance Report.

Related Party Transactions

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with the promoters, directors, key managerial personnel or other designated persons which may have a potential confict with the interest of the Company at large.

As required under clause 49(V)(D) of the listing agreement, the Company has formulated a policy for determining 'material' subsidiaries, the said policy is disclosed at Company's website at www.cigniti.com.

As required under clause 49(VIII)(A)(2) of the listing agreement, the Company has disclosed the policy on dealing with related party transactions at Company's website at www.cigniti.com.

Your Directors draw attention of the members to Note 29 to the financial statement which sets out related party disclosures.

Disclosure About Cost Audit

Cost Audit is not applicable to your Company.

Ratio of Remuneration to each Director

Under section 197(12) of the Companies Act, 2013, and Rule 5(1)(2) & (3) of the Companies (Appointment & Remuneration) Rules, 2014, ratio of remuneration to maiden employees for Mr. C.V. Subramanyam is 1:10 times in rupees and for Mr. C. Srikanth is 1:5 times in rupees.

Listing with Stock Exchanges

The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to BSE Limited and National Stock Exchange Limited where the Company's Shares are listed.

Corporate Governance and Shareholders Information:

Directors are happy to report that your Company is compliant with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. A separate section on Corporate Governance and Management Discussion and Analysis together with a certificate from the Statutory Auditor confirming compliance is set out in the Annexure forming part of this report.

Industry Based Disclosures as Mandated by the Respective Laws Governing the Company

The Company is not an NBFC, Housing Companies etc., and hence Industry based disclosures are not required.

Secretarial Standards Event Based Disclosures

During the year under review, the Company has not taken up any of the following activities:

1. Issue of sweat equity share : NA

2. Issue of shares with differential rights : NA

3. Issue of shares under employee's stock option scheme : NA

4. Disclosure on purchase by company or giving of loans by it for purchase of its shares : NA

5. Buy back shares : NA

6. Disclosure about revision : NA

7. Preferential Allotment of Shares : Yes

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaint Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed during the calendar year.

- No. of complaints received : Nil

- No. of complaints disposed of : Nil

Acknowledgements

Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels, to the continued growth and prosperity of your Company.

Your Directors also wish to place on record their appreciation of business constituents, banks and other financial institutions and shareholders of the Company like SEBI, BSE, NSE, MCX, NSDL, CDSL, Axis Bank, HDFC Bank etc. for their continued support for the growth of the Company.

For and on behalf of the Board

Cigniti Technologies Limited

C.V. Subramanyam

Place: Hyderabad Chairman & Managing Director

Date: 24.08.2015 DIN: 00071378


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Sixteenth Annual Report together with the Audited Balance Sheet, Statement of Profit & Loss Account and Cash Flow Statement for the financial year ended 31st March, 2014.

FINANCIAL RESULTS

The highlights of the financial results for the year under review along with the comparative figures for the previous year are as follows:

(Rs. in Lakhs)

2013 – 14 2012 – 13 Particulars Consolidated Standalone Consolidated Standalone

Income from Operations 25909.98 5552.12 15087.76 2356.75

Profit before depreciation and Tax 3528.32 1359.02 911.36 341.40

Depreciation 243.35 169.33 157.10 136.06

Profit before Tax 3284.97 1189.69 691.64 169.60

Provision for Tax 730.47 385.73 191.26 52.09

Profit after Tax 2554.50 803.96 500.38 117.51

REVIEW AND PROSPECTS

The total revenue of the Company for the financial year ended 31st March, 2014 is Rs. 25,909.98 Lakhs as compared to the previous year''s total revenue of Rs. 15,087.76 Lakhs. This represents an increase of 72% Year on Year in revenues. During this financial year the Company has recorded a net profit of Rs. 2554.50 Lakhs as against the previous year''s net profit of Rs.500.38 Lakhs. The Year-on-year Net Profit growth is 410%.

The past year has been an eventful one for the Company and all its stakeholders. The Company has grown from strength to strength, and has undertaken challenges on the global stage in its strategic drive to reach the key markets of the world.

1. Current Scenario

The independent testing space has been acknowledged by NASSCOM, Nelson Hall and other industry analysts as one of the fastest growing niches in the software services space. Nelson Hall has called specialist testing services recession proof because of the growth in this segment even during the downturn period of 2008 to 2012. The software testing segment of the IT industry in India is expected to continue to grow at a CAGR of more than 20% over the next six years.

Your company has been acknowledged as the third largest independent testing services company by Nelson Hall, a leading IT industry analyst that tracks the software testing industry closely. The company has grown 72% over last year and expects to grow aggressively over the next few years to emerge as the largest independent testing services company in the world. Your company has ambitious plans to emerge as the second largest independent testing services company in the world over the next one year through a combination of organic growth and inorganic acquisitions. Your company has tripled its sales force and marketing investments to ensure that our aggressive growth plans can be achieved.

A key aspect of being a global leader is operations and geographic spread across the world. In the last one year your company has spread its operations to Europe, Australia and Asia Pacific apart from strengthening its sales and marketing operations in North America. Today with operations and a sales force spread across six countries in four continents your company is truly a global organization. Being a truly global company also derisks the company from geographic risks and helps us leverage its experience and talent pool across the globe to deliver superior value to its clients.

The overall IT situation across the world is improving slowly and new technologies like social mobile, cloud and analytics are driving increasing investments into software development. The increasing exposure of these software applications to consumers and the business critical nature of these applications necessitates very high quality software. Your company is well positioned to help companies deliver high quality software through its services. The current year promises to be exciting with growth in new geographies and new service offerings.

2. Quality

Your company continues to lay emphasis on high- level quality processes to deliver solutions to clients exceeding their expectations. Your company became the first independent testing services company to be rated at CMMI–SVC v1.3 Maturity Level 3 of the CMMI Institute (Powered by Carnegie Mellon University) Capability Maturity Model Integration (CMMI). The CMMI for Services (CMMI-SVC) model is most relevant for IT services companies like Cigniti and provides an integrated set of guidelines for providing superior services. This year your company is aiming higher and hoping to achieve the pinnacle of the CMMI-SVC model by preparing for and undergoing an assessment for Level 5 of the CMMI model.

Your company is also ISO 27001:2005 compliant. This certification compliance establishes that Cigniti''s infrastructure and practices meet ISO''s stringent standards for information security management and business continuity capabilities. Cigniti''s evaluation was conducted by TÜV Rheinland Group which is a leading provider of technical services worldwide. This certification helps Cigniti prove to its customers that they take the security of customers'' data very seriously and are committed to provide seamless services.

Your company is also pursuing other domain related IT security certifications like the PCI and HIPAA. These certifications will enable us to serve clients in the BFSI and Healthcare segments.

DIVIDEND

The Board of Directors of Company believe that the profits and retained earnings are best utilized to propel our sales efforts and for inorganic acquisitions in the coming year. Once the consolidation is done and your company achieves a leadership position, a generous dividend policy can be adopted. Hence, the Directors regret their inability to recommend dividend for the year under review.

RESERVES

The Company proposes to transfer Rs. 803.96 lakhs to Reserves and Surplus for the financial year 2013-14.

DIRECTORS

The Board of Directors of the Company has decided to adopt the provisions with respect to appointment and tenure of Independent Directors which is consistent with the Companies Act, 2013 and the amended Listing Agreement. With the changes in the Companies Act, the Company would not have any upper age limit of retirement of Independent Directors from the Board and their appointment and tenure will be governed by the provisions of Companies Act, 2013. In line with the requirements of the Companies Act, 2013, it is therefore proposed to appoint the existing independent directors, as Independent Directors on the Board of the Company for a term up to five consecutive years. A brief profile of proposed Independent Directors, including nature of their expertise, is provided in this Annual Report.

Notices have been received from Members proposing candidature of the Directors namely Mr. K. Ch. Subba Rao, Mr. M. Subramanian and Mr. K. Nageswara Rao for the office of Independent Directors of the Company. In the opinion of the Board, they fulfill the conditions specified in the Companies Act, 2013 and the Rules made there under for appointment as Independent Directors of the Company. A copy of the draft Letter of Appointment for Independent Directors, setting out terms and conditions of their appointment, is available for inspection at the Registered Office of the Company during business hours on any working day and is also available on the website of the Company www.cigniti.com

Mr. C. Srikanth will retire by rotation at the ensuing Annual General Meeting in terms of Section 152 and any other applicable provisions of the Companies Act, 2013 and being eligible offers himself for re-appointment.

Mr. C. Sudhakar will retire by rotation at the ensuing Annual General Meeting in terms of Section 152 and any other applicable provisions of the Companies Act, 2013 and has not opted for re-appointment.

ACQUISITION OF GALLOP SOLUTIONS

During the year the company completed the acquisition of a US based software testing services company called Gallop Solutions Inc. based in Irving, Texas, USA and Gallop Solutions Pvt. Ltd, India.

AUTHORISED SHARE CAPITAL OF THE COMPANY

The authorized capital of the company increased from Rs. 20 crores to Rs. 25 crores during the financial year 2013-14. The authorized capital of the company stands at Rs. 25,00,00,000/- divided into 2,50,00,000 equity shares of Rs.10/- each.

PAID UP CAPITAL

During the financial year 2013-14, the company has allotted 7,54,211 Equity Shares for Acquisition of Gallop Solutions

Inc –USA on SWAP basis and 12,15,289 Equity Shares allotted to Promoters and others. The company''s paid up capital increased from Rs. 18,84,55,000 to Rs. 20,81,50,000 and capital of the company divided into 2,08,15,000 equity shares of Rs. 10/- each.

UTILISATION OF THE PROCEEDS

During the year Company has allotted 19,69,500 equity shares of Rs. 10/- to M/s Gallop Solutions Inc – USA on swap basis and for cash to the promoters and the others. The Company could raise about Rs. 26.54 crores from the above issue and spent the same towards purposes as mentioned in the respective explanatory statements.

EMPLOYEE STOCK OPTION SCHEME

Board of Directors of the company believes that in order to build your company into a world leader, we need to attract world class talent and more importantly retain them over the long term. Hence, over the period of time, your Company has introduced different Stock Option Schemes to issue and allot Stock options to the employees of the Company and to the employees of Subsidiary Companies. Necessary approvals from the members of the company and statutory authorities were accorded in the due course to give effect to the said schemes.

The details of the stock options granted are forming part of this report and given in a separate Annexure to this report.

CORPORATE GOVERNANCE

Directors are happy to report that your Company is compliant with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. A separate section on Corporate Governance and Management Discussion and Analysis together with a certificate from the Statutory Auditor confirming compliance is set out in the Annexure forming part of this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

i. In the preparation of the annual accounts for the year ended 31st March, 2014, the applicable accounting standards have been followed and there are no material departures.

ii. We have selected appropriate accounting policies and applied them consistently and have 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 as on 31st March 2014 and of the profit of the company for the financial year ended 31st March 2014.

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

iv. We have prepared the annual accounts for the financial year ended 31st March, 2014 on a going concern basis.

AUDITORS

M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The said Auditors have furnished the Certificate of their eligibility for re-appointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed there under, it is proposed to appoint them as Statutory Auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the AGM to be held in the year 2017, subject to ratification of their appointment at the subsequent AGMs.

FIXED DEPOSITS

The Company has not invited/accepted any fixed deposits from the public in terms of Section 58A of the Companies Act, 1956.

RISK MANAGEMENT SYSTEM

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well structured risk management process.

INSURANCE

The Company assets are adequately insured.

EMPLOYEE PARTICULARS

Particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956 (''''the Act'''') form part of this report. However, as per the provisions of Section 219(1)(b) (iv) of the Act, the report and accounts are being sent to the shareholders of the Company excluding the particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company for the same.

STOCK EXCHANGES

Company''s present Equity shares are listed in Bombay Stock Exchange Limited, Bangalore Stock Exchange and Madras Stock Exchange, and the Company has paid the Listing Fees to the Stock Exchanges for the Financial Year 2014-15.

ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation for the continued co-operation and support by the Banks, Government authorities, Business Partners, Customers and other Stakeholders. Your Directors also wish to place on record their sincere appreciation for the dedicated contribution made by all the Executives, Staff members of the Company in the achievements of the Company during the year under review.

On behalf of the Board Cigniti Technologies Limited

C.V. Subramanyam

Managing Director

Place : Hyderabad K. Ch. Subba Rao

Date : 14th August, 2014 Director


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the Fifteenth Annual Report together with the Audited Balance Sheet, Profit & Loss Account and Cash Flow Statement for the financial year ended 31st March, 2013.

FINANCIAL RESULTS

The highlights of the financial results for the year under review along with the comparative figures for the previous year are as follows:

(Rs. in Lakhs)

2012 - 13 2011 - 12 Consolidated Standalone Consolidated Standalone

Income from Operations 15087.761 2356.75 3383.98 1023.89

Profit before depreciation and Tax 911.36 341.40 276.50 151.56

Depreciation 157.10 136.06 98.29 95.09

Profit before Tax 691.64 169.60 178.46 56.47

Provision for Tax 191.26 52.09 60.41 17.45

Profit after Tax 500.38 117.51 118.05 39.02

Profit carried forward to Balance sheet 907.10 445.18 406.70 327.67

REVIEW AND PROSPECTS

The total revenue of the Company for the financial year ended 31st March, 2013 is Rs.15,087.76 lakhs as compared to the previous year''s total revenue of Rs.3,383.98 lakhs. During this financial year the company has recorded a net profit of Rs.500.38 lakhs as against the previous year''s net profit of Rs.118.05 lakhs.

The past year has been an eventful one for the Company and all its stakeholders. The Company has grown from strength to strength, and undertaken challenges on the global stage in its strategic drive to reach the key markets of the world.

1. Current Scenario

Your company has been acknowledged as the third largest independent testing services company by Nelson Hall a leading IT industry analyst that tracks the software testing industry closely. The company has grown exponentially over the last one year on the basis of inorganic acquisition and organic growth. We have signed multiple Fortune 500 clients and continue to see rapid growth in our sales pipeline. Cigniti continues to expand its sales team, marketing investments and focus on newer geographies like Europe, Canada and Asia Pacific.

Your company''s management believes that with the current pace of organic growth combined with inorganic acquisitions, Cigniti can aim to become the world''s second largest independent testing services company by next year and aim to become the largest in the world by 2015.

While the overall IT industry has been growing at a sedate pace of 10-12%, Cigniti''s focus on a niche area like software testing is yielding helping your company achieve significantly higher growth rates than the industry. Your company expects to maintain this growth rate over the next few years to emerge as a world leader in our segment.

2. Quality:

Your company continues to lay emphasis on high-level quality processes to deliver solutions to clients exceeding their expectations. Your company became the first independent testing services company to be rated at CMMI-SVC v1.3 Maturity Level 3 of the CMMI Institute (Powered by Carnegie Mellon University) Capability Maturity Model Integration (CMMI). The CMMI for Services (CMMI-SVC) model is most relevant for IT services companies like Cigniti and provides an integrated set of guidelines for providing superior services.

Your company also successfully passed the external compliance audit for ISO 27001:2005 certification. This certification compliance establishes that Cigniti''s infrastructure and practices meet ISO''s stringent standards for information security management and business continuity capabilities. Cigniti''s evaluation was conducted by TUV Rheinland Group which is a leading provider of technical services worldwide. This certification helps Cigniti prove to its customers that they take the security of customers'' data very seriously and committed to provide seamless services. The ISO 27001 audit specifies the requirements for establishing, implementing, operating, monitoring, reviewing, maintaining and improving a documented Information Security Management System, taking into account the organization''s overall business risks.

DIVIDEND:

The Board of Directors of Company believe that the profits and retained earnings are best utilized to propel our sales efforts and for inorganic acquisitions in the coming year. Once consolidation is done and your company achieves leadership position a generous dividend policy can be adopted. Hence, Directors regret their inability to recommend dividend for the year under review.

DIRECTORS

In accordance with the requirements of the Companies Act, 1956 and Articles of Association of the Company, Sri. K. Ch. Subba Rao and Sri. K Nageswara Rao retire by rotation at the 15th Annual General Meeting and being eligible, offer themselves for re-appointment. Also, Sri. C Srikanth was appointed as Additional Director in the Board Meeting held on 5th July 2013. His term of office as Director will expire on the date of this Annual General Meeting.

Brief resumes of the Directors proposed to be appointed / re-appointed, their expertise in specific functional areas and names of the companies in which they hold directorship / membership / chairmanship of Board Committees, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges have been provided as an annexure to the Notice convening the 15th Annual General Meeting.

None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 274(1) (g) of the Companies Act, 1956

ALLOTMENT OF EQUITY SHARES

During the financial year, the Board of the Company in its meeting held on 8th February 2013 allotted 19,54,102 equity shares on preferential basis to the persons belonging to promoter & promoter group and persons belonging to other than promoters, and pursuant to this allotment the paid-up capital of the company has been increased accordingly,

EMPLOYEE STOCK OPTION SCHEME

Board of Directors of the company believes that in order to build your company into a world leader, we need to attract world class talent and more importantly retain them over the long term. Hence, over the period of time, your Company has introduced different Stock Option Schemes to issue and allot Stock options to the employees of the Company and to the employees of Subsidiary Company. Necessary approvals from the members of the company and statutory authorities were accorded in the due course to give effect to the said schemes.

SHARE CAPITAL

During the financial year, the Board of the Company in its meeting held on 8th February 2013 allotted 19,54,102 equity shares on preferential basis to the persons belonging to promoter & promoter group and persons belonging to other than promoters, and pursuant to this allotment the paid-up capital of the company has been increased accordingly,

CORPORATE GOVERNANCE

Directors are happy to report that your Company is compliant with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. A separate section on Corporate Governance and Management Discussion and Analysis together with a certificate from the Statutory Auditor confirming compliance is set out in the Annexure forming part of this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

i. In the preparation of the annual accounts for the year ended 31st March, 2013, the applicable accounting standards have been followed and there are no material departures.

ii. We have selected appropriate accounting policies and applied them consistently and have 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 as on 31st March 2013 and of the profit of the company for the financial year ended 31st March 2013.

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

iv. We have prepared the annual accounts for the financial year ended 31st March, 2013 on a going concern basis.

AUDITORS

M/s. P. Murali & Co., Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

FIXED DEPOSITS

The Company has not invited/accepted any fixed deposits from the public in terms of Section 58A of the Companies Act, 1956.

RISK MANAGEMENT SYSTEM

Your Company follows a comprehensive system of Risk Management. Your Company has adopted a procedure for assessment and minimization of probable risks. It ensures that all the risks are timely defined and mitigated in accordance with the well structured risk management process.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, form a part of this report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956 this report and accounts are being sent to all the members of the Company and others entitled there to, excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the Secretarial Office of the Company and the same will be sent by post.

Additional Information as Required U/S 217(1) (e) of the Companies Act, 1956

1. Conservation of Energy:

Our operations are not energy intensive; however significant measures are taken to reduce energy consumption by using energy efficient computers and purchasing energy efficient equipment. We constantly evaluate new technologies and invest to make our infrastructure more energy efficient.

(b) Research and Development and Technology Absorption:

Research and development of new products, processes and methodologies continue to be of importance to us. This allows us to enhance quality, productivity and customer satisfaction through continuous innovation. Our Company continues to invest in rapidly changing technologies and use them to improve the quality of the products, service offerings to ensure overall reduction in defect rates and a higher level of customer satisfaction.

(c) Please refer to "Notes to Accounts" for Foreign exchange earnings & outflow

STOCK EXCHANGES

Company''s present Equity shares are listed in Bombay Stock Exchange Limited, Bangalore Stock Exchange and Madras Stock Exchange, and the Company has paid the Listing Fees to the Stock Exchanges for the Financial Year 2013-14.

LISTING OF SHARES AT BOMBAY STOCK EXCHANGE

We are happy to inform you that, during the period under review the company has applied for the Direct Listing of its equity shares to be traded directly at Bombay Stock Exchange and has accorded the necessary approval for the same.

ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation for the continued co-operation and support by the Banks, Government authorities, Business Partners, Customers and other Stakeholders. Your Directors wish to place on record their sincere appreciation for the dedicated contribution made by all the Executives, Staff members of the Company in the achievements of the Company during the year under review.

On behalf of the Board

Cigniti Technologies Limited

Place: Hyderabad C. V. Subramanyam P. Sudhakar

Date: 19.08.2013 Managing Director Director

 
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