Mar 31, 2023
Your directors take pleasure in presenting the Thirty Second (32nd) Boardâs Report on the business and operations of your Company (the "Company" or "Cyient"), along with the audited financial statements for the FY ended 31 March 2023. The consolidated performance of the Company and its subsidiaries has been referred to wherever required in the report.
1. FINANCIAL HIGHLIGHTS:
(Amount in '' Million, except for EPS data) |
||||
Particulars |
Standalone |
Consolidated |
||
2022-2023 |
2021-2022 |
2022-2023 |
2021-2022 |
|
Revenue from operations |
22,279 |
17,505 |
60,159 |
45,344 |
Other Income |
822 |
2,753 |
814 |
1,121 |
Total Income |
23,101 |
20,258 |
60,973 |
46,465 |
Expenses Operating Expenditure |
17177 |
12,377 |
50,128 |
37166 |
Depreciation and amortization expense |
1,135 |
967 |
2,566 |
1,922 |
Total Expenses |
18,312 |
13,344 |
52,694 |
39,088 |
Profit before finance cost, tax and share of profit from Joint Venture |
4,789 |
6,914 |
7812 |
7377 |
Finance Cost |
166 |
104 |
1,000 |
393 |
Exceptional item |
- |
- |
467 |
- |
Profit before tax (PBT) |
4,623 |
6,810 |
6,812 |
6,984 |
Current tax |
1,099 |
1,162 |
2,016 |
1,692 |
Deferred tax |
(24) |
(43) |
(348) |
69 |
Profit after Tax (PAT) |
3,548 |
5,691 |
5,144 |
5,223 |
Non- controlling Interest |
- |
- |
- |
- |
Profit attributable to Shareholders of the Company |
3,548 |
5,691 |
5,144 |
5,223 |
Other Comprehensive Income attributable to shareholders of the Company |
(258) |
(34) |
602 |
19 |
Non-Controlling Interest |
- |
- |
- |
- |
Basic EPS |
32.44 |
52.03 |
47.03 |
47.75 |
Diluted EPS |
32.22 |
51.80 |
46.71 |
47.54 |
Paid up share capital |
553 |
552 |
553 |
552 |
Other Equity |
26,476 |
25,435 |
34,114 |
30,614 |
Your Company is a global engineering and technology solutions company. It engages with customers across their value chain helping to design, build, operate and maintain the products and services that make them leaders and respected brands in their industries and markets. Customers draw on the Companyâs expertise in engineering, manufacturing, and digital technology to deliver and support their next-generation solutions that meet the highest standards of safety, reliability and performance.
Your Company provides engineering, manufacturing, geospatial, network and operations management services to global industry leaders. It delivers innovative solutions that add value to businesses through the deployment of robust processes and state-of-the-art technology. The Companyâs high-quality products and services help clients leverage market opportunities and gain competitive advantage.
There has been no change in the nature of business of the Company during the FY 2023.
3. DIVIDEND:In terms of regulation 43A of SEBI Listing Regulations, the Company has formulated and uploaded dividend distribution policy on itsâ corporate website. The web-link for the same has been disclosed separately at the end of this report.
Details of dividend declared by the Company are as follows:
FY 2023 |
FY 2022 |
|||
Dividend |
Dividend |
Dividend |
Dividend |
|
per share (in ?) |
% |
per share (in ?) |
% |
|
Interim dividend |
10 |
200 |
10 |
200 |
Final dividend1 |
16 |
320 |
14 |
280 |
Total dividend |
26 |
520 |
24 |
480 |
1 Final Dividend was recommend by the Board of Directors at its Meeting held on 20 April 2023 which is subject to approval
of the shareholders of the Company in the ensuing Annual General Meeting of the Company.
The Basic EPS of the Company stood at ? 32.44 at standalone level and basic EPS at consolidated level stood at ? 47.03 for the FY ended 31 March 2023.
The Company has not transferred any amount to reserves during the year under review.
The Company continues to be debt-free and maintains sufficient cash reserves to meet its operations and strategic objectives. As at 31 March 2023, your Company had liquid assets of ? 4,731 Million as against ? 11,772 Million at the previous year end. These funds have been invested in short-term deposits with scheduled banks & financial institutions, mutual funds, perpetual bonds and tax-free bonds.
Your Company has not accepted any deposits falling within the meaning of Section 73 or 74 of the Act during the FY 2023 and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
8.1. The Particulars of share capital of the Company are as follows: |
|
Particulars |
Amount (?) |
Authorized share capital (28,00,00,000 Equity Shares of ? 5 each) |
140,00,00,000 |
Issued, subscribed and paid-up share capital (11,05,75,006 Equity Shares of ? 5 each) |
55,28,75,030 |
8.2. Shares allotted during the FY 2023:
Your Company has allotted in aggregate 257,590 equity shares of ?5 each in the FY 2023 to the associates of the Company and its subsidiaries upon exercise of an equal number of stock options vested in them pursuant to the extant Stock Option Schemes of the Company.
9. SUBSIDIARIES AND JOINT VENTURES:
The details of the subsidiaries and joint venture (JV) company have been provided as part of the financial statements. During the year, there has been no material change in the nature of the business of the subsidiaries and JV. As per the provisions of Sections 129 of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the Financial Statements of the Subsidiary Companies/Associate Companies/JV in Form AOC-1 is published as a part of the Annual Report.
Further, Cyient DLM Limited (Cyient DLM) - the wholly owned subsidiary of the company is proposing an initial public offering of its equity shares of up to ? 7,400.00 million (the "Issue") in accordance with the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and other applicable laws. The Draft Red Herring Prospectus (DRHP) of Cyient DLM was filed with SEBI on January 9, 2023 and SEBI issued its final observation letter on the DRHP on 29 March 2023..
In June 2022, the company acquired Celfient - Consultoria Em Telecomunicacoes, SA, a Portugal based company through Cyient Europe Limited, its wholly owned subsidiary.
In April 2022, the company acquired Citec to expand its footprint in the Nordic countries of Finland, Norway and Sweden and in Germany and France through Cyient Europe Limited, its wholly owned subsidiary. The company also acquired Citec Engineering India Limited in India. Citec is a plant and product engineering services company. Celfinet provides engineering and operations services for wireless (macro and small cells) deployment.
In April 2022, the company acquired Grit Consulting, Singapore, through Cyient Singapore Pvt Ltd, a wholly owned subsidiary. Grit is a global performance improvement design consultancy that provides consulting services with a core focus on asset intensive industries such as metal mining and energy.
10. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:
Cyient is committed to ''Design a Sustainable Tomorrow Togetherâ and to integrating environmental, social, and governance (ESG) considerations throughout the value chain, from our operations to our suppliers, clients, and the communities in which we operate. We are dedicated to working together to ensure consistency throughout, concentrating on circularity, and producing social value that will benefit the ecosystem in the long run.
In pursuance of Regulation 34 of the SEBI Listing Regulations, the Business Responsibility and Sustainability Report describing the initiatives taken by the Company from an environmental, social and governance perspective is enclosed to this report. Kindly refer to Annexure A. The web-link for the same has been disclosed separately at the end of this report.
11. CORPORATE SOCIAL RESPONSIBILITY:
Your Company believes in giving back to society in some measure that is proportionate to its success in business. In view of this, the Companyâs corporate social responsibility (CSR) aims to extend beyond charity and enhance social impact.
Cyientâs ''Global Policy on Corporate Social Responsibilityâ outlines its philosophy of "Empowering Tomorrow Together". Cyient and its subsidiaries have an abiding concern for society and environment. As responsible corporate citizens, we undertake several transformational initiatives that contribute towards community empowerment and all-round societal development. With strategic social investments in several key areas like healthcare, smart villages, skill development, and education, we foster long-term sustainable community development, and drive growth initiatives that aim to make a meaningful impact in peopleâs lives.
Cyientâs CSR activities are spearheaded by the Cyient Foundation and Cyient Urban Micro Skill Centre Foundation. Cyient is guided by its CSR committee and CSR Policy and vision. The Company has formed a CSR committee (designatedas ESG Committee) as per Section 135 of the Companies Act, 2013 to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified by law.
CSR programs are focused under 4 pillars i.e.,
a) Education & IT Literacy - School Education, Digital / IT Literacy;
b) Skills & employment, Innovation & Entrepreneurship - Women Empowerment, School of Innovation and Entrepreneurship;
c) Preventive Health Care, Sanitation & Hygiene - Health care and WASH Facilities, Disaster Relief and Rehabilitation;
d) Environmental Protection & Community Development - Promotion of Greenery, Water Conservation and Renewable Energy;
During the Financial year 2022-23, the Company has spent an amount of ? 81,236,741 in pursuance of CSR Activities. The details of the CSR initiatives of the Company forms part of the annual report. The CSR Annual Report is enclosed to this report. Kindly refer to Annexure D.
The details of the Committee can be found at the Report of Corporate Governance, which forms part of this report. The CSR Policy of the Company can be accessed at the Companyâs website. The web-link for the same has been disclosed separately at the end of this report.
12. BOARD OF DIRECTORS & KMP:12.1. Board of Directors:
The Board of the Company is duly constituted. None of the directors of the Company is disqualified under the provisions of the Act or under the SEBI Listing Regulations.
The Company has a truly diverse Board that includes and makes good use of diversity in the skills, regional and industry experience, background, race, gender, ethnicity and other distinctions among directors. This diversity is considered in determining the optimum composition of the Board. All Board appointments are made on merit, in the context of the skills, experience, independence and knowledge which the Board as a whole requires to be effective.
As a policy, the Company believes that independent directors comprise at least 50% of the board strength. Mr. Vivek Gour has been nominated as Lead Independent Director. He acts as a liaison between the non-executive directors and the management and performs such other duties as the Board/ Independent Directors may decide from time to time.
12.4. Declaration by Independent Directors
The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the SEBI Listing Regulations.
12.5. Certificate from company secretary in practice:
The Certificate on Non- Disqualification of Directors pursuant to Regulation 34(3) and Schedule V Para C clause 10 (i) of the SEBI Listing Regulations is published elsewhere in the Annual Report.
12.6. Registration of Independent Directors in Independent Directors Databank:
All the Independent Directors of your Company have been registered and are members of Independent Directors Databank maintained by the Indian Institute of Corporate Affairs (IICA).
12.7. Changes in the composition of Board of Directors:
Your Company has reorganized Executive Leadership to Accelerate Technology Led Growth and made certain changes to the Board composition as follows:
12.7.1. Appointments/Re-appointments and Change in Designation (Including those made after the end of financial year and the date of this report):
12.7.1.1. Mr. Krishna Bodanapu (DIN: 00605187): Mr. Krishna Bodanapu, was serving as the MD and CEO of the Company. He has been appointed and re-designated as Executive Vice-Chairman and MD of the Company for a period of 3 years w.e.f. 3 April 2023, subject to confirmation of the same by the shareholders in the ensuing AGM. The details of the same forms part of the notice convening the AGM.
12.7.1.2. Mr. Karthikeyan Natarajan (DIN: 03099771) Mr. Karthikeyan Natarajan was serving as an Executive Director and COO of the Company. He has been appointed and re-designated as an Executive Director and CEO of the Company for a period of 3 years w.e.f. 3 April 2023, subject to confirmation of the same by the shareholders in the ensuing AGM. The details of the same forms part of the notice convening the AGM.
12.7.2. Retirements and resignations during the financial year:
12.7.2.1. Mr. Alain De Taeye (DIN: 03015749), Non-Executive - Non-Independent Director stepped down as Director from the Board w.e.f. 3 June 2022;
12.7.2.2. Amb. Vinai Kumar Thummalapally (DIN: 07797921), Independent Director of the Company retired from Board of Directors on completion of his term (i.e. w.e.f. 3 June 2022).
12.7.2.3. Mr. Ajay Aggarwal (DIN: 02565242) retired as Executive Director w.e.f. 2 March 2023.
12.7.3. Re-Appointments (Director liable to retire by rotation):
The following directors retire by rotation and being eligible, offer themselves for re-appointment in the ensuing AGM:
12.7.3.1. Mr. Krishna Bodanapu (DIN: 00605187); and
12.7.3.2. Mr. Karthikeyan Natarajan (DIN: 03099771);
12.7.4. Re-appointment of Independent Director:
12.7.4.1. Mr. Ramesh Abhishek (DIN: 07452293) is proposed to be appointed for a second term of 5 years in the ensuing AGM. The details of the same form part of the notice convening the AGM.
Pursuant to the provisions of regulation 36 of the SEBI Listing Regulations and SS 2 on General Meetings issued by ICSI, brief particulars of the director proposed to be re-appointed are provided as an annexure to the notice convening the AGM.
12.8. KMP as at the end of the financial year:
12.8.1. Following are the KMP of the Company in accordance with the provisions of Section 2(51), and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as at 31 March 2023:
Sl. No. |
Name of the KMP |
Designation |
1. |
Mr. Krishna Bodanapu |
MD and CEO |
2. |
Mr. Karthikeyan Natarajan |
WTD and COO |
3. |
Mr. Ajay Aggarwal |
CFO |
4. |
Mr. Sudheendhra Putty |
Company Secretary |
12.8.2. Changes in composition of KMP:
There was no change in the composition of the KMP for the FY 2023.
12.8.2.1. Changes in composition of KMP after the end of financial year and the date of this report:
12.8.2.1.1. Mr. Krishna Bodanapu has stepped down from his position of CEO effective 3 April 2023;
12.8.2.1.2. Mr. Karthikeyan Natarajan has been appointed as the CEO effective 3 April 2023;
12.8.2.1.3. Mr. Ajay Aggarwal has stepped down from his position of CFO effective 20 April 2023;
12.8.2.1.4. Mr. Prabhakar Atla has been appointed as CFO of the Company effective 21 April 2023;
12.9. Summary of Changes after the end of the financial year and the date of this report in the board of directors and KMP:
Sl. No. |
Name of the Director/ KMP |
Designation as on 31 March 2023 |
Effective Date of Appointment/change in Designation |
Designation as on the date of this report |
1. |
Krishna Bodanapu (DIN: 00605187) |
MD&CEO |
3 April 2023 |
Executive Vice-Chairman and MD1 |
2. |
Karthikeyan Natarajan (DIN: 03099771) |
WTD & COO |
3 April 2023 |
WTD and CEO1 |
3. |
Ajay Aggarwal2 |
CFO |
20 April 2023 |
- |
4. |
Prabhakar Atla |
- |
21 April 2023 |
CFO |
14. BOARD MEETINGS DURING THE YEAR:
During the FY 2023, Nine (09) meetings of the board were held, the details of which have been disclosed in the report on Corporate Governance, which forms part of this report. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act.
15. BOARD EVALUATION AND ASSESSMENT:
The Company believes that formal evaluation of the board and of the individual directors, on an annual basis, is a potentially effective way to respond to the demand for greater board accountability and effectiveness. For the Company, evaluations provide an ongoing means for directors to assess their individual and collective performance and effectiveness. In addition to greater board accountability, evaluation of board members helps in:
⢠More effective board processes;
⢠Better collaboration and communication;
⢠Greater clarity with regard to membersâ roles and responsibilities; and
⢠Improved Chairman - Managing Director - Board relations;
By focusing on the board as a team and on its overall performance, the Company ensures that communication and overall level of participation and engagement also improves.
In order to facilitate the same, the board undertook a formal board assessment and evaluation process during 2022-23. The board evaluation was performed after seeking inputs from all the directors and included criteria such as the board composition and structure, effectiveness of board processes, information and functioning as provided by the Guidance Note on Board Evaluation issued by the SEBI on 5 January 2017.
The Leadership, Nomination & Remuneration Committee has overall stewardship for the process. The evaluation process covers the following aspects:
⢠Peer and self-evaluation of Directors;
⢠Evaluation of the performance and effectiveness of the board;
⢠Evaluation of the performance and effectiveness of Board Committees;
⢠Evaluation of the performance of the Non-Executive Chairman;
⢠Evaluation of the performance of the MD & CEO
⢠Feedback on management support to the Board;
The evaluation process elicits responses from the directors in a judicious manner - ranging from composition and induction of the board to effectiveness and governance. It also sought feedback on board and committee charters, strategy, risk management and quality of discussion and deliberations at the board. The evaluation process also ensures the fulfilment of independence criteria as specified in the applicable regulations and that the latter are independent of the management.
As required under the provisions of the Act and the SEBI Listing Regulations, as on 31 March 2023, the Board has the following committees:
⢠Audit Committee;
⢠Leadership, Nomination & Remuneration Committee;
⢠Risk Management Committee;
⢠Stakeholders Engagement Committee.
⢠ESG committee (this committee handles the matters pertaining to Corporate Social Responsibility and Diversity and Inclusion Committee);
During the year, all recommendations made by the committees were approved by the Board. A detailed note on the composition of the various committees (including non-mandatory committees not mentioned here) is provided in the report on Corporate Governance, which forms part of this report.
17. ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
Internal Financial Controls are part of risk management process addressing financial and financial reporting risks. They ensure the orderly and efficient conduct of business, including adherence to Company policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records. They aid in the timely preparation of financial statements. The Internal Financial Controls have been documented, digitized and embedded in the business process.
18. AUDITORS:18.1. Statutory Auditors:
At the 28th (Twenty Eighth) AGM held on 6 June 2019, the members had approved the appointment of S.R. Batliboi & Associates LLP, Chartered Accountants, (ICAI Firm Registration Number 101049W/E300004) as the Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the 33rd (Thirty Third) AGM.
The Board has appointed Mr. S. Chidambaram (CP No.2286) as the Secretarial Auditors for the financial year ended 31 March 2023.
M/s KPMG are the internal auditors of the Company for the financial year ended 31 March 2023.
19. AUDITORS'' REPORT AND SECRETARIAL AUDITORS'' REPORT:19.1. Auditor''s Report:
The Auditorsâ Report for Financial Year 2023 does not contain any qualification, reservation or adverse remark. The Report is enclosed with the financial statements in this Annual Report.
19.2. Secretarial Auditors'' Report:
The Company has undertaken an audit for the Financial Year 2023 as required under the Act and the SEBI Listing Regulations. The Secretarial Auditorsâ Report for FY 2023 does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report for the financial year ended 31 March 2023 is enclosed to this report. Kindly refer to Annexure G.
The Secretarial Audit Report issued by Mr. S. Chidambaram, Secretarial Auditors (CP No.2286) for Cyient DLM Private Limited, a material unlisted subsidiary for the Financial Year 2023 is enclosed to this report. Kindly refer to Annexure H.
19.3. Instances of fraud reported by the Auditors:
During the FY 2023, the statutory auditors and the secretarial auditor have not reported any instances of frauds committed in the Company by its Officers or Employees under section 143(12) of the Act to the Central Government or the Audit Committee under section 143(12) of the Companies Act.
19.4. Annual Secretarial Compliance Report:
The Annual Secretarial Compliance Report for the Financial Year 2023 for all applicable compliance as per the Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder has been duly obtained by the Company.
The Annual Secretarial Compliance Report issued by Mr. S. Chidambaram, practicing company secretary (CP No.2286) will be submitted to the Stock Exchanges within 60 days of the end of the Financial Year.
The Company has put in place a Whistle Blower Policy and has established the necessary vigil mechanism as defined under Regulation 22 of the SEBI Listing Regulations for employees and others to report concerns about unethical behaviour. It also provides for adequate safeguards against the victimisation of employees who avail of mechanism. No person has been denied access to the Chairman of the audit committee.
The Whistle blower Policy is available on the website of the company. The web-link for the same has been disclosed separately at the end of this report. The Company has implemented a web based/online mechanism under the whistle blower policy. This mechanism encompasses the entire trail from the login of a complaint to its eventual redressal. The system also affords a dial-in facility to associates in various languages across the countries where the company has its operations.
During the year, the company had granted options to the associates of the company and its subsidiaries, in accordance with the SEBI (SBEB & SE) Regulations. Disclosures pursuant to the said regulations are enclosed to this report. Kindly refer to Annexure J. The web-link for the same has been disclosed separately at the end of this report.
Further, a Certificate from the secretarial auditors of the company as prescribed under SEBI (SBEB & SE) Regulations shall be placed before the members in the AGM.
22. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Companies Act, 2013 are enclosed to this report. Kindly refer to Annexure I.
23. MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Regulation 34 read with Schedule V of the SEBI Listing Regulations, a report on Management Discussion & Analysis is enclosed to this report. Kindly refer to Annexure C.
24. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act, the board of directors, to the best of their knowledge and ability, confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
b) they 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 of the company for that period;
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively;
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
25. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan, guarantee, or security is proposed to be utilised by the recipient are provided in the Standalone Financial Statements. (Kindly refer note 24 to the Standalone Financial Statements).
26. RELATED PARTY TRANSACTIONS
The company has complied with the provisions of section 188(1) of the Act dealing with related party transactions. The information on transactions with related parties pursuant to section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and is enclosed to this report. Kindly refer to Annexure B. Reference is also made to Note No. 24 of standalone financial statements.
In accordance with the Act, a copy of the annual return in the prescribed form as on March 31, 2023 is available on the Companyâs website. The web-link for the same has been disclosed separately at the end of this report.
The information required under Section 197(12) of the Companies Act, 2013 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are as follows:
I. Disclosures as per Rule 5(1):
a) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
i) Executive Directors:
Name DIN |
Designation |
Ratio to Median remuneration |
||||
Krishna Bodanapu 00605187 |
Managing Director & CEO |
168.99 |
||||
Karthikeyan Natarajan 03099771 |
WTD & COO |
103.45 |
||||
Ajay Aggarwal 02565242 |
WTD & CFO |
43.57 |
||||
ii) Non-Executive/ Independent Directors: |
||||||
Ratio to Median |
||||||
Name |
DIN |
Designation remuneration |
||||
M.M. Murugappan |
00170478 |
Director 2.01 |
||||
B V R Mohan Reddy |
00058215 |
Director 6.03 |
||||
Matangi Gowrishankar |
01518137 |
Director 2.01 |
||||
Ramesh Abhishek |
07452293 |
Director 2.01 |
||||
Vikas Seghal |
05218876 |
Director 4.12 |
||||
Vivek N Gour |
00254383 |
Director 2.01 |
||||
b) The percentage increase in remuneration of each director, chief executive officer, chief financial officer, |
||||||
company secretary in the financial year: |
||||||
% increase in remuneration in the |
||||||
Name |
Designation |
financial year |
||||
Krishna Bodanapu |
Managing Director & CEO |
6.40 |
||||
Karthikeyan Natarajan |
Whole-time Director & COO |
-39.60 |
||||
M.M. Murugappan |
Director |
33.3 |
||||
B V R Mohan Reddy |
Director |
20.0 |
||||
Matangi Gowrishankar |
Director |
33.3 |
||||
Ramesh Abhishek |
Director |
33.3 |
||||
Vikas Seghal |
Director |
0 |
||||
Vivek N Gour |
Director |
33.3 |
||||
Ajay Aggarwal |
WTD & CFO |
-34.00 |
||||
Sudheendhra Putty |
Company Secretary |
-5.0 |
c) The percentage increase in the median remuneration of employees in the financial year: 13.57%
d) The number of permanent employees on the rolls of Company: 12,014
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 8.64% and the average annual increase of managerial personnel 6%.
f) Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms remuneration is as per the remuneration policy of the Company.
II. Disclosures as per Rule 5(2):
The names of the top ten employees in terms of remuneration drawn and the name of every employee, who:
a. if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees;
b. if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month;
c. if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in an annexure forming part of this report. Further, the report and the financial statements are being sent to the members excluding the aforesaid sub-annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at [email protected].
29. LOANS AND ADVANCES IN THE NATURE OF LOANS TO FIRMS/COMPANIES IN WHICH DIRECTORS ARE INTERESTED:
The information as required to be provided under Schedule V Para C clause 10 (m) of the SEBI Listing Regulations forms part of the report on Corporate Governance enclosed to the Annual Report.
30. DETAILS OF MATERIAL SUBSIDIARIES OF THE LISTED ENTITY:
The information as required to be provided under Schedule V Para C clause 10 (n) of the SEBI Listing Regulations forms part of the report on Corporate Governance enclosed to the Annual Report.
31. PARTICULARS RELATING TO THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 (POSH):
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 during the FY 2023.
List of Initiatives under POSH for 2022-23
⢠Posh Panel connect every quarter to ensure all the complaints registered are duly discussed with improved approach on building awareness. Further, the Company continues to have the posh committee meetings to enhance the awareness among associates.
⢠Digital compliance of POSH-100% in the portal.
⢠Awareness sessions to associates through Virtual platforms and also through other business monthly meetings. Awareness and sensitization continue during Induction of associates.
⢠Awareness worked out creatively through "Theater Play" and Musical Platforms making it more interesting for associates to watch and understand in the digitally.
⢠POSH panel have been nominated for training in various national and state level forums (NHRD, NASSCOM and CII)
⢠Further, the Company has introduced mandatory POSH Course for all the new joiners in Dcafe (L&D portal). A new module to the course has been introduced from the FY 23 onwards.
⢠For DLM, a session specifically for all the blue collared employees in Hyderabad campus on POSH awareness was held during the year.
There are no pending complaints either at the beginning or at end of the financial year. The following is the summary of the complaints received and disposed off during the FY 2022 - 23:
(a) No. of Complaints Received: 1
(b) No. of complaints disposed: 1
(c) number of complaints pending as on end of the financial year: Nil
The company pursues a comprehensive risk management programme as an essential element of sound corporate governance and is committed to continuously embedding risk management in its daily culture. This process is followed in five steps:
⢠Identify risks and opportunities
⢠assess risk and performance for key processes
⢠evaluate the risk impact across business operations
⢠develop mitigation plan for the risks identified and
⢠monitor the risks at regular intervals and report to
⢠the Risk Management Committee
The company has classified the risks into five categories:
i. Strategic
ii. Reputational
iii. Operational
iv. Financial
v. Compliance/Litigation.
Each identified risk is assessed according to its probability and impact on the company.
The Board of Directors has formed an internal risk management committee to identify, evaluate, mitigate and monitor the risk management in the company. The committee comprises cross-functional membership from the senior management of the company. The primary objectives of the Committee are to assist the Board in the following:
⢠To provide an oversight for all categories of risk and promulgate risk culture in the organization.
⢠To adopt leading risk management practices in the industry and manage risk proactively at organizational level.
⢠Help to develop a culture of the enterprise that all levels of people understand risks.
⢠Provide input to management of risk appetite and tolerance and monitor the organization''s risk on an ongoing basis.
⢠Approve and review risk management plan which includes company''s risk management structure, framework, methodologies adopted, guidelines and details of assurance and review of the risk management process.
⢠Monitor risks and risk management capabilities and mitigation plans.
More details on the risk management committee of the board can be found in the report on corporate governance. Members may also refer to the Management Discussion & Analysis Report.
The Company will continue to uphold the true spirit of Corporate Governance and implement the best governance practices. A report on Corporate Governance pursuant to the provisions of Corporate Governance Code stipulated under the SEBI Listing Regulations forms part of the Annual Report. Kindly refer to Annexure F.
Full details of the various board committees are also provided therein along with Auditorsâ Certificate regarding compliance of conditions of corporate governance is enclosed as Annexure E.
34. SIGNIFICANT AND MATERIAL ORDERS:
There are no orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.
Pursuant to the provisions of Regulation 17 of the SEBI Listing Regulations, a declaration by the CEO of the company declaring that all the members of the board and the senior management personnel of the company have affirmed compliance with the Code of Conduct of the company is enclosed to this report. Kindly refer to Annexure K.
The CEO/CFO certification to the board pursuant to Regulation 17 of the SEBI Listing Regulations is enclosed to this report. Kindly refer to Annexure L.
36. MATERIAL CHANGES & COMMITMENTS:
There were no material changes and commitments affecting the financial position of the Company which occurred between the end of financial year to which the financial statement relates on the date of this report. The other changes in commitments are provided in the relevant places of the annual report.
37. COST RECORDS AND COST AUDIT
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Act are not applicable for the business activities carried out by the Company.
38. APPLICATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016:
The Company has not made any application under the Insolvency and Bankruptcy Code, 2016 during the FY 2023.
39. DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF:
The Company has not made any such valuation during the FY 2023.
40. WEB-LINKS OF VARIOUS POLICIES:
As required by the Act and the SEBI Listing Regulations, your Company provides the weblinks are provided herewith:
Sl. No. |
Particulars |
Weblink |
1. |
Annual Return |
|
2. |
Business Responsibility and Sustainability Report |
|
3. |
Dividend Distribution Policy |
https://www.cyient.com/hubfs/2021/investors/corporate-governance/ Dividend Distribution Policy (FY22)%5B21%5D.pdf |
4. |
Corporate Social Responsibility Policy |
https://www.cyient.com/hubfs/2021/CSR/Cyient_CSR_Policy_3.1.pdf. |
5. |
Policy on directors'' appointment and Remuneration |
|
6. |
Whistle Blower Policy |
https://www.cyient.com/hubfs/Statutory_information/Whistle_Blower_ |
7. |
ESOP disclosures |
|
8. |
Familiarization programme of the independent directors |
|
9. |
Policy for determining material subsidiaries of the Company |
https://cdn2.hubspot.net/hubfs/5724847/FY_19_Revamp_Assets_Website/ Investors /Corporate Governance/Material subsidiaries Policy.pdf |
10. |
Policy on dealing with related party transactions |
https://cdn2.hubspot.net/hubfs/5724847/FY_19_Revamp_Assets_Website/ Investors /Corporate Governance/Related Party Transactions Policy.pdf |
11. |
Prevention of sexual harassment policy |
|
12. |
Environment, health and safety policy |
https://www.cyient.com/hubfs/FY_19_Revamp_Assets_Website/Investors / Corporate Governance/EOHS-Policy.pdf |
13. |
Company''s policy on Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under subsection (3) of section 178 of the Companies Act, 2013 |
The board of directors expresses their thanks to the companyâs customers, shareholders, vendors and bankers for their support to the company during the year. We also express our sincere appreciation to the contribution made by employees at all levels. Our consistent growth was made possible by their hardwork, cooperation and support.
Your directors would like to make a special mention of the support extended by the various Departments of the Central and State Governments, particularly the Software Technology Parks of India, Development Commissioners - SEZ, Department of Communication and Information Technology, the Direct and Indirect tax authorities, the Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate Affairs/Registrar of Companies, Securities and Exchange Board of India, the Stock Exchanges and others and look forward to their support in all future endeavours.
Subject to confirmation of appointment in the ensuing AGM.
Retired as CFO.
The details about the composition of board, KMP and the committees of the board can be found at the Report of Corporate Governance, which forms part of this report.
13. POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION AND OTHER DETAILS:
The Companyâs policy on directorsâ appointment and remuneration and other matters provided in section 178(3) of the Act have been disclosed in the report on Corporate Governance, which forms part of the directorsâ report. The web-link for the same has been disclosed separately at the end of this report.
Mar 31, 2022
Your directors take pleasure in presenting the Thirty First (31st) Board''s Report on the business and operations of your Company (the "Company" or "Cyient"), along with the audited financial statements for the Financial Year ("FY") ended March 31, 2022.
1. FINANCIAL HIGHLIGHTS: |
(Amount in ? Million, except for EPS data) |
||||
Particulars |
Consolidated |
Standalone |
|||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
||
Revenue |
45,344 |
41,324 |
17,505 |
13,799 |
|
Other Income |
1,121 |
1,399 |
2,753 |
1,198 |
|
Total Income |
46,465 |
42,723 |
20,258 |
14,997 |
|
Expenses Operating Expenditure |
37,166 |
35,300 |
12,377 |
10,255 |
|
Depreciation and amortization expense |
1,922 |
1,945 |
967 |
962 |
|
Impairment of non-current assets |
- |
274 |
- |
114 |
|
Total Expenses |
39,088 |
37,519 |
13,344 |
11,331 |
|
Profit before finance cost, tax and share of profit from Joint Venture |
7,377 |
5,204 |
6,914 |
3,666 |
|
Finance Cost |
393 |
433 |
104 |
146 |
|
Profit before tax (PBT) |
6,984 |
4,771 |
6,810 |
3,520 |
|
Current tax |
1,692 |
1,351 |
1,162 |
755 |
|
Deferred tax |
69 |
(218) |
(43) |
(16) |
|
Profit after Tax (PAT) |
5,223 |
3,638 |
5,691 |
2,781 |
|
Profit attributable to Shareholders of the Company |
5,223 |
3,638 |
5,691 |
2,781 |
|
Other Comprehensive Income attributable to owners of the Company |
19 |
231 |
(34) |
120 |
|
Basic EPS |
47.75 |
33.08 |
52.03 |
25.29 |
|
Diluted EPS |
47.54 |
33.06 |
51.80 |
25.27 |
|
Paid up share capital |
552 |
550 |
552 |
550 |
|
Retained Earnings |
30,582 |
28,991 |
25,435 |
23,429 |
2. STATE OF AFFAIRS / COMPANY''S PERFORMANCE:
Your company is a global engineering and technology solutions company. It engages with customers across their value chain helping to design, build, operate and maintain the products and services that make them leaders and respected brands in their industries and markets. Customers draw on the companyâs expertise in engineering, manufacturing, and digital technology to deliver and support their next-generation solutions that meet the highest standards of safety, reliability and performance.
Your Company provides engineering, manufacturing, geospatial, network and operations management services to global industry leaders. It delivers innovative solutions that add value to businesses through the deployment of robust processes and state-of-the-art technology. The Companyâs high-quality products and services help clients leverage market opportunities and gain competitive advantage. There has been no change in the nature of business of the Company during the FY 2022.
The summary of your Companyâs performance is as follows: |
(Amount in ? Million) |
|||
Sl. No. |
Particulars |
FY 2022 |
FY 2021 |
% Increase/ (Decrease) YoY |
1. |
Revenue from Operations -Standalone basis |
17,505 |
13,799 |
26.86 |
2. |
Revenue from Operations - Consolidated basis |
45,344 |
41,324 |
9.73 |
3. |
Profit for the year -Standalone basis |
5,691 |
2,781 |
104.64 |
4. |
Profit for the year - Consolidated basis |
5,223 |
3,638 |
43.57 |
5. |
The profit for the year attributable to shareholders and non-controlling interests |
5,223 |
3,638 |
43.57 |
In terms of regulation 43A of SEBI (Listing Obligations & Disclosure requirements) Regulations, 2015, the Company has formulated and uploaded dividend distribution policy on itsâ corporate website i.e. https://www.cyient.com/investors/ corporate-governance/.
Details of dividend declared by the Company are as follows:
FY 2022 |
FY 2021 |
|||
Dividend per share (in ?) |
Dividend % |
Dividend per share (in ?) |
Dividend % |
|
Interim dividend |
10 |
200 |
NA |
NA |
Final dividend* |
14 |
280 |
17 |
340 |
Total dividend |
24 |
480 |
17 |
340 |
*Final Dividend recommend by the Board of Directors at its Meeting held on 21 April 2022. The payment of final dividend is subject to approval of the shareholders of the Company in the ensuing Annual General Meeting of the Company.
The Basic EPS of our Company stood at ? 52.03 at standalone level and basic EPS at consolidated level stood at ? 47.75 for the year ended 31 March 2022.
The Company has transferred ? 65 to Special Economic Zone re-investment reserve during the year under review.
The Company continues to be debt-free and maintains sufficient cash reserves to meet its operations and strategic objectives. As at 31 March 2022, Your Company had liquid assets of ? 11,772 Mn as against ? 11,543 Mn at the previous year end. These funds have been invested in short-term deposits with scheduled banks & financial institutions, mutual funds, perpetual bonds and tax free bonds.
The FY 2022 being the second year of the COIVID-19 pandemic, the Company has considered internal and external sources of information up to date of approval of these financial statements in evaluating possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of trade and unbilled receivables, investments, goodwill and intangible assets. The Company is confident about the recoverability of these assets.
The company has not accepted any deposits falling within the meaning of Section 73 or 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
The authorized share capital of the Company is ? 1,400,000,000 consisting of 280,000,000 Equity Shares of ? 5 (Rupees Five only) each;
The issued, subscribed and paid-up share capital of the Company is ? 551,587,080 consisting of 110,317,416 Equity Shares of ? 5 (Rupees Five only) each;
During the year, your company has allotted 287,604 equity shares of ?5 each to the associates of the company and its subsidiaries upon exercise of an equal number of stock options vested in them pursuant to the extant Stock Option Schemes of the company.
10. SUBSIDIARIES AND JOINT VENTURES (JV):
As per the provisions of Sections 129 of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the Financial Statements of the Subsidiary Companies/Associate Companies/JV in Form AOC-1 is published as a part of the Annual Report.
During the year, there has been no material change in the nature of the business of the subsidiaries and JV.
11. BUSINESS RESPONSIBILITY REPORT:
In pursuance of Regulation 34 of the SEBI (LODR) Regulations, 2015, the Company is publishing business responsibility report. The same is enclosed as Annexure ''A''.
12. CORPORATE SOCIAL RESPONSIBILITY:
Your company believes in giving back to society in some measure that is proportionate to its success in business. Corporate Social Responsibility (CSR) aims at balancing the needs ofall stakeholders. The companyâs CSR initiative goes beyond charity and believes that as a responsible company it should take into account its impact on society as much as creating business impact. The CSR initiatives are conducted through Cyient Foundation. An elaborate report on CSR is published elsewhere in this annual report. The CSR Annual Report is enclosed as Annexure ''B''.
For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of this report. This CSR Policy of the Company is available on the Companyâs website at https:// www.cyient.com/hubfs/2021/CSR/Cyient_CSR_ Policy_3.1.pdf.
13. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL:
The Board of the Company is duly constituted. None of the directors of the company is disqualified under the provisions of the Companies Act, 2013 (the ''Actâ) or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Declaration by independent directors The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that he/ she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Certificate on Non- Disqualification of Directors pursuant to Regulation 34(3) and Schedule V Para C clause 10 (i) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 forms part of this Annual Report.
Appointments/Re-appointments, Inductions and Change in Designation:
1. Mr. Ajay Aggarwal (DIN: 02565242) was appointed as an Additional Director w.e.f. 22 April 2021; his appointment as Director was ratified in the AGM held on 17 June 2021. He was further appointed as Executive Director and CFO for a period that is the earlier of 3 years from 22 April 2021 or the attainment of the age of 60 years.
2. Mr. Karthikeyan Natarajan (DIN: 03099771) was appointed as an Additional Director w.e.f 22 April 2021; his appointment as Director was ratified in the AGM held on 17 June 2021. He was further appointed as Executive Director and COO for a period that is the earlier of 3 years from 22 April 2021 or the attainment of the age of 60 years.
3. Mr. M.M. Murugappan (DIN: 00170478), NonExecutive, Non- Independent Director was appointed as Chairman w.e.f. 22 April2021;
4. Mr. Vikas Sehgal (DIN: 05218876) was re-appointed as Independent Director for a second consecutive term by members in the AGM held on 17 June 2021 for a period of 5 years w.e.f. 17 October 2021;
5. Mr. Vivek Gour (DIN: 00254383) and Ms. Matangi Gowrishankar (DIN: 01518137) were each appointed for a second consecutive term by members vide Postal Ballot dated 31 March 2022 for a period of 5 years w.e.f. 25 April 2022
6. Mr. Ramesh Abhishek was appointed as Additional Director on 12 August 2020 and the appointment was regularized by the members at the 30th AGM held on 17 June 2021
Re-appointments:
The following directors retire by rotation and being eligible, offer themselves for re-appointment in the ensuing AGM:
1. Mr. B.V.R. Mohan Reddy (DIN 00058215), NonExecutive, Non- Independent Director;
2. Mr. M.M. Murugappan (DIN: 00170478), NonExecutive, Non- Independent Director;
Pursuant to the provisions of regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2 on General Meetings issued by ICSI, brief particulars of the directors proposed to be appointed/ re-appointed are provided asan annexure to the notice convening the AGM. Retirements:
1. Mr. B.V.R. Mohan Reddy stepped down as Executive-Chairman w.e.f. 22 April 2021 and continues as NonExecutive, Non-Independent Director;
2. Mr. Som Mittal, Independent Director retired from directorship w.e.f. 6 February 2022;
3. There were no resignations during the year.
Following are the are Key Managerial Personnel of the Company in accordance with the provisions of Section(s) 2(51), and 203 of theCompanies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
1. Mr. Krishna Bodanapu, Managing Director & CEO.
2. Mr. Karthikeyan Natarajan, Executive Director & COO
3. Mr. Ajay Aggarwal, Executive Director & CFO; and
4. Mr. Sudheendhra Putty, Company Secretary.
Registration of Independent Directors in Independent Directors Databank
All the Independent Directors of your Company have been registered and are members of Independent Directors Databank maintained by the Indian Institute of Corporate Affairs (IICA).
14. POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION AND OTHER DETAILS:
The Companyâs policy on directorsâ appointment and remuneration and other matters provided in section 178(3) of the Act have been disclosed in the corporate governance report, which forms part of the Board''s report.
15. NUMBER OF BOARD MEETINGS DURING THE YEAR:
During the FY 2022, six (6) meetings of the board were held, the details of which have been disclosed in the corporate governance report, which forms part of the Board''s report. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Companies Act, 2013.
16. BOARD EVALUATION AND ASSESSMENT:
The company believes that formal evaluation of the board and of the individual directors, on an annual basis, is a potentially effective way to respond to the demand for greater board accountability and effectiveness. For the company, evaluations provide an ongoing means for directors to assess their individual and collective performance and effectiveness. In addition to greater board accountability, evaluation of board members helps in:
⢠More effective board processes
⢠Better collaboration and communication
⢠Greater clarity with regard to membersâ roles and responsibilities and
⢠Improved Chairman - Managing Director - Board relations;
By focusing on the board as a team and on its overall performance, the company ensures that communication and overall level of participation and engagement also improves.
In order to facilitate the same, the board undertook a formal board assessment and evaluation process during 2021-22. The board evaluation was performed after seeking inputs from all the directors and included criteria such as the board composition and structure, effectiveness of board processes, information and functioning as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 05, 2017.
The Leadership, Nomination & Remuneration Committee has overall stewardship for the process. The evaluation process covers the following aspects:
⢠Peer and self-evaluation of Directors;
⢠Evaluation of the performance and effectiveness of the board;
⢠Evaluation of the performance and effectiveness of Board Committees;
⢠Evaluation of the performance of the Chairman and the Managing Director & CEO;
⢠Feedback on management support to the Board;
The evaluation process elicits responses from the directors in a judicious manner - ranging from composition and induction of the board to effectiveness and governance. It also sought feedback on board and committee charters, strategy, risk management and quality of discussion and deliberations at the board. The evaluation process also ensures the fulfilment of independence criteria as specified in the applicable regulations and that the latter are independent of the management.
KPMG analyzed the responses that were collected as part of the board evaluation exercise and categorized the questions and responses based on a pre-determined framework. The report was presented with the findings on the individual strengths and opportunities to improve Board efficiency.
As required under the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as on March 31, 2022, the Board has the following committees:
⢠Audit Committee;
⢠Leadership, Nomination & Remuneration Committee;
⢠Risk Management Committee;
⢠Stakeholders Relationship Committee.
⢠Environment, Social and Governance (ESG) committee (this committee subsumed the Corporate Social Responsibility and Diversity and Inclusion Committees);
The Board of Directors of the Company at its meeting held on January 19, 2022, constituted the Environment, Social and Governance (ESG) committee.
During the year, all recommendations made by the committees were approved by the Board. A detailed note on the composition of the committees is provided in the Corporate governance report.
18. ADEQUACY OF INTERNAL FINANCIAL CONTROLS: Internal Financial Controls are part of risk management process addressing financial and financial reporting risks. They ensure the orderly and efficient conduct of business, including adherence to Company policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records. They aid in the timely preparation of financial statements. The Internal Financial Controls have been documented, digitised and embedded in the business process.
19. AUDITORS:
1. Statutory Auditors
At the 28th Annual General Meeting (the ''AGM'') held on 6 June 2019, the members approved the appointment of S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W/E-300004) as Statutory Auditors of the company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the 33rd AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act.
The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at this AGM.
2. Secretarial Auditors
The Board has appointed Mr. S. Chidambaram as the Secretarial Auditors (CP No.2286) for the financial year ended March 31, 2022. The Secretarial Audit Report for the financial year ended 31 March 2022 is annexed as Annexure ''C'' to this report.
The Secretarial Audit Report issued by Mr. S. Chidambaram, Secretarial Auditors (CP No.2286) for Cyient DLM Private Limited, a material unlisted subsidiary for the financial year ended 31 March 2022 is annexed as Annexure ''D'' to this report.
20. AUDITORS'' REPORT AND SECRETARIAL AUDITORS'' REPORT:
The Auditorsâ Report for FY 2022 does not contain any qualification, reservation or adverse remark. The Report is enclosed with the financial statements in this Annual Report.
The Secretarial Auditorsâ Report for FY 2022 does not contain any qualification, reservation or adverse remark. During the FY 2022, the statutory auditors and secretarial auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act.
Annual Secretarial Compliance Report
The Company has undertaken an audit for the Financial Year ended 31 March 2022 for all applicable compliances as per the Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by Mr. S. Chidambaram has been submitted to the Stock Exchanges within 60 days of the end of the Financial Year.
The Company has put in place a Whistle Blower Policy and has established the necessary vigil mechanism as defined under Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements), 2015 for employees and others to report concerns about unethical behaviour. It also provides for adequate safeguards against the victimisation of employees who avail of mechanism. No person has been denied access to the Chairman of the audit committee.
The Whistle blower Policy is available on the website of the company i.e. (https://www.cyient.com/investors/ corporate-governance/). The Company has implemented a web based/online mechanism under the whistle blower policy. This mechanism encompasses the entire trail from the lodging of a complaint to its eventual redressal. The system also provides a dial-in facility to associates in various languages across the countries where the company has its operations.
22. EMPLOYEE STOCK OPTION PLANS:
During the year, the company had granted options to the associates of the company and its subsidiaries, in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. Disclosures pursuant to the said regulations is disclosed at the website of the company at https://www.cyient.com/investors/
corporate-governance/ and enclosed as Annexure ''E''.
23. CONSERVATION OF ENERGY, RESEARCH ANDDEVELOPMENT, TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars relating to conservation of energy,
research and development, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Companies Act, 2013 are provided in Annexure ''F'' to the report.
24. MANAGEMENT DISCUSSION & ANALYSIS:
Pursuant to the provisions of Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a report on Management Discussion & Analysis is enclosed as Annexure ''G''.
25. DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:
a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
b) they 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 of the company for that period;
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively;
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
26. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan, guarantee, or security is proposed to be utilised by the recipient are provided in the standalone financial statements. (refer note no. 5, 6 and 24 to the standalone financial statements).
27. RELATED PARTY TRANSACTIONS:
The company has complied with the provisions of section 188(1) of the Act dealing with related party transactions. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and is enclosed as Annexure ''H''. Reference is also made to Note No. 24 of standalone financial statements.
In accordance with the Companies Act, 2013, a copy of the annual return in the prescribed format as on 31 March 2022 is available on the Companyâs website at https:// www.cyient.com/investors/.
The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
Name |
DIN |
Designation |
Ratio to Median remuneration |
Krishna Bodanapu |
00605187 |
Managing Director |
197.51 |
Karthikeyan Natarajan |
03099771 |
Executive Director &COO |
212.86 |
Ajay Aggarwal |
02565242 |
Executive Director &CFO |
82.12 |
Non-Executive/ Independent Director |
|||
Name |
DIN |
Designation |
Ratio to Median remuneration |
M.M. Murugappan |
00170478 |
Director |
1.87 |
Som Mittal (resigned w.e.f 06.02.2022) |
00074842 |
Director |
1.87 |
Ramesh Abhishek |
07452293 |
Director |
1.87 |
Vikas Seghal |
05218876 |
Director |
4.74 |
Vivek N Gour |
00254383 |
Director |
1.87 |
Matangi Gowrishankar |
01518137 |
Director |
1.87 |
Vinai Thummalapally |
07797921 |
Director |
4.74 |
B.V.R. Mohan Reddy |
00058215 |
Director |
6.24 |
Alain A De Taeye |
03015749 |
Director |
1.87 |
b) The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:
Name |
Designation |
% increase in remuneration in the financial year |
Krishna Bodanapu |
Managing Director & CEO |
34.0 |
Karthikeyan Natarajan |
Executive Director &COO |
247.9 |
Ajay Aggarwal |
Executive Director & CFO |
174.0 |
Sudheendhra Putty |
Company Secretary |
56.8 |
As Mr. Karthik Natarajan and Mr. Ajay Aggarwal were not Executive Directors but executives of the company for the financial year ended 31 March 2021, the amounts indicated above are not strictly comparable
c) The percentage increase in the median remuneration of employees in the financial year: 6.55%
d) The number of permanent employees on the rolls of Company: 12,780
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 5.26% and the average annual increase managerial personnel 6%.
f) Affirmation that the remuneration is as per the remuneration policy of the Company:
The Company affirms remuneration is as per the remuneration policy of the Company.
g) The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report.
Further, the report and the financial statements are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary - company.secretary@ cyient.com
30. PARTICULARS RELATING TO THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 (POSH):
The company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 during the FY 2022.
The year 2021-22 continues to be challenging for many with lot of changes in policies and practices based on the prevailing situations. With majority of work force Working from home, Organization had reworked on the POSH connect initiatives and ensured Virtual connects every month with associates to build awareness among them.
List of Initiatives under POSH for 2021-22
⢠We had one registered POSH case in Q1 of FY21-22 which was closed within the timeline and the respondent was given a warning letter with a penalty of no increment for the FY21- 22
⢠Awareness and sensitization continues during Induction and mandatory POSH Course for all the new joiners in Dcafe (l&d portal) For all associates we should be making it mandatory with the new module in this FY22- 23
⢠With the present WFH Scenario , there were no key events
⢠We continue to have our posh committee meetings to enhance the awareness among associates.
There are no pending complaints either at the beginning or at end of the financial year.
31. RISK MANAGEMENT:
The company pursues a comprehensive risk management programme as an essential element of sound corporate governance and is committed to continuously embedding risk management in its daily culture. This process is followed in five steps:
⢠Identify risks and opportunities
⢠assess risk and performance for key processes
⢠evaluate the risk impact across business operations
⢠develop mitigation plan for the risks identified and
⢠monitor the risks at regular intervals and report to
⢠the Risk Management Committee
The company has classified the risks into five categories:
i. Strategic
ii. Reputational
iii. Operational
iv. Financial
v. Compliance/Litigation.
Each identified risk is assessed according to its probability and impact on the company.
The Board of Directors has formed an internal risk management committee to identify, evaluate, mitigate and monitor the risk management in the company. The committee comprises cross-functional membership from the senior management of the company. The primary objectives of the Committee are to assist the Board in the following:
⢠To provide an oversight for all categories of risk and promulgate risk culture in the organization.
⢠To adopt leading risk management practices in the industry and manage risk proactively at organizational level.
⢠Help to develop a culture of the enterprise that all levels of people understand risks.
⢠Provide input to management of risk appetite and tolerance and monitor the organization''s risk on an ongoing basis.
⢠Approve and review risk management plan which includes company''s risk management structure, framework, methodologies adopted, guidelines and details of assurance and review of the risk management process.
⢠Monitor risks and risk management capabilities and mitigation plans.
More details on the risk management committee of the board can be found in the Corporate governance report. Members may also refer to the Management Discussion & Analysis Report.
32. CORPORATE GOVERNANCE:
The Company will continue to uphold the true spirit of Corporate Governance and implement the best governance practices. A report on Corporate Governance pursuant to the provisions of Corporate Governance Code stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.
Full details of the various board committees are also provided therein along with Auditorsâ Certificate regarding compliance of conditions of corporate governance is enclosed as Annexure ''I''.
33. DISCLOSURE REQUIREMENTS:
Familiarization programme of the independent directors:
https://www.cyient.com/investors/corporate-
Policy for determining material subsidiaries of the Company: https://www.cyient.com/investors/ corporate-governance/
Policy on dealing with related party transactions:
https://www.cyient.com/investors/corporate-
Prevention of sexual harassment policy:
https://www.cyient.com/investors/corporate-
Environment, health and safety policy
https://www.cyient.com/investors/corporate-
https://www.cyient.com/investors/corporate-governance/
company''s policy on Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 of the Companies Act, 2013:
https://www.cyient.com/investors/corporate-governance/
34. SIGNIFICANT AND MATERIAL ORDERS:
There are no orders passed by the regulators or courts or tribunals impacting the going concern status and Companyâs operations in future.
Pursuant to the provisions of Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a declaration by the Managing Director & CEO of the company declaring that all the members of the board and the senior management personnel of the company have affirmed compliance with the Code of Conduct of the company is enclosed as Annexure ''Jâ.
The CEO/CFO certification to the board pursuant to Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is enclosed as Annexure ''Kâ.
36. MATERIAL CHANGES & COMMITMENTS:
There were no material changes and commitments affecting the financial position of the Company which occurred between the end of financial year to which the financial statement relate on the date of this report.
37. COST RECORDS AND COST AUDIT:
Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.
38. APPLICATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016:
The Company has not made any application under the Insolvency and Bankruptcy Code, 2016 during the FY 2022.
39. DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF:
The Company has not made any such valuation during the FY 2022.
The board of directorsâ expresses their thanks to the companyâs customers, shareholders, vendors and bankers for their support to the company during the year. We also express our sincere appreciation to the contribution made by employees at all levels. Our consistent growth was made possible by their hard work, cooperation and support.
Your directors would like to make a special mention of the support extended by the various Departments of the Central and State Governments, particularly the Software Technology Parks of India, Development Commissioners - SEZ, Department of Communication and Information Technology, the Direct and Indirect tax authorities, the Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate Affairs/Registrar of Companies, Securities and Exchange Board of India, the Stock Exchanges and others and look forward to their support in all future endeavours.
For and on behalf of the Board
M.M. Murugappan Krishna Bodanapu
Place: Hyderabad Non-Executive Chairman Managing Director &CEO
Date: 21 April 2022 (DIN-00170478) (DIN-00605187)
Note: Except as otherwise stated, all the numbers in the Board''s Report are based on standalone financial statements.
Mar 31, 2018
Dear Shareholders,
The directors have pleasure in presenting their 27th Report on the business and operations of the company, for the financial year ended 31st March 2018.
1. FINANCIAL HIGHLIGHTS (Amount in Rs. Million)
Particulars |
Consolidated |
Standalone |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Total Income |
40,694 |
36,997 |
16,320 |
13,736 |
EBIDTA |
6,873 |
5,704 |
5,671 |
3,617 |
Finance Cost |
204 |
172 |
6 |
6 |
Depreciation |
1,052 |
953 |
508 |
540 |
Exceptional item |
50 |
261 |
(103) |
201 |
Profit before Tax |
5,567 |
4,318 |
5,260 |
2,870 |
Current Tax |
1,493 |
927 |
1,285 |
601 |
Deferred Tax |
(113) |
118 |
(43) |
(100) |
Share of(loss)/profit in associate company |
(160) |
118 |
- |
- |
Joint Venture |
4 |
5 |
- |
- |
Non-controlling Interest |
(23) |
(42) |
- |
- |
Profit after Tax |
4,054 |
3,438 |
4,018 |
2,369 |
Basic Earnings per share (Rs.) |
36.00 |
30.55 |
35.69 |
21.05 |
Diluted Earnings per share (Rs.) |
35.85 |
30.53 |
35.54 |
21.03 |
Special Dividend per share (Rs.) |
- |
2.50 |
- |
2.50 |
Interim dividend paid (â/Share) |
9.00 |
3.00 |
9.00 |
3.00 |
Final dividend recommended (â/Share) |
4.00 |
5.00 |
4.00 |
5.00 |
Paid up Equity Share Capital |
563 |
563 |
563 |
563 |
Reserves |
22,876 |
20,610 |
20,051 |
18,259 |
2. STATE OF AFFAIRS/COMPANYâS PERFORMANCE
On a consolidated basis, the revenue from operations for FY 2018 at Rs. 39,175 million was higher by Rs.3,110 million over the last year. The profit for the year attributable to shareholders and non-controlling interests was Rs.4,031 million, recording an increase of Rs.635 million over FY 2017. The profit after tax attributable to shareholders of the company was Rs.4,054 million, 17.92% higher than that of the previous year Rs.3,438 million.
On a stand-alone basis, the revenue from operations for FY 2018 atRs.14,397 million, was higher by 24.07% over the last year Rs.12,920 million in FY 2017. The profit for the year was Rs.4,018 million, registering a growth of 69.61% over the PAT of Rs.2,369 million in FY 2017.
3. DIVIDEND
Your directors have recommended a final dividend of Rs.4.00 per share (80%) on par value of Rs. 5.00 per share. During the year, the Company declared two Interim Dividends of Rs.5.00 per equity share [100%] and Rs.4.00 [80%]on par value of 5.00 per share on 12October2017and 18 January 2018 respectively. Total dividend (including dividend distribution tax) as a percentage of profit after tax were 47.21% as compared to 60% in the previous year. In terms of regulation 43A of SEBI (Listing Obligations & Disclosure requirements) Regulations, 2015, the company has formulated and published dividend policy on the corporate website (www.cyient.com/investors/ corporate-governance)
4. TRANSFER TO RESERVES
Your company has not transferred any amount to reserves during the year under review and proposes to retain the entire amount of Rs.4,018 million in its Profit and Loss Account.
5. LIQUIDITY
Your company continues to be debt-free and maintains sufficient cash reserves to meet its operations and strategic objectives. As at 31 March 2018, Your Company had liquid assets of Rs. 8,396 million as against Rs.7,464 million at the previous year end. These funds have been invested in short term deposits and mutual funds with scheduled banks, financial institutions and debt based mutual funds.
6. PUBLIC DEPOSITS
Your company has not accepted any deposits falling within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review.
7. SHARE CAPITAL
Your company has allotted 29,662 equity shares of Rs.5.00 each to the associates of the company and its subsidiaries upon exercise of an equal number of stock options vested in them pursuant to the extant Stock Option Schemes of the company. In view of the above allotments, the outstanding shares of the company increased from 11,25,66,340 equity shares of Rs. 5.00 each to 11,25,96,002 equity shares of Rs. 5.00 each.
8. SUBSIDIARIES
Cyient, Inc. (CI)
Headquartered in East Hartford, Connecticut, Cyient Inc. provides engineering, manufacturing, geospatial, network, and operations management services to customers in North America. Cyient Inc. has over 30 offices across the US and Canada, with over 1,800 associates sourced primarily from within country.
CI caters to a broad spectrum of clients, from Fortune 500 companies to small organizations and local, state, and federal government agencies. CI generates annual revenues of over US $260M working across 40 states and 6 Canadian provinces. Cl leverages both the local and global delivery capability of Cyient while executing projects across North America. CI is also principal unit for executing the acquisition strategy in North America.
During the year, Cl acquired B&F Design Services, a Connecticut based company, engaged in the design and manufacturing of tools, which will focus on machining development hardware for the aerospace and defense industry .
Cyient Europe Limited (CEL)
Incorporated in London as Dataview Solutions Limited in 1992, it became a part of the Infotech Group in1999.
Its services are designed to cater to leading Tier-1 and Tier-2 Telcos, gas, electric and water utility companies, public sector agencies, and commercial businesses. In addition it provides world-class engineering services as well as big data and analytics capabilities to rail, aerospace and manufacturing companies. The company enjoys long-term relationships with several of its partners and customers and has built a strong foundation of trust and reliability.
Cyient Europe Ltd has 3 wholly owned subsidiaries. The oldest Cyient Benelux BV, based in Breda, the Netherlands provides support to our customers and business in the Benelux region while Cyient Schweiz GmbH, based in Bern, provides support and local presence for our long standing engagement with Swisscom. Cyient SRO, based on Prague in the Czech Republic is the 3rd and newest subsidiary having been established in September 2015. Its primary focus is to provide engineering services to our rail and aerospace customers across Europe and has now grown to a team of over 120 associates.
The November 2016 acquisition of BlomAerofilms Ltd, the UK subsidiary of NRC Group from Norway is progressing well. The business bought a team with complementary skills of around 40 associates, mostly based out of their offices in Cheddar, Somerset, who have now been fully integrated into Cyientâs European operations.
The company is an ISO 9001 and ISO 27001 certified organization. Leveraging the global execution capability of its parent organization, it maintains client relationships and ensures efficient project management across Europe.
Cyient GmbH (CG)
Cyient GmbH offers world-class engineering services as well as big data and analytics capabilities to rail, aerospace and manufacturing companies in Germany and neighbouring countries such as Austria, France and Sweden. It was established as Advanced Graphics Software (AGS) in Leonberg, Germany, in 1992 - a 3D CAD/CAM, e-solution software and application provider.
After becoming a part of Cyient Group in 2000, it extended its foray into other service areas like GIS and IT solutions. Owing to the large pool of engineering, GIS, IT resources, CG provides high-quality services and solutions to the clients with offshore cost advantage and onsite project management. Growth in recent months has included an expansion of our Telecom Plan and Design services in Germany as well as of our semi-conductor design and verification business. We will be moving our offices from Leonberg to Stuttgart to reflect this growth and expansion.
Cyient KK (CKK)
Established in 2008 in Central Tokyo, CKK is a leading engineering service provider in Japan. CKK provides end-to-end engineering services and solutions to manufacturing industries.
CKK leverages the global delivery capability of the parent organisation, while maintaining client relationships and managing projects locally.
Cyient Australia Pty Limited (CAPL)
Established in 2014, Cyient Australia provides engineering design and network operations services to diverse industries to its Asia Pacific customers. CAPL supports its customers especially Telecommunication, Utilities and Rail transportation from global delivery centres in Sydney and Melbourne with operations Australia wide and across the APAC region. CAPL has over 600 associates operating from our global delivery centres and customers across Australia. Melbourne is the APAC headquarter.
Cyient Singapore Pte Limited (CSPL)
Established in 2015, Cyient Singapore is the South East Asia headquarters. CSPL provides services and solutions to diverse industries such as aerospace, telecommunications, utilities and rail transportation. CSPL has close to 100 engineers supporting its customers from the engineering centre in Singapore. CSPL has a strong customer base in the region and this entity becomes very important for the future growth in the region.
Cyient Engineering (Beijing) Limited (CEBL)
Cyient established its presence by setting up a subsidiary in Beijing in 2017. CEBL sees China as having long term market not only to support its global customers in China but also to capture huge potential that the China market brings to its future growth. Particular focus is on semiconductor, manufacturing and energy markets.
Cyient Israel India Limited (CIIL)
During FY17, Cyient established its local presence in Israel to engage more closely with Israeli Defense OEMs who are significant clients for the companyâs Design-Led Manufacturing (DLM) business. Cyient has invested in local business development and consulting resources to strengthen its focus on this important market that has significant, long-term potential particularly around Indian Defence offsets opportunities. Cyient additionally engaged in an Israeli start-up accelerator programme that gives the company access to partnerships around innovative technology for military, defense and homeland security applications.
Cyient DLM Private Limited (CDLMPL)
Cyient acquired Cyient DLM Pvt Ltd (erstwhile Rangsons Electronics Private Limited) in 2014. This is towards Cyientâs vision to provide a complete product life cycle solution (Design Led Manufacturing (DLM)) to our customers, as part of S3 strategy. Today CDLMPL is recognised as a market leader in High-Mix, High-Tech Electronic & Mechanical Manufacturing Services in Aerospace & Defense, Rail Transportation, Medical Technology, Telecom & Industrial business segments. CDLMPL possesses and maintains quality certifications that enable it to design and manufacture products to clients in these industry verticals.
CDLMPL is responsible for seamless transition from the design phase to the manufacturing phase by arriving at Integrated Product Development Plan (IPDP) with all BUâs. In many cases, we support our customer in technocommercial points by a set of seasoned experts to deliver value engineered products derived from a combination of efficient designs, sourcing and production processes.
Effective April 01, 2017, Techno Tools Precision Engineering Private Limited, CDLMPLâs wholly owned subsidiary, has been merged with its holding company, Cyient DLM Private Limited, pursuant to the order dated April 02, 2018from National Company Law Tribunal.
Cyient Insights Private Limited (CIPL)
Cyient acquired a majority stake in Invati Insights Private Limited, Hyderabad, India in October 2014. The company was subsequently renamed Cyient Insights Private Limited.
Cyient Insights enables its customers to derive end to end business excellence and derive quantifiable business results through gamut of machine learning and deep learning capabilities and associated actionable insights. Cyient Insights stands apart from its peers with its capability to acquire, manage and analyse vast amount of data generated by sensors embedded in machines and devices, and the unmatched commitment to add value to customers with the proven global delivery model. Cyient Insights brings in domain specialists through Cyientâs decades of work with verticals such as Aerospace & Defence, Heavy Engineering, Transportation, Medical, Telecommunications, Utilities, Energy & Natural Resources and marries it to its data science capability to execute projects.
Cyient Solutions and Systems Private Limited (CSSPL)
In April 2017, Cyient Solutions and Systems Pvt. Ltd. (CSS) was established to focus exclusively on business in the Indian Defence Sector. CSS underlines Cyientâs commitment to the Make in India initiative that reflects the nationâs aspirations for increased self-reliance in Defence. Cyient has been actively investing in technology IP, design, development, manufacturing and system integration capabilities to address critical technology requirements of the Defence sector.
CSS signed a collaboration agreement with BlueBird Aero Systems Israel to design, manufacture, and maintain UAV Systems for Indian defence, paramilitary and homeland security agencies. BlueBirdâs world-class technology combined with Cyientâs manufacturing, aftermarket capabilities and local presence offers exceptional value to the rapidly expanding market for UAV solutions in India.
Infotech Aerospace Services Inc. (IASI)
Established in 2003 in Puerto Rico, Infotech Aerospace Services Inc. provides engineering outsourcing and other professional services to Defense, Aerospace, and Power Generation Industries. IASI is an associate company between Cyient and Pratt & Whitney, a pioneer in flight technology.
IASI ceased to be an associate pursuant to the disinvestment of 49% stake in the entity with effect from 8 December 2017.
Infotech HAL Limited (IHL)
IHL aims to provide comprehensive solutions involving conceptual design, re-design and derivates of modules, systems and components, prototyping and supply of these through Manufacturing Programme Management. IHL offers design services in the field of aerospace, viz., aero thermo and mechanical design, structural, stress, thermal and rotor dynamic analysis, aeronautics, computational fluid dynamics, combustion studies, preparation of digital mock up, testing and analysis, control system design, development and software applications.
IHL is a joint venture between Cyient and Hindustan Aeronautics Limited. IHL delivers engineering as well as aftermarket engineering and support services, i.e., technical publications, repair design, service bulletins, testing, performance analysis and maintenance monitoring in the aerospace domain.
IHL is well positioned to undertake work under offset program from various original equipment manufacturers.
A statement showing the contribution of each subsidiary has been published as part of consolidated financial statements. Further, pursuant to the provisions of section 129 (3) of the Act, a statement showing the salient features of the financial statements of the subsidiaries in Form AOC-1 is published elsewhere in the report.
9. QUALITY
The company is committed to creating and delivering engineering services and solutions that exceed customer expectations and enhance the level of business profitability.
The companyâs quality implementation efforts are all pervasive, beginning with a stated goal.
True to the image as a global player, the company has developed a reputation for providing its clients with world-class quality; the clients trust the strength of quality processes that have always assured them of timely defect-free deliverables. The quality management system (QMS) is a testimony derived and optimized with experiences and best practices that are aligned with the internationally renowned quality standards and models like ISO 9001:2015, ISO 27001:2013, AS 9100 D, ISO 13485:2003, ISO 22163: 2017 (IRIS), TL 9000 R 5.5, ISO 14001:2015, BS-OHSAS 18001-2007 and CMMI-DEV Version 1.3 Level 5. Quality policy and objectives are mentioned elsewhere in the annual report.
10. BUSINESS RESPONSIBILITY REPORT
In pursuance of Regulation 34 of the SEBI (LODR) Regulations, 2015, the company is publishing the Business Responsibility Statement. The same is enclosed as Annexure âAâ.
11. CORPORATE SOCIAL RESPONSIBILITY
The company believes in giving back to society in some measure that is proportionate to its success in business. Corporate Social Responsibility (CSR) aims at balancing the needs of all stakeholders. The companyâs CSR initiative goes beyond charity and believes that as a responsible company it should take into account its impact on society as much as designing tomorrow together. The CSR initiatives are conducted through Cyient Foundation. The CSR Annual Report is enclosed as Annexure âBâ.
12. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
None of the directors of the company is disqualified under the provisions of the Companies Act, 2013 (âAct) or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All Independent Directors have provided confirmations as contemplated under section 149(7) of the Act.
Appointments/Re-appointments
Pursuant to the provisions of section 152 of the Act, read with applicable rules and regulations thereunder, Mr. B V R Mohan Reddy (DIN: 00058215) retires by rotation at the ensuing Annual General Meeting (AGM) and offers himself for re-appointment.
Pursuant to the provisions of regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2 on General Meetings issued by ICSI, brief particulars of the directors who are proposed to be appointed/ re-appointed are provided as an annexure to the notice convening the AGM.
Mr. Tom Prete and Mr. Harsh Manglik did not offer themselves for reappointment. Your directors appreciate their valuable contribution to the company during their tenure.
Amb. Vinai Thummalapally was appointed as Independent Director at the 26th AGM held onl3July2017.
Apart from the above, there has been no change in the key managerial personnel during the year.
13. POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Companyâs policy on directorsâ appointment and remuneration and other matters provided in section 178(3) of the Act have been disclosed in the corporate governance report, which forms part of this report.
14. NUMBER OF BOARD MEETINGS DURING THE YEAR
During the year, 4 meetings of the board were held, the details of which form part of the report on corporate governance.
15. BOARD EVALUATION AND ASSESSMENT
Board evaluation processes, including in relation to the chairman, individual directors and committees, constitute a powerful and valuable feedback mechanism to improve board effectiveness, maximise strengths and highlight areas for further development. In addition to greater board accountability, evaluation of board members helps in:
- More effective board processes
- Better collaboration and communication
- Greater clarity with regard to membersâ roles and responsibilities and
- Improved Chairman - Managing Director - Board relations
By focusing on the board as a team and on its overall performance, the company ensures that communication and overall level of participation and engagement improves.
In order to facilitate the same, the board undertook a formal board assessment and evaluation process during 2017-18. The board evaluation was performed after seeking inputs from all the directors and included criteria such as the board composition and structure, effectiveness of board processes, information and functioning as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board oflndia on 5 January 2017.
The Leadership, Nomination & Remuneration Committee has overall stewardship for the process. The evaluation process covers the following aspects:
- Peer and self-evaluation of Directors
- Evaluation of the performance and effectiveness of the board
- Evaluation of the performance and effectiveness of Board Committees
- Feedback from the Non-Executive Directors to the Chairman, and
- Feedback on management support to the Board
The evaluation process elicited responses from the directors in a judicious manner - ranging from composition and induction of the board to effectiveness and governance. It also sought feedback on board and committee charters, strategy, risk management and quality of discussion and deliberations at the board. The Lead Independent Director provides feedback to the Executive Chairman. The same is discussed and acted upon accordingly at the board.
16. AUDITORS
Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, Deloitte Haskins & Sells, Chartered Accountants, were appointed as statutory auditors of the company from the conclusion of the 23rd AGM of the company held on 17 July 2014 till the conclusion of the 28th AGM to be held in the year 2019, subject to ratification of their appointment at every AGM. Accordingly, requisite resolution forms part of the notice convening the AGM.
17. AUDITORSâ REPORT AND SECRETARIAL AUDITORSâ REPORT
The auditorsâ report and secretarial auditorsâ report do not contain any qualifications, reservations or adverse remarks.
Report of the secretarial auditor is given as an annexure which forms part of this report.
18. EMPLOYEE STOCK OPTION PLANS
During the year, the company had granted options/ RSUs under two ASOP schemes and Restricted Stock Units scheme to the associates of the company and its subsidiaries, in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. Disclosure pursuant to the said regulations is enclosed as Annexure âDâ.
19. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The details are enclosed as Annexure âEâ.
20. MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Regulation 34 read with Schedule V of the SEBI (LODR) Regulations, 2015, a report on Management Discussion & Analysis is enclosed as Annexure âFâ.
21. DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, (âthe Actâ) the board of directors, to the best of their knowledge and ability, confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they 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 of the company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Further, there are no qualifications, reservations or adverse remarks made by the Statutory Auditors/ Practising Company Secretary in their respective reports.
22. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
23. RELATED PARTY TRANSACTIONS
None of the transactions with related parties falls under the scope of section 188(1) of the Act. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and is enclosed as Annexure âGâ.
24. EXTRACT OF ANNUAL RETURN (MGT 9)
The extract of the annual return in Form MGT 9 as required under the provisions of section 92 of the Act is enclosed as Annexure âHâ.
The extract of the annual return of the company is also hosted on the companyâs website at www.cyient.com/ investors/financial-information/
25. PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
Executive Directors |
Ratio to Median remuneration |
B.V.R. Mohan Reddy |
129.59 |
Krishna Bodanapu |
165.88 |
Independent Directors |
|
M.M. Murugappan |
1.73 |
K. Ramachandran |
1.73 |
Som Mittal |
1.73 |
John Paterson |
5.18 |
Andrea Bierce |
5.18 |
Vinai Kumar Thummalapally |
5.18 |
b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:
Directors, Chief Executive Officer, Chief Financial Officer and Company |
% increase in remuneration in |
Secretary |
The financial year |
B. V. R. Mohan Reddy |
44.2% |
Krishna Bodanapu |
52.4% |
Ajay Aggarwal |
53.3% |
Sudheendhra Putty |
20.3% |
c. The percentage increase in the median remuneration of employees in the financial year: 8%
d. The number of permanent employees on the rolls of Company: 11,677
e. The explanation on the relationship between average increase in remuneration and Company performance:
On an average, employees received an annual increase of 8% in India. The individual increments varied from 2% to 20%, based on individual performance.
Employees outside India received wage increase varying from 1 % to 4.50%. The increase in remuneration is in line with the market trends in the respective countries. In order to ensure that remuneration reflects company performance, the performance pay is also linked to organization performance, apart from an individualâs performance.
f. Comparison of the remuneration of the key managerial personnel against the performance of the Company:
(Amount in Rs. Million)
Aggregate remuneration of key managerial personnel (KMP) in FY18 |
49 |
Revenue |
14,397 |
Remuneration of KMPs (as % of revenue) |
0.3% |
Profit before Tax (PBT) |
5,260 |
Remuneration of KMP (as % of PBT) |
0.9% |
g. Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:
Particulars |
March 31, 2018* |
March 31, 2017 |
% of change |
Market Capitalization (Rs. Million) |
78,237 |
52,467 |
49.12% |
Price Earnings Ratio |
19.47 |
22.14 |
-12.07% |
*28 March 2018was the last trading day for FY 2017-18
h. Percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:
Particulars |
March 31, 2018 |
IPO date |
IPO Price |
Adjusted IPO price by considering CA* |
% of change |
Market Price (BSE) |
688.80 |
September 25, 1997 |
87.7 |
7.31 |
9325% |
Market Price (NSE) |
694.85 |
September 30, 1998 |
124.3 |
10.36 |
6608% |
* Adjusted for 1:1 bonus issue in 2002 and 2010
* Sub divided 1 share of Rs.10 into 2 shares of Rs.5 in 2006
* One bonus share issue for every 2 shares of Rs.5 each in2006
i. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 7%. However, during the course of the year, the total increase is approximately 7%, after accounting for promotions and other event based compensation revisions.
Increase in the managerial remuneration for the year was 49%
j. Comparison of remuneration of the key managerial personnel against the performance of the company:
(Amount in Rs. Million)
Particulars |
B.V.R. Mohan Reddy Executive Chairman |
Krishna Bodanapu MD & CEO |
Ajay Aggarwal Chief Financial Officer |
Sudheendhra Putty Company Secretary |
Remuneration |
75 |
96 |
23 |
3 |
Revenue |
14,397 |
|||
Remuneration as % of |
||||
revenues |
0.52% |
0.67% |
0.16% |
0.02% |
Profit before Tax (PBT) |
5,260 |
|||
Remuneration (as % of PBT) |
1.43% |
1.83% |
0.44% |
0.06% |
k. The key parameters for any variable component of remuneration availed by the directors:
The members of the company vide postal ballot in October 2014 approved payment of commission to the non-executive directors within the ceiling ofl% of the net profits of the company as computed under the applicable provisions of the Act. The said commission is decided each year by the board of directors, based on the recommendations of Leadership, Nomination & Remuneration Committee and distributed amongst the non-executive directors based on their attendance and contribution at the board and certain committee meetings, as well as the time spent on operational matters other than at meetings.
l. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: None.
m. Affirmation that the remuneration is as per the remuneration policy of the Company:
The company affirms that the remuneration is as per its remuneration policy.
n. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
o. Particulars relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:
Your Company has always provided a safe and harassment free workplace for every individual working in its premises through various policies and practices. The company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment. Your company has been actively involved in ensuring that the associates are aware of the provisions of the POSH Act and rights thereunder.
During the year, the company:
1. Conducted awareness campaigns at all locations in India
2. Held awareness sessions on a quarterly basis at all locations in India through specific connect sessions by in-house women leaders and âfloor connectâ
3. Enhanced the Internal web portal - âDcafeâ with videos and animated visuals for better understanding of POSH among associates. Approximately 60% of the associates have accessed the portal
4. Have made POSH MODULE as Mandatory in the digital induction.
5. Registered one case under the POSH Act (At Kakinada location)
Both the cases have been closed within the stipulated time limits an in accordance with the law
6. Nominated the POSH panel (across India locations) to attend related sessions on POSH being conducted by various organizations such as IWN , NHRD and CII for better understanding of the Act and its requirements
7. Nominated associates to attend women safety sessions (One session as part of women leadership programme) organized by IWN in March 2017
8. Devised plan of action for financial year 2018.
26. RISK MANAGEMENT
The board of directors has formed a risk management committee to identify, evaluate, mitigate and monitor the risk management in the company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. A comprehensive enterprise risk management mechanism has been put in place and the same is regularly reviewed.
A more detailed analysis of the risk management in the company is published in the management discussion and analysis report published elsewhere in the annual report.
27. CORPORATE GOVERNANCE
The corporate governance framework in the company ensures that we make timely disclosures and share accurate information regarding the financials and performance, as well as disclosures related to the leadership and governance of the company. The company believes that an active, well-informed and independent board is necessary to ensure the highest standards of corporate governance. The company will continue to uphold the true spirit of Corporate Governance and implement the best governance practices. A report on Corporate Governance pursuant to the provisions of Corporate Governance Code stipulated under SEBI (LODR) Regulations, 2015 is published elsewhere in the report. The auditorsâ certificate regarding compliance of conditions of corporate governance is annexed as Annexure â Iâ.
28. DISCLOSURE REQUIREMENTS
Details of the familiarization programme of the independent directors are available on the website of the company (http://www.cyient.com/investors/corporate-governance) Policy for determining material subsidiaries of the company is available on the website of the company (http://www.cyient.com/investors/corporate-governance);
Policy on dealing with related party transactions is available on the website of the company (http:// www. cyient.com/investors/corporate-governance);
The company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for associates including directors of the company to report genuine concerns. The provisions of this policy are in line with the provisions of the section 177(9) of the Act and the SEBI (LODR) Regulations, 2015 (http://www.cyient.com/ investors/corporate-governance).
Pursuant to the provisions of Regulation 17 of the SEBI (LODR) Regulations, 2015, a declaration by the Managing Director & CEO of the company declaring that all the members of the board and the senior management personnel of the company have affirmed compliance with the Code of Conduct of the company is enclosed as AnnexureâS.
The CEO/CFO certification to the board pursuant to Regulation 17 of the SEBI (LODR) Regulations, 2015 is enclosed as an Annexure âKâ.
29. ACKNOWLEDGMENTS
The board of directors expresses its thanks to the companyâs customers, shareholders, vendors and bankers for their support to the company during the year. Your directors would like to make a special mention of the support extended by the various Departments of the Central and State Governments, particularly the Software Technology Parks of India, Development Commissioners - SEZ, Department of Communication and Information Technology, the Direct and Indirect tax authorities, the Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate Affairs/Registrar of Companies, Securities and Exchange Board of India, the Stock Exchanges, the Depositories and others and look forward to their support in all future endeavors.
Your directors wish to place on record their deep sense of appreciation for the committed services of the associates of the company at all levels.
For and on behalf of the Board
B V R Mohan Reddy
Place : Hyderabad Executive Chairman
Date : 19 April 2018 (DIN-00058215)
Mar 31, 2017
Dear Shareholders,
The directors have pleasure in presenting the 26th Directorsâ Report on the business and operations of your company, for the financial year ended 31 March 2017.
FINANCIAL HIGHLIGHTS
(Amount in Rs. Million)
Particulars |
Consolidated |
Standalone |
||
2016-17 |
2015-16* |
2016-17 |
2015-16* |
|
Total Income |
36,997 |
32,106 |
13,736 |
13,591 |
EBIDTA |
5,704 |
5,226 |
3,617 |
3,637 |
Finance Cost |
172 |
164 |
6 |
3 |
Depreciation |
953 |
888 |
540 |
684 |
Exceptional item |
261 |
87 |
201 |
72 |
Profit before Tax |
4,318 |
4,087 |
2,870 |
2,878 |
Current Tax |
927 |
1,149 |
601 |
615 |
Deferred Tax |
118 |
(138) |
(100) |
(72) |
Share of profit in associate company |
118 |
120 |
||
Joint Venture |
5 |
5 |
||
Minority Interest |
(42) |
(54) |
||
Profit after Tax attributable to shareholders |
3,438 |
3,255 |
2,369 |
2,335 |
Basic Earnings per share (Rs.) |
30.55 |
28.95 |
21.05 |
20.77 |
Diluted Earnings per share (Rs.) |
30.53 |
28.90 |
21.03 |
20.73 |
Special Dividend per share (Rs.) |
2.50 |
2.50 |
||
Interim dividend paid (â/Share) |
3.00 |
7.00 |
3.00 |
7.00 |
Final dividend recommended (â/Share) |
5 |
- |
5 |
- |
Paid up Equity Share Capital |
563 |
562 |
563 |
562 |
Reserves |
20,610 |
17,743 |
18,259 |
16,213 |
* The previous year figures have been adjusted, re-grouped or re-classified pursuant to adoption of the Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015.
STATE OF AFFAIRS/COMPANYâS PERFORMANCE
On a consolidated basis, the revenue from operations for FY 2017 at Rs.36,065 million was higher by 16% over the last year (Rs.31,021 million in FY 2016). The profit for the year attributable to shareholders and non-controlling interests was Rs.3,396 million, recording a growth of 6% over the last year (Rs.3,201 million of FY 2016). The profit after tax attributable to shareholders of the company was 3,438 million, 6% higher than that of the previous year (Rs.3,255 million).
On a stand-alone basis, the revenue from operations for FY 2017 at Rs.12,920 million, was higher by 4.0% over the last year (Rs.12,456 million in FY 2016). The profit for the year was Rs.2,369 million, registering a growth of 1% over the previous year (Rs.2,335 million).
APPROPRIATIONS
Dividend
Your directors have recommended a final dividend of Rs.5 per share (100%) on par value of Rs.5 per share.
During the year, the company declared and paid a special dividend and an interim dividend aggregating to 110% of the par value of the equity share. The special dividend declared to commemorate the Silver Jubilee of the company was at the rate of Rs.2.50 per equity share (50%) on par value of Rs.5 per share. The interim dividend was at the rate of Rs.3 per equity share (60%) on par value of Rs.5 per share. The dividends were declared on 29 August 2016 and 13 October 2016 respectively. Total dividend (including dividend distribution tax) as a percentage of profit after tax was 60% as compared to 41% in the previous year.
Resrves
Your company proposes to retain the entire amount of Rs.2,369 million in its profit and loss account.
LIQUIDITY
Your company continues to be debt-free and maintains sufficient cash reserves to meet its operations and strategic objectives. As at 31 March 2017, your company had liquid assets of Rs.7,464 million as against Rs.5,746 million at the previous year end. Surplus funds have been invested in short term deposits and mutual funds with scheduled banks and debt based mutual funds.
FIXED DEPOSITS
Your company has not accepted any deposits and as such, no amount of principal or interest was outstanding as on 31 March 2017
SHARE CAPITAL
Allotment of Shares
Your company has allotted 82,963 equity shares of Rs.5 each to the associates of the company and its subsidiaries upon exercise of an equal number of stock options vested in them pursuant to the extant Stock Option Schemes of the company.
In view of the above allotments, the outstanding shares of the company increased from 112,483,377 equity shares of Rs.5 each to 112,566,340 equity shares of Rs.5 each.
Consequent upon the merger of Infotech Geospatial (India) Private Limited, a wholly owned subsidiary, the authorised share capital of the company increased from Rs. 135 crores to Rs. 139 crores.
SUBSIDIARIES
Cyient, Inc. (CI)
Headquartered in East Hartford, Connecticut, CI provides engineering, network and operations and data analytics services to customers in North America. CI has 30 offices across the US and Canada, with over 1,600 associates working with clients in North America.
CI caters to a broad spectrum of clients, from Fortune 500 companies to small organizations and local, state, and federal government agencies. CI generates annual revenues of over $242M working across 40 states and 6 Canadian provinces.
CI leverages both the local and global delivery capability of Cyient while executing projects in the Americas region and is the principal unit for executing the acquisition strategy in North America.
During the year, Cyient Inc., acquired a Florida based company, viz., Certon Software Inc. and its wholly owned subsidiary Certon Instruments Inc. During the year CI incorporated Cyient Defence Services Inc. as wholly owned subsidiary.
Cyient Europe Limited (CEL)
Incorporated in London as Dataview Solutions Limited in 1992, it became a part of the Infotech Group in1999.
Its services are designed to cater to leading Tier-1 and Tier-2 Telcos, gas, electric and water utility companies, public sector agencies, and commercial businesses. In addition it provides world-class engineering services as well as big data and analytics capabilities to rail, aerospace and manufacturing companies. The company enjoys long-term relationships with several of its partners and customers and has built a strong foundation of trust and reliability.
Cyient Europe Ltd has 3 wholly owned subsidiaries. The oldest Cyient Benelux BV, based in Breda, the Netherlands provides support to our customers and business in the Benelux region while Cyient Schweiz GmbH, based in Bern, Switzerland provides support and local presence for our long standing engagement with Swisscom. Cyient SRO, based in Prague, the Czech Republic. Its primary focus is to provide engineering services to our rail and aerospace customers across Europe.
In November 2016, the company completed the acquisition of Blom Aerofilms Ltd, the UK subsidiary of NRC Group from Norway. The business brings a team with complementary skills of around 40 associates, mostly based out of their offices in Cheddar, Somerset.
The company is an ISO 9001 and ISO 27001 certified organization. Leveraging the global execution capability of its parent organization, it maintains client relationships and ensures efficient project management across Europe.
Cyient GmbH (CG)
Cyient GmbH offers world-class engineering services as well as big data and analytics capabilities to rail, aerospace and manufacturing companies in Germany and neighbouring countries such as Austria, France and Sweden. It was established as Advanced Graphics Software (AGS) in Leonberg, Germany, in 1992 - a 3D CAD/CAM, e-solution software and application provider.
After becoming a part of Cyient Group in 2000, it extended its foray into other service areas like GIS and IT solutions. Owing to the large pool of engineering, GIS, IT resources, CG provides high-quality services and solutions to the clients with offshore cost advantage and onsite project management.
Cyient KK (CKK)
Established in 2008 in Central Tokyo, CKK is a leading engineering service provider in Japan. CKK provides end-to-end engineering services and solutions to manufacturing industries.
CKK leverages the global delivery capability of the parent organisation, while maintaining client relationships and managing projects locally.
Cyient Australia Pty Limited (CAPL)
Established in 2005 and Headquartered in Melbourne as a branch and incorporated as subsidiary in the year 2014, CAPL commenced commercial operations during the current year. It provides engineering design and network operations services to diverse industries to its Asia Pacific customers. CAPL supports its customers especially Telecommunication, Utilities and Rail transportation from global delivery centres in Sydney and Melbourne with operations Australia wide and across the APAC region. CAPL has over 600 associates operating from our global delivery centres and customers across Australia.
Cyient Singapore Pte Limited (CSPL)
Established in 2015, Cyient Singapore is the South East Asia headquarter. CSPL provides services and solutions to diverse industries such as aerospace, telecommunications, utilities and rail transportation. CSPL has close to 100 engineers supporting its customers from the engineering centre in Singapore. CSPL has a strong customer base in the region and this entity becomes very important for the future growth in the region.
Cyient Engineering (Beijing) Limited (CEBL)
Cyient established its presence in 2016, by setting up a subsidiary in Beijing. CEBL sees China as having long term market not only to support its global customers in China but also to capture huge potential that the China market brings to its future growth. Particular focus is on semiconductor, manufacturing and energy markets.
Cyient DLM Private Limited (CDLMPL)
After acquisition of a majority interest in Rangsons Electronics Pvt Ltd ( REPL) in 2015, Cyient completed the integration and in 2017 renamed REPL as Cyient DLM Pvt Ltd. This is towards Cyientâs vision to provide a complete product life cycle solution (Design Led Manufacturing (DLM)) to our customers, as part of S3 strategy. Today CDLMPL is recognised as a market leader in High-Mix, High-Tech Electronic & Mechanical Manufacturing Services in Aerospace & Defense, Rail Transportation, Medical Technology, Telecom & Industrial business segments. CDLMPL possesses and maintains quality certifications that enable it to design and manufacture products to clients in these industry verticals.
CDLMPL has taken responsibility for seamless transition from the design phase to the manufacturing phase by arriving at Integrated Product Development Plan (IPDP) with all BUâs. In many cases, we support our customer in techno-commercial points by a set of seasoned experts to deliver value engineered products derived from a combination of efficient designs, sourcing and production processes.
Cyient Insights Private Limited (CIPL)
Cyient acquired a majority stake in Invati Insights Private Limited, Hyderabad, India in October 2014. The company was subsequently renamed Cyient Insights Private Limited.
CIPL enables customers drive business innovation and deliver quantifiable business results through smart data analytics and actionable intelligence. CIPL prides itself on the unique approach in acquiring, managing and analyzing the vast amount of data generated by sensors embedded in machines and devices, and the unmatched commitment to add value to customers with the proven global delivery model. CIPL leverages Cyientâs relationships in different verticals such as Aerospace & Defence, Heavy Engineering, Transportation, Medical, Telecommunications, Utilities, Energy & Natural Resources its global delivery model in executing projects.
Cyient Israel India Limited (CIIL)
During FY17, Cyient established its local presence in Israel to engage more closely with Israeli Defense OEMs who are significant clients for the companyâs Design-Led Manufacturing (DLM) business. Cyient has invested in local business development and consulting resources to strengthen its focus on this important market that has significant, longterm potential particularly around Indian Defence offsets oportunities. Cyient additionally engaged in an Israeli startup accelerator programme that gives the company access to partnerships around innovative technology for military, defense and homeland security applications.
Infotech Aerospace Services Inc. (IASI)
Established in 2003 in Puerto Rico, Infotech Aerospace Services Inc. provides engineering outsourcing and other professional services to Defense, Aerospace, and Power Generation Industries. IASI is an associate company between Cyient and Pratt & Whitney, a pioneer in flight technology.
IASI also provides engineering and supply chain services, including aerospace engineering, mechanical and software development for military, industrial and applications.
Infotech HAL Limited (IHL)
IHL aims to provide comprehensive solutions involving conceptual design, re-design and derivates of modules, systems and components, prototyping and supply of these through Manufacturing Programme Management. IHL offers design services in the field of aerospace, viz., aero thermo and mechanical design, structural, stress, thermal and rotor dynamic analysis, aeronautics, computational fluid dynamics, combustion studies, preparation of digital mock up, testing and analysis, control system design, development and software applications.
IHL is a joint venture between Cyient and Hindustan Aeronautics Limited. IHL delivers engineering as well as aftermarket engineering and support services, i.e., technical publications, repair design, service bulletins, testing, performance analysis and maintenance monitoring in the aerospace domain.
IHL is well positioned to undertake work under offset program from various original equipment manufacturers.
Highlights of the performance of the above companies are published elsewhere in the Annual Report.
BUSINESS RESPONSIBILITY REPORT
In pursuance of Regulation 34 of the SEBI (LODR) Regulations, 2015, the company is publishing the Business Responsibility Statement. The same is enclosed as Annexure âAâ
Global Compact Network India
The company is a member of the Global Compact Network India - the Indian arm of the United Nationsâ Global Compact. The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption. As a member of the Global Compact Network, the company is committed to comply with the following principles of United Nations Global Compact:
Human Rights
Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and-
Principle 2: make sure that they are not complicit in human rights abuses.
Labour
Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and-
Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
CORPORATE SOCIAL RESPONSIBILITY
The company believes in giving back to society in some measure that is proportionate to its success in business. Corporate Social Responsibility (CSR) aims at balancing the needs of all stakeholders. The companyâs CSR initiative goes beyond charity and believes that as a responsible company it should take into account its impact on society as much as designing tomorrow together. The CSR initiatives are conducted through Cyient Foundation. The CSR Annual Report is enclosed as Annexure âBâ.
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
None of the directors of the company is disqualified under the provisions of the Companies Act, 2013 (âAct) or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All indepedent directors have provided confirmations as contemplated under section 149(7) of the Act.
Appointments/Re-appointments
Pursuant to Article 56 of the Articles of Association of your company and the provisions of section 152 of the Act, Mr. Alain De Taeye (DIN 03015749) retires by rotation at the ensuing Annual General Meeting (AGM) and offers himself for re-appointment. Mr. Thomas Prete (DIN 06634086) retires by rotation; he does not offer himself for re-appointment.
Ambassador Vinai Thummalapally (DIN 07797921) was inducted on the Board as an additional director on 20 April 2017 pursuant to the provisions of section 161 of the Companies Act, 2013 read with Article 55 of the Articles of Association of the company. He is proposed to be appointed as an independent director in the ensuing AGM.
Pursuant to the provisions of Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2 on General Meetings issued by ICSI, brief particulars of the directors who are proposed to be appointed/ re-appointed are provided as an annexure to the notice convening the AGM.
Cessations
Dr. Jayant Sabnis ceased to be an Alternate Director with effect from 21 April 2016. Your directors place on record their appreciation and gratitude to him for his valuable contributions during his tenure as director.
There is no change in the key managerial personnel during the year.
Policy on directorsâ appointment and remuneration and other details
The Companyâs policy on directorsâ appointment and remuneration and other matters provided in section 178(3) of the Act have been disclosed in the corporate governance report, which forms part of this report.
Number of board meetings during the year
During the year, six meetings of the board were held, the details of which form part of the report on corporate governance.
Board evaluation and assessment
Board evaluation processes, including in relation to the chairman, individual directors and committees, constitute a powerful and valuable feedback mechanism to improve board effectiveness, maximise strengths and highlight areas for further development. In addition to greater board accountability, evaluation of board members helps in:
- More effective board processes
- Better collaboration and communication
- Greater clarity with regard to membersâ roles and responsibilities and
- Improved Chairman - Managing Director - Board relations
By focusing on the board as a team and on its overall performance, the company ensures that communication and overall level of participation and engagement also improves. In this background, the board undertook a formal board assessment and evaluation process during 2016-17. The board evaluation was performed after seeking inputs from all the directors and included criteria such as the board composition and structure, effectiveness of board processes, information and functioning as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5 January 2017.
The Leadership, Nomination & Remuneration Committee has overall stewardship for the process. The evaluation process covers the following aspects:
- Peer and self-evaluation of Directors
- Evaluation of the performance and effectiveness of the board
- Evaluation of the performance and effectiveness of Board Committees
- Feedback from the Non-Executive Directors to the Chairman, and
- Feedback on management support to the Board
The evaluation process elicited responses from the directors in a judicious manner - ranging from composition and induction of the board to effectiveness and governance. It also sought feedback on board and committee charters, strategy, risk management and quality of discussion and deliberations at the board. The Lead Independent Director provides feedback to the Executive Chairman. The same is discussed and acted upon accordingly at the board.
AUDITORS
Pursuant to the provisions of section 139 of the Act and the rules framed thereunder, Deloitte Haskins & Sells, Chartered Accountants, were appointed as statutory auditors of the company from the conclusion of the 23rd AGM of the company held on 17 July 2014 till the conclusion of the 28th AGM to be held in the year 2019, subject to ratification of their appointment at every AGM. Accordingly, requisite resolution forms part of the notice convening the AGM.
AUDITORSâ REPORT AND SECRETARIAL AUDITORSâ REPORT
The auditorsâ report and secretarial auditorsâ report do not contain any qualifications, reservations or adverse remarks.
Report of the secretarial auditor is given as an Annexure âCâ which forms part of this report.
EMPLOYEE STOCK OPTION PLANS
During the year the company had the Infotech Associate Stock Option Plans in operation for granting stock options to the associates of the company and its subsidiaries, in accordance with the Securities Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. Disclosure pursuant to the above regulation is enclosed as Annexureâ Dâ
RESTRICTED STOCK UNITS
During the year, to commemorate the Silver Jubilee year, the company implemented the âCyient Restricted Stock Units Scheme -2016â pursuant to the special resolution passed by postal ballot on 12 December 2016.
Company has since obtained in-principle approval for the scheme from BSE Limited and National Stock Exchange of India Limited. During the year, company has granted 637,476 units to the associates of the company and its subsidiaries.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The details are enclosed as Annexure âEâ.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Regulation 34 read with Schedule V of the SEBI (LODR) Regulations, 2015, a report on Management Discussion & Analysis is enclosed as Annexure âFâ.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, (âthe Actâ) the board of directors, to the best of their knowledge and ability, confirm that:
i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;
ii. they 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 of the company for that period;
iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively;
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Further, there are no qualifications, reservations or adverse remarks made by the Statutory Auditors/ Practising Company Secretary in their reports.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the financial statements.
RELATED PARTY TRANSACTIONS
None of the transactions with related parties falls under the scope of section 188(1) of the Act. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and is enclosed as Annexure âGâ.
EXTRACT OF ANNUAL RETURN (MGT 9)
The extract of the annual return in Form MGT 9 as required under the provisions of section 92 of the Act is enclosed as Annexure âHâ.
PARTICULARS OF EMPLOYEES
The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:
Directors |
Ratio to Median remuneration |
Executive |
|
B. V. R. Mohan Reddy |
87.78 |
Krishna Bodanapu |
106.35 |
Independent Directors |
|
M.M. Murugappan |
1.69 |
K. Ramachandran |
1.69 |
Som Mittal |
1.69 |
Harsh Manglik |
1.69 |
John Paterson |
5.06 |
Andrea Bierce |
5.06 |
b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:
Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary |
% increase in remuneration in the financial year |
B.V.R Mohan Reddy |
0.0 |
Krishna Bodanapu |
-3.1 |
Ajay Aggarwal |
15.4 |
Sudheendhra Putty |
13.3 |
c. The percentage increase in the median remuneration of employees in the financial year: 7%
d. The number of permanent employees on the rolls of Company: 11,006
e. The explanation on the relationship between average increase in remuneration and Company performance:
On an average, employees received an annual increase of 7% in India. The individual increments varied from 3 % to 13 %, based on individual performance.
Employees outside India received wage increase varying from 1 % to 2.75 %. The increase in remuneration is in line with the market trends in the respective countries. In order to ensure that remuneration reflects company performance, the performance pay is also linked to organization performance, apart from an individualâs performance.
f. Comparison of the remuneration of the key managerial personnel against the performance of the Company:
(Amount in Rs. Million)
Aggregate remuneration of key managerial personnel (KMP) in FY17 |
33 |
Revenue |
12,920 |
Remuneration of KMPs |
|
(as % of revenue) |
0.3 |
Profit before Tax (PBT) |
2,870 |
Remuneration of KMP |
|
(as % of PBT) |
1.1 |
g. Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:
Particulars |
March 31, 2017 |
March 31, 2016 |
% Change |
Market Capitalization (Rs.Million) |
52,625 |
47,997 |
9.64 |
Price Earnings Ratio |
22.21 |
20.54 |
8.10 |
h. Percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:
Particulars |
March 31, 2017 (Rs.) |
IPO Date |
IPO Price (Rs.) |
Adjusted IPO price by considering CA1 |
% Change |
Market Price (BSE) |
468.75 |
September 25, 1997 |
87.70 |
7.31 |
6314 |
Market Price (NSE) |
467.50 |
September 30, 1998 |
124.30 |
10.36 |
4413 |
* Adjusted for 1:1 bonus issue in 2002 and 2010
* Sub divided 1 share of Rs.10 into 2 shares of Rs.5 in 2006
* One bonus share issue for every 2 shares of Rs.5 each in in 2006
i. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 7%. However, during the course of the year, the total increase is approximately 7%, after accounting for promotions and other event based compensation revisions.
Increase in the managerial remuneration for the year was -3%.
j. Comparison of remuneration of the key managerial personnel against the performance of the company:
(Amount in Rs. Million)
B.V.R. Mohan Reddy Executive Chairman |
Krishna Bodanapu MD & CEO |
Ajay Aggarwal Chief Financial Officer |
Sudheendhra Putty Company Secretary |
|
Remuneration |
52 |
63 |
15 |
2 |
Revenue |
12,920 |
|||
Remuneration as % of revenues |
0.4% |
0.5% |
0.1% |
0.02% |
Profit before Tax (PBT) |
2,870 |
|||
Remuneration (as % of PBT) |
1.81% |
2.2% |
0.5% |
0.07% |
k. The key parameters for any variable component of remuneration availed by the directors:
The members of the company vide postal ballot in October 2014 approved payment of commission to the non-executive directors within the ceiling of1% of the net profits of the company as computed under the applicable provisions of the Act. The said commission is decided each year by the board of directors, based on the recommendations of Leadership, Nomination & Remuneration Committee and distributed amongst the non-executive directors based on their attendance and contribution at the board and certain committee meetings, as well as the time spent on operational matters other than at meetings.
l. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year:
None.
m. Affirmation that the remuneration is as per the remuneration policy of the Company:
The company affirms that the remuneration is as per its remuneration policy.
n. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
Particulars relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company has always provided a safe and harassment free workplace for every individual working in its premises through various policies and practices. The company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.
Your company has been actively involved in ensuring that the associates are aware of the provisions of the POSH Act and rights thereunder.
During the year, the company:
1. Conducted awareness campaigns at all locations in India
2. Held awareness sessions on a quarterly basis at all locations in India through specific connect sessions by in-house women leaders and âfloor connect â
3. Enhanced the Internal web portal - âDcafeâ with videos and animated visuals for better understanding of POSH among associates. Approximately 40% of the associates have accessed the portal
4. Registered two cases under the POSH Act (one each at Manikonda, Hyderabad and Visakhapatnam locations). Both the cases have been closed within the stipulated time limits an in accordance with the law
5. Nominated the POSH panel (across India locations ) to attend related sessions on POSH being conducted by various organisations such as IWN , NHRD and CII for better understanding of the Act and its requirements
6. Nominated associates to attend women safety sessions(One session as part of women leadership programme) organized by IWN in March 2017
7. Devised plan of action for financial year 2018.
RISK MANAGEMENT
The board of directors has formed a risk management committee to identify, evaluate, mitigate and monitor the risk management in the company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. A comprehensive enterprise risk management mechanism has been put in place and the same is regularly reviewed.
A more detailed analysis of the risk management in the company is published in the management discussion and analysis report published elsewhere in the annual report.
CORPORATE GOVERNANCE
The corporate governance framework in the company ensures that we make timely disclosures and share accurate information regarding the financials and performance, as well as disclosures related to the leadership and governance of the company. The company believes that an active, well-informed and independent board is necessary to ensure the highest standards of corporate governance. The company will continue to uphold the true spirit of Corporate Governance and implement the best governance practices. A report on Corporate Governance pursuant to the provisions of Corporate Governance Code stipulated under SEBI (LODR) Regulations, 2015 is published else where in the report. The auditorsâ certificate regarding compliance of conditions of corporate governance is annexed as Annexure â Iâ.
DISCLOSURE REQUIREMENTS
Details of the familiarization programme of the independent directors are available on the website of the company (http:// www.cyient.com/investors/corporate-governance)
Policy for determining material subsidiaries of the company is available on the website of the company (http://www.cyient. com/investors/corporate-governance)
Policy on dealing with related party transactions is available on the website of the company(http:// www.cyient.com/ investors/corporate-governance)
The company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for associates including directors of the company to report genuine concerns. The provisions of this policy are in line with the provisions of the section 177(9) of the Act and the SEBI (LODR) Regulations, 2015 (http:// www.cyient.com/investors/corporate-governance).
CEOâs DECLARATION
Pursuant to the provisions of Regulation 17 of the SEBI (LODR) Regulations, 2015, a declaration by the Managing Director & CEO of the company declaring that all the members of the board and the senior management personnel of the company have affirmed compliance with the Code of Conduct of the company is enclosed as Annexure Jâ.
The CEO/CFO certification to the board pursuant to Regulation 17 of the SEBI (LODR) Regulations, 2015 is enclosed as an Annexure âKâ.
ACKNOWLEDGMENTS
The board of directors expresses its thanks to the companyâs customers, shareholders, vendors and bankers for their support to the company during the year. Your directors would like to make a special mention of the support extended by the various Departments of the Central and State Governments, particularly the Software Technology Parks of India, Development Commissioners - SEZ, Department of Communication and Information Technology, the Direct and Indirect tax authorities, the Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate Affairs/Registrar of Companies, Securities and Exchange Board of India, the Stock Exchanges and others and look forward to their support in all future endeavours.
Your directors wish to place on record their deep sense of appreciation for the committed services of the associates of the company at all levels.
For and on behalf of the Board
B.V.R. Mohan Reddy
Executive Chairman
(DIN-00058215)
Place : Hyderabad
Date : 20 April 2017
Mar 31, 2016
Dear Shareholders,
The directors have pleasure in presenting the 25th Directors'' Report
on the business and operations of your company, for the financial year
ended 31 March 2016.
FINANCIAL HIGHLIGHTS
(Amount in Rs. Million)
Consolidated Standalone
Particulars 2015-16 2014-15 2015-16 2014-15
Total Income 32,041.1 28,577.0 13,590.6 13,969.5
EBIDTA 5,292.9 5,225.9 3,635.0 4,053.6
Finance Cost 178.8 57.6 2.3 5.1
Depreciation 893.0 712.8 688.0 618.1
Exceptional items 87.2 - 71.6 -
Profit before Tax 4,134.0 4,455.5 2,873.0 3,430.5
Current Tax 1,139.4 1,023.6 614.5 707.6
Tax pertaining to
earlier years 10.3 24.0 - 1.3
MAT Credit (30.3) (1.4) (30.3) (2.0)
Deferred Tax (133.3) 50.1 (45.7) 12.0
Share of profit in
associate company 120.3 150.4 - -
Minority Interest (5.7) 22.4 - -
Profit after Tax 3,262.5 3,532.0 2,334.5 2,711.6
Basic Earnings per
share (Rs.) 29.01 31.48 20.76 24.17
Diluted Earnings
per share (Rs.) 28.96 31.37 20.73 24.09
Interim dividend
paid (Rs./Share) 7.00 3.00 7.00 3.00
Final dividend
recommended (Rs./Share) - 5.00 - 5.00
Paid up Equity Share
Capital 562.4 561.8 562.4 561.8
Reserves 18,535.7 17,878.8 16,267.7 15,244.3
APPROPRIATIONS
Dividend
During the year company has declared and paid two interim dividends of
140% of the par value of the equity share. The 1st interim dividend was
Rs. 3 per equity share (60%) on par value of Rs. 5 per share. The 2nd
interim dividend was Rs. 4 per equity share (80%) on par value of Rs. 5
per share. The interim dividends were declared on 15 October 2015 and
17 March 2016 respectively. Total dividend (including dividend
distribution tax) as a percentage of profit after tax is 40.6% as
compared to 39.5% in the previous year.
LIQUIDITY
Your company maintains sufficient cash reserves to meet its operations
and strategic objectives. As at 31 March 2016, your company had liquid
assets of Rs. 5,746.7 million as against Rs. 4,760.6 million at the
previous year end. These funds have been invested in short term
deposits and mutual funds with scheduled banks and debt based mutual
funds.
FIXED DEPOSITS
Your company has not accepted any deposits and as such, no amount of
principal or interest was outstanding as on 31 March 2016.
SHARE CAPITAL
Allotment of Shares
Your company has allotted 1,22,312 equity shares of Rs. 5 each to the
associates of the company and its subsidiaries upon exercise of an
equal number of stock options vested in them pursuant to the extant
Stock Option Schemes of the company.
In view of the above allotments, the outstanding shares of the company
increased from 112,361,065 equity shares of Rs. 5 each to 112,483,377
equity shares of Rs. 5 each.
STATE OF AFFAIRS/COMPANY''S PERFORMANCE
DNO
With a goal to provide specialized solutions across our customer''s
value chain, the Data Transformation, Network and Operations (DNO)
group has been engaged in wide- ranging long-term customer engagements,
that has enabled the company to emerge as a renowned organization in
the industry with marque customers in the sectors addressed.
In the Data Transformation, we have over 2 decades of experience in
providing varied services in the geospatial technology and mapping
industry. Over the years, this Data Transformation group has moved from
creating of spatial data to also developing insights from the data,
positioning itself as an end to end data transformation business.
With some of the world''s largest Communication Service Providers and
Utilities as our customers, this Network & Operations group provides
specialized services spanning across the "Plan - Build - Operate" life
cycle of our customers.
This operating unit generated revenues of Rs. 5,308.0 million as
against previous year''s Rs. 5,833.5 million, at a degrowth rate of
9.0%. As a percentage of operating revenues, this vertical contributed
42.6%. Number of employees in this group - 5,343.
Engineering
This operating unit provides complete product life cycle support, from
product ideation and design engineering, through product realization to
aftermarket services, across Aerospace & Defense, Transportation,
Industrial Equipment, Oil & Gas, Energy, Mining, Semiconductors,
Consumer, and Medical industries. With deep domain knowledge combined
with engineering expertise, application know how and innovative
business models, Cyient is positioning itself as an ideal partner for
clients who want to design innovative products faster, optimize their
engineering costs and improve time to market.
The operating unit generated revenues of Rs. 7,138.8 million as against
last year''s revenues of Rs. 7,106.5 million, resulting in an increase
of 0.5%. This vertical contributed 57.3% of the total operating
revenues. Number of employees in this group - 3,944.
Product Realization
This business unit focuses on building capabilities that support
conceptualizing, system engineering, prototyping, testing,
certification and high-value realization for customers and prospects.
This operating unit generated revenues of Rs. 8.8 million and
contributed 0.1% of the total operating revenues. Number of employees
in this group - 23.
Focused on Aerospace & Defense, Medical, Rail and Industrial, this
business unit of the company offers Design Led Product Realization for
its customers by providing sub systems partnerships, accelerated
product development and customizing product for emerging markets.
SUBSIDIARIES
Cyient, Inc. (CI)
Headquartered in East Hartford, Connecticut, CI provides engineering
services in North America. CI has 23 offices across the US and Canada,
with over 1,600 associates working with clients in North America.
CI caters to a broad spectrum of clients, from Fortune 500 companies to
small organizations and local, state, and federal government agencies.
CI generates annual revenues of over $230 M working across 40 states
and 6 Canadian provinces.
CI leverages both the local and global delivery capability of Cyient
while executing projects in the Americas region.
Cyient Europe Limited (CEL)
Incorporated in London as Dataview Solutions in 1992, it became a part
of the Infotech Group in1999.
Its services are designed to cater to leading tier-1 and tier- 2
telcos, large utility companies, public sector agencies, and commercial
businesses. In addition it provides engineering design services as well
as big data and analytics capabilities. The company enjoys long-term
relationships with several of its partners and customers and has built
a strong foundation of trust and reliability.
Cyient Benelux BV, based in Breda, the Netherlands provides support to
our business in the Benelux region, Cyient Schweiz GmbH provides
support to our business in Switzerland, while the Middle East
operations are managed at the Dubai Office. In September 2015, Cyient
SRO, Czech Republic was created to provide engineering and data
services to customers across the European Union.
The company is an ISO 9001 and ISO 27001 certified organization.
Leveraging the global execution capability of its parent organization,
it maintains client relationships and ensures efficient project
management in Europe.
Cyient GmbH (CG)
Cyient GmbH offers world-class engineering services and solutions in
Germany. It was established as Advanced Graphics Software (AGS) in
Leonberg, Germany, in 1992 - a 3D CAD/CAM, e-solution software and
application provider.
After becoming a part of Cyient Group in 2000, it extended its foray
into other service areas like GIS and IT solutions. Owing to the large
pool of engineering, GIS, IT resources, CG provides high-quality
services and solutions to the clients with offshore cost advantage and
onsite project management.
Cyient KK (CKK)
Established in 2008 in Central Tokyo, CKK is a leading engineering
service provider in Japan. CKK provides end- to-end engineering
services and solutions to manufacturing industries.
CKK leverages the global delivery capability of the parent
organisation, while maintaining client relationships and managing
projects locally.
Cyient Australia Pty Limited (CAPL)
Headquartered in Melbourne and incorporated during the year 2014-15,
CAPL commenced commercial operations during the current year. It
provides engineering, data and network operations services to diverse
industries to its Asia Pacific customers. CAPL supports its customers
from global delivery centres in Sydney and Melbourne with operations
Australia wide and across the APAC region.
Cyient Singapore Pte Limited (CSPL)
Cyient Singapore is the South East Asia headquarter. CSPL provides
services and solutions to diverse industries such as aerospace,
telecommunications, utilities and rail transportation. CSPL has close
to 100 engineers supporting its customers from the engineering centre
in Singapore. CSPL has a strong customer base in the region and this
entity becomes very important for the future growth in the region.
Cyient Engineering (Beijing) Limited (CEBL)
Cyient established its presence by setting up a subsidiary in Beijing.
CEBL sees China as having long term market not only to support its
global customers in China but also to capture huge potential that the
China market brings to its future growth. Particular focus is on semi
conductor, manufacturing and energy markets.
Rangsons Electronics Private Limited (REPL)
In 2015 Cyient acquired a majority interest in REPL as an expression of
its S3 strategy to provide a complete product life cycle solution set
to its customers. Established in 1993 in Mysore, Karnataka with 3
manufacturing facilities REPL is a market leader in High-Mix, High-Tech
Electronic & Mechanical Manufacturing Services in Aerospace & Defence,
Rail Transportation, Medical Technology, Telecom & Industrial business
segments. REPL possesses and maintains quality certifications that
enable it to supply electro-mechanical products to clients in these
industries.
Since acquisition, REPL is being aligned with the 7 business units of
Cyient to extend Design Led Manufacturing solutions to their clients
around the world. In many cases, techno-commercial stress points faced
by clients (e.g., pricing pressure, supplier cost escalation or need to
enter emerging market at different feature/price point) are addressed
by a set of seasoned experts to deliver value- engineered products
derived from a combination of manufacturing, sourcing and design
solutions.
Infotech Geospatial India Private Limited (IGIPL)
IGIPL, a wholly owned subsidiary of the company, was merged effective 1
April 2015 vide order of the Hon''ble High Court of Judicature at
Hyderabad for the states of Telangana and Andhra Pradesh dated 2 March
2016.
Infotech Enterprises Information Technology Services Private Limited
(IEITSPL)
The Company disinvested its 100% stake in IEITSPL on 16 September 2015.
Cyient Insights Private Limited (CIPL)
Cyient acquired a majority stake in Invati Insights Private Limited,
Hyderabad, India and Troy, Michigan, USA based Datasciences Company in
October 2014. The company was subsequently renamed Cyient Insights
Private Limited.
CIPL enables customers drive business innovation and deliver
quantifiable business results through smart data analytics and
actionable intelligence. CIPL prides itself on the unique approach in
acquiring, managing and analyzing the vast amount of data generated by
sensors embedded in machines and devices, and the unmatched commitment
to add value to customers with the proven global delivery model.
CIPL leverages Cyient''s relationships in different verticals such as
Aerospace & Defence, Heavy Engineering, Transportation, Medical,
Telecommunications, Utilities, Energy & Natural Resources its global
delivery model in executing projects.
Infotech Aerospace Services Inc. (IASI)
Established in 2003 in Puerto Rico, Infotech Aerospace Services Inc.
provides engineering outsourcing and other professional services to
Defense, Aerospace, and Power Generation Industries. IASI is a
associate company between Cyient and Pratt & Whitney, a pioneer in
flight technology.
We also provide engineering and supply chain services, including
aerospace engineering, mechanical design and software development for
military, industrial and applications.
Infotech HAL Limited (IHL)
IHL aims to provide comprehensive solutions involving conceptual
design, re-design and derivates of modules, systems and components,
prototyping and supply of these through Manufacturing Programme
Management. IHL offers design services in the field of aerospace, viz.,
aero thermo and mechanical design, structural, stress, thermal and
rotor dynamic analysis, aeronautics, computational fluid dynamics,
combustion studies, preparation of digital mock up, testing and
analysis, control system design, development and software applications.
IHL is a joint venture between Cyient and Hindustan Aeronautics
Limited. IHL delivers engineering as well as after market engineering
and support services, i.e., technical publications, repair design,
service bulletins, testing, performance analysis and maintenance
monitoring in the aerospace domain.
IHL is well positioned to undertake work under offset program from
various original equipment manufacturers.
Pursuant to section 129(3) of the Companies Act, 2013, a statement
containing salient features of the financial statements of company''s
subsidiaries in Form AOC-1 is enclosed elsewhere in this report.
BUSINESS RESPONSIBILITY REPORT
The company has suo moto adopted the ''National Voluntary Guidelines on
Social, Environmental and Economical Responsibilities of Business''
issued by the Ministry of Corporate Affairs (MCA).
The nine areas of business responsibility adopted by the company are
briefly described as follows:
Principle 1: Businesses should conduct and govern themselves with
Ethics, Transparency and Accountability.
Principle 2: Businesses should provide goods and services that are safe
and contribute to sustainability throughout their life cycle.
Principle 3: Businesses should promote the well being of all employees.
Principle 4: Businesses should respect the interests of, and be
responsive towards all stakeholders, especially those who are
disadvantaged, vulnerable and marginalized.
Principle 5: Businesses should respect and promote human rights
Principle 6: Business should respect, protect, and make efforts to
restore the environment.
Principle 7: Business, when engaged in influencing public and
regulatory policy, should do so in a responsible manner.
Principle 8: Business should support inclusive growth and equitable
development.
Principle 9: Business should engage with and provide value to their
customers and consumers in a responsible manner.
The business responsibility report is enclosed as Annexure ''A''.
Global Compact Network India
The company is a member of the Global Compact Network India - the
Indian arm of the United Nations'' Global Compact. The UN Global Compact
asks companies to embrace, support and enact, within their sphere of
influence, a set of core values in the areas of human rights, labour
standards, the environment and anti-corruption. As a member of the
Global Compact Network, the company iscommitted to comply with the
following principles of United Nations Global Compact:
Human Rights
Principle 1: Businesses should support and respect the protection of
internationally proclaimed human rights; and-
Principle 2: make sure that they are not complicit in human rights
abuses.
Labour
Principle 3: Businesses should uphold the freedom of association and
the effective recognition of the right to collective bargaining;-
Principle 4: the elimination of all forms of forced and compulsory
labour;-
Principle 5: the effective abolition of child labour; and-
Principle 6: the elimination of discrimination in respect of employment
and occupation.
Environment
Principle 7: Businesses should support a precautionary approach to
environmental challenges;-
Principle 8: undertake initiatives to promote greater environmental
responsibility; and
Principle 9: encourage the development and diffusion of environmentally
friendly technologies.
Anti-Corruption
Principle 10: Businesses should work against corruption in all its
forms, including extortion and bribery.
CORPORATE SOCIAL RESPONSIBILITY
The company believes in giving back to society in some measure that is
proportionate to its success in business. Corporate Social
Responsibility (CSR) aims at balancing the needs of all stakeholders.
The company''s CSR initiative goes beyond charity and believes that as a
responsible company it should take into account its impact on society
as much as designing tomorrow together. The CSR initiatives are
conducted through Cyient Foundation. The CSR Annual Report is enclosed
as Annexure ''B''.
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL
None of the directors of the company is disqualified under the
provisions of the Act or under the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015
Appointments/Re-appointments
Pursuant to Article 56 of the Articles of Association of your company
and the provisions of section 152 of the Companies Act, 2013, Mr.
B.V.R. Mohan Reddy and Mr.Krishna Bodanapu retire by rotation at the
ensuing Annual General Meeting (AGM) and offer themselves for re-
appointment.
Pursuant to the provisions of Secretarial Standard 2 on General
Meetings issued by ICSI, brief particulars of the directors who are
proposed to be re-appointed are provided as an annexure to the notice
convening the AGM.
During the year no additional directors were inducted on the Board.
There are no new appointments being made in the ensuing AGM.
Cessations
Mr. Shankar Narayanan ceased to be a Director with effect from 6 August
2015. Your directors place on record their appreciation and gratitude
to him for his valuable contributions during his tenure as director.
There is no change in the key managerial personnel during the year.
Policy on directors'' appointment and remuneration and other details
The Company''s policy on directors'' appointment and remuneration and
other matters provided in section 178(3) of the Act have been disclosed
in the corporate governance report, which forms part of this report.
Number of board meetings during the year
During the year, five meetings of the board were held, the details of
which form part of the report on corporate governance.
Board evaluation and assessment
The company believes that formal evaluation of the board and of the
individual directors, on an annual basis, is a potentially effective
way to respond to the demand for greater board accountability and
effectiveness. For the company, evaluations provide an ongoing means
for directors to assess their individual and collective performance and
effectiveness. In addition to greater board accountability, evaluation
of board members helps in:
- More effective board processes
- Better collaboration and communication
- Greater clarity with regard to members'' roles and responsibilities
and
- Improved Chairman - Managing Director - Board relations
By focusing on the board as a team and on its overall performance, the
company ensures that communication and overall level of participation
and engagement also improves. In this background, the board undertook a
formal board assessment and evaluation process during 2015-16. The
Leadership, Nomination & Remuneration Committee has overall stewardship
for the process. The evaluation process covers the following aspects:
- Peer and self-evaluation of Directors
- Evaluation of the performance and effectiveness of the board
- Evaluation of the performance and effectiveness of Board Committees
- Feedback from the Non-Executive Directors to the Chairman, and
- Feedback on management support to the Board
The evaluation process elicits responses from the directors in a
judicious manner - ranging from composition and induction of the board
to effectiveness and governance. It also seeks feedback on board and
committee charters, strategy, risk management and quality of discussion
and deliberations at the board. The Lead Independent Director provides
feedback to the Executive Chairman. The same is discussed and acted
upon accordingly at the board.
AUDITORS
Pursuant to the provisions of section 139 of the Act and the rules
framed thereunder, Deloitte Haskins & Sells, Chartered Accountants,
were appointed as statutory auditors of the company from the conclusion
of the 23rd AGM of the company held on 17 July 2014 till the conclusion
of the 28th AGM to be held in the year 2019, subject to ratification of
their appointment at every AGM. Accordingly, requisite resolution forms
part of the notice convening the AGM.
AUDITORS'' REPORT AND SECRETARIAL AUDITORS'' REPORT
The auditors'' report and secretarial auditors'' report do not contain
any qualifications, reservations or adverse remarks. Report of the
secretarial auditor is given as an annexure which forms part of this
report (Annexure ''C'').
EMPLOYEE STOCK OPTION PLANS
During the year the company had the Infotech Associate Stock Option
Plans in operation for granting stock options to the associates of the
company and its subsidiaries, in accordance with the Securities
Exchange Board of India (Share Based Employee Benefits) Regulations,
2014. Disclosures pursuant to the above Regulations are enclosed as
Annexure ''D''.
During the year company put in place a new stock option scheme named
''Cyient Associate Stock Option Plan 2015'' based on the special
resolution passed by the shareholders at the 24th AGM. Company has
since obtained the in- principle approval for the scheme from BSE
Limited and National Stock Exchange of India Limited. No options have
been granted by the company from this scheme during this year.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The details are enclosed as Annexure ''E''.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Regulation 34 read with Schedule V of the
SEBI (LODR) Regulations, 2015, a report on Management Discussion &
Analysis is enclosed as Annexure ''F''.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, (''the Act'') the
board of directors, to the best of their knowledge and ability, confirm
that:
i. in the preparation of the annual accounts, the applicable
accounting standards have been followed and there are no material
departures;
ii. they 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 of the
company for that period;
iii. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the company and for preventing and
detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by
the company and such internal financial controls are adequate and
operating effectively;
vi. they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
Further, there are no qualifications, reservations or adverse remarks
made by the statutory auditors/ Practising Company Secretary in their
reports.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments have been
disclosed in the financial statements.
RELATED PARTY TRANSACTIONS
None of the transactions with related parties falls under the scope of
section 188(1) of the Act. Information on transactions with related
parties pursuant to section 134(3)(h) of the Act read with rule 8(2) of
the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and is
enclosed as Annexure ''G''.
EXTRACT OF ANNUAL RETURN (MGT 9)
The extract of the annual return in Form MGT 9 as required under the
provisions of section 92 of the Act is enclosed as Annexure ''H''.
Particulars of employees
The information required under Section 197 of the Act read with rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are given below:
a. The ratio of the remuneration of each director to the median
remuneration of the employees of the Company for the financial year:
Executive Directors Ratio to Median
remuneration
B. V. R. Mohan Reddy 85.92
Krishna Bodanapu 108.21
Independent Directors
M.M. Murugappan 2.00
K. Ramachandran 2.00
Som Mittal 2.00
Harsh Manglik 2.00
John Paterson 4.30
Andrea Bierce 4.30
b. The percentage increase in remuneration of each director, chief
executive officer, chief financial officer, company secretary in the
financial year:
Directors, Chief Executive % increase in
Officer, Chief Financial remuneration
Officer and Company in the financial year
Secretary
B.V.R Mohan Reddy -9.0%
Krishna Bodanapu 84.7%
Ajay Aggarwal 13%
Sudheendhra Putty 12%
c. The percentage increase in the median remuneration of employees in
the financial year: 8%
d. The number of permanent employees on the rolls of Company: 13,123
e. The explanation on the relationship between average increase in
remuneration and Company performance:
On an average, employees received an annual increase of 8% in India.
The individual increments varied from 4 % to 14 %, based on individual
performance.
Employees outside India received wage increase varying from 1 % to 3 %.
The increase in remuneration is in line with the market trends in the
respective countries. In order to ensure that remuneration reflects
company performance, the performance pay is also linked to organization
performance, apart from an individual''s performance.
f. Comparison of the remuneration of the key managerial personnel
against the performance of the Company:
Aggregate remuneration of key
managerial personnel (KMP) in FY16 32,950,356
Revenue 12,455,620,209
Remuneration of KMPs
(as % of revenue) 0.3
Profit before Tax (PBT) 2,873,032,762
Remuneration of KMP
(as % of PBT) 1.1
g. Variations in the market capitalisation of the Company, price
earnings ratio as at the closing date of the current financial year and
previous financial year:
Particulars March 31, 2016 March 31, 2015 % Change
Market Capitalization
(Rs. lakhs) 479,967 566,603 -15.30
Price Earnings Ratio 20.55 20.86 -1.50
h. Percentage increase or decrease in the market quotations of the
shares of the Company in comparison to the rate at which the Company
came out with the last public offer:
Particulars March 31,
2016 IPO Date IPO Price Adjusted
IPO price
by % Change
consider
ing CA*
Market Price (BSE) 425.4 September
25, 1997 87.70 7.31 5719
Market Price (NSE) 426.7 September
30, 1998 124.30 10.36 4019
* Adjusted for 1:1 bonus issue in 2002 and 2010
Sub divided 1 share of Rs. 10 into 2 shares of Rs. 5 in 2006
One bonus share issue for every 2 shares of Rs. 5 each in 2006
i. Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 8%. However, during the course
of the year, the total increase is approximately 8%, after accounting
for promotions and other event based compensation revisions.
Increase in the managerial remuneration for the year was 24.4%. j.
Comparison of remuneration of the key managerial personnel against the
performance of the Company:
(Amount in Rs.)
B.V.R. Mohan
Reddy Krishna
Bodanapu Ajay
Aggarwal Sudheendhra
Putty
Executive MD & CEO Chief
Financial Company
Chairman Officer Secretary
Remuneration 51,663,911 65,061,685 12,949,163 2,126,663
Revenue 12,455,620,209
Remuneration
as % of
revenues 0.41% 0.52% 0.10% 0.02%
Profit
before Tax
(PBT) 2,873,032,762
Remuneration
(as % of PBT) 1.80% 2.26% 0.45% 0.07%
k. The key parameters for any variable component of remuneration
availed by the directors:
The members of the company vide postal ballot in October 2014 approved
payment of commission to the non-executive directors within the ceiling
of 1% of the net profits of the company as computed under the
applicable provisions of the Act. The said commission is decided each
year by the board of directors, based on the recommendations of
Leadership, Nomination & Remuneration Committee and distributed amongst
the non-executive directors based on their attendance and contribution
at the board and certain committee meetings, as well as the time spent
on operational matters other than at meetings.
l. The ratio of the remuneration of the highest paid director to that
of the employees who are not directors but receive remuneration in
excess of the highest paid director during the year:
None.
m. Affirmation that the remuneration is as per the remuneration policy
of the Company:
The company affirms that the remuneration is as per its remuneration
policy.
n. The statement containing particulars of employees as required under
Section 197(12) of the Act read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, is
provided in a separate annexure forming part of this report. Further,
the report and the accounts are being sent to the members excluding the
aforesaid annexure. In terms of Section 136 of the Act, the said
annexure is open for inspection at the Registered Office of the
Company. Any shareholder interested in obtaining a copy of the same may
write to the Company Secretary.
Particulars relating to the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
Your Company has always believed in providing a safe and harassment
free workplace for every individual working in its premises through
various policies and practices. Company always endeavours to create and
provide an environment that is free from discrimination and harassment
including sexual harassment.
Your Company has adopted a policy on Prevention of Sexual Harassment
(POSH) at Workplace which aims at prevention of harassment of employees
and lays down the guidelines for identification, reporting and
prevention of undesired behaviour. An Internal Complaints Committee
("ICC") has been set up from the senior management (with women
employees constituting the majority) which is responsible for redressal
of complaints related to sexual harassment and follows the guidelines
provided in the Policy.
During the year the company:
- organized hourly sessions for female associates at each location to
connect with them & create more awareness about POSH & its processes
- created a page in Company''s internal portal along with a mailer to
all associates with the link to view this page & educate themselves
about POSH.
- created an online training programme on POSH for all associates.
There were no complaints received under the policy during 2015-16.
RISK MANAGEMENT
The board of directors has formed a risk management committee to
identify, evaluate, mitigate and monitor the risk management in the
company. The committee is responsible for reviewing the risk management
plan and ensuring its effectiveness. The audit committee has additional
oversight in the area of financial risks and controls. A comprehensive
enterprise risk management mechanism has been put in place and the same
is regularly reviewed.
A more detailed analysis of the risk management in the company is
published in the management discussion and analysis report published
elsewhere in the annual report.
CORPORATE GOVERNANCE
The company will continue to uphold the true spirit of Corporate
Governance and implement the best governance practices. A report on
Corporate Governance pursuant to the provisions of Corporate Governance
Code stipulated under SEBI (LODR) Regulations, 2015 is published else
where in the report . The Auditors'' Certificate regarding compliance of
conditions of corporate governance is enclosed as Annexure ''I''.
DISCLOSURE REQUIREMENTS
Details of the familiarization programme of the independent directors
are available on the website of the Company
(http://www.cyient.com/investors/corporate- governance).
Policy for determining material subsidiaries of the Company is
available on the website of the Company (http://
www.cyient.com/investors/corporate-governance).
Policy on dealing with related party transactions is available on the
website of the Company (http://www.cyient.com/
investors/corporate-governance).
The Company has formulated and published a Whistle Blower Policy to
provide Vigil Mechanism for employees including directors of the
Company to report genuine concerns. The provisions of this policy are
in line with the provisions of the section 177(9) of the Act and the
SEBI (LODR) Regulations, 2015 (http://www.cyient.com/
investors/corporate-governance).
CEO''s DECLARATION
Pursuant to the provisions of Regulation 17 of the SEBI (LODR)
Regulations, 2015, a declaration by the Managing Director & CEO of the
company declaring that all the members of the board and the senior
management personnel of the company have affirmed compliance with the
Code of Conduct of the company is enclosed as Annexure ''J''.
The CEO/CFO certification to the board pursuant to Regulation 17 of the
SEBI (LODR) Regulations, 2015 is enclosed Annexure ''K''.
ACKNOWLEDGMENTS
The board of directors expresses its thanks to the company''s customers,
shareholders, vendors and bankers for their support to the company
during the year. Your directors would like to make a special mention of
the support extended by the various Departments of the Central and
State Governments, particularly the Software Technology Parks of India,
Development Commissioners - SEZ, Department of Communication and
Information Technology, the Direct and Indirect tax authorities, the
Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate
Affairs/Registrar of Companies, Securities and Exchange Board of India,
the Stock Exchanges and others and look forward to their support in all
future endeavours.
Your directors wish to place on record their deep sense of appreciation
for the committed services of the associates of the company at all
levels.
For and on behalf of the Board
B.V.R. Mohan Reddy
Executive Chairman
(DIN-00058215)
Place: Hyderabad
Date : 21 April 2016
Mar 31, 2014
Dear Members,
The directors have pleasure in presenting the 23rd Directors'' Report
on the business and operations of your company, for the financial year
ended 31 March 2014.
FINANCIAL HIGHLIGHTS
(Amount in Rs. Million)
Consolidated Standalone
Particulars 2013-14 2012-13 2013-14 2012-13
Total Income 22,233.7 19,111.7 12,769.2 10,888.7
EBIDTA 4,271.7 3,804.7 3,967.3 3,196.2
Finance Cost 13.7 2.9 3.6 0.9
Depreciation 720.0 635.5 648.7 563.2
Exceptional item - 18.1 - 18.1
Profit Before Tax 3,538.0 3148.2 3,315.0 2,614.0
Current Tax 1036.0 930.5 763.1 698.1
Earlier Years'' Tax 1.3 1.0 - 1.0
MAT Credit 0.5 (1.6) - -
Deferred Tax (7.7) 36.8 2.8 71.5
Share of profit in associate
company 152.0 129.1 - -
Profit After Tax 2,660.0 2310.6 2,549.1 1,843.4
Basic Earnings per
share (Rs.) 23.80 20.72 22.81 16.53
Diluted Earnings per
share (Rs.) 23.70 20.68 22.71 16.50
Interim dividend paid
(Rs./ Share) 2.00 2.00 2.00 2.00
Final dividend recommended
(Rs./Share) 3.00 2.50 3.00 2.50
Paid up Equity Share Capital 559.8 558.0 559.8 558.0
Reserves 15,323.44 12,663.5 13,298.3 11,108.3
APPROPRIATIONS
Dividend
Your directors have recommended a final dividend of Rs. 3.00 per share
(60%) on par value of Rs. 5 per share. The total dividend including
dividend distribution tax (gross) is Rs. 633.8 million as against Rs. 585.5
million for the previous year. During the year, the board also declared
an interim dividend of Rs. 2.00 per share (40%). The total interim
dividend paid including the dividend distribution tax (gross) was Rs.
240.7 million. The interim dividend was paid on 9 November 2013. Total
dividend (including dividend distribution tax) as a percentage of
profit after tax is 24.9% as compared to 31.8% in the previous year.
Transfer to Reserves
Your directors have proposed to transfer Rs. 255 million to the General
Reserve retaining Rs. 4,271.0 million in the Profit and Loss Account.
LIQUIDITY
Your company maintains sufficient cash reserves to meet its operations
and strategic objectives. As at 31 March 2014, your company had liquid
assets of Rs. 6,208.3 million as against Rs. 4,857.8 million at the
previous year end. These funds have been invested in short term
deposits and mutual funds with scheduled banks and the debt based
mutual funds respectively.
FIXED DEPOSITS
Your company has not accepted any deposits and as such, no amount of
principal or interest was outstanding as on 31 March 2014.
SHARE CAPITAL
Allotment of Shares
Your company has allotted 361,646 equity shares of Rs. 5 each to the
associates of the company and its subsidiaries upon exercise of an
equal number of stock options vested in them pursuant to the extant
Stock Option Schemes of the company.
In view of the above allotments, the outstanding shares of the company
increased from 111,602,967 equity shares of Rs. 5 each to 111,964,613
equity shares of Rs. 5 each.
NAME CHANGE AND RE-BRANDING
As on 31 March 2014, company has issued notice of a special resolution
to be passed through postal ballot for the change of name of the
company from Infotech Enterprises Limited to Cyient Limited. The last
date to receive the postal ballot forms is 28 April 2014 and the
results would be declared by 30 April 2014.
This name change is part of the company''s re-branding exercise.
VERTICAL WISE PERFORMANCE
Utilities, Communications and D&A
This vertical provides geospatial technology solutions and data
management services. With wide-ranging customer engagements, this has
enabled the company to emerge as one of the largest and most
accomplished firms in the industry today.
Focused on electric, gas and water utilities, telecom network
operators, transportation companies and government agencies, this
vertical of the company helps its customers leverage geospatial
technology and data to improve the way they do business.
This vertical generated revenues of Rs. 5,463.9 million as against
previous year''s Rs. 3,987.9 million, at a growth rate of 37.0%. As a
percentage of operating revenues, this vertical contributed 44.6%.
Engineering
This vertical has developed a unique track record in supporting leading
Automotive, Aerospace, Energy, Marine, Plant Engineering, Rail and
other engineering industries in their product development support and
optimizing their development time & processes.
The Engineering vertical of your company offers a unique combination of
engineering skills, domain experience and application know-how. The
company''s expert teams in engineering span the complete product
development cycle, from concept development through after market
support in the areas of Mechanical Design, Electronics Design,
Technical publication and Engineering Software Development.
The vertical generated revenues of Rs. 6,764.6 million as against last
year''s revenues of Rs. 6,527.7 million, resulting in an increase of 3.6%.
This vertical contributed 55.4% of the total operating revenues.
SUBSIDIARIES
Infotech Enterprises Europe Limited (IEEL)
Incorporated in London as Dataview Solutions in 1992, it became a part
of the Infotech Group in1999.
Our services are designed to cater to leading tier-1 and tier- 2
telcos, large utility companies, public sector agencies, and commercial
businesses. We enjoy long-term relationships with several of our
partners and customers that have built a strong foundation of trust and
reliability.
Infotech Benelux BV, based in Breda, the Netherlands provides support
to our business in the Benelux region, while the Middle East operations
are managed at the Dubai Office.
We are an ISO 9001 and ISO 27001 certified organization. Leveraging
the global execution capability of our parent organization, we maintain
client relationships and ensure efficient project management in Europe.
Infotech Enterprises America, Inc. (IEAI)
Headquartered in East Hartford, Connecticut, IEAI provides engineering
services in North America. We have additional offices across the US and
Canada, with over 1,000 associates working in North America alone.
We cater to a broad spectrum of clients, from Fortune 500 companies to
small organizations and local, state, and federal government agencies,
generating annual revenues of over $150M.
We leverage the global delivery capability of Infotech Enterprises
Ltd., while engaging clients and executing projects in the American
region.
Infotech Enterprises GmbH (IEG)
Infotech Enterprises GmbH offers world-class engineering services and
solutions in Germany. It was established as Advanced Graphics Software
(AGS) in Leonberg, Germany, in 1992 Â a 3D CAD/CAM, e-solution software
and application provider.
After becoming a part of Infotech Group in 2000, we extended our foray
into other service areas like GIS and IT solutions. Owing to our large
pool of engineering, GIS, IT resources, we provide high-quality
services and solutions to our clients with offshore cost advantage and
onsite project management
Infotech Enterprises Japan KK (IEJ)
Established in 2008 in Central Tokyo, Infotech Enterprises Japan K.K.
is a leading engineering service provider in Japan. We provide our
end-to-end services and solutions across a wide variety of sectors.
We leverage the global delivery capability of Infotech Enterprises
Ltd., while maintaining client relationships and managing projects
locally.
Infotech Geospatial (India) Private Limited (IGIPL)
IGIPL, based in Hyderabad, addresses geospatial business opportunities
in India and the Middle East. The geospatial market in India and the
Middle East is estimated at Rs. 10 billion and is expected to see a 12%
growth rate over the next five years. The Indian government''s Open Map
Policy and Survey of India''s large-scale mapping initiatives are
unlocking geospatial opportunities in several areas. These include:
land records; urban planning; environment, forestry and natural
resources; utility infrastructure planning and management; and defence.
Similarly, the rapid pace of infrastructure development in the Middle
East has led to a growing demand for geospatial services in that
region. During the year, the company was converted into a private
limited company.
Infotech Enterprises Information Technology Services Private Limited
(IEITSPL)
Infotech Enterprises IT is a wholly owned subsidiary of Infotech
Enterprises Ltd., offering innovative software solutions and services
for the retail and supply chain sector across the globe.
We have expertise in a wide of variety of software platforms, including
Internet and e-commerce technologies. Leveraging our huge pool of
resources and technical acumen, we deliver cutting-edge and
cost-effective solutions and services. With global software giants as
our partners, we develop end-to-end solutions for the retail sector,
including manufacturing, transportation and finance.
JOINT VENTURES
Infotech Aerospace Services Inc (IASI)
Established in 2003 in Puerto Rico, Infotech Aerospace Services Inc.
(IAS) provides engineering outsourcing and other professional services
to Defense, Aerospace, and Power Generation Industries. IAS is a joint
venture between Infotech and Pratt & Whitney, a pioneer in flight
technology.
We also provide engineering and supply chain services, including
aerospace engineering, mechanical design and software development for
military, industrial and applications.
Infotech HAL Limited (IHL)
IHL aims to provide comprehensive solutions involving conceptual
design, re-design and derivates of modules, systems and components,
prototyping and supply of these through Manufacturing Programme
Management. IHL offers design services in the field of aerospace, viz.,
aero thermo and mechanical design, structural, stress, thermal and
rotor dynamic analysis, aeronautics, computational fluid dynamics,
combustion studies, preparation of digital mock up, testing and
analysis, control system design, development and software applications.
IHL is a joint venture between Infotech and Hindustan Aeronautics
Limited. IHL delivers engineering as well as after market engineering
and support services, i.e., technical publications, repair design,
service bulletins, testing, performance analysis and maintenance
monitoring in the aerospace domain.
IHL is well positioned to undertake work under offset program from
various original equipment manufacturers.
PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
Your company has prepared the consolidated financial statements in
accordance with the relevant accounting standards and the provisions of
the Companies Act, 1956 (Act). Pursuant to the provisions of Section
212 of the Act, documents in respect of the various subsidiaries viz.,
Directors'' Report, Auditor''s Report, Balance Sheet and Statement of
Profit and Loss, are required to be attached to the Balance sheet of
the Holding Company. However, in terms of the provisions of Section
212(8) of the Act, the Government of India, Ministry of Corporate
Affairs (MCA), has vide Circular No. 2/2011, dated 8 February 2011
granted exemption from the provisions of Section 212(1) of the Act.
Accordingly, the annual report does not contain the financial
statements of the subsidiaries of the company. However, the company
will make available, the audited annual accounts and related detailed
information of the subsidiaries, to the shareholders upon request in
accordance with the applicable law. These documents are also available
for inspection at the Registered Office of the company and also at the
respective subsidiary companies during business hours.
BUSINESS RESPONSIBILITY REPORT
The company has suo moto adopted the ''National Voluntary Guidelines on
Social, Environmental and Economical Responsibilities of Business''
issued by the Ministry of Corporate Affairs (MCA).
The nine areas of business responsibility adopted by the company are
briefly described as follows:
Principle 1: Businesses should conduct and govern themselves with
Ethics, Transparency and Accountability.
Principle 2: Businesses should provide goods and services that are safe
and contribute to sustainability throughout their life cycle.
Principle 3: Businesses should promote the well being of all employees.
Principle 4: Businesses should respect the interests of, and be
responsive towards all stakeholders, especially those who are
disadvantaged, vulnerable and marginalized.
Principle 5: Businesses should respect and promote human rights
Principle 6: Business should respect, protect, and make efforts to
restore the environment.
Principle 7: Business, when engaged in influencing public and
regulatory policy, should do so in a responsible manner.
Principle 8: Business should support inclusive growth and equitable
development.
Principle 9: Business should engage with and provide value to their
customers and consumers in a responsible manner.
The business responsibility report is enclosed as Annexure ''A''.
CORPORATE SOCIAL RESPONSIBILITY
The company believes in giving back to society in some measure that is
proportionate to its success in business. Corporate Social
Responsibility (CSR) aims at balancing the needs of all stakeholders.
The company''s CSR initiative goes beyond charity and believes that as a
responsible company it should take into account its impact on society
as much as creating business impact.The CSR initiatives are conducted
through Infotech Enterprises Charitable Trust (IECT). An elaborate
report on CSR is published elsewhere in this annual report.
GREEN INITIATIVES
Company has adopted the publication of abridged standalone financial
statements in compliance with the applicable provisions of the
Companies Act (the Act) and the Listing Agreement. Since 2010-11, the
company is also sending quarterly results, annual report and other
correspondence to the shareholders through e-mail, in keeping with its
green initiatives. Further, notices of board meetings, draft minutes
thereof and circular resolutions are also transacted through electronic
mode.
DIRECTORS
None of the directors of the company is disqualified under the
provisions of the Act or under the Listing Agreement with the Stock
Exchanges.
Appointments
Dr. Jayant Sabnis was appointed as alternate director to Mr. Thomas
Prete on 21 October 2013.
Mr. Som Mittal and Mr. Krishna Bodanapu were appointed as additional
directors of the company on 24 April 2014. Mr. Som Mittal and Mr.
Krishna Bodanapu are proposed to be appointed as directors under the
provisions of section 160 of the Companies Act, 2013 at the ensuing
Annual General Meeting (AGM). Mr. B.V.R. Mohan Reddy was appointed as
Executive Chairman and Mr. Krishna Bodanapu was appointed as Managing
Director & Chief Executive Officer by the board on 24 April 2014; on
the same date, Mrs. B. Sucharitha stepped down as Whole Time Director.
Pursuant to Article 56 of the Articles of Association of your company
and the provisions of Section 256 of the Companies Act, 1956, Mrs. B.
Sucharitha, Mr. G.V. Prasad and Mr. Vikas Sehgal retire by rotation at
the ensuing AGM and do not offer themselves for re-appointment.
Pursuant to the provisions of Clause 49 of the Listing Agreement, brief
particulars of the retiring directors who are proposed to be
appointed/re-appointed are provided as an annexure to the notice
convening the AGM.
AUDITORS
Deloitte Haskins & Sells (DHS), Chartered Accountants, who are the
statutory auditors of the Company, hold office till the conclusion of
the forthcoming AGM and are eligible for re-appointment. Pursuant to
the provisions of section 139 of the Companies Act, 2013 and the Rules
framed thereunder, it is proposed to appoint DHS 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 2019, subject to
ratification of their appointment at every AGM.
SECRETARIAL AUDIT
As a measure of good corporate governance and as recommended by the MCA
Corporate Governance Voluntary Guidelines, 2009, the company has
voluntarily got a secretarial audit done for the financial year
2013-14. The secretarial audit covered the provisions of the Act, the
Depositories Act, 1996, the Listing Agreement with the Stock Exchanges
and the SEBI guidelines/regulations on Employee Stock Options, Insider
Trading and Takeover Code.
Mr. S. Chidambaram, Company Secretary in Practice, performed the
secretarial audit and the report thereon is enclosed as Annexure ''B''.
EMPLOYEE STOCK OPTION PLANS
During the year under report, the company had the Infotech Associate
Stock Option Plans in operation for granting stock options to the
associates of the company and its wholly owned subsidiaries, in
accordance with the Securities Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
Disclosures pursuant to Para 12 of the Securities Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 is enclosed as Annexure ''C''.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed pursuant to provisions of Section
217(1)(e) of the Act read with Companies (Disclosure of particulars in
the report of Board of Directors) Rules, 1988, is enclosed as Annexure
''D''.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Act, read with the
Companies (Particulars of Employees) Rules, 1975, the names and other
particulars of employees are set out in an Annexure to the Directors''
Report. However, having regard to the provisions of Section 219
(1)(b)(iv) of the Act, the Annual Report excluding the aforesaid
information is being sent to all the members of the company and others
entitled thereto. Any member interested in obtaining such particulars
may write to the Company Secretary at the Registered Office of the
Company.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Clause 49 of the Listing Agreement, a
report on Management Discussion & Analysis is enclosed as Annexure ''E''.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Act, the
directors confirm that:
i) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii) they 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 of the
Company for that period;
iii) they have 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;
iv) they have prepared the Annual Accounts on a going concern basis.
Your directors also state that there are proper systems in place to
ensure compliance of all laws applicable to the company.
CORPORATE GOVERNANCE
The Company will continue to uphold the true spirit of Corporate
Governance and implement the best governance practices. A report on
Corporate Governance pursuant to the provisions of Clause 49 of the
Listing Agreement forms part of the Annual Report. As required under
Clause 49 of the Listing Agreement, the Auditors'' Certificate regarding
compliance of conditions of corporate governance is enclosed as
Annexure ''F''.
Further, the company has substantially complied with the MCA''s
Corporate Governance Voluntary Guidelines, 2009.
CEO''s DECLARATION
Pursuant to the provisions of clause 49(I)(D)(ii) of the Listing
Agreement, a declaration by the Chairman and Managing Director of the
company declaring that all the members of the board and the senior
management personnel of the company have affirmed compliance with the
Code of Conduct of the company is enclosed as Annexure ''G''.
The CEO/CFO certification to the board pursuant to clause 49(V) of the
listing agreement is enclosed Annexure ''H''.
ACKNOWLEDGMENTS
The board of directors expresses its thanks to the company''s customers,
shareholders, vendors and bankers for their support to the company
during the year. Your directors would like to make a special mention of
the support extended by the various Departments of the Central and
State Governments, particularly the Software Technology Parks of India,
Development Commissioners - SEZ, Department of Communication and
Information Technology, the Direct and Indirect tax authorities, the
Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate
Affairs/Registrar of Companies, Securities and Exchange Board of India,
the Stock Exchanges and others and look forward to their support in all
future endeavours.
Your directors wish to place on record their deep sense of appreciation
for the committed services of the associates of the company at all
levels.
For and on behalf of the Board
B.V.R. Mohan Reddy
Chairman and Managing Director
Place : Hyderabad
Date : April 24, 2014
Mar 31, 2013
Dear Shareholders,
The directors have pleasure in presenting the 22nd Directors'' Report on
the business and operations of your company, for the financial year
ended March 31, 2013.
FINANCIAL HIGHLIGHTS
(Amount in Rs. Million)
Particulars Consolidated Standalone
2012-13 2011-12 2012-13 2011-12
Total Income 19,111.7 15,706.6 10,888.7 9,173.8
EBIDTA 3,804.7 2,866.4 3,196.2 2,645.6
Finance Cost 2.9 7.3 0.9 5.6
Depreciation 635.5 494.1 563.2 411.6
Exceptional items 18.1 15.9 18.1 -
Profit before Tax 3,148.2 2,349.0 2,614.0 2,228.4
Current Tax 930.5 628.7 698.1 477.3
Earlier Years Tax 1.0 2.6 1.0 2.6
MAT Credit (1.6) 234.7 - 234.7
Deferred Tax 36.8 (30.7) 71.5 (72.1)
Share of profit in
associate Company 129.1 100.1 - -
Profit after Tax 2,310.6 1,613.8 1,843.4 1,585.9
Basic Earnings per share
(Rs.) 20.72 14.49 16.53 14.24
Diluted Earnings per share
(Rs.) 20.68 14.49 16.50 14.24
Interm dividend paid
(Rs./Share) 2.00 1.25 2.00 1.25
Final dividend recommended
(Rs./Share) 2.50 1.25 2.50 1.25
Paid up Equity Share Capital 558.0 557.1 558.0 557.1
Reserves 12,663.5 11,017.7 11,108.3 9,792.3
APPROPRIATIONS
Dividend
Your directors have recommended a final dividend of Rs. 2.50 per share
(50%) on a par value of Rs. 5 per share. The total dividend including
dividend distribution tax is Rs. 585.5 million as against Rs. 323.7
million for the previous year. During the year, the board also declared
an interim dividend of Rs. 2.00 per share (40%). The total interim
dividend paid including the dividend distribution tax was Rs. 259.1
million. The interim dividend was paid on November 30, 2012. Total
dividend (including dividend distribution tax) as a percentage of
profit after tax was 31.8% as compared to 20.4% in the previous year.
Transfer to Reserves
Your directors have proposed to transfer Rs. 210 million to the General
Reserve retaining Rs. 2,563.1 million in the Profit and Loss Account.
LIQUIDITY
Your company maintains sufficient cash reserves to meet its operations
and strategic objectives. As at March 31, 2013, your company had liquid
assets of Rs. 4,857.8 million as against Rs. 4,130.8 million at the
previous year end. These funds have been invested in fixed deposits
with scheduled banks and debt based mutual funds.
FIXED DEPOSITS
Your Company has not accepted any deposits and as such, no amount of
principal or interest was outstanding as on March 31, 2013.
SHARE CAPITAL
Allotment of Shares
Your company has allotted 187,705 equity shares of Rs. 5 each to the
associates of the company and its subsidiaries upon exercise of an
equal number of stock options vested in them pursuant to the extant of
Stock Option Schemes of the company.
In view of the above allotments, the outstanding shares of the company
during the year increased from 111,415,262 equity shares of Rs. 5 each
to 111,602,967 equity shares of Rs. 5 each.
BUSINESS UNIT WISE PERFORMANCE
Company has been re-aligned into business units (BU) effective April 1,
2012, which reflect the markets it addresses, and the solutions it
provides.
Utilities, Telecom & Content
This BU delivers intelligent network engineering solutions to electric,
gas and water utilities, telecom network operators, and government
agencies. From helping several US based utilities realize their smart
grid vision by providing geospatial information, to helping leading
telecom companies improve their network performance, this BU has been
at the forefront of technology demands faced by the utilities and
telecom industries. Company''s unique combination of utility domain
knowledge, experience, partnerships and global delivery capabilities
help next generation utilities meet their business challenges. Company
out-of-the-box thinking helps create innovative assurance, fulfillment,
and data governance strategies and solutions. It enables telecom
service providers efficiently manage their operations, create new
efficiencies, and drive cost optimization.
Company''s D&A solutions help the customers achieve business
excellence by using analytics to transform existing data into value
added information for critical decision making. From providing road
data updates to enable millions of people reach their homes safely
every day, these solutions transform every-day life in more ways than
one.
This BU generated revenues of Rs. 3,987.9 million as against previous
year''s Rs. 3,038.5 million, at a growth rate of 31.2%. As a
percentage of operating revenues, this BU contributed 38%.
Engineering
This BU cutting-edge engineering solutions help customers transform
challenges into opportunities. From partnering with an aircraft OEM to
help regain its leadership position in the global aerospace industry to
designing safer signaling systems for the railways, we have helped our
clients achieve more. Company help them contain engineering cost,
streamline manufacturing, boost productivity, comply with regulations,
enter emerging markets and accelerate time to market. Company provide
process engineering solutions to energy, mining, oil and gas companies,
and power plants to help improve their efficiencies through process
optimization. Company product engineering solutions span across
aerospace, defense, hi-tech, consumer, medical, rail transportation,
and heavy equipment.
This BU generated revenues of Rs. 6,527.7 million as against previous
year''s Rs. 5,600.1 million, at a growth rate of 16.6%. As a
percentage of operating revenues, this vertical contributed 62%.
SUBSIDIARIES
Infotech Enterprises Europe Limited (IEEL)
Headquartered in London, IEEL was incorporated in 1992 as Dataview
Solutions which subsequently become part of the Infotech Enterprises
group in 1999. The company''s fully owned subsidiary, Infotech
Enterprises Benelux BV based in Breda, The Netherlands supports its
business in the Benelux region, and the Middle East operations are
managed out of its Dubai, UAE office.
Building on the company''s long and successful tradition in
engineering, geospatial and IT sectors, IEEL has established a
significant presence in the network and content engineering markets in
the EMEA region. It provides services to major tier 1 and tier 2
telcos, large utility companies, public sector agencies and commercial
businesses and enjoys long-term relationships with several customers
and partners.
While leveraging the global execution capability of the parent
organization, IEEL ensures local responsibility in terms of client and
contractual relationships and project management.
Infotech Enterprises America, Inc. (IEAI)
IEAI, a California corporation, was incorporated in 1999, with
additional offices across the US and Canada. The company offers
engineering services to clients and partners in North America. With
more than 1,000 associates working throughout North America, IEAI
generates in excess of $100 mn annual revenue.
IEAI leverages the global delivery capability of IEL, while maintaining
local responsibility for client management and project execution.
Vertical markets addressed include Aerospace, Automotive, Consumer
Electronics, Energy, Heavy Equipment, Marine, Medical Devices, Oil &
Gas, Transportation, Semiconductor, Telecom and Utilities. Clients
range from Fortune 500 companies to small business, as well as local,
state and federal government agencies.
Infotech Enterprises GmbH (IEG)
IEG was incorporated as Advanced Graphics Software(AGS) in Leonberg,
Germany in 1992. This is a successful mechanical engineering software
and services company specializing in 3D CAD/CAM. AGS focused on
engineering services and e-solution software and applications within
the German market space.
Since becoming part of the Infotech Group in 2000, IEG has broadened
its portfolio to include GIS and IT-enabled services. The large pool
of engineering, GIS and software development service resources has
enabled IEG to address its existing and new customer requirements more
effectively by delivering world- class, high-quality services with
offshore cost advantage and onsite project management.
Infotech Enterprises Japan KK (IEJ)
IEJ was incorporated in 2008 with its registered office in central
Tokyo. Leveraging parent and group companies'' experience and global
presence, IEJ offers a wide range of onsite & offshore engineering and
design services to Japanese automotive, aerospace, consumer
electronics, rail transportation and heavy engineering industries.
IEJ has gained a strong position in the Japanese engineering services
market by acquiring a few most valued Japanese companies as customers.
Building upon the initial success and helped by a changing mindset
towards engineering offshoring, IEJ expects robust growth in the
foreseeable future.
IEJ''s highly motivated Japanese bilingual staff is capable of providing
sales, account & relationship management and local delivery interface.
IEJ is working closely with Japanese customers in the region and
providing innovative, high quality and cost effective solutions to
sustain their global competitiveness.
Infotech Geospatial (India) Limited (IGIL)
IGIL, based in Hyderabad, addresses geospatial business opportunities
in India and the Middle East. The geospatial market in India and the
Middle East is estimated at Rs. 10 billion and is expected to see a 12%
growth rate over the next five years. The Indian government''s Open Map
Policy and Survey of India''s large-scale mapping initiatives are
unlocking geospatial opportunities in several areas. These include:
land records; urban planning; environment, forestry and natural
resources; utility infrastructure planning and management; and defence.
Similarly, the rapid pace of infrastructure development in the Middle
East has led to a growing demand for geospatial services in that
region.
Infotech Enterprises Information Technology Services Private Limited
(IEITSPL)
IEITSPL, incorporated in 2008 and headquartered at Hyderabad, offers a
range of quality business software solutions and services to several
large and medium customers across the globe.
With partnerships with global software giants and skills and expertise
on a wide variety of software platforms, including leading- edge
internet and e-commerce technologies, IEITSPL brings to its customers
high-quality software services and products.
IEITSPL offers cost-effective solutions through its onsite
responsibility and offshore development to various customers in the
Manufacturing, Finance, Transportation and Retail industries.
ASSOCIATE
Infotech Aerospace Services Inc (IASI)
IASI is joint venture established in 2003 between the company and the
Connecticut-based Pratt & Whitney, a pioneer in flight technology.
IASI is a ''near-shore'' facility providing engineering outsourcing and
other professional services to the Defence, Aerospace, and Power
Generation Industries. IASI provides skilled US labour while
maintaining the price and resource advantage of being offshore.
The joint venture also provides Engineering and Supply Chain services
for UTC and Non-UTC companies in the areas of Aerospace Engineering,
Mechanical Design, and Software Development for military, commercial
and industrial applications.
JOINT VENTURES
Infotech HAL Limited (IHL)
IHL aims to provide comprehensive solutions involving conceptual
design, re-design and derivates of modules, systems and components,
prototyping and supply of these through Manufacturing Programme
Management. IHL offers design services in the field of aerospace, viz.,
aero thermo and mechanical design, structural, stress, thermal and
rotor dynamic analysis, aeronautics, computational fluid dynamics,
combustion studies, preparation of digital mock up, testing and
analysis, control system design, development and software applications.
IHL delivers engineering as well as aftermarket engineering and support
services, i.e., technical publications, repair design, service
bulletins, testing, performance analysis and maintenance monitoring in
the aerospace domain.
IHL is well positioned to undertake work under offset program from
various original equipment manufacturers.
SUSTAINABILITY INITIATIVES
Corporate sustainability is a business approach that creates long- term
consumer and associate value by not only creating a ''green strategy''
aimed towards the natural environment, but taking into consideration
every dimension of how the business operates in the social, cultural
and economic environment.
It means meeting the needs of the company''s direct and indirect
stakeholders (such as shareholders, associates, clients, pressure
groups, communities and so on) without compromising its ability to meet
the needs of future stakeholders. The company believes that a single
minded focus on economic sustainability can only succeed in the short
term. Social and environmental sustainability must be satisfied
simultaneously to ensure a smooth continuity of business in the
long-term. The company has voluntarily adopted the ''National
Voluntary Guidelines on Social, Environmental and Economical
Responsbilities of Business'' issued by the Ministry of Corporate
Affairs (MCA). The Business Responsiblity Report (BRR) is available on
the company''s website.
The nine areas of business responsibility adopted by the company are
briefly described as follows:
Principle 1: Businesses should conduct and govern themselves with
Ethics, Transparency and Accountability.
Principle 2: Businesses should provide goods and services that are safe
and contribute to sustainability throughout their life cycle.
Principle 3: Businesses should promote the well being of all employees.
Principle 4: Businesses should respect the interests of, and be
responsive towards all stakeholders, especially those who are
disadvantaged, vulnerable and marginalized.
Principle 5: Businesses should respect and promote human rights.
Principle 6: Business should respect, protect, and make efforts to
restore the environment.
Principle 7: Business, when engaged in influencing public and
regulatory policy, should do so in a responsible manner.
Principle 8: Business should support inclusive growth and equitable
development.
Principle 9: Business should engage with and provide value to their
customers and consumers in a responsible manner.
CORPORATE SOCIAL RESPONSIBILITY
The company believes in giving back to society in some measure that is
proportionate to its success in business. Corporate Social
Responsibility (CSR) aims at balancing the needs of all stakeholders.
The company''s CSR initiative goes beyond charity and believes that as
responsible company it should take into account its impact on society
as much as creating business impact. The CSR initiatives are conducted
through Infotech Enterprises Charitable Trust (IECT). IECT mainly
concentrates on improving quality of education imparted to
underprivileged children. As on date, IECT has adopted 13 schools and
is supporting 7,000 underprivileged children.
GREEN INITIATIVES
Company has adopted the publication of abridged standalone financial
statements in compliance with the applicable provisions of the
Companies Act (the Act) and the Listing Agreement. Since 2010-11, the
company is also sending quarterly results, annual report and other
correspondence to the shareholders through e-mail, in keeping with its
green initiatives. Further, notices of board meetings, draft minutes
thereof and circular resolutions are also transacted through electronic
mode.
PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
Your company has prepared the consolidated financial statements in
accordance with the relevant accounting standards and the provisions of
the Act. Pursuant to the provisions of Section 212 of the Act,
documents in respect of the various subsidiaries viz, Directors''
Report, Auditors'' Report, Balance Sheet and Profit and Loss Account,
are required to be attached to the Balance sheet of the Holding
Company. However, in terms of the provisions of Section 212(8) of the
Act, the Government of India, MCA, has vide Circular No. 2/2011, dated
8 February 2011 granted exemption from the provisions of Section 212(1)
of the Act. Accordingly, the annual report does not contain the
financial statements of the subsidiaries of the company. However, the
company will make available, the audited annual accounts and related
detailed information of the subsidiaries, to the shareholders upon
request in accordance with the applicable law. These documents are also
available for inspection at the Registered Office of the company and
also at the respective subsidiary companies during business hours.
DIRECTORS
None of the directors of the company is disqualified under the
provisions of the Act or under the Listing Agreement with the Stock
Exchanges.
Appointments
Mr. Harsh Manglik and Mr. Shankar Narayanan were appointed as
additional directors of the company on July 18, 2012 and January 17,
2013 respectively. Mr. Harsh Manglik and Mr. Shankar Narayanan are
proposed to be appointed as directors under the provisions of Section
257 of the Act at the ensuing Annual General Meeting (AGM). Mr. Thomas
W Prete is also proposed to be appointed as director at the ensuing AGM
under the provisions of the said section.
Pursuant to Article 56 of the Articles of Association of your company
and the provisions of Section 256 of the Act, Mr. Alain De Taeye,
retires by rotation at the ensuing AGM and being eligible, offers
himself for re-appointment. Mr. Abhay Havaldar and Mr. Allan Brockett,
who retire by rotation at the ensuing AGM do not offer themselves for
re-appointment.
Pursuant to the provisions of Clause 49 of the Listing Agreement, brief
particulars of the directors who are proposed to be
appointed/re-appointed are provided as an annexure to the notice
convening the AGM.
Cessations
Prof. J. Ramachandran ceased to be a director of the Company w.e.f.
July 18, 2012. Your directors place on record the appreciation and
gratitude to him for his valuable contributions during his tenure as
director.
AUDITORS
M/s Deloitte Haskins & Sells (DHS), Chartered Accountants, who retire
at the ensuing AGM of the company, are eligible for re-appointment for
2013-14.
The company has received the consent/confirmation of DHS for their
re-appointment as statutory auditors and that the same, when made by
the members of the company at the 22nd AGM will be within the limits
prescribed under Section 224(1B) of the Act.
SECRETARIAL AUDIT
As a measure of good corporate governance and as recommended by the MCA
Corporate Governance Voluntary Guidelines, 2009, the company has
voluntarily got a secretarial audit done for the financial year 2012-13
also. The secretarial audit covered the provisions of the Act, the
Depositories Act, 1996, the Listing Agreement with the Stock Exchanges
and the SEBI guidelines/ regulations on Employee Stock Options, Insider
Trading and Takeover Code.
Mr. S. Chidambaram, Company Secretary in Practice, performed the
secretarial audit and the report thereon is enclosed as Annexure-A.
EMPLOYEE STOCK OPTION PLANS
During the year under report, the company had the Infotech Associate
Stock Option Plans in operation for granting stock options to the
associates of the company and its wholly owned subsidiaries, in
accordance with the Securities Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
Disclosures pursuant to Para 12 of the Securities Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are enclosed as Annexure-B.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed pursuant to provisions of Section
217(1)(e) of the Act read with Companies (Disclosure of particulars in
the report of Board of Directors) Rules, 1988, is enclosed as
Annexure-C.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Act, read with the
Companies (Particulars of Employees) Rules, 1975, the names and other
particulars of employees are set out in an Annexure to the Directors''
Report. However, having regard to the provisions of Section 219
(1)(b)(iv) of the Act, the Annual Report excluding the aforesaid
information is being sent to all the members of the company and others
entitled thereto. Any member interested in obtaining such particulars
may write to the Company Secretary at the Registered Office of the
Company.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Clause 49 of the Listing Agreement, a
report on Management Discussion & Analysis including risk management
report is enclosed as Annexure-D.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Act, the
directors confirm that:
i) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii) they 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 of the
Company for that period;
iii) they have 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;
iv) they have prepared the Annual Accounts on a going concern basis.
Your directors also state that there are proper systems in place to
ensure compliance of all laws applicable to the company.
CORPORATE GOVERNANCE
Your company will continue to implement and abide by the best
principles of corporate governance. Recognizing the quality of
transparency and best governance practices that the company has
adopted, your company was awarded the prestigious Golden Peacock Award
for Excellence in Corporate Governance for the year 2012. Established
by the Institute of Directors in 1992, the Golden Peacock Awards are
regarded as the ''Holy Grail'' of corporate excellence and best practices
worldwide. The award was presented to the company at the third ''Global
Conference on Sustainability'' at Lords in London on October 11, 2012.
A report on Corporate Governance pursuant to the provisions of Clause
49 of the Listing Agreement forms part of the Annual Report. As
required under Clause 49 of the Listing Agreement, the Auditors''
Certificate regarding compliance of conditions of corporate governance
is enclosed as Annexure-E.
The company has substantially complied with the MCA''s Corporate
Governance Voluntary Guidelines, 2009.
CEO''s DECLARATION
Pursuant to the provisions of clause 49(I)(D)(ii) of the Listing
Agreement, a declaration by the Chairman and Managing Director of the
company declaring that all the members of the board and the senior
management personnel of the company have affirmed compliance with the
Code of Conduct of the company is enclosed as Annexure-F.
The CEO/CFO certification to the board pursuant to clause 49(V) of the
listing agreement is enclosed as Annexure-G.
ACKNOWLEDGMENTS
The board of directors expresses its thanks to the company''s customers,
shareholders, vendors and bankers for their support to the company
during the year. Your directors would like to make a special mention of
the support extended by the various Departments of the Central and
State Governments, particularly the Software Technology Parks of India,
Development Commissioners - SEZ, Department of Communication and
Information Technology, the Direct and Indirect tax authorities, the
Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate
Affairs/Registrar of Companies, Securities and Exchange Board of India,
the Stock Exchanges and others and look forward to their support in all
future endeavours.
Your directors wish to place on record their deep sense of appreciation
for the committed services of the associates of the company at all
levels.
For and on behalf of the Board
Place : Hyderabad B.V.R. Mohan Reddy
Date : April 25, 2013 Chairman and Managing Director
Mar 31, 2012
The directors have pleasure in presenting the 21st Directorsà Report
on the business and operations of your company, on a standalone basis,
for the financial year ended March 31, 2012.
FINANCIAL HIGHLIGHTS ON STANDALONE BASIS
(Amount in Rs.Million)
Particulars 2011-12 2010-11
Total Income 9,173.8 6,774.2
Operating Profit (PBIDT) 2,645.6 1,667.7
Interest 5.6 0.8
Depreciation 411.6 375.5
Exceptional items à (22.9)
Profit before Tax 2,228.4 1,314.3
Current Tax 477.3 250.2
Earlier Yearsà Tax 2.6 0.3
MAT Credit 234.7 (124.8)
Deferred Tax (72.1) 9.8
Profit after Tax 1,585.9 1,178.8
Basic Earnings per share (Rs. 14.24 10.60
Diluted Earnings per share (Rs. 14.24 10.58
Dividend recommended (Rs./Share) 2.50 1.25
Dividend recommended (%) 50% 25%
Paid up Equity Share Capital 557.1 556.4
Reserves 9,792.3 8,523.1
Following are the results of operations for the financial year (FY)
2011-12:
BUSINESS PERFORMANCE
Revenues
The total income of the company for the FY 2011-12 comprises operating
revenues of Rs. 8,637.9 million as against Rs. 6,476.7 million in FY
2010-11 and other income of Rs. 535.8 million for the current year as
against Rs. 297.6 million in the previous year. Total sales increased by
33.4% over the last financial year.
Profits
Profit before Tax (PBT) stood at Rs. 2,228.4 million as against Rs. 1,314.3
million for the previous year. Profit after Tax (PAT) stood at Rs.
1,585.9 million as against Rs. 1,178.8 million for the previous year.
APPROPRIATIONS
Dividend
Your directors have recommended a final dividend of Rs. 1.25 per share
(25%) on par value of Rs. 5 per share. The total dividend including
dividend distribution tax is Rs. 161.9 million as against Rs. 162.2 million
for the previous year. During the year, the board also declared an
interim dividend of Rs. 1.25 per share (25%). The total interim dividend
paid including the dividend distribution tax was Rs. 161.8 million. The
interim dividend was paid on 18 November 2011. Total dividend
(including dividend distribution tax) as a percentage of profit after
tax is 20.4% as compared to 13.8% in the previous year. The company
also decided to enhance the dividend payout ratio to up to 20% of the
profit after tax on a consolidated basis.
Transfer to Reserves
Your directors have proposed to transfer Rs. 158.6 million to the General
Reserve retaining Rs. 1,515.2 million in the Profit and Loss Account.
SHARE CAPITAL
Allotment of Shares
Your company has allotted 138,993 equity shares of Rs. 5 each to the
associates of the company and its subsidiaries upon exercise of an
equal number of stock options vested in them pursuant to the extant
Stock Option Schemes of the company.
In view of the above allotments, the outstanding shares of the company
during the year increased from 111,276,269 equity shares of Rs. 5 each to
111,415,262 equity shares of Rs. 5 each.
VERTICAL WISE PERFORMANCE
Network & Content Engineering
This vertical provides geospatial technology solutions and data
management services. With wide-ranging customer engagements, this has
enabled the company to emerge as one of the largest and most
accomplished firms in the industry today.
Focused on electric, gas and water utilities, telecom network
operators, transportation companies and government agencies, this
vertical the company helps its customers leverage geospatial technology
and data to improve the way they do business.
This vertical generated revenues of Rs. 3,038.5 million as against
previous yearà Rs. 2,302.5 million, at a growth rate of 31.9%. As a
percentage of operating revenues, this vertical contributed 35%.
Engineering
This vertical has developed a unique track record in supporting leading
Automotive, Aerospace, Energy, Marine, Plant Engineering, Rail and
other engineering industries in their product development support and
optimizing their development time & processes.
The Engineering vertical of your company offers a unique combination of
engineering skills, domain experience, and application know-how. The
companyÃs expert teams in engineering span the complete product
development cycle, from concept development through after market
support in the areas of Mechanical Design, Electronics Design,
Technical publication and Engineering Software Development.
The vertical generated revenues of Rs. 5,600.1 million as against last
yearà revenues of Rs. 4,162.5 million, resulting in a decrease of 34.5%.
This vertical contributed 65.0% of the total operating revenues.
INFRASTRUCTURE
The company operates out of its development centres and offices spread
over 12 lakh sq. ft across the country. With the withdrawal of tax
benefits for STPI units, it has become imperative for the company to
scale up the SEZ facilities. The companyÃs SEZ facilities at Noida,
Kakinada and Visakhapatnam give the marginal advantage of lower
operating costs and lower attrition.
The companyÃs own development centres in India - Hyderabad, Bangalore,
Noida, Kakinada and Visakhapatnam are high-tech facilities of global
standards with superior IT infrastructure, connectivity and the latest,
state of the art amenities.
SUBSIDIARIES
Infotech Enterprises Europe Limited (IEEL)
Headquartered in London, IEEL was incorporated in 1992 as Dataview
Solutions which subsequently become part of the Infotech Enterprises
group in 1999. The companyÃs fully owned subsidiary, Infotech
Enterprises Benelux BV based in Breda, The Netherlands supports its
business in the Benelux region, and the Middle East operations are
managed out of its Dubai, UAE office.
Building on the organizationà long and successful tradition in
engineering, geospatial and IT sectors, IEEL has established a
significant presence in the network and content engineering markets in
the EMEA region. It provides services to major tier 1 and tier 2
telcos, large utility companies, public sector agencies and commercial
businesses and enjoys long-term relationships with several customers
and partners.
While leveraging the global execution capability of the parent
organization, IEEL ensures local responsibility in terms of client and
contractual relationships and project management. The company is
certified to ISO 9001 and ISO 27001 standards.
Infotech Enterprises America, Inc. (IEAI)
IEAI, a California corporation, was incorporated in 1999, with
additional offices across the US and Canada. The company offers
engineering services to clients and partners in North America. With
more than 1,000 associates working throughout North America, IEAI
generates in excess of $100 mn annual revenue.
IEAI leverages the global delivery capability of IEL, while maintaining
local responsibility for client management and project execution.
Vertical markets addressed include Aerospace, Automotive, Consumer
Electronics, Energy, Heavy Equipment, Marine, Medical Devices, Oil &
Gas, Transportation, Semiconductor, Telecom and Utilities. Clients
range from Fortune 500 companies to small business, as well as local,
state and federal government agencies.
Infotech Enterprises GmbH (IEG)
IEG was incorporated as Advanced Graphics Software(AGS) in Leonberg,
Germany in 1992. This is a successful mechanical engineering software
and services company specializing in 3D CAD/CAM. AGS focused on
engineering services and e-solution software and applications within
the German market space.
Since becoming part of the Infotech Group in 2000, IEG has broadened
its portfolio to include GIS and IT-enabled services. The large pool
of engineering, GIS and software development service resources has
enabled IEG to address its existing and new customer requirements more
effectively by delivering world- class, high-quality services with
offshore cost advantage and onsite project management.
Infotech Enterprises Japan KK (IEJ)
IEJ was incorporated in 2008 with its registered office in central
Tokyo. Leveraging parent and group companiesà experience and global
presence, IEJ offers a wide range of onsite & offshore engineering and
design services to Japanese automotive, aerospace, consumer
electronics, rail transportation and heavy engineering industries.
In just over three years, IEJ has gained a strong position in the
Japanese engineering services market by acquiring a few most valued
Japanese companies as customers. Building upon the initial success and
helped by a changing mindset towards engineering off shoring, IEJ
expects robust growth in the foreseeable future.
IEJÃ highly motivated Japanese bilingual staff is capable of providing
sales, account & relationship management and local delivery interface.
IEJ has stood by its customers and Japanese people during last yearÃ
great Tohoku earthquake and subsequent nuclear accident at Fukushima
power plant by providing uninterrupted services. IEJ is working
closely with Japanese customers in the region and providing innovative,
high quality and cost effective solutions to sustain their global
competitiveness.
Infotech Geospatial (India) Limited (IGIL)
IGIL, based in Hyderabad, addresses geospatial business opportunities
in India and the Middle East. The geospatial market in India and the
Middle East is estimated at Rs. 10 billion and is expected to see a 12%
growth rate over the next five years. The Indian governmentà Open Map
Policy and Survey of IndiaÃs large-scale mapping initiatives are
unlocking geospatial opportunities in several areas. These include:
land records; urban planning; environment, forestry and natural
resources; utility infrastructure planning and management; and defence.
Similarly, the rapid pace of infrastructure development in the Middle
East has led to a growing demand for geospatial services in that
region.
Infotech Enterprises Information Technology Services Private Limited
(IEITSPL)
IEITSPL, incorporated in 2008 and head quartered at Hyderabad, offers a
range of quality business software solutions and services to several
large and medium customers across the globe.
With partnerships with global software giants and skills and expertise
on a wide variety of software platforms, including leading-edge
internet and e-commerce technologies, IEITSPL brings to its customers
high-quality software services and products.
IEITSPL offers cost-effective solutions through its onsite
responsibility and offshore development to various customers in the
Manufacturing, Finance, Transportation and Retail industries.
JOINT VENTURES
Infotech Aerospace Services Inc (IASI)
IASI is joint venture established in 2003 between the company and the
Connecticut-based Pratt & Whitney, a pioneer in flight technology.
IASI is a Rs.near-shoreà facility providing engineering outsourcing and
other professional services to the Defence, Aerospace, and Power
Generation Industries. IASI provides skilled US labour while
maintaining the price and resource advantage of being offshore.
The joint venture also provides Engineering and Supply Chain services
for UTC and Non-UTC companies in the areas of Aerospace Engineering,
Mechanical Design, and Software Development for military, commercial
and industrial applications.
Infotech HAL Limited (IHL)
IHL aims to provide comprehensive solutions involving conceptual
design, re-design and derivates of modules, systems and components,
prototyping and supply of these through Manufacturing Programme
Management. IHL offers design services in the field of aerospace, viz.,
aero thermo and mechanical design, structural, stress, thermal and
rotor dynamic analysis, aeronautics, computational fluid dynamics,
combustion studies, preparation of digital mock up, testing and
analysis, control system design, development and software applications.
IHL delivers engineering as well as aftermarket engineering and support
services, i.e, technical publications, repair design, service
bulletins, testing, performance analysis and maintenance monitoring in
the aerospace domain.
IHL is well positioned to undertake work under offset program from
various original equipment manufacturers.
PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
Your company has prepared the consolidated financial statements in
accordance with the relevant accounting standards and the provisions of
the Companies Act, 1956 (Act). Pursuant to the provisions of Section
212 of the Act, documents in respect of the various subsidiaries viz.,
Directorsà Report, Auditorà Report, Balance Sheet and Profit and Loss
Account, are required to be attached to the Balance sheet of the
Holding Company. However, in terms of the provisions of Section 212(8)
of the Act, the Government of India, Ministry of Corporate Affairs
(MCA), has vide Circular No. 2/2011, dated 8 February 2011 granted
exemption from the provisions of Section 212(1) of the Act.
Accordingly, the annual report does not contain the financial
statements of the subsidiaries of the company. However, the company
will make available, the audited annual accounts and related detailed
information of the subsidiaries, to the shareholders upon request in
accordance with the applicable law. These documents are also available
for inspection at the Registered Office of the company and also at the
respective subsidiary companies during business hours.
LIQUIDITY
Your Company maintains sufficient cash reserves to meet its operations
and strategic objectives. As at March 31, 2012, your company had liquid
assets of Rs. 4,130.8 million as against Rs. 3,272.7 million at the
previous year end. These funds have been invested in Short term
deposits and Mutual funds with scheduled banks and the debt based
mutual funds.
FIXED DEPOSITS
Your Company has not accepted any deposits and as such, no amount of
principal or interest was outstanding as on 31 March 2012.
DIRECTORS
None of the directors of the company is disqualified under the
provisions of the Act or under the Listing Agreement with the Stock
Exchanges.
Appointments
Mr. Vikas Sehgal was appointed an additional director of the company on
18 January 2012. He joins the board as a non- executive independent
director. Mr. Sehgal is proposed to be appointed as a director under
the provisions of section 257 of the Act at the ensuing Annual General
Meeting (AGM).
Pursuant to Article 56 of the Articles of Association of your company
and the provisions of Section 256 of the Act, Mr. B.V.R. Mohan Reddy,
Mr. G.V. Prasad and Mr. K. Ramachandran retire by rotation at the
ensuing AGM and being eligible, offer themselves for re-appointment.
Pursuant to the provisions of Clause 49 of the Listing Agreement, brief
particulars of the retiring directors who are proposed to be
appointed/re-appointed are provided as an annexure to the notice
convening the AGM.
Cessations
Mr. Jaithirth Rao resigned as director on 16 August 2011.
The board places on record its appreciation and gratitude to the said
director for his valuable contributions during his tenure.
AUDITORS
M/s Deloitte Haskins & Sells (DHS), Chartered Accountants, who retire
at the ensuing AGM of the company, are eligible for re-appointment for
2012-13.
The company has received the consent/confirmation of DHS for their
re-appointment as statutory auditors and that the same, when made by
the members of the company at the 21st AGM will be within the limits
prescribed under Section 224(1B) of the Act.
SECRETARIAL AUDIT
As a measure of good corporate governance and as recommended by the MCA
Corporate Governance Voluntary Guidelines, 2009, the company has
voluntarily got a secretarial audit done for the financial year
2011-12. The secretarial audit covered the provisions of the Act, the
Depositories Act, 1996, the Listing Agreement with the Stock Exchanges
and the SEBI guidelines/regulations on Employee Stock Options, Insider
Trading and Takeover Code.
Mr. S. Chidambaram, Company Secretary in Practice, performed the
secretarial audit and the report thereon is enclosed as Annexure "A".
EMPLOYEE STOCK OPTION PLANS
During the year under report, the company had the Infotech Associate
Stock Option Plans in operation for granting stock options to the
associates of the company and its wholly owned subsidiaries, in
accordance with the Securities Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
Disclosures pursuant to Para 12 of the Securities Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are enclosed as Annexure "B".
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed pursuant to provisions of Section
217(1)(e) of the Act read with Companies (Disclosure of
particulars in the report of Board of Directors) Rules, 1988, are
enclosed as Annexure "C".
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Act, read with the
Companies (Particulars of Employees) Rules, 1975, the names and other
particulars of employees are set out in an Annexure to the DirectorsÃ
Report. However, having regard to the provisions of Section 219
(1)(b)(iv) of the Act, the Annual Report excluding the aforesaid
information is being sent to all the members of the company and others
entitled thereto. Any member interested in obtaining such particulars
may write to the Company Secretary at the Registered Office of the
Company.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Clause 49 of the Listing Agreement, a
report on Management Discussion & Analysis is enclosed as Annexure "D".
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Act, the
directors confirm that:
i) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii) they 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 of the
Company for that period;
iii) they have 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;
iv) they have prepared the Annual Accounts on a going concern basis.
Your directors also state that there are proper systems are in place to
ensure compliance of all laws applicable to the company
CORPORATE GOVERNANCE
The Company will continue to uphold the true spirit of Corporate
Governance and implement the best governance practices. A report on
Corporate Governance pursuant to the provisions of Clause 49 of the
Listing Agreement forms part of the Annual Report. As required under
Clause 49 of the Listing Agreement, the Auditorsà Certificate regarding
compliance of conditions of corporate governance is enclosed as
Annexure "E".
Further, the company has substantially complied with the MCAÃ
Corporate Governance Voluntary Guidelines, 2009.
CEOÃ DECLARATION
Pursuant to the provisions of clause 49(I)(D)(ii) of the Listing
Agreement, a declaration by the Chairman and Managing Director of the
company declaring that all the members of the board and the senior
management personnel of the company have affirmed compliance with the
Code of Conduct of the company, is enclosed as Annexure "F".
The CEO/CFO certification to the board pursuant to clause 49(V) of the
listing agreement is enclosed as Annexure "G".
ACKNOWLEDGMENTS
The board of directors thank the companyÃs customers, shareholders,
vendors and bankers for their support to the company during the year.
Your directors would like to make a special mention of the support
extended by the various Departments of the Central and State
Governments, particularly the Software Technology Parks of India,
Department of Communication and Information Technology, the Direct and
Indirect tax authorities, the Ministry of Commerce, the Reserve Bank of
India, Ministry of Corporate Affairs/Registrar of Companies, Securities
and Exchange Board of India, the Stock Exchanges and others and look
forward to their support in all future endeavours.
Your directors wish to place on record their deep sense of appreciation
for the committed services of the associates of the company at all
levels.
For and on behalf of the Board
Place : Hyderabad B.V.R. Mohan Reddy
Date : April 18, 2012 Chairman and Managing Director
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the 20th Directors' Report
on the business and operations of your Company, on a standalone basis,
for the financial year ended March 31, 2011.
FINANCIAL HIGHLIGHTS ON STANDALONE BASIS
(Amount in Rs Million)
Particulars 2010-11 2009-10
Total Income 6,797.14 6,079.50
Operating Profit (PBIDT) 1,692.81 1,960.04
Interest 3.0 4.71
Depreciation 375.48 407.07
Profit before Tax 1,314.34 1,548.26
Current Tax 250.20 190.30
Earlier Years' Tax 0.34 45.30
MAT Credit (124.76) (109.90)
Deferred Tax 9.76 154.91
Profit after Tax 1,178.80 1,267.65
RESULTS OF OPERATIONS
Your Company has emerged as a complete Engineering Services Provider
with "Global Collaborative Engineering" as its model for growth.
Following are the results of operations for the financial year (FY)
2010-11:
BUSINESS PERFORMANCE
Revenues
The total income of the Company for the FY 2010-11 comprises operating
revenues of Rs 6,476.67 million as against Rs 5,617.99 million in FY
2009-10 and other income of Rs 320.47 million for the current year as
against Rs 461.5 million in the previous year. Total sales increased
by 15.28% over the last financial year.
Profits
Profit before Tax (PBT) stood at Rs 1,314.34 million as against Rs
1,548.26 million for the previous year. Profit after Tax (PAT) stood at
Rs 1,178.8 million as against Rs 1,267.65 million for the previous
year.
Liquidity
Your Company continues to be debt-free and maintains sufficient
liquidity to meet its strategies including acquisitions. During the
financial year, cash flows have more than adequately covered working
capital requirements as well as for the capital expenditure. As of 31
March 2011, the Company had cash and cash equivalents of Rs 3,272.75
million, as against Rs 3,363.68 million on 31 March 2010. During the
year, the Company invested an amount of Rs 201.32 million towards the
acquisition of Wellsco Inc., in the US through its wholly owned
subsidiary, Infotech Enterprises America Inc.
APPROPRIATIONS
Dividend
Your Directors have recommended a final dividend of Rs 1.25 per share
(25%) on par value of Rs 5/-. The total dividend including dividend
distribution tax amount is Rs 162.20 million as against Rs 129.86
million for the previous year. Dividend (including dividend
distribution tax) as a percentage of profit after tax is 13.76% as
compared to 10.24% in the previous year.
Transfer to Reserves
Your Directors have proposed to transfer Rs 830.67 million to the
General Reserve retaining Rs 411.16 million in the Profit and Loss
Account.
SHARE CAPITAL
Allotment of Shares
During the year under report, Company completed an issue of bonus
shares in the ratio of 1:1, i.e., one equity share for every one
existing equity share of Rs 5/- each held by the members on the record
date. The record date fixed was 12 June 2010. Company allotted
5,55,52,348 bonus shares on 14 June 2010. Further, your Company has
allotted 2,24,397 equity shares of Rs 5/- each to the associates of the
Company and its subsidiaries upon exercise of an equal number of stock
options vested in them pursuant to the extant Stock Option Schemes of
the Company.
In view of the above allotments, the outstanding shares of the Company
increased from 5,54,99,524 equity shares of Rs 5/- on 31 March 2010
each to 11,12,76,269 equity shares of Rs 5/- each on 31 March 2011.
SIGNIFICANT EVENTS
- Opened a new Centre of Excellence (CoE) at Visakhapatnam SEZ
- Renewed contract with Tom Tom for a further period of three years
- The Company's wholly owned subsidiary in the US, Infotech Enterprises
America Inc., acquired Wellsco Inc., a Telecom Engineering Company
based at Paragould, Arkansas, USA in an all cash deal
- Rebranded Utilities, Telecom & Government (UTG) vertical as Network &
Content Engineering (N&CE) - a step towards emerging as a Global
Engineering Services Company
- Began long term relationships with Seawell and Westinghouse
- Rewarded shareholders by completing a 1:1 bonus issue of shares
VERTICAL WISE PERFORMANCE
Network & Content Engineering
Network & Content Engineering (erstwhile UTG) vertical is the world's
leading dedicated provider of engineering services and solutions.
Supported by an outstanding team of consultants and engineers, deep
domain knowledge, superior technical expertise, and 20 years of
successful engagements, we are well positioned to provide scalable
network and content solutions that are fully optimized to support
operational efficiency, market response and profitability. Network
Engineering provides design, deployment and management of
next-generation networks, including fibre networks and smart-grid
solutions to some of the major telecom service providers and utilities
globally. The Content Engineering division serves major organizations
and government in delivering, managing and optimizing their critical
content and data needs. Leveraging years of experience and a wide
range of next- generation services and solutions, we optimize content
to facilitate better business decision-making and support the delivery
of tangible business results.
This vertical generated revenues of Rs 2,322 million as against
previous year's Rs 2,540 million, at a negative growth rate of 8.6%.
This vertical contributed 36% of the total operating revenues.
Associate strength of the vertical stood at 3,338 as at 31 March 2011.
During the year, 3 trademarks, viz., iGEMS, TruShift and TeemNG were
registered by this vertical.
Engineering
This vertical witnessed a series of transformative initiatives to
consolidate efforts and to tap the vast synergies for accelerated
growth. Restructuring of our Global Aerospace Practice and merging the
practice under this vertical made us realize cost efficiencies and
revenue opportunities. The restructuring has helped cross $100 million
in terms of aerospace revenues, thus making the Company the leader of
aerospace engineering services in India. Today, this vertical is
trusted to solve complex product and process engineering challenges
across industries such as Automotive, Aerospace, Consumer & Medical,
Energy, Hi-Tech, Heavy Equipment, Marine and Rail.
The Product & Process Engineering vertical of your Company offers a
unique combination of engineering skills, domain experience and
application know-how. The Company's expert teams in engineering span
the complete product development cycle, from concept development
through aftermarket support in the areas of Mechanical Design,
Electronics Design, Technical publication and Engineering Software
Development.
The vertical generated revenues of Rs 4,155 million as against last
year's revenues of Rs 3,078 million, resulting in an increase of 35%.
This vertical contributed 64% of the total operating revenues.
Associate strength of the vertical stood at 3,487 as at 31 March 2011.
SUBSIDIARIES
Infotech Enterprises Europe Limited (IEEL), UK
IEEL reported revenues of GBP 14.58 million (Rs 1,031.89 million) as
against previous year's GBP 16.46 million (Rs 1,246.9 million). The net
profit for the year was GBP 0.25 million (Rs 16.83 million) as against
GBP 0.72 million (Rs 54.60 million) in the previous year.
Infotech Enterprises America, Inc. (IEAI), USA
IEAI reported revenues of USD 108.13 million (Rs 4,922.81 million) as
against previous year's USD 72.86 million (Rs 3,448.2 million). The net
profit for the year was USD 1.94 million (Rs 89.10 million) as against
USD 3.24 million (Rs 157.9 million) in the previous year. During the
year, IEAI acquired a wholly owned subsidiary i.e., Wellsco Inc.
Infotech Enterprises GmbH (IEG), Germany
IEG reported revenues of Euro 39.65 million (Rs 2,389.95 million) as
against previous year's Euro 32.91 million (Rs 2,208.13 million),
representing a growth of 20.4%. The net profit for the year was Euro
1.80 million (Rs 107.73 million) as against Euro 2.24 million (Rs 150.7
million) in the previous year.
Infotech Enterprises Japan KK (IEJ), Japan
IEJ reported revenues of Rs 28.94 million as against Rs 9.44 million
and a net loss of Rs 13.31 as against Rs 21.98 million last year; it is
expected to improve its business in the coming years.
Infotech Geospatial (India) Limited (IGIL), India
IGIL reported revenues of Rs 63.51 million as against Rs 61.64 million
last year. It reported a profit of Rs 3.95 million as against a net
loss of Rs 18.38 million last year.
TTM Institute of Information Technology Private Limited (TIIT), India
TIIT reported a net loss of Rs 3.09 million as against Rs 4.47 million
last year. During the financial year, TIIT made an application to the
Hon'ble High Court of Andhra Pradesh seeking sanction of a scheme of
amalgamation with the Company. The Hon'ble High Court has sanctioned
the scheme effective 1 April 2011.
Infotech Enterprises Information Technology Services Private Limited
(IEITSPL), India
IEITPSL reported revenues of Rs 71.05 million and a net loss of Rs
12.88 milllion.
PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
Pursuant to the provisions of Section 212 of the Companies Act, 1956
(Act), documents in respect of the various subsidiaries viz.,
Directors' Report, Auditor's Report, Balance Sheet and Profit and Loss
Account, are required to be attached to the Balance Sheet of the
holding company. However, in terms of the provisions of Section 212(8)
of the Act, the Government of India, Ministry of Corporate Affairs, has
vide letter No. 47/15/ 2011-CL-III dated 27 January 2011 granted
exemption from the provisions of Section 212(1) of the Act.
Accordingly, the Annual Report does not contain the financial
statements of the subsidiaries of the Company. However, the Company
will make available the audited annual accounts and related detailed
information of the subsidiaries to the shareholders upon request in
accordance with the applicable law. These documents are also available
for inspection at the Registered Office of the Company during business
hours. The details of accounts of individual subsidiary companies will
also be available on the website of the Company.
A statement pursuant to the provisions of Section 212(1)(e) of the Act
appears elsewhere in the Annual Report.
FIXED DEPOSITS
Your Company has not accepted any deposits and as such, no amount of
principal or interest was outstanding as on 31 March 2011.
DIRECTORS
Appointments
Mr. K. Ramachandran, Mr. Jaithirth Rao, Mr. Alain De Taeye, Mr. Abhay
Havaldar and Mr. Allan Brockett were appointed as directors by the
members of the Company on 14 July 2010 under Section 257 of the Act.
Pursuant to Article 56 of the Articles of Association of the Company
read with the provisions of Section 256 of the Act, Mrs. B. Sucharitha,
Mr. M.M. Murugappan and Prof. J. Ramachandran retire by rotation at the
ensuing Annual General Meeting (AGM) and being eligible, offer
themselves for re-appointment.
None of the Directors of the Company is disqualified under the
provisions of the Act or under the Listing Agreement with the Stock
Exchanges.
Pursuant to the provisions of Clause 49 of the Listing Agreement, brief
particulars of the retiring directors who are proposed to be
re-appointed are provided as an annexure to the Notice convening the
AGM.
Cessations
Mr. Willam Grabe and Mr. Paul Adams ceased to be directors on the Board
effective 14 July 2010. Mr. Sunish Sharma and Mr. David Carter also
vacated office as alternate directors under the provisions of Section
313 of the Act.
The Board places on record its appreciation and gratitude to the said
directors for their valuable contributions.
AUDITORS
M/s Deloitte Haskins & Sells (DHS), Chartered Accountants (ICAI Reg.
No. 008072S), who retire at the ensuing AGM of the Company, are
eligible for re-appointment. DHS has confirmed that the re-appointment,
if made, would be within the permitted limits under the Act.
SECRETARIAL AUDIT
As a measure of good corporate governance and as recommended by the
Ministry of Corporate Affairs' (MCA) Corporate Governance Voluntary
Guidelines, 2009, the Company has voluntarily got a secretarial audit
done for the FY 2010-11. The audit report is enclosed as Annexure "A".
EMPLOYEE STOCK OPTION PLANS
During the year under report, the Company had various Associate Stock
Option Plans in operation for granting stock options to the Associates
of the Company and its Wholly Owned Subsidiaries, in accordance with
the Securities Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999.
Disclosures pursuant to Para 12 of the said Guidelines are enclosed as
Annexure "B".
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed pursuant to provisions of Section
217(1)(e) of the Act read with Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, are enclosed as Annexure
"C".
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Act, read with the
Companies (Particulars of Employees) Rules, 1975, as amended, the names
and other particulars of employees are set out in an Annexure to the
Directors' Report. However, having regard to the provisions of Section
219 (1)(b)(iv) of the Act, the Annual Report excluding the aforesaid
information is being sent to all the members of the Company and others
entitled thereto. Any member interested in obtaining such particulars
may write to the Company Secretary at the registered office of the
Company.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Clause 49 of the Listing Agreement, a
report on the Management Discussion & Analysis is enclosed as Annexure
"D".
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Act, the
Directors confirm that:
i) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii) they 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 of the
Company for that period;
iii) they have 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;
iv) they have prepared the Annual Accounts on a going concern basis.
CORPORATE GOVERNANCE
Pursuant to the provisions of Clause 49 of the Listing Agreement with
the Stock Exchanges, a report on Corporate Governance features as a
part of Annual Report. Further, the Company has substantially complied
with the MCA's Corporate Governance Voluntary Guidelines, 2009.
As required under Clause 49 of the Listing Agreement, the Auditors'
Certificate regarding compliance of conditions of corporate governance
is enclosed as Annexure "E".
Your Company will continue to implement and adhere in letter and spirit
to the policies of good corporate governance.
CEO's DECLARATION
Pursuant to the provisions of Clause 49(I)(D)(ii) of the Listing
Agreement, a declaration by the Chairman and Managing Director of the
Company declaring that all the members of the Board and the Senior
Management Personnel of the Company have affirmed compliance with the
Code of Conduct of the Company, is enclosed as Annexure "F".
ENVIRONMENT CONSERVATION
Your Company is conscious of its responsibilities as a corporate
citizen, particularly in the realm of pollution control and environment
conservation. Towards this end, the Company is publishing the abridged
standalone financial statements prepared in accordance with the
provisions of Section 219 of the Act. Further, the Company also
welcomes the Green Initiative in Corporate Governance heralded by the
Ministry of Corporate Affairs that enables dispatch of various
documents in electronic mode. Complete details of the same, including
the CompanyÃs proposals to send documents in the electronic form, are
available elsewhere in the Annual Report and also on the website of the
Company.
ACKNOWLEDGMENTS
Your Directors place on record their gratitude to the Company's
shareholders, customers, vendors, bankers and all other stakeholders
for their continued support to its growth initiatives. Your Directors
also place on record, their appreciation of the contribution made by
associates at all levels, who, through their competence, sincerity,
hard work, solidarity and dedicated support, have enabled your Company
to make rapid strides in its business. Your Directors also thank the
Central and State Governments and their various agencies, particularly,
the Ministry of Communication & Information Technology, Software
Technology Parks of India, Departments of Customs and Central Excise,
Ministry of Corporate Affairs, the Governments of the various countries
where it has operations, SEBI, Stock Exchanges, Reserve Bank of India,
APIIC, and other governmental agencies for extending their support
during the year and look forward to their continued support.
For and on behalf of the Board
B.V.R. Mohan Reddy
Chairman and Managing Director
Place : Hyderabad
Date : April 20, 2011
Mar 31, 2010
The Directors have pleasure in presenting the 19th Directorsà Report
on the business and operations of your Company, on a standalone basis,
for the financial year ended March 31, 2010.
FINANCIAL HIGHLIGHTS ON STANDALONE BASIS
(Amount in Rs. Million)
Particulars 2009-10 2008-09
Total Income 6,079.50 5,438.11
Operating Profit (PBIDT) 1,960.04 1,123.30
Interest 4.71 35.14
Depreciation 407.07 426.64
Profit before Tax 1,548.26 661.52
Current Tax 190.30 110.00
Earlier Years Tax 45.30 -
MAT Credit (109.90) -
Fringe Benefit Tax - 17.00
Deferred Tax 154.91 (174.10)
Profit after Tax 1,267.65 708.62
Basic Earnings per share (Rs.) 22.90 13.30
Diluted Earnings per share (Rs.) 22.82 13.28
Dividend recommended (Rs./Share) 2.00 1.50
Dividend recommended (%) 40 30
Paid up Equity Share Capital 277.50 276.15
Reserves 7,760.85 6,622.86
RESULTS OF OPERATIONS
Your Company has firmly established itself as a global Engineering
Services and Geospatial Information Services Company and has excelled
in gaining expertise in all service offerings.
Following are the results of operations for the financial year (FY)
2009-10:
BUSINESS PERFORMANCE
Revenues
The total income of the Company for the FY 2009-10 comprises operating
revenues of Rs. 5,617.99 million as against Rs. 5,665.72 million in FY
2008-09 and other income of Rs. 461.50 million for the current year as
against Rs. (227.61)million in the previous year. Total sales degrew by
0.8% over the last financial year primarily due to adverse exchange
rate fluctuations.
Profits
Profit Before Tax (PBT) stood at Rs. 1,548.26 million as against Rs.
661.52 million for the previous year. Profit After Tax (PAT)
stood at Rs. 1,267.65 million as against Rs. 708.62 million for the
previous year.
APPROPRIATIONS
Dividend
Your Directors have recommended a final dividend of Rs. 2 per share
(40%) on par value of Rs. 5 per share (pre-bonus issue). The total
dividend including dividend distribution tax amount is Rs. 129.86
million as against Rs. 96.92 million for the previous year. Dividend
(including dividend distribution tax) as a percentage of profit after
tax is 10.24% as compared to 13.68% in the previous year.
Transfer to Reserves
Your Directors have proposed to transfer Rs. 1,000 million to the
General Reserve retaining Rs. 224.79 million in the Profit and Loss
Account.
SHARE CAPITAL
Allotment of Shares
Your Company has allotted 269,728 equity shares of Rs. 5 each to the
associates of the Company and its subsidiaries upon exercise of an
equal number of stock options vested in them pursuant to the extant
Stock Option Schemes of the Company.
In view of the above allotments, the outstanding shares of the Company
during the year has increased from 55,229,796 equity shares of Rs. 5
each to 55,499,524 equity shares of Rs. 5 each.
SIGNIFICANT EVENTS
- Completed 6 years of partnership with Bombardier Transportation
- Strengthened market presence in APAC region by setting up a branch in
Malaysia
- Rail groups achieved IRIS (International Rail Industry Standard)
certification
- Signed a long term engineering services contract with Hamilton
Sundstrand; a contract in the avionics segment with an opportunity to
add 400 engineers in three years
- Won the Urban Property Ownership Records - Technical Service Provider
project for five towns in Karnataka (Awarded by the Department of
Survey, Settlement and Land Records, Government of Karnataka)
- The Companys wholly owned subsidiary in the US, Infotech Enterprises
America Inc., acquired Daxcon Engineering Inc., a Peoria, Illinois, US
based corporation in an all cash deal
VERTICAL WISE PERFORMANCE
Utilities, Telecom & Government
This vertical provides geospatial technology solutions and data
management services. With wide-ranging customer engagements, this has
enabled the Company to emerge as one of the largest and most
accomplished firms in the industry today.
Focused on electric, gas and water utilities, telecom network
operators, transportation companies and government agencies, the
Company helps its customers leverage geospatial technology and data to
improve the way they do business.
Driven by strong traction from the existing customers, this vertical
generated revenues of Rs. 2,540.35 million as against previous years
Rs. 2,441.10 million, at a growth rate of 4.07%. As a percentage of
operating revenues, this vertical contributed 45.21%. Associates
strength of the vertical stood at 3,727 as at 31 March 2010.
Engineering
This vertical has developed a unique track record in supporting leading
Automotive, Aerospace, Energy, Marine, Plant Engineering, Rail and
other engineering industries in their product development support and
optimizing their development time & processes.
The Engineering vertical of your Company offers a unique combination of
engineering skills, domain experience, and application know-how. The
Companys expert teams in engineering span the complete product
development cycle, from concept development through after market
support in the areas of Mechanical Design, Electronics Design,
Technical publication and Engineering Software Development.
The vertical generated revenues of Rs. 3,077.65 million as against last
years revenues of Rs. 3,224.60 million, resulting in a decrease of
4.54%. This vertical contributed 54.79% of the total operating
revenues. Associates assigned to this vertical as on 31 March 2010 are
2,611.
SUBSIDIARIES
Infotech Enterprises Europe Limited, U.K. (IEEL)
IEEL reported revenues of GBP 16.46 million (Rs. 1,246.9 million) as
against previous yearÃs GBP 14.10 million (Rs. 1,091.90 million). The
net profit for the year was GBP 0.72 million (Rs. 54.60 million) as
against GBP 0.73 million (Rs. 57.18 million) in the previous year.
Infotech Enterprises America, Inc. (IEAI)
IEAI reported revenues of USD 72.86 million (Rs. 3,448.2 million) as
against previous years USD 73.85 million (Rs. 3,399.8 million). The
net profit for the year was USD 3.24 million
(Rs. 157.9 million) as against USD 3.66 million (Rs. 173.3 million) in
the previous year. During the year, IEAI acquired a wholly owned
subsidiary i.e., Daxcon Engineering Inc.
Infotech Enterprises GmbH (IEG)
IEG reported revenues of Euro 32.91 million (Rs. 2,208.13 million) as
against previous years Euro 29.07 million (Rs. 1,893.50 million),
representing a growth of 13.20%. The net profit for the year was Euro
2.24 million (Rs. 150.7 million) as against Euro 1.02 million (Rs. 67.0
million) in the previous year.
Infotech Enterprises Japan KK (IEJ)
IEJ reported revenues of Rs. 9.44 million and a net loss of Rs. 21.98
million during the financial year 2009-10; it is expected to improve
its business in the coming years.
Infotech Geospatial (India) Limited (IGIL)
IGIL reported revenues of Rs. 61.64 million as against Rs. 78.26
million last year. It reported a net loss of Rs. 18.38 million as
against a net loss of Rs. 0.79 million last year.
TTM Institute of Information Technology Private Limited (TIIT)
Total income from training was Rs. 1.7 million. TIIT reported a net
loss of Rs. 4.47 million.
Infotech Enterprises Information Technology Services Private Limited
(IEITSPL)
Formerly known as Infotech Enterprises Engineering Services Private
Limited, the name and objects of this company were changed during the
year to exclusively focus on information technology services. This
company will start its operations in the FY 2010-11.
TTM (India) Private Limited (TTM)
Pursuant to the scheme of amalgamation as approved by Honble High
Court of Judicature, Andhra Pradesh, the erstwhile TTM has been
amalgamated with the company effective April 1, 2009, under the
provisions of Sections 391 and 394 of the Companies Act, 1956 (the
Act).
PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
Pursuant to the provisions of Section 212 of the Act, documents in
respect of the various subsidiaries viz., Directors Report, Auditors
Report, Balance Sheet and Profit and Loss Account, are required to be
attached to the Balance sheet of the Holding Company. However, in terms
of the provisions of Section 212(8) of the Act, the Government of
India, Ministry of Corporate Affairs, has granted exemption from the
provisions of Section 212(1) of the Act. Accordingly, the annual report
does not containthe financial statements of the subsidiaries of the
Company. However, the Company will make available the audited annual
accounts and related detailed information of the subsidiaries to the
shareholders upon request in accordance with the applicable law. These
documents are also available for inspection at the Registered Office of
the Company during business hours. The details of accounts of
individual subsidiary companies will also be available on the website
of the Company.
FIXED DEPOSITS
Your Company has not accepted any deposits and as such, no amount of
principal or interest was outstanding as on 31 March 2010.
DIRECTORS
Appointments
During the FY 2009-10, Mr. K. Ramachandran and Mr. Jaithirth Rao were
appointed as Additional Directors by the Board on 20 July 2009.
Further, Mr. Alain De Taeye was also appointed as Additional Director
by the Board on 21 April 2010.
The offices of Mr. K. Ramachandran, Mr. Jaithirth Rao and Mr. Alain De
Taeye as Additional Directors of the Company will expire at the ensuing
Annual General Meeting (AGM). The Company has received notices from
three members in accordance with the provisions of Section 257 of the
Act, proposing their candidacy as Directors.
Pursuant to Article 56 of the Articles of Association of your Company
and the provisions of Section 256 of the Act, Mr. B.V.R. Mohan Reddy
and Mr. G.V. Prasad retire by rotation at the ensuing AGM and being
eligible, offer themselves for re- appointment.
None of the Directors of the Company is disqualified under the
provisions of the Companies Act, 1956 or under the Listing Agreement
with the Stock Exchanges.
Pursuant to the provisions of Clause 49 of the Listing Agreement, brief
particulars of the retiring directors who are proposed to be
re-appointed as well as directors being appointed under the provisions
of Section 257 of the Act are provided as an annexure to the Notice
convening the AGM.
Cessations
Mr. Ranjan Chak and Mr. William Patrick Henry ceased to be directors on
the Board effective 14 October 2009 and 21 April 2010 respectively.
The Board places on record its appreciation and gratitude to the said
directors for their valuable contributions.
AUDITORS
M/s Deloitte Haskins & Sells (DHS), Chartered Accountants (ICAI Reg.
No. 008072S) were appointed as statutory auditors of the Company at the
18th AGM of the Company. They are eligible for re-appointment for the
FY 2010-11. The Company has received the consent/confirmation of DHS
for their re-appointment as statutory auditors and that the same, when
made by the members of the Company in the 19th AGM will be within the
permitted limits under the provisions of Section 224(1B) of the Act.
SECRETARIAL AUDIT
As a measure of good corporate governance and as recommended by the
Ministry of Corporate Affairs (MCA) Corporate Governance Voluntary
Guidelines, 2009, the Company has voluntarily got a secretarial audit
done for the FY 2009-10. The secretarial audit covered the provisions
of the Act, the Depositories Act, 1996 the Listing Agreement with the
Stock Exchanges and the SEBI guidelines/regulations on Employee Stock
Options, Insider Trading and Takeover Code.
Mr. S. Chidambaram, Company Secretary in Practice, performed the
secretarial audit and the report thereon is enclosed as Annexure - A to
this report.
EMPLOYEE STOCK OPTION PLANS
During the year under report, the Company had the following Schemes in
operation for granting stock options to the Associates of the Company
and its Wholly Owned Subsidiaries, in accordance with the Securities
Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999.
Infotech Associate Stock Option Plan - 2002
Infotech Associate Stock Option Plan - 2004
Infotech Associate Stock Option Plan - 2008
Disclosures pursuant to Para 12 of the Securities Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are enclosed as Annexure - B to this report.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed pursuant to provisions of Section
217(1)(e) of the Act read with Companies (Disclosure of particulars in
the report of Board of Directors) Rules, 1988, is enclosed as Annexure
- C to this Report.
PARTICULARS OF EMPLOYEES
The particulars of employees as required under the provisions of
Section 217(2A) of the Act read with the Companies (Particulars of
Employees) Rules, 1975, is enclosed as Annexure - D to this Report.
Pursuant to the provisions of Clause 49 of the Listing Agreement, a
report on Management Discussion & Analysis is enclosed as Annexure - E
to this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 217(2AA) of the Act, the
Directors confirm that:
i) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii) they 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 of the
Company for that period;
iii) they have 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;
iv) they have prepared the Annual Accounts on a going concern basis.
CORPORATE GOVERNANCE
Pursuant to the provisions of Clause 49 of the Listing Agreement with
the Stock Exchanges, a report on Corporate Governance features as a
part of Annual Report. Further, the Company has substantially complied
with the MCAÃs Corporate Governance
Voluntary Guidelines, 2009. As required under Clause 49 of the Listing
Agrement, the Auditorsà Certificate regarding compliance of conditions
of corporate governance is enclosed as Annexure-F.
Your company will continue to implement and adhere in letter and spirit
to the policies of good corporate governance.
CEOs DECLARATION
Pursuant to the provisions of Clause 49(I)(D)(ii) of the Listing
Agreement, a declaration by the Chairman and Managing Director of the
Company declaring that all the members of the Board and the Senior
Management Personnel of the Company have affirmed compliance with the
Code of Conduct of the Company, is enclosed as Annexure - G to this
Report.
ACKNOWLEDGMENTS
Your Directors wish to place on record their gratitude to the Companys
shareholders, customers, vendors, bankers and all other stakeholders
for their continued support to its growth initiatives. Your Directors
also wish to place on record, their appreciation of the contribution
made by associates at all levels, who, through their competence,
sincerity, hard work, solidarity and dedicated support, have enabled
your Company to make rapid strides in its business initiatives. Your
Directors also thank the Central and State Governments and their
various agencies, particularly, the Ministry of Communication &
Information Technology, Software Technology Parks of India, Departments
of Customs and Central Excise, MCA, SEBI, Stock Exchanges, Reserve Bank
of India, APIIC, and other governmental agencies for extending their
support during the year and look forward to their continued support.
For and on behalf of the Board
Place:Hyderabad B.V.R. Mohan Reddy
Date : April 21, 2010 Chairman and Managing Director