Mar 31, 2016
Dear Shareholders,
The Directors of your Company ( i.e. Educomp Solutions Limited) have pleasure in presenting herewith the 22nd Annual Report of your Company together with the audited accounts for the Financial Year ended 31st March 2016.
1. FINANCIAL PERFORMANCE :
The highlights of the consolidated and standalone audited financial results for the year ended 31st March 2016 are as follows
(Rs. in millions)
Particulars |
Consolidated |
Standalone |
||
Year Ended |
Year Ended |
|||
Audited |
Audited |
|||
31.03.2016 |
31.03.2015 |
31.03.2016 |
31.03.2015 |
|
Sales and other Income |
5,873.51 |
5,941.97 |
2,230.88 |
2,322.01 |
Net profit/ (Loss) before tax |
(4,823.97) |
(16,998.05) |
(3,624.29) |
(11,654.39) |
Tax Expenses |
(139.54) |
(11.19) |
(190.91) |
- |
Net profit/(Loss) after tax |
(4,684.43) |
(16,986.86) |
(3,433.38) |
(11,654.39) |
Minority interest and equity in earnings/ (losses) in affiliates/ Pre acquisition Loss/ (profit) |
(211.73) |
(565.31) |
||
Net profit/ (Loss) after tax for the year |
(4,472.70) |
(16,421.55) |
(3,433.38) |
(11,654.39) |
Appropriations |
- |
- |
- |
- |
Interim Dividend |
- |
- |
- |
- |
Proposed Dividend on equity shares |
||||
Corporate Ta-on distributed dividend |
||||
Transfer to Debenture Redemption Reserve |
||||
Transfer to General Reserve |
- |
- |
- |
- |
2. DIVIDEND AND TRANSFER TO RESERVE:
In view of the losses incurred by the Company, your Directors have not recommended any dividend for the financial year ended March 31, 2016.
In view of the losses incurred by the Company, no amount has been transferred to reserve for the financial year ended March 31, 2016.
3. OPERATING RESULTS AND BUSINESS:
We enjoy long-term annuity relationships with both private schools as well as government customers, ranging from three to five years. Our revenues are predictable & locked in for three to five years on account of the contractual nature of our business.
In the Smart Class ⢠segment, we have the total number of schools to 17,289 as on March 31, 2016.
In Edureach (formerly ICT) business segment, we have an ongoing partnership with 3 State Governments and reaches to 1,779 Government schools in various states as on March 31, 2016.
On Standalone basis Company''s total revenue stands at Rs.2,230.88 million as on March 31, 2016 as compared to Rs.2,322.01 million as on March 31, 2015, a decline of 3.92%. The loss before taxes is Rs.3,624.29 million as on March 31, 2016 as against loss before taxes of Rs.11,654.39 million as on March 31, 2015.
On Consolidated basis Company''s total revenue stands at Rs.5,873.51 million as on March 31, 2016 as compared to Rs.5,941.97 million as on March 31, 2015, registering a decline of 1.15%. The loss before tax and after prior period items/ exceptional items stands at Rs.4,823.97 million as on March 31, 2016 as against loss of Rs.16,998.05 million as on March 31, 2015.
There have been no material changes and commitments between the end of the financial year 2015-16 & the date of the report.
SEGMENTAL PERFORMANCE (STANDALONE):
The EBIT margins in the School learning solutions (SLS) Segment of the Company for the year amounted to Rs.(497.65) million or (25.32%) of SLS revenues as on March 31, 2016 as compared to Rs.(9,007.37) million or (472.59%) of SLS revenues as on March 31, 2015.
The EBIT margins in the Higher learning solutions (HLS) segment of the Company for the year amounted to Rs.10.81 million or 54.82% of HLS revenues as on March 31, 2016 as compared to Rs.47.99 million or 83.39% of HLS revenues as on March 31, 2015.
The EBIT margins in Online Supplemental and Global (OSG) segment of the Company for the year amounted to Rs.(16.79) million or (68.56%) of OSG segment revenues as on March 31, 2016 as compared to Rs.(1.27) million or (6.96%) of OSG revenues as on March 31, 2015.
EXPENDITURE (STANDALONE):
Cost of Goods Sold (COGS) has increased to 17.38% of our total revenue as on March 31, 2016 from 10.06% as on March 31, 2015. This increase is on account of change in revenue.
Personnel expenses have decreased to 51.55% of total revenue as on March 31, 2016 from 55.49% as on March 31, 2015. Other expenses have increased to 52.97% as on March 31, 2016 from 43.37% of total revenue as on March 31, 2015. This increase is essentially because of the fall in revenues and the absolute expenses have infect reduced.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management''s Discussion and Analysis Report for the year under review detailing economic scenario and outlook, as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 ("SEBI LODR Regulations") is presented in a separate section and forms integral part of this Report.
4. CHANGES IN CAPITAL STRUCTURE: AUTHORIZED SHARE CAPITAL
Authorized Share Capital of the Company is Rs.40,00,00,000/-(Rupees Forty Crores Only) divided into 20,00,00,000 (Twenty Crores) equity shares of Rs.2/- (Rupees Two Only) each.
ISSUED AND PAID-UP SHARE CAPITAL
During the year under review, the Company has not issued and allotted any equity shares and the paid up share capital stood at Rs.24,49,34,336/- consisting of 12,24,67,168 Equity Shares of the face value of Rs.2/- each as on 31st March, 2016 and as on the date of report.
5. FOREIGN CURRENCY CONVERTIBLE BONDS
In Year 2012-13, the Company had raised US$ 10 million, Zero Coupon Foreign Currency Convertible Bonds (FCCB) for redemption of outstanding Zero Coupon Foreign Currency Convertible Bonds. The Bond holders, as per the agreement, have the option to convert these bonds into Equity Shares, at a price of Rs.188.62 per share within 5 years and 1 day from the date of disbursement. The FCCB are redeemable at a premium of 33.15 % on principal after 5 years and 1 day. The FCCB were raised for the purposes of redemption of earlier FCCB of the Company. As on March, 31, 2016 US$ 10 million (previous year US$ 10 million) FCCB were outstanding for conversion into equity shares of Rs.2 each.
6. SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES & EXTERNAL COMMERCIAL BORROWINGS Non-Convertible Debenture
As on 31st March 2016, the Company has outstanding Secured Non-Convertible Debentures for an aggregate value of Rs.45 Crores comprising 350, 13.5% Secured Non-Convertible Debentures (Listed on Bombay Stock exchange) of the face value of Rs.10,00,000/- each aggregating to Rs.35 Crores and 100, 13.25% Secured Non-Convertible Debentures of the face value of Rs.10,00,000/- each aggregating to Rs.10 Crores.
The aforesaid debentures are secured with the debenture trustee i.e. Axis Trustee Services Limited having its registered office at Axis House, 2nd Floor, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai, Maharashtra-400025. Ph:-022-24255215/5216; email:[email protected];debenturetrustee@ axistrustee.com
External Commercial Borrowings
In Year 2012-13, the Company has raised US$ 70 million through External Commercial Borrowing (ECB) comprising US$ 30 million from International Financial Corporation (IFC) a member of the World Bank Group and US$ 40 million from Societe De Promotion Et De Participation Pour La Cooperation Economique (PROPARCO), a French development financial institution. The ECB has a term of 8.5 years with a 3 years moratorium and the coupon rate is LIBOR 4.5%. The ECB has been raised for purposes of redemption of existing FCCB. The said ECB is outstanding at the Financial Year ending on March 31, 2016.
7. MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments between the end of the financial year 2015-16 & the date of the report.
8. EXTRACT OF ANNUAL RETURN
Pursuant to the provision of Section 92 (3) of the Companies Act, 2013, the extract of the Annual Return in Form No. MGT-9 is presented in a separate section and is annexed herewith as "Annexure - I" to this report.
9. PUBLIC DEPOSITS:
During the year, the Company has not accepted any deposits under the provisions of the Companies Act, 2013.
10. SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATES
As on March 31, 2016, the Company had 42 Subsidiaries, 1 Joint ventures having 1 subsidiary and 1 Associates. During the year, M/s. Educomp Intelliprop Ventures Pte. Ltd., Subsidiary of the Company was sold its entire stake in Wiz Learn Technology Pte. Ltd., Singapore to V-cuble Global Services Pte. Ltd., thus, in accordance of such sale, the investment of Wiz Learn Technology Pte. Ltd. in three Subsidiaries naming Singapore Learning.com Pte. Ltd.; Pave Education Pte. Ltd.;Wiz Learn Pte. Ltd. was also stand ceased. During the year, the Board of Directors (the Board) reviewed the affairs of material subsidiaries. We have, in accordance with Section 129(3) of the Companies Act, 2013 prepared consolidated financial statements of the Company and all its subsidiaries except M/s Edu Smart Services Private Limited, which form part of the Annual Report. Further, the consolidated financial results of JV of the Company i.e. Educomp Raffles Higher Education Limited as at March 31, 2016 are not available with the Company. The consolidated financial results of the Company reflects total revenue of Rs.176.46 lacs and total loss after taxes of Rs.143.01 lacs for the year ended March 31, 2016 which are based on unrelieved consolidated financial results of the JV for the quarter ended June 30, 2015.
Further, the report on the performance and financial position of each of the subsidiary, associate and joint venture and salient features of the financial statements in the prescribed Form AOC-1, duly approved along with the financial statements, is annexed to this report [Annexure - II].
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements of each of the subsidiary will be available on our website http://www. educomp.com/content/investors-home. These documents will also be available for inspection during business hours at the registered office of the Company.
11. CHANGE IN SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES
During the Financial year 2015-16, M/s. Educomp Intelliprop Ventures Pte. Ltd., Subsidiary of the Company sold its entire stake in Wiz Learn Technology Pte. Ltd., Singapore and its subsidiaries namely Singapore Learning.com Pte. Ltd.; Pave Education Pte. Ltd and Wiz Learn Pte. Ltd. to V-cuble Global Services Pte. Ltd.Singapore, thus, Hence, indirect subsidiary of the company namely M/s Wiz Learn Technology Pte. Ltd., Singapore; M/s Singapore Learning.com Pte. Ltd.; M/s Pave Education Pte. Ltd and M/s Wiz Learn Pte. Ltd ceased to be the subsidiary Companies of the Company during the year under review.
Further, pursuant to a negotiated settlement entered into with ICICI Bank, after 31st March 2016, board of the company accorded its approval to divest its entire shareholding in Vidya Mandir Classes Limited (being 67% shareholding of VMCL), a subsidiary of the Company and Educomp Learning Hour Private Limited, a step down subsidiary of the Company by executing the share purchase agreement dated July 25, 2016 with the buyer. The transaction is consummated as on the date of this report. However, part of the consideration shall be received on or before March 31, 2019.
In addition to above, after 31st March 2016, M/s Little Millennium Education Private Limited( Formerly known as Educomp Child Care Private Limited), ceased to be the subsidiary of the company from April 22, 2016 due to dilution of the share of the Company, below 50%, in the paid share capital of Little Millennium Education Private Limited. The said dilution is due to additional subscription of shares, in the paid up share capital, by the other minority shareholder.
12. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL: - Composition of Board of Directors
As on 31st March 2016, Board of Directors of Educomp Solutions Limited comprises of two Executive Directors namely Mr. Shantanu Prakash, Chairman & Managing Director and Mr. Vinod Kumar Dandona, Whole Time Director and Five Independent Non-Executive Directors, namely Ms. Azra Shauqia Hasan, Mr. Rajat Khare, Mr. Vijay Kumar Choudhary, Dr. Venkata Subbarao Valluri and Ms. Swati Sinha.
- Appointment and Resignation of Director and Key Managerial Personnel
During the year, the Company, pursuant to the applicable provisions of the Companies Act, 2013 and Listing Agreement and on the recommendations of the Nomination and Remuneration Committee, made appointment of Ms. Azra Shauqia Hasan as the Additional Director (Independent) w.e.f. 28th May, 2015 to hold the office till the conclusion of the Last Annual General Meeting of the Company. The Company has received declarations from the said Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under the Clause 49 of Listing Agreement. Further, Mr. Shonu Chandra, Independent Director of the Company resigned, due to preoccupation, from the office w.e.f. 29th May, 2015.
Further, during the year, on the recommendations of the Nomination and Remuneration Committee and board, the shareholders of the company in their previous Annual general Meeting held in the year 2015 appointed Ms. Azra Shauqia Hasan as an Independent Director of the Company w.e.f. 28th May, 2015. In accordance with the provisions of Section 149 and proviso to Section 152(5) of the Companies Act, 2013, Ms. Azra Shauqia Hasan is being appointed as Independent Directors to hold office for the term of five years w.e.f 28th May 2015.
After 31st March, 2016, Mr. Rajat Khare & Mr. Venkata Subbarao Valluri, Independent Directors of the Company has resigned, due to their preoccupation, from the office w.e.f. 27th May, 2016 and the Board of Directors of the Company, vide resolution by circulation on 16th July 2016, has appointed Mr. Sanjay Kumar Bhattacharyya as Additional Director (Category -Independent/Non-Executive) of the Company to hold the office till the conclusion of the ensuing Annual General Meeting of the Company. He is also appointed as the Chairman of the Board in place of Mr. Shantanu Prakash, Managing Director of the company.
- Re-appointment
In terms of the Companies Act, 2013, the directors other than independent directors shall only be considered for ascertaining the directors liable to retire by rotation. Further as per section 152 of the Companies Act, 2013 Mr. Shantanu Prakash is the Director liable to retire by rotation and further being eligible, offers themselves for re-appointment at the ensuing Annual General Meeting. The Board recommends their re-appointment and requisite resolution forms part of the notice convening the AGM.
Further, the existing tenure of Mr. Vinod Kumar Dandona, Whole Time Director of the company will be expired on November 12, 2016. The Nomination and Remuneration Committee and Board of Directors of the Company felt that, considering the rich experience and contribution of Mr. Vinod Kumar Dandona, Whole Time Director, the reappointment of Mr. Vinod Kumar Dandona as Whole Time Director of the company for further period of three (3) years is in the interest of the company and accordingly proposes his re-appointment as Whole Time Director of the company for further period of three (3) ( years and at such remuneration mentioned in the Notice of the forthcoming AGM of the Company.
The brief resume and other details relating to the directors, who are to be appointed/ re-appointed as stipulated under Listing Regulations, 2015, are furnished in the Notice of AGM forming part of the Annual Report.
- Board Evaluation
Pursuant to applicable provisions of the Companies Act, 2013 and the Listing Regulations, 2015 the Board has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual Directors, including Independent Directors.
Schedule IV to the Companies Act, 2013 also provides for the performance evaluation of Independent Directors by the entire Board of Directors, excluding the Directors being evaluated.
After performance evaluation of the Independent Directors, the performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.
Details regarding the process of formal evaluation of the performance of the Board, its Committees and individual Directors including the manner in which the evaluation board, its committees and individual directors has been carried out for the financial year ended March 31, 2016 are provided in the Corporate I Governance Report.
13. BOARD MEETINGS
A calendar of Meetings is prepared and circulated in advance to the Directors. The Board met 4 (Four) times during the year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations, 2015.
14. INDEPENDENT DIRECTORS DECLARATION
The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Companies Act, 2013, that he/she meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 read with Clause 16(1)(b) and 25 of the Listing Regulations, 2015.
15. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Your Company has put in place a structured induction and familiarization programme for Independent Directors. The Company through such programme familiarizes Independent Directors with a brief background of the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model, operations of the Company, etc. Details on familiarization programme for Independent Directors is posted on the Company''s website and can be accessed at http://www.educomp.com/content/familiarisation-programme.
16. COMMITTEES TO THE BOARD OF DIRECTORS
- Audit Committee
The Company also has Audit Committee which is constituted as per requirement of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations, 2015. Audit Committee has 4 members out of which 3 are Non-Executive Independent Directors and one is Executive Director. The Chairman of Audit Committee is an Independent Non-Executive Director.
The Committee met 4 (Four) times during the year.
- Nomination and Remuneration Committee
The Company also has Nomination and Remuneration Committee which is duly constituted as per Section P:? of the Companies Act, 201? and Regulation 19 of the Listing Regulations, 2015. Nomination and Remuneration Committee has 3 members which are Independent Non-Executive Directors. The Chairman of Nomination and Remuneration Committee is an Independent Non-Executive Director.
The Committee met 4 (Four) times during the year.
- Stakeholders Relationship Committee
The Company also has Stakeholders Relationship Committee which is duly constituted as per Section 178 of the Companies Act, 2013 and Regulation 20 of the Listing Regulations, 2015. Stakeholders Relationship Committee has 3 members out of which 2 are Nonexecutive Independent Directors and one is Executive Director. The Chairman of Stakeholders Relationship Committee is an Independent Non-Executive Director.
The Committee met 5 (Five) times during the year.
- Corporate Social Responsibility Committee
The Company also has Corporate Social Responsibility Committee which is duly constituted as per Section 135 of the Companies Act, 2013. Corporate Social Responsibility Committee has 3 members out of which one is Non-Executive Independent Directors and two are Executive Director. The Chairman of Corporate Social Responsibility Committee is an Executive Director.
The Committee met 1 (One) time only during the year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The Policy on Corporate Social Responsibility is available on Company''s website and may be access on http://www.educomp.com/content/policies. .
Note:
1) The details of the above committees along with their composition, number of meetings and attendance of members at the meetings are provided in the corporate governance report which forms part of this annual report.
2) The details of the other committees to the board are provided in the corporate governance report that forms part of this Annual Report.
17. NOMINATION AND REMUNERATION POLICY
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed nomination and remuneration Policy for selection and appointment of Directors, Key Managerial Personnel and their remuneration as well as policy on the appointment and remuneration of other employees. The Remuneration Policy is stated in the Corporate Governance Report that forms part of this Annual Report.
18. DIRECTORS RESPONSIBILITY STATEMENT:
In pursuance of provisions of Section 134(3) and 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability confirm:
a. That in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
b. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the period ended on March 31, 2016;
c. That Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. That the annual accounts have been prepared on a going concern basis; and
e. that proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively.
f. That the directors have devised the proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
19. STATUTORY DISCLOSURES:
The Company has received Form DIR-8 from all Directors as required under the provisions of Section 164(2) of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014.
None of the Directors of your Company is disqualified as per provision of Section 164(2) of the Companies Act, 2013 read with Regulation 16(1)(b) and 25 of Listing Regulations, 2015. The Directors of the Company have made necessary disclosures, as required under various provisions of the Companies Act, 2013 and Listing Regulations, 2015.
20. HUMAN RESOURCE MANAGEMENT:
Educomp is an equal opportunity employer with total employee strength of 5065 (Five Thousand Sixty Five) as on 31st March, 2016 as compared to 6879 (Six Thousand Eight Hundred Seventy Nine) as on 31st March, 2015.
The Company has a suitable recruitment and human resource management process, which enables us to attract and retain high caliber employees. Company has created incentive driven remuneration policies which act as an effective retention tool.
21. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Company has the Corporate Social Responsibility (CSR) Committee, as per the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014. Further, the Annual Report on CSR Activities in format prescribed in Companies (Corporate Social responsibility) Rules, 2014 including the brief outline of the corporate social responsibility (CSR) policy of the Company annexed to this report Annexure III. For other details regarding the CSR Committee, please refer to the corporate governance report, which forms part of this report.
22. REVISION OF FINANCIAL STATEMENTS
No revision is made in the financial statements or Board''s report for the year under review.
23. AUDITORS & AUDITORS'' REPORT:
-Statutory Auditors and Statutory Auditors Report
Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 103523W), who are the Statutory Auditors of the Company, hold office until the conclusion of the 25th (Twenty Fifth) Annual General Meeting (AGM). The Members of the Company at the 20th (Twentieth) AGM held on 29th September, 2014 was approved the appointment of M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 103523W) to examine and audit the accounts of the Company for Five years to hold office till the conclusion of the Twenty Fifth AGM of the Company to be held in the year 2019 subject to ratification at every AGM held thereafter. The Company has received letter from them to the effect that their ratification, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from being auditors of the Company. Accordingly, pursuant to the provisions of Section 139 of the Companies Act, 2013, it is proposed to ratify the appointment of M/s Haribhakti & Co. LLP, Chartered Accountants as statutory auditors of the Company from the conclusion of the forthcoming AGM till the conclusion of the next AGM.
The Directors refer to the auditors'' qualification, matter of emphasis, observation in the Annexure to Independent Auditors'' Report and as required under Section 134(3) of the Companies Act, 2013, provide their explanation as under:
MANAGEMENT''S RESPONSETO AUDITORS''QUALIFICATION, MATTER OF EMPHASIS AND AUDITORS'' OBSERVATIONS -MANAGEMENT RESPONSE TO THE MATTER OF EMPHASIS IN THE STANDALONE AUDIT REPORT FOR THE FINANCIAL YEAR ENDING 31ST MARCH 2016:-
Response to Point (a)
In this regard the management of the Company is in the process of making necessary application to the Central Government to obtain its approval for the waiver/approval of the remuneration so paid in years ended March 31, 2014, March 31, 2015 and quarter ended June 30, 2015, in due course.
Response to Point (b)
The Company has assessed the business projections of six of its subsidiary companies, namely Educomp Infrastructure and School Management Limited, Educomp Online Supplemental Service Limited, Educomp Child Care Private Limited, Educomp Professional Education Limited, Vidya Mandir Classes Limited, Educomp Intelliprop Ventures Pte Ltd. (Formerly known as Educomp Intelprop Ventures Pte Ltd.) and its associate Greycells18 Media Limited, having a total investment of Rs.153,090.73 lacs and has concluded that their businesses are sustainable on a going concern basis. The Company evaluated the recoverability of its investments, using business valuations performed by independent experts, according to which the decline in the carrying value of these long term investments has been considered to be temporary. The said evaluation is based on the long term business plans of its subsidiaries and associate as on March 31, 2016 and concluded that no adjustments to the carrying value of its long term investments is required to be recorded in these audited standalone financial results of the Company for the year ended March 31, 2016.
Response to Point (c)
Pursuant to implementation of approved Corporate Debt Restructuring Scheme (CDR scheme), certain lenders have disbursed fresh corporate loans to the Company and corresponding trade receivables were bought from Edu Smart Services Private Limited (ESSPL) together with future business relating to these customers. Due to this restructuring, the remaining receivables in ESSPL may not yield adequate surplus to discharge its liability towards the Company for trade receivables and redemption of redeemable non convertible preference shares. However, the approved CDR scheme has mandated merger of ESSPL with the Company and accordingly, the Company has initiated the process and has taken the approval of Board of Directors in the board meeting held on 13th January 2015. The Board of Directors in their meeting held on 26th May 2016 has suggested certain changes in the scheme with respect to above said merger and revised scheme shall be placed in next board meeting. The impact for the amalgamation shall be given/ recorded in the books of accounts upon obtaining approvals and implementation of the Scheme.
Response to Point (d)
The Company has incurred substantial losses and its net worth has significantly eroded. Based on Company''s projected cash flows, it shall have sufficient funds to run its operations in foreseeable future. As regards availability of requisite funds to meet its debt related obligations including those overdue and falling due in financial year 2016-17 as per its CDR package executed with Company''s lenders, the Company intends to monetize its identified investments, receivables and assets to meet the necessary obligations. The Company is also taking several measures to improve operational efficiencies and other avenues of raising funds.
The management is confident that with the above measures and continuous efforts to improve the business, it would be able to generate sustainable cash flow, discharge its short-term and long term liabilities and recover and recoup the erosion in its net worth through profitable operations and continue as a going concern. Accordingly, these standalone financial results have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary, if the entity is unable to continue as a going concern.
MANAGEMENT RESPONSE TO THE MATTER OF EMPHASIS IN THE CONSOLIDATED AUDIT REPORT FOR THE FINANCIAL YEAR ENDING 31ST MARCH 2016:-
Response to point (a)
In this regard The management of the Company is in the process of making necessary applications to the Central Government to obtain its approval for the waiver/approval of the remuneration so paid/recorded in year ended March 31, 2014, March 31, 2015 and quarter ended June 30, 2015 in due course.
EISML has submitted an application to the Central Government for waiver/approval of managerial remuneration pertaining to year ended March 31, 2014.
Response to point (b)
Due to longer than expected gestation period of schools, recovery of trade receivables amounting Rs.19,363 lacs from various Trusts engaged in running the schools, to the subsidiary Company EISML has been slow. The Management of EISML, is regularly monitoring the growth in schools and their future projections, based on which, the Management believes that the trade receivables from the Trusts are fully recoverable.
Response to point (c)
The Group has assessed the business projections of six companies in the Group, namely, Educomp Infrastructure and School Management Limited, Educomp Online Supplemental Service Limited, Educomp Child Care Private Limited, Educomp Professional Education Limited, Vidya Mandir Classes Limited, Educomp Intelliprop Ventures Pte Ltd. (Formerly known as Educomp IntelpropVentures Pte Ltd.) and its associate Greycells18 Media Limited., for evaluating the recoverability of Group''s share of net assets and has concluded that their businesses are sustainable on a going concern basis. The Company has evaluated the recoverability of its share of net assets held through these Companies, using business valuations performed by independent experts, according to which the decline in the carrying value of net assets is considered to be temporary. The said evaluation is based on the long term business plans of its subsidiaries/associate as on March 31, 2016 and concluded that no adjustments to the carrying value of its share in net assets is required to be recorded in the consolidated financial results of the Company for the year ended March 31, 2016.
Response to point (d)
The Management is continuously monitoring the settlement of these balances and is regularly following up with respective parties for recovery of the said capital advances. The
Management believes that other capital advances, which have not been provided for, although have been long outstanding are fully recoverable and hence, existing provision recorded in books is sufficient to cover any possible future losses on account of non recovery of such capital advances.
Response to point ''e''
The Group''s management has reviewed business plan of its joint venture, Educomp Raffles Higher Education Limited which had advanced loans amounting Rs.5,147 lacs to Jai Radha Raman Education Society (Society) and its subsidiary Millennium Infra Developers Limited which had trade receivables of Rs.6,021 lacs from the same Society under contractual obligations. The Group''s management had also considered the business plan of the Society and estimated market value of its net assets, based on which no adjustment is required in carrying value of its share of net assets in such joint venture. The Group''s holding in the joint venture is 41.82%.
The consolidated financial results of Educomp Raffles Higher Education Limited subsequent to June 30, 2015 are not available with the Company, hence there is no update available on above status.
Response to point (f)
The Group had evaluated the recoverability of intangible assets in form of Brand ''Universal'' in one of its step down subsidiary, by using valuations performed by an independent valuation expert.
The said evaluation was based on long term business plans and underlying assumptions used for the purpose of valuation, which in view of the Management were realistic and achievable by the subsidiary. Based on revised business plans which entailed scaling down the operation of ''Universal'' brand of schools, the management had recorded an impairment of Rs.4,527 lacs to this asset till March 31, 2016.
Response to point (g)
Pursuant to implementation of approved CDR scheme, certain lenders have disbursed fresh corporate loans to the Company and corresponding trade receivables were bought from Edu Smart Services Private Limited (ESSPL) together with future business relating to these customers. Due to this restructuring, the remaining receivables in ESSPL may not yield adequate surplus to discharge its liability towards the Company for trade receivables and redemption of Redeemable non convertible preference shares. However, the approved CDR scheme has mandated merger of ESSPL with the Company and accordingly, the Company has initiated the process and has taken the approval of Board of Directors in the board meeting held on 13th January 2015. The Board of Directors in their meeting held on 26th May 2016 has suggested certain changes in the scheme with respect to above said merger and revised scheme shall be placed in next board meeting. The impact for the amalgamation shall be given/ recorded in the books of accounts upon obtaining approvals and implementation of the Scheme.
Response to point ( hr)
The Company has incurred substantial losses and its net worth has been significantly eroded. Based on Company''s projected cash flows, it shall have sufficient funds to run its operations in foreseeable future. As regards availability of requisite funds to meet its debt related obligations including those overdue and falling due in year 2016-17 as per its CDR package executed with Company''s lenders, the Company intends to monetize its identified investments, receivables and assets to meet the necessary obligations. The Company is also taking several measures to improve operational efficiencies and other avenues of raising funds.
The management is confident that with the above measures and continuous efforts to improve the business, it would be able to generate sustainable cash flow, discharge its short-term and long term liabilities and recover & recoup the erosion in its net worth through profitable operations and continue as a going concern. Accordingly, these consolidated financial results have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary if the entity is unable to continue as a going concern.
Response to point (i)
The Company''s subsidiary, Educomp Infrastructure & School Management Limited has incurred losses and the subsidiary''s debt related obligation in form of Funded Interest Term Loan has been converted into 0.1% Cumulative Compulsory Convertible Preference Shares during the earlier quarters. Based on subsidiary company''s projected cash flows, it shall have sufficient funds to run its operations in foreseeable future. As regards availability of requisite funds to meet its debt related obligations overdue and including those falling due in year 2016-17 as per the CDR package executed with subsidiary''s lenders, the subsidiary intends to monetize its assets identified for sale to meet the necessary obligations. The subsidiary is also taking several measures to improve operational efficiencies and other avenues of raising funds.
The management of the subsidiary is confident that with the above measures and continuous efforts to improve the business, it would be able to generate sustainable cash flow to discharge its short-term and long term liabilities and recover & recoup the erosion in its net worth through profitable operations and continue as a going concern. Accordingly, these consolidated financial results have been prepared considering EISML''s financial results on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary if the subsidiary is unable to continue as a going concern.
Response to point (j)
The Company''s step down subsidiary, Knowledge Vistas Limited
- has taken land from Lavasa Corporation Limited on lease vide lease agreement dated June 30, 2009 for a period of 999 years to construct an international residential school. Further, this subsidiary has entered into a sub-lease agreement with Gyan Kunj Educational Trust (GKET) to sub lease the school building.
As per the sub lease agreement, GKET shall be liable to pay lease rental to the subsidiary from the year in which it has cash surplus.
GKET has started its operations in Academic Session 2011-12 but due to certain environmental matters, GKET decided to suspend its operations and is waiting for favourable business opportunities.
On the basis of the valuation reports from an independent valuer, the carrying cost of the said subsidiary''s assets is not less that its net realizable value. Hence, the management doesn''t anticipate any asset impairment. These consolidated financial results have been prepared considering the subsidiary''s financials results on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets, or to amounts and classification of liabilities that may be necessary if the subsidiary''s is unable to continue as a going concern.
MANAGEMENT RESPONSE TO THE QUALIFICATION IN THE CONSOLIDATED AUDIT REPORT FOR THE FINANCIAL YEAR ENDING 31ST MARCH 2016:-
As per the terms of Master Restructuring Agreement and approved Corporate Debt Restructuring Scheme (CDR) of Educomp Infrastructure & School Management Limited (EISML), a subsidiary Company, there are certain assets amounting Rs.32,075.33 Lacs ( at cost) which have been identified for sale in a time bound manner. The lead bank carried out a valuation of these assets which are indicative in nature. Market valuations have not been carried out by EISML and its step down subsidiaries, as some of these assets are not ready for sale due to pending regulatory approvals/permissions.
Based on recent firm offers and valuation reports, the Management believes that the market value of these assets is higher than as considered under the indicative valuation reports and differences, if any, are temporary only. Therefore, no adjustment is required to the carrying value of these assets.
EXPLANATION TO THE OBSERVATIONS IN THE ANNEXURE
TO STANDALONE INDEPENDENT AUDITORS'' REPORT, AS REQUIRED UNDER THE COMPANIES ACT, 2013 EXPLANATION ON THE SAME AS UNDER:-
(vii) In respect of auditors'' observation in standalone financial statements regarding delay in the depositing statutory dues.
In this regard, it has been clarified that the delays were not material and the same has been subsequently rectified.
(viii) In respect of auditors'' observation in standalone financial statements regarding certain default in repayment of dues to financial institutions, banks and debenture holders.
It was clarified that the delay in payment of dues was from mismatches of cash inflows and outflows. Further, management believes that with improved business scenario, the company will be able to meet its obligation in time.
(xi) In respect of auditors'' observation in standalone financial statements regarding the payment of managerial remuneration in excess of the limits prescribed in the Companies Act, 2013
In this regard the management of the Company is in the process of making necessary application to the Central Government to obtain its approval for the waiver/approval of the remuneration so paid in years ended March 31, 2014, March 31, 2015 and quarter ended June 30, 2015, in due course.
- Secretarial Auditor & Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company was appointed M/s. Sanjay Grover & Associates, Company Secretaries, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2015-16. The Report of the Secretarial Auditor is annexed herewith as (Annexure - IV).
MANAGEMENT RESPONSE TO THE OBSERVATIONS IN THE SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDING 31ST MARCH 2016:-
Response to point No. (i)
In this regard the management of the company is in the process of making necessary application to the Central Government to obtain its approval for the waiver/approval of the remuneration so paid, in due course.
Response to point No. (ii)
The Company was prohibited to file the Charge with the Registrar of Companies, NCT of Delhi & Haryana due to the order of Debt Recovery Tribunal-II, Delhi, by their order no. 393/14 dated 24.09.2014. In terms of the said Order, the Company unable to secure and create charge for making the 100% asset cover for the Debt Securities. However, the company has specifically mentioned in the Master Restructuring Agreement, as executed by the Company with the CDR lender, for the perfection / creation of the security for its Debt Securities. Moreover, the Company will file and provide 100% asset cover for the Debt Securities after the reversal of the said order of the tribunal.
Response to point No. (iii)
The delay in payment of installment(s) of External Commercial Borrowings was from mismatches of cash inflows and outflows. Further, the management believes that with improved business scenario, the company will be able to meet its obligation in time.
- Cost Auditor and Cost Audit Report
As per Section 148 of the Companies Act, 2013, the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice. In this connection, the Board of Directors of the Company was appointed M/s Ahuja Sunny & Co., Cost Accountant, as the Auditor of the Cost records of the Company for the year ending 31st March, 2016 and on the recommendation of the Audit Committee, the Board further approved the appointment of M/s Ahuja Sunny & Co., Cost Accountant, as the cost auditors of the Company for the year ending 31st March, 2017, at a remuneration, t*" subject to approval and ratification by the shareholders, of JU$j Rs.1,40,000/- (Rupees One Lacs Forty Thousand Only) plus out of pocket expenses.
The cost audit report of M/s Ahuja Sunny & Co., Cost Accountant, for the financial year 2015-16 does not contains any adverse qualification or remarks.
24. SHARE REGISTRATION ACTIVITY:
The Company has appointed "LINK INTIME INDIA PRIVATE LIMITED" a category-I Registrar and Share Transfer Agent reregistered with Securities and Exchange Board of India (SEBI) to handle the work related to Share Registry.
25. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Pursuant to Section 177 of the Companies Act, 2013 and Regulation 22 of the Listing Regulations, 2015, the Company has a Vigil Mechanism Policy/ Whistle Blower Policy to deal with instance of unethical practices, fraud and mismanagement or gross misconduct by the employees of the Company, if any, that can lead to financial loss or reputational risk to the organization. The details of the vigil mechanism Policy/ Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the website of the Company. It can be accessed on the following link http://www.educomp.com/content/policies
26. RISK MANAGEMENT COMMITTEE AND RISK MANAGEMENT POLICY
Like any other business, the Company too is exposed to various uncertainties and risks such as changing customer preferences and behavior, competition and economic uncertainties. Thus, with the objective of assessing and addressing such business risks and their prioritization on regular basis, a comprehensive risk management policy has been put in place, which describes the scope, objectives, processes as well as roles and responsibilities of various functions in risk management.
By way of a systematic risk assessment process, a detailed enterprise risk identification exercise is carried out every year; and risks are evaluated for their likelihood of materialization, potential impact and mitigation efforts. Management has assigned ownership of key risks to various risk owners who are responsible to monitor and review these risks from time to time, and plan for their mitigation measures.
Your Company''s Risk Management Policy is backed by strong internal control systems. The risk management framework consists of policies and procedures framed at management level and strictly adhered to and monitored at all levels. The framework also defines the risk management approach across the enterprise at various levels. Risk management is embedded in our critical business activities, functions and processes. The risks are reviewed for change in the nature and extent of the major risks identified since the last assessment. It also provides control measures for risk and future action plans.
At the Beginning of the Financial Year, the Company had the Risk Management Committee of the Board of Directors of the Company, but as per the provisions of the Companies Act, 2013 and Regulation 21 of the Listing Regulations 2015, it was not mandatory for the Company to constitute such Committee. Further, there was no meeting held of the Risk Management Committee during the Financial Year 2015-16, Thus, the Board of Directors of the Company dissolved such Committee in their meeting held on 11th February, 2016 during the financial year.
The internal audit team periodically visits the divisions and carries out audit. The findings are periodically reviewed by the Board and Audit Committee with emphasis on maintaining its effectiveness in dynamic business environment.
27. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. All the Related Party Transactions are placed before the Audit Committee for approval as per the Related Party Transactions Policy of the Company as approved by the Board. The Policy is also uploaded on the website of the Company & can be accessed on http://www.educomp.com/content/policies .
Since all related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business and there was no material related party transactions entered into by the Company during the financial year, accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not required.
The details of the transactions with related parties are provided in the notes to accompanying standalone financial statements.
28. CONSOLIDATED FINANCIAL STATEMENTS:
As required under the Listing Regulations, 2015, Consolidated Financial Statements of the Company and all its subsidiaries and Joint Venture(s) except M/s Edu Smart Services Private Limited, a Subsidiary Company and M/s Educomp Raffles Higher Education Limited, a Joint Venture are attached to the Annual Report. The consolidated Financial statements have been prepared in accordance with Accounting standard 21 ,Accounting standard 23 and Accounting standard 27 issued by The Institute of Chartered Accountants of India and showing the financial resources, assets, liabilities, income, profits and other details of the Company and its subsidiaries as a single entity, after elimination of minority interest. The audited consolidated financial statements together with Auditor''s Report form part of this Annual Report.
29. LISTING OF SHARES:
The Equity Shares of your Company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Listing fee for the financial year 2016-17 has already been paid to BSE and NSE.
30. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars are prescribed under section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 regarding the energy conservation, technology absorption and foreign exchange earnings and outgo are set out in ''Annexure - V'' attached to this report.
31. RATINGS, AWARDS, ACHIEVEMENTS & RECOGNITIONS: Ratings
Credit Analysis & Research Ltd, or CARE, has reaffirmed the following ratings in relation to our long term and short term financing facilities:
Bank facilities: ''CARE D'' (Single D) to our bank facilities aggregating to Rs.1921.80 Crore.
Receivable assignment facilities: ''CARE D'' (Single D) to our Receivable Assignment facilities, aggregating to Rs.404.08 Crore.
Non-Convertible Debentures (NCDs): ''CARE D'' (Single D) to our Non- Convertible Debenture issuance of Rs.45 crore.
AWARDS, ACHIEVEMENTS & RECOGNITIONS:
In exploring the horizons of what learning can be, accolades and awards have come our way, awards which have reiterated our resolve to live our vision everyday and fulfill our mission.
Over the year, Educomp, its affiliates and it leadership has won recognition from several renowned institutions. We have received following awards this year which truly attest to the quality and excellence created by our teams.
- Award for Leadership Project in eEducation 2016 by @Assocham;
- Little Millennium awarded as the ''Best Standalone Pre School '' at Indian Education Awards 2016;
- Awarded for ''Best Education Initiative'' for smartclass Pro by Indian Education Awards 2016;
- Awarded for''Best Innovative Learning Tool for smartstem'' for smartstem by Indian Education Awards 2016;
- Mr. Shantanu Prakash felicitated with Education Entrepreneurship Leadership Award 2016;
- Award for ''Most Promising Brand for Digital Learning'' at the 2016 Leaders Awards.
32. CORPORATE GOVERNANCE
The Company has always been committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements as set out by Statutory Bodies. As committed to good corporate governance practices, your company fully conform to standards set out by SEBI and other regulatory authorities and has implemented and complied with all of its major stipulations. As per Regulation 34(3) read with Schedule V of the Listing Regulations, 2015, a detailed report on Corporate Governance along with the Certificate from M/s Sanjay Grover & Associates, Company Secretaries, confirming compliance with conditions of Corporate Governance as stipulated under Part C of Schedule V of the Listing Regulations, 2015 are annexed and forms part of this Annual Report.
33. CODE OF CONDUCT:
As per the Listing Regulations, 2015, the Board of the Company has laid down Code of Conduct for all the Board members of the Company and Senior Management Personnel as well and the same has been posted on Website of the Company which can be access by the following link http://www.educomp.com/content/code-conduct. Annual Compliance Report for the year ended 31st March 2016 has been received from all the Board members and senior management of the Company regarding the compliance of all the provisions of Code of Conduct. Declaration regarding compliance by Board members and senior management personnel with the Company''s Code of Conduct are hereby attached as ''Annexure - VI'' to this report.
34. NOTES TO ACCOUNTS:
They are self-explanatory and do not require any explanations.
35. INTERNAL FINANCIAL CONTROLS AND INTERNAL CONTROL SYSTEM
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company has appointed M/s Rajnish & Associates, Chartered Accountants and M/s. Mazars, Chartered Accountants, as the Joint Internal Auditors of the Company to maintain its objectivity and independence, the Internal Auditor reports to the Audit Committee.
The Internal Audit Department monitors and evaluates the efficacy and adequacy of the internal control system in the Company, it compliance with operating systems, accounting procedures and policies of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee.
36. PARTICULARS OF EMPLOYEES:
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report [Annexure - VII].
Further, the disclosure pursuant to Section 197(14) of the Companies Act, 2013 in respect of remuneration or commission received from any holding or subsidiary company of company by any Managing Director or Whole Time Director who is also in receipt of commission from that company is annexed with this report as Annexure- VIII.
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 or any statutory modification or amendment in these Rules, a statement showing the name of top ten employees in terms of Remuneration drawn forms part of the Report and annexed to this report as Annexure IX. Further, there was no employee in the Company who drawn the remuneration in excess of the limits set out in the said Rules. Therefore, the disclosure for the same is not required.
37. DETAILS OF FRAUD REPORTABLE BY STATUTORY AUDITOR TO BOARD
Basis the confirmations reported to the Board in this regard, there were no instance of fraud, misfeasance or irregularity detected and reported in the Company during the Financial Year 2015-16 by the Statutory Auditors of the Company pursuant to Section 143 (12) of the Companies Act, 2013.
38. EMPLOYEES STOCK OPTION SCHEMES (ESOPs)
The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Employees'' Stock Option Schemes of the Company in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (erstwhile Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999) hereinafter referred as the "SEBI Guidelines".
The Details as required under the SEBI Guidelines, for Employees'' Stock Option Schemes have been uploaded on the website of the Company and can be accessed through the link http://www.educomp.com/content/employee-stock-option-schemes. There is no material change in the ESOP schemes of the Company during the year. The
Certificate from Auditors confirming that schemes have been implemented in accordance with the SEBI Guidelines will be placed at the forthcoming Annual General Meeting of the Company before the members and a copy of the same shall be available for inspection at the registered office of the Company.
39. DISCLOSURE PURSUANT TO REGULATION 39 OF THE LISTING REGULATIONS, 2015
Details pursuant to Regulation 39 of the Listing Regulations, 2015 are given in Corporate Governance Report annexed herewith
40. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees given, security provided and investments made during the year as per Section 186 of the Companies Act, 2013 form part of the notes and schedules of the Financial Statements provided in this Annual Report.
41. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE
REGULATORS, COURTS OR TRIBUNAL
There are no significant or material orders passed by the Regulators / Courts /Tribunal which would impact the going concern status of the Company and its operations in future.
42. DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. No case has been reported during the year under review.
43. ACKNOWLEDGEMENT:
Your Directors wish to place on record their appreciation for the Co-operation and support received from the Government and Semi-Government agencies.
Your Directors are also thankful to all the bankers and financial institutions for their support to the Company. The Board places on record its appreciation for continued support provided by the esteemed customers, suppliers, consultants and shareholders.
The directors also acknowledge the hard work, dedication and commitment of the employees of the Company and its subsidiaries. The enthusiasm and unstinting efforts of the employees have enabled the Company to continue being a leading player in the Education field.
For and on Behalf of the Board of Directors
Educomp Solutions Limited
Sd/- Sd/-
(Shantanu Prakash) Vinod Kumar Dandona
Date : August 12, 2016 Managing Director Whole-time Director
Place : Gurgaon, Haryana DIN: 00983057 DIN: 06730804
Mar 31, 2014
Dear Shareholders,
The Directors of your Company have pleasure in presenting herewith the
20th Annual Report of your Company together with the audited accounts
for the Financial Year ended 31st March 2014.
1. FINANCIAL PERFORMANCE:
The highlights of the consolidated and standalone audited financial
results for the year ended 31st March 2014 are as follows:
(Rs. in million)
Particulars Consolidated Year Ended
Audited
31.03.2014 31.03.2013
Sales and other Income 7,246.97 13,264.29
Net profit/ (Loss) (4,616.96) (1,532.94)
before tax
Provision for Tax (758.15) (104.17)
(3,858.81) (1,428.77)
Net profit/ (Loss)
after tax
Minority interest and (251.24) (100.40)
equity in earnings/
(losses) in affiliates/ Pre
acquisition Loss/(profit)
Net profit/ (Loss) (3,607.56) (1,328.37)
after tax for the year
Appropriations
Interim Dividend - 30.06
Proposed Dividend on 16.65 22.09
equity shares
Corporate Tax on - 5.99
distributed dividend
Transfer to Debenture - 89.00
Redemption Reserve
Transfer to General 4.45 3.69
Reserve
Particulars Standalone Year Ended
Audited
31.03.2014 31.03.2013
Sales and other Income 3171.77 8,204.04
Net profit/ (Loss) (3319.28) (489.76)
before tax
Provision for Tax (196.98) (82.56)
(3122.30) (407.20)
Net profit/ (Loss)
after tax
Minority interest and - -
equity in earnings/
(losses) in affiliates/ Pre
acquisition Loss/(profit)
Net profit/ (Loss) (3122.30) (407.20)
after tax for the year
Appropriations
Interim Dividend - -
Proposed Dividend on - -
equity shares
Corporate Tax on - -
distributed dividend
Transfer to Debenture - -
Redemption Reserve
Transfer to General - -
Reserve
2. DIVIDEND AND TRANSFER TO RESERVE:
In view of the losses incurred by the Company, your Directors have not
recommended any dividend for the financial year ended March 31, 2014.
In view of the losses incurred by the Company, no amount has been
transferred to reserve for the financial year ended March 31, 2014.
3. OPERATING RESULTS AND BUSINESS:
We enjoy long-term annuity relationships with both private schools as
well as government customers, ranging from three to five years. Our
revenues are predictable & locked in for three to five years on account
of the contractual nature of our business.
In the Smart Class  segment, we have added 327 new customers taking
the total number of schools to 15,126 as on March 31, 2014.
In Edureach (formerly ICT) business segment, we have an ongoing
partnership with 14 State Governments and reaches to 10711 Government
schools in various states and 7.9 million students as on March 31,
2014.
On Standalone basis Company''s total revenue stands at Rs. 3,171.77
million as on March 31, 2014 as compared to Rs. 8,204.04 million as on
March 31, 2013, a decline of 61.34%. The loss before taxes is Rs.
3,319.28 million as on March 31, 2014 as against loss before taxes of
Rs. 489.76 million as on March 31, 2013.
On Consolidated basis Company''s t2tal revenue stands at Rs. 7,246.97
million as on March 31, 2014 as compared to Rs. 13,264.29 million as on
March 31, 2013, registering a decline of 45.36%. The loss before tax
and after prior period items/exceptional items stands at Rs. 4,616.96
million as on March 31, 2014 as against loss of Rs. 1,532.94 million As
on March 31, 2013.
SEGMENTAL PERFORMANCE (STANDALONE):
The EBIT margins in the School learning solutions (SLS) Segment of the
Company for the year amounted to Rs. (1,698.62) million or (83.53%) of
SLS revenues as on March 31, 2014 as compared to Rs. 1,089.70 million
or 17.37% of SLS revenues as on March 31, 2013.
The EBIT margins in the Higher learning solutions (HLS) segment of the
Company for the year amounted to Rs. 38.73 million or 50.78% of HLS
revenues as on March 31, 2014 as compared to Rs. 10.34 million or
11.11% of HLS revenues as on March 31, 2013.
The EBIT margins in the K-12 Schools Segment of the Company for the
year amounted to Rs. 3.28 million or 46.33% of K-12 segment revenues as
on March 31, 2014 as compared to Rs. 15.52 million or 93.38% of K-12
segment revenues as on March 31, 2013.
The EBIT margins in Online Supplemental and Global (OSG) segment of the
Company for the year amounted to Rs. (15.89) million or (2.25%) of OSG
segment revenues as on March 31, 2014 as compared to Rs. 15.23 million
or 1.61% of OSG revenues as on March 31, 2013.
EXPENDITURE (STANDALONE):
Cost of Goods Sold (COGS) has decreased to 37.1% of our total revenue
as on March 31, 2014 from 40.90% as on March 31, 2013. This decrease is
on account of change in revenue and cost recognition method from
upfront recognition to recognition our the period of rendering
services.
Personnel expenses have increased to 44.90% of total revenue as on
March 31, 2014 from 23.96% as on March 31, 2013. Other expenses have
increased to 39.81% as on March 31, 2014 from 17.55% of total revenue
as on March 31, 2013. This increase is essentially because of the fall
in revenues and the absolute expanses have infact reduced.
DEBT RESTRUCTURING
One of the biggest accomplishments in addressing the cash flow issue
has been successful completion of Corporate Debt Restructuring ("CDR")
mechanism for two of the main companies where major debt resided, i.e.,
Educomp Solutions Limited and Educomp Infrastructure and School
Management Limited. During the process of CDR, consortium of lenders
performed a detailed assessment of company''s business fundamentals
keeping in mind next 10-15 years and restructured their debts
accordingly. This is a big vote of confidence by the bankers of the
business prospects of the company.
4. CHANGES IN CAPITAL STRUCTURE:
AUTHORIZED SHARE CAPITAL
Authorised Share Capital of the Company is Rs. 40,00,00,000/- (Rupees
Forty Crores Only) divided into 20,00,00,000 (Twenty Crores) equity
shares of Rs. 2/- (Rupees Two Only) each.
ISSUED AND PAID-UP SHARE CAPITAL
During the year under review, the Company allotted 33575 Equity Shares
of face value of Rs. 2/- each upon exercise of stock options under
Employee Stock Option Scheme 2006.
In year 2012-13, on 26th July, 2012, the company had issued and
allotted 11,479,096 warrants to M/s. A P Eduvision Pvt. Ltd, a promoter
group entity, at an issue price of Rs. 193.74 per warrant, as per the
provisions of Chapter VII of SEBI (ICDR) Regulations, 2009, convertible
into equal number of equity shares of the face value of Rs. 2/- each
and convertible within a period of 18 months from the date of
allotment. In 2012-13, out of the total warrant issued, 2,979,939
equity shares of face value of Rs. 2 each at a premium of Rs. 191.74
were allotted to M/s A P Eduvision Pvt. Ltd. upon the conversion of
warrants issued under provisions of Chapter VII of SEBI (ICDR)
Regulations, 2009.
Further, as per the terms of issue, M/s A P Eduvision Pvt. Ltd was
entitled to apply for and obtain one equity shares of par value of Rs.
2/- each against the remaining 8,499,157 warrants held as per the terms
of issue of these warrants, upon payment of exercise price of Rs.
193.74 per warrant, as reduced by the 25% upfront money paid at the
time of the allotment of warrants. The last date for the exercise of
the conversion option/said right was January 25, 2014 i.e. 18 months
from the date of their allotment.
However, the warrant holder has not exercised its option to convert the
aforesaid 84,99,157 warrants into equity shares of the company.
Accordingly, as per the term, the company during the financial year
2013-14 had forfeited 8,499,157 warrants, due to non receipt of balance
75% of the issue price in the stipulated period of 18 months from the
date of issuance of these warrants.
Post 31st March, 2014 & till 12th August 2014, the Company has allotted
26100 Equity Shares of face value of Rs. 2/- each upon exercise of
stock options by the eligible employees/Directors of the
Company/subsidiaries under Employee Stock Option Scheme 2006.
The paid up capital after taking the effect of aforesaid changes, stood
at Rs. 24,49,34,336/- consisting of 122467168 of the face value of Rs.
2/- each as on 12th August, 2014.
5. FOREIGN CURRENCY CONVERTIBLE BONDS
US$ 10 Million Zero Coupon Foreign Currency Convertible Bonds In Year
2012-13, the Company had raised US$ 10 million, Zero Coupon Foreign
Currency Convertible Bonds (FCCB) for redemption of outstanding Zero
Coupon Foreign Currency Convertible Bonds. The Bond holders, as per the
agreement, have the option to convert these bonds into Equity Shares,
at a price of Rs. 188.62 per share with in 5 years and 1 day from the
date of disbursement. The FCCB are redeemable at a premium of 33.15 %
on principal after 5 years and 1 day. The FCCB were raised for the
purposes of redemption of earlier FCCB of the Company. As on March, 31,
3014 US$ 10 million (previous year US$ 10 million) FCCB were
outstanding for conversion into equity shares of Rs. 2 each.
6. SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES & EXTERNAL
COMMERCIAL BORROWINGS
Non-Convertible Debentures
As on 31st March 2014, the Company has outstanding Secured Non-
Convertible Debentures for an aggregate value of Rs. 45 Crores
comprising 350, 13.5% Secured Non-Convertible Debentures (Listed on
Bombay Stock exchange) of the face value of Rs. 10,00,000/- each
aggregating to Rs. 35 Crores and 100, 13.25% Secured Non-Convertible
Debentures of the face value of Rs. 10,00,000/- each aggregating to Rs.
10 Crores.
External Commercial Borrowings
In Year 2012-13, the Company has raised US$ 70 million through External
Commercial Borrowing (ECB) comprising US$ 30 million from International
Financial Corporation (IFC) a member of the World Bank Group and US$ 40
million from Societe De Promotion Et De Participation Pour La
Cooperation Economique (PROPARCO), a French development financial
institution. The ECB has a term of 8.5 years with a 3 years moratorium
and the coupon rate is LIBOR 4.5%. The ECB has been raised for
purposes of redemption of existing FCCB. The said ECB is outstanding
at the Financial Year ending on March 31, 2014.
7. PUBLIC DEPOSITS:
During the year under review, the Company did not accept any deposits
with in the meaning of the provisions of Section 58A of the Companies
Act, 1956.
8. SUBSIDIARIES/JOINT VENTURE/ASSOCIATES
As on March 31, 2014, the Company had 47 Subsidiaries, 1 Joint ventures
having 1 subsidiaries and 1 Associates.
During the year under review, Company has sold its entire 50% stake in
the loss making vocational training business (IndiaCan Education
Private Limited), to its JV partner Pearson.
9. PARTICULARS REQUIRED AS PER SECTION 212 OF THE COMPANIES ACT, 1956 &
CONSOLIDATED FINANCIAL STATEMENT:
Ministry of Corporate Affairs, vide its circular dated February 8, 2011
has granted general exemption from attaching the Balance Sheet, Profit
and Loss Account and other documents of the subsidiary companies with
the Balance Sheet of the Company.
Board of Directors of the Company in its meeting held on 26th May 2014
consented for not attaching the balance sheet of the subsidiary
companies. A statement containing brief financial details of the
Company''s subsidiaries for the financial year ended March 31, 2014 is
included in the Annual Report. The annual accounts of these
subsidiaries and the related detailed information will be made
available to any member of the Company/its subsidiaries seeking such
information at any point of time and are also available for inspection
by any member of the Company/its subsidiaries at the registered office
of the Company. The annual accounts of the said subsidiaries will also
be available for inspection, as above, at the head offices/registered
offices of the respective subsidiary companies. The Company shall
furnish a copy of details of annual accounts of subsidiaries to any
member on demand.
Further the annual report of the Company contains the consolidated
audited financial statements prepared, pursuant to Clause 41 of The
Listing Agreement entered into with the stock exchanges and prepared in
accordance with the accounting standards notified by Ministry of
Corporate Affairs under Accounting Standard Rules 2006.The financial
data of the subsidiaries has been furnished along with the statement
pursuant to Section 212 of the Companies Act, 1956 forming part of the
Annual Report.
10. DIRECTORS:
As on 31st March 2014, Board of Directors of Educomp Solutions Limited
comprises of two Executive Directors namely Mr. Shantanu Prakash,
Chairman & Managing Director and Mr. Vinod Kumar Dandona, Whole Time
Director and Four Independent Non-Executive Directors, namely Mr. Shonu
Chandra, Mr. Rajat Khare, Mr. Vijay Kumar Choudhary and Dr. Venkata
Subbarao Valluri.
During the year Dr. Shyama Chona had resigned from the Board on 29th
July, 2013 and Dr. Venkata Subbarao Valluri was appointed as an
additional Director of the Company w.e.f 31st July 2013. Mr. Jagdish
Prakash and Mr. Sankalp Srivastava had resigned from the Board with
effect from 13th November 2013 and Mr. V K Dandona, Mr. Rajat Khare and
Vijay K Choudhary were appointed as additional Director(s) of the
Company w.e.f 13th November 2013. Mr. Rajiv Krishan Luthra and Mr. Roy
Campbell II had resigned from the Board with effect from 22nd November
2013 and 15th January 2014, respectively.
The Board of Directors records its appreciation & recognition of the
valuable contribution and services rendered by the director(s)
resigned.
Mr. Vijay Kumar Choudhary; Mr. Rajat Khare; and Mr. Vinod Kumar Dandona
will hold office of the Additional Director up to the date of the
ensuing Annual General Meeting. The Company has received Notice under
Section 160 of the Companies Act, 2013 from a member signifying his
intention to propose the candidature of Mr. Vijay Kumar Choudhary; Mr.
Rajat Khare; Mrs. Swati Sinha; Mr. Shonu Chandra; Dr. Venkata Subbarao
Valluri and Mr. Vinod Kumar Dandona for the office of Director(s) at
the ensuing Annual General Meeting.
The Company, pursuant to the applicable provisions of the Companies
Act, 2013 and listing agreement, proposes the appointment of Mr. Vijay
Kumar Choudhary; Mr. Rajat Khare; Mrs. Swati Sinha; Mr. Shonu Chandra
and Dr. Venkata Subbarao Valluri as Independent Directors of the
Company. The Company has received declarations from the said
Independent Directors confirming that they meet the criteria of
independence as prescribed both under sub-section (6) of Section 149 of
the Companies Act, 2013 and under the said Clause 49. In accordance
with the provisions of Section 149 and proviso to Section 152(5) of the
Companies Act, 2013, these Directors are being appointed as Independent
Directors to hold office as per their tenure of appointment mentioned
in the Notice of the forthcoming AGM of the Company.
In terms of the Companies Act, 2013, directors other than independent
directors shall only be considered for ascertaining the directors
liable to retire by rotation. Further as per section 152 of the
Companies Act, 2013 Mr. Shantanu Prakash is the Director liable to
retire by rotation and further being eligible, offers themselves for
re-appointment at the ensuing Annual General Meeting.
The brief resume and other details relating to the directors, who are
to be appointed/ re-appointed as stipulated under Clause 49(IV)(G) of
the Listing Agreement, are furnished in the Notice of AGM forming part
of the Annual Report.
The Company also has Audit Committee which is constituted as per
requirement of Section 292A of the Companies Act, 1956 and Section 177
of the Companies Act, 2013 and Clause 49 of Listing Agreement. Audit
Committee has 4 members out of which 3 are Non-Executive Independent
Directors and one is Executive Director. Chairman of Audit Committee is
an Independent Non-Executive Director.
11. STATUTORY DISCLOSURES:
The Company has received Form DD-A from all Directors as required under
the provisions of Section 274(1)(g) of the Companies Act, 1956 read
with Companies (Disqualification of Directors under Section 274 (1) (g)
of the Companies Act, 1956) Rules, 2003.
None of the Directors of your Company is disqualified as per provision
of Section 274(1)(g) of the Companies Act, 1956. The Directors of the
Company have made necessary disclosures, as required under various
provisions of the Companies Act, 1956 and Clause 49 of the Listing
Agreement.
12. HUMAN RESOURCE MANAGEMENT:
Educomp is an equal opportunity employer with total employee strength
of 10927 as on 31st March, 2014 as compared to 16919 as on 31st March,
2013.
The Company has a suitable recruitment and human resource management
process, which enables us to attract and retain high caliber employees.
Company has created incentive driven remuneration policies which act as
an effective retention tool.
13. DIRECTORS RESPONSIBILITY STATEMENT:
In pursuance of provisions of Section 217(2AA) of the Companies Act,
1956, we hereby confirm that:
1) That in the preparation of the Annual Accounts for the period ended
as on 31st March 2014, the applicable Accounting Standards have been
followed and no material departure has been identified.
2) Accounting Policies have been consistently applied in a reasonable
and prudent manner so as to give true and fair view of the state of
affairs of the Company for the financial year ending 31st March 2014
and of the Profit and Loss Account for the financial year ending as on
31st March 2014
3) Proper and sufficient care has been taken for the maintenance of
adequate records in accordance with the applicable provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
4) The Annual Accounts for the Financial Year ended on 31st March 2014
have been prepared on the going concern basis.
14. auditors & auditors'' REPORT:
Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No.
103523W), who are the Statutory Auditors of the Company, hold office
until the conclusion of the ensuing Annual General Meeting. It is
proposed to re-appoint M/s Haribhakti & Co. LLP, Chartered Accountants
(ICAI Firm Registration No. 103523W) to examine and audit the accounts
of the Company for Five years to hold office from the conclusion of
this AGM till the conclusion of the Twenty Fifth AGM of the Company to
be held in the year 2019 subject to ratification of their appointment
at every AGM. M/s Haribhakti & Co. LLP have, under Section 139(1) of
the Companies Act, 2013 and the Rules framed thereunder furnished a
certificate of their eligibility and consent for re-appointment.
M/s Haribhakti & Co converted itself into a Limited Liability
Partnership (LLP) under the provisions of the Limited Liability
Partnership Act, 2008 and is now known as Haribhakti & Co LLP. In terms
of the Ministry of Corporate Affairs, Government of India, General
Circular No. 9/2013 dated April 30, 2013, if a firm of CAs, being an
auditor in a company under the Companies Act, 1956, is converted into
an LLP, then such an LLP would be deemed to be the auditor of the said
company.
The Directors refer to the auditors'' qualification, matter of emphasis,
observation in the Annexure to Independent Auditors'' Report and as
required under Section 217(3) of the Companies Act, 1956, provide their
explanation as under:
management''s RESPONSE TO AUDITORS'' QUALIFICATION, MATTER of emphasis
and auditors'' observations -
Management Response to the Qualification in the consolidated audit
report for the Financial Year ending 31st March 2014:
As per the terms of MRA and approved CDR scheme of Educomp
Infrastructure & School Management Limited, a subsidiary of the
company, there are certain assets which have been identified for sale
in a time bound manner. The lead bank carried out a valuation of these
assets which are indicative in nature. Market valuations have not been
carried out by the Company as some of these assets are not ready for
sale due to pending regulatory approvals/permissions.
Based on recent firm offers and latest valuation reports, the
management believes that the market value of investments may be higher
than as considered under the indicative valuation reports used for CDR
Scheme. Differences, if any, will be adjusted at the time of sale of
such assets.
Management Response to the Matter of Emphasis in the consolidated audit
report for the Financial Year ending 31st March 2014:-
Response to point (a)
In this regard the management of the Company and Educomp Infrastructure
& School Management Limited (EISML) are in the process of making
necessary application to the Central Government to obtain its approval
for the waiver/approval of the remuneration so paid, in due course.
Response to point (b)
The Company as part of its regular recoverability evaluation process,
identified certain trade receivables amounting to Rs. 11,654 lacs as
doubtful of recovery. Consequently, the management provided the said
amount as doubtful debts, out of which Rs. 7,000 lacs has been provided
for during the quarter end March 31, 2014 which has been disclosed as
exceptional item. Further, the auditors have specifically provided
that their opinion is not qualified in this regard.
Response to point (c)
Due to longer than expected gestation period of schools, recoverability
of trade receivables from trusts, due to the subsidiary Company EISML
has been slow. The management of EISML, is regularly monitoring the
growth in schools and their future projections, based on which, the
management believes that the trade receivables from the trusts are
fully recoverable. Further, the auditors have specifically provided
that their opinion is not qualified in this regard.
Response to point (d)
The Company assessed the business projections of its 2 subsidiaries
Educomp Online Supplemental Services Limited and Educomp Child Care
Private Limited and one of its associates Greycells18 Media Limited and
concluded that their business is sustainable on a going concern basis.
The Company evaluated the recoverability of its share of net assets
held through these Companies, using business valuations performed by
independent experts. The said evaluation is based on the long term
business plans of its subsidiaries/associates and concluded no
adjustments to the carrying value of its share in net assets is
required to be recorded in the Consolidated financial statements of the
Company for the year ended March 31, 2014. Further, the auditors have
specifically provided that their opinion is not qualified in this
regard.
Response to point (e)
The management is continuously monitoring the settlement of these
balances and is regularly following up with respective parties for
recovery of the said capital advances. The management believes that
other capital advances, which have not been provided for, although have
been long outstanding but are fully recoverable and hence the
management believes that existing provision recorded in books is
sufficient to cover any possible future losses on account of non
recovery of such capital advances. Further, the auditors have
specifically provided that their opinion is not qualified in this
regard.
Response to point (f)
The Company has evaluated the recoverability, using valuations
performed by an independent valuation expert, of intangible assets in
the form of Brand "Universal". The said evaluation is based on long
term business plans and underlying assumptions used for the purpose of
valuation, which in view of the management are realistic and achievable
by the subsidiary. Accordingly, the management has concluded that no
adjustments to the carrying value of the intangible assets aggregating
to Rs. 9,268 lacs is required to be recorded in the financial
statements for the year ended March 31, 2014. Further, the auditors
have specifically provided that their opinion is not qualified in this
regard.
Response to point (g)
As at year end, the joint venture of the Group, Educomp Raffles Higher
Education Limited has foreign currency receivables of Rs. 164.70 lacs
which are outstanding for a period greater than one year. As per the
Reserve Bank of India''s (RBI) Master Circular on Export of Goods and
Services, foreign currency receivables should be realized, except with
prior approval of RBI, within a period of one year. Further, as at year
end the joint venture has netted off foreign currency payables of Rs.
122.55 lacs against its foreign currency receivables. As per the
Reserve Bank of India''s (RBI) Master Circular on Export of Goods and
Services, foreign currency receivables cannot be set off against
foreign currency payables except with prior approval of RBI. The
management of the Company believes that the non compliance emphasized
by the auditors of the joint venture is procedural in nature and it
does not expect any significant penalties or fines to be levied on
account of this matter. The joint venture is in the process of making
application with the concerned authorities for regularization of this
matter. Further, the auditors have specifically provided that their
opinion is not qualified in this regard.
Response to point (h)
During the year, the Company has reviewed business plan of its joint
venture, Educomp Raffles Higher Education Limited which has advanced
loans to Jai Radha Raman Education Society (Society) and its subsidiary
Millennium Infra Developers Limited which has receivable from same
society under contractual obligation. The Company has considered the
business plan of the society and estimated market value of its net
assets based on which no adjustment is required in carrying value of
its share of net assets in such joint venture. Further, the auditors
have specifically provided that their opinion is not qualified in this
regard.
Management response to the Matter 2f Emphasis in the standalone audit
report for the Financial Year ending 31st March 2014:-
Response to point (a)
In this regard the management of the Company is in the process of
making necessary application to the Central Government to obtain its
approval for the waiver/approval of the remuneration so paid, in due
course.
Further, the auditors have specifically provided that their opinion is
not qualified in this regard.
Response to point (b)
The Company as part of its regular recoverability evaluation process,
identified certain trade receivables amounting to Rs. 11,654 lacs as
doubtful of recovery. Consequently, the management provided the said
amount as doubtful debts, out of which Rs. 7,000 lacs has been provided
for during the quarter end March 31, 2014 which has been disclosed as
exceptional item. Further, the auditors have specifically provided
that their opinion is not qualified in this regard.
Response to point (c)
During the year, the Company assessed the business projections of its 2
subsidiaries Educomp Online Supplemental Services Limited and Educomp
Child Care Private Limited and one of its associates Greycells 18 Media
Limited and concluded that their business is sustainable on a going
concern basis. The Company evaluated the recoverability of its share of
net assets held through these Companies, using business valuations
performed by independent experts. The said evaluation is based on the
long term business plans of its subsidiaries/associates and concluded
no adjustments to the carrying value of its share in net assets is
required to be recorded in the financial statements of the Company for
the year ended March 31, 2014. Further, the auditors have specifically
provided that their opinion is not qualified in this regard.
Explanation to the observations in the Annexure to Independent
Auditors'' Report, as required under the companies Act, explanation on
the same as under:
(ix) (a) In respect of auditors'' observation in standalone financial
statements regarding delay in the depositing statutory dues.
In this regard it has been clarified that the delays arose on account
of mismatches of cash inflow and outflows which were subsequently
rectified.
(x) In respect of auditors'' observation in standalone financial
statements regarding cash losses incurred by the company during the
Financial Year.
In this regard, it has been clarified that the cash losses were
occurred due to higher finance cost. Further, management is
continuously taking corrective steps to reduce the cash losses by way
increasing revenue and along with minimizing cost.
(xi) In respect of auditors'' observation in standalone financial
statements regarding certain default in repayment of dues to financial
institutions and banks.
It was clarified that the delay in payment of dues was from mismatches
of cash inflows and outflows. Further management believes that, with
improved business scenario, the company will be able to meet its
obligation in time.
(xix) In respect of auditors'' observation in standalone financial
statements regarding creation of partial security on the Non
Convertible Debentures (NCD).
It was clarified that the company is taking necessary steps to create
security in respect of NCD of the company.
15. SHARE REGISTRATION ACTIVITY:
Company has appointed "LINK INTIME INDIA PRIVATE LIMITED" a category-I
Registrar and Share Transfer Agent reregistered with SEBI to handle the
work related to Share Registry.
16. CONSOLIDATED FINANCIAL STATEMENTS:
As required under the Listing Agreements with the Stock Exchanges
Consolidated Financial Statements of the Company and all its
subsidiaries are attached. The consolidated Financial statements have
been prepared in accordance with Accounting standard 21 ,Accounting
standard 23 and Accounting standard 27 issued by The Institute of
Chartered Accountants of India and showing the financial resources,
assets, liabilities, income, profits and other details of the Company
and its subsidiaries as a single entity, after elimination of minority
interest.
17. LISTING OF SHARES:
The Equity Shares of your Company are listed on National Stock Exchange
of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The
Listing fee for the financial year 2014-15 has already been paid to BSE
and NSE.
18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ADOPTION AND
INNOVATION, FOREIGN ExCHANGE EARNINGS AND OUTGO:
The particulars are prescribed under section 217(1) (e) of the
Companies Act, 1956, read with the Companies (Disclosure of particulars
in the report of Board of Director s) Rules, 1988 are set out in an
Annexure A attached to this report.
19. RATINGS, AWARDS, ACHIEVEMENTS & RECOGNITIONS:
Ratings
Credit Analysis & Research Ltd, or CARE, has reaffirmed the following
ratings in relation to our long term and short term financing
facilities:
Long term facilities: ''CARE D'' (Single D) to our long term facilities
i.e. facilities having tenure of more than one year, aggregating to Rs.
299.07 Crore.
Short term facilities: ''CARE D'' ( Single D) to our short term
facilities i.e. facilities having tenure of less than one year,
aggregating to Rs. 410 Crore.
Receivable assignment facilities: ''CARE D'' ( Single D) to our
Receivable Assignment facilities, aggregating to Rs. 404.08 Crore.
Non-Convertible Debentures (NCDs): ''CARE D'' (Single D) to our NCD
issuance of Rs. 45 crore.
AWARDS, ACHIEVEMENTS & RECOGNITIONS:
In exploring the horizons of what learning can be, accolades and awards
have come our way, awards which have reiterated our resolve to live our
vision everyday and fulfill our mission.
Over the year, Educomp, its affiliates and it leadership has won
recognition from several renowned institutions.
* PricewaterhouseCoopers (PwC) report ranks Educomp at No. 85 among the
top 100 software vendors in the emerging markets, commanding a combined
revenue of $797 million, and among the 16 Indian companies that have
made it to the list.
* Educomp ranked No. 12 in Business World''s India''s fastest growing
companies (May 2013).
* Educomp Childcare Pvt. Ltd. received World Education Award in
category "Best Tablet Providers in Education", for unique and
innovative initiatives in the field of education globally, after
rigorous screening by eminent jury members and by receiving substantial
online public votes.
* JRE School of Management ranked 39th in India''s Best B-Schools-Career
Connect (December 2013)
* Karman Singh, a student of Grade 7 of The Millennium School Patiala,
won gold medal in 200 meters race in The Special Olympics 2013 Asia
Pacific Games. He was part of the 527-member Indian contingent which
took part in the games held at Newcastle, NSW, Australia, in December
2013.
20. Report on Corporate Governance and Management Discussion & Analysis
Committed to good corporate governance practices, your company fully
conform to standards set out by SEBI and other regulatory authorities
and has implemented and complied with all of its major stipulations. As
per clause 49 of the Listing Agreement, a report on Corporate
Governance along with Compliance Certificate from the Practicing
Company Secretary and Management Discussion and Analysis Report are
annexed and forms part of this Annual Report.
21. CODE OF CONDUCT:
As per Clause 49 (I) (D), the Board of the Company has laid down Code
of Conduct for all the Board members of the Company and Senior
Management as well and the same has been posted on Website of the
Company. Annual Compliance Report for the year ended 31st March 2014
has been received from all the Board members and senior management of
the Company regarding the compliance of all the provisions of Code of
Conduct. Declaration regarding compliance by Board members and senior
management personnel with the Company''s Code of Conduct is hereby
attached as Annexure B to this report.
22. NOTES TO ACCOUNTS:
They are self-explanatory and do not require any explanations.
23. PARTICULARS OF EMPLOYEES:
In Terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are set out
in the Annexure -"C" to the Director''s Report.
24. EMPLOYEES STOCK OPTION SCHEMES (ESOPS)
The growth of the Company has, in large measure, been possible owing to
the wholehearted support, commitment and teamwork of its personnel.
Accordingly, the Company has introduced ES0P-2006, ES0P-2007, ESOP-
2008, ESOP-2010, ESOP-2011 and ESOP-2012 for its employees and
employees of its subsidiary companies.
The details of options granted under ESOP-2006, ESOP-2007, ESOP - 2008,
ESOP - 2010, ESOP - 2011 and ESOP - 2012 is attached as Annexure D
A certificate from Statutory Auditors, with respect to the
implementation of the Company Employee''s Stock Option schemes, would be
placed before the shareholders at the ensuing Annual General Meeting,
and a copy of the same shall be available for inspection at the
registered office of the Company.
25. DISCLOSURE PURSUANT TO CLAUSE 5A OF LISTING AGREEMENT
Pursuant to insertion of clause 5A in listing Agreement as per SEBI
notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 the
details in respect of the shares lying in the suspense account till
March 31, 2014 is as under.
Description No. of No. of Shares
Cases
1. Aggregate number of shareholders 3 750
and the outstanding shares in
the initiation of suspense account.
2. Number of shareholders who 0 0
approached the Company for transfer
of shares from suspense account
during the year 2013-14
3. Number of shareholders to whom
shares were transferred from 0 0
suspense account during the year
2013-14
4. Aggregate number of shareholders 3 750
and the outstanding shares in the
suspense account lying as on March
31, 2014
All the unclaimed shares are being credited to a DEMAT suspense account
and all the corporate benefits in terms of securities, accruing to on
these unclaimed shares shall be credited to such account. Voting rights
on these shares shall remain frozen till the rightful owner of such
shares claims the shares.
26. CORPORATE GOVERNANCE:
The Company has always been committed to maintain the highest standards
of Corporate Governance and adhere to the Corporate Governance
requirements as set out by Statutory Bodies.
The Ministry of Corporate Affairs, Government of India, introduced the
Corporate Governance Voluntary Guidelines, 2009. These guidelines have
been issued to provide Corporate India a framework to govern themselves
voluntarily as per the highest standards of ethical and responsible
conduct of business. The Guidelines broadly outline conditions for
appointment of directors (including independent directors), guiding
principles to remunerate directors, responsibilities of the Board, risk
management, the enhanced role of Audit Committee, rotation of audit
partners and firms and conduct of secretarial audit. Your company is
already by and large complying with the voluntary guidelines Corporate
Governance various requirements.
27. ACKNOWLEDGEMENT:
Your Directors wish to place on record their appreciation for the
Co-operation and support received from the Government and
Semi-Government agencies.
Your Directors are also thankful to all the bankers and financial
institutions for their support to the Company. The Board places on
record its appreciation for continued support provided by the esteemed
customers, suppliers, consultants and shareholders.
The directors also acknowledge the hard work, dedication and commitment
of the employees of the Company and its subsidiaries. The enthusiasm
and unstinting efforts of the employees have enabled the Company to
continue being a leading player in the Education field.
For and on Behalf of the Board of Directors
Sd/-
Date : 12th August 2014 (Shantanu Prakash)
Place : Gurgaon, Haryana Chairman & Managing Director
Mar 31, 2013
Dear Shareholders,
The Directors of your Company have pleasure in presenting herewith the
19th Annual Report of your Company together with the audited accounts
for the Financial Year ended 31st March 2013.
1. FINANCIAL PERFORMANCE :
The highlights of the consolidated and standalone audited financial
results for the year ended 31st March 2013 are as follows:
(Rs. in million)
Particulars Consolidated
Year Ended Standalone Year Ended
Audited Audited
31.03.2013 31.03.2012 31.03.2013 31.03.2012
Sales and other 13,264.29 15,224.36 8,204.04 10,920.37
Income
Net Profit/(Loss) (1,532.94) 1,945.30 (489.76) 2,444.80
before tax
Provision for Tax 104.17 574.74 82.56 555.77
Net Profit/(Loss) (1,428.77) 1,370.56 (407.20) 1,889.03
after tax
Minority interest and 100.40 15.201
equity in earnings/
(losses) in affiliates/
Pre acquisition Loss/
(Profit)
Net Profit/(Loss) (1,328.37) 1,355.36 (407.20) 1,889.03
after tax for the
year
Appropriations
Interim Dividend 30.06
Proposed Dividend 22.09 45.62 28.99
on equity shares
Corporate Tax on 5.99 5.57 4.70
distributed dividend
Transfer to 89.00 209.39
Debenture
Redemption Reserve
Transfer to General 3.69 99.45 94.45
Reserve
2. DIVIDEND:
In view of the losses incurred by the Company, your Directors have not
recommended any dividend for the financial year ended March 31, 2013.
3. OPERATING RESULTS AND BUSINESS:
We enjoy long-term annuity relationships with both private schools as
well as government customers, ranging from three to five years. Our
revenues are predictable & locked in for three to five years on account
of the contractual nature of our business.
In the SmartClass segment, we have added 2,171 new customers taking the
total number of schools to 14,823 as on March 31, 2013.
In Edureach (formerly ICT) business segment, we have an ongoing
partnership with thirteen state Governments and reaches to 10,771
Government schools in various states and 5.1 million students as on
March 31, 2013.
On Standalone basis Company''s total revenue stands at Rs. 8,204.04
million as on March 31, 2013 as compared to Rs. 10,920.37 million as on
March 31, 2012, a decline of 24.87%. The loss before tax is Rs. 489.76
million as on March 31, 2013 as against profit before tax of Rs. 2444.80
million as on March 31, 2012.
On Consolidated basis Company''s total revenue stands at Rs.13,264.29
million as on March 31, 2013 as compared to Rs.15,224.36 million as on
March 31, 2012, registering a decline of 12.87%. The loss before tax
and after prior period items stands at Rs.1,532.94 million as on March
31, 2013 as against profit of Rs. 1,945.30 million as on March 31, 2012.
SEGMENTAL PERFORMANCE (STANDALONE):
The EBIT margins in the School learning solutions (SLS) Segment of the
Company for the year amounted to Rs. 1,089.70 million or 17.37% of SLS
revenues as on March 31, 2013 as compared to Rs.4,275.39 million or
40.81% of SLS revenues as on March 31, 2012.
The EBIT margins in the Higher learning solutions (HLS) segment of the
Company for the year amounted to Rs. 10.34 million or 11.11% of HLS
revenues as on March 31, 2013 as compared to Rs.43.48 million or 32.03%
of HLS revenues as on March 31, 2012.
The EBIT margins in the K-12 Schools Segment of the Company for the
year amounted to Rs.15.52 million or 93.38% of K-12 segment revenues as
on March 31, 2013 as compared to Rs. 13.81 million or 97.85% of K-12
segment revenues as on March 31, 2012.
The EBIT margins in Online Supplemental and Global (OSG) segment of the
Company for the year amounted to Rs. 15.23 million or 1.61% of OSG
segment revenues as on March 31, 2013 as compared toRs. (19.01) million
of OSG revenues as on March 31, 2012.
EXPENDITURE(STANDALONE):
Cost of Goods Sold (COGS) has increased to 40.90% of our revenue as on
March 31, 2013 from 35.38% as on March 31, 2012. This increase is on
account of implementation of Assam State Government 1054 Schools in
Edureach Segment.
Personnel expenses have increased to 23.96% of revenue as on March 31,
2013 from 16.20% as on March 31, 2012. Other expenses have increased to
17.55% as on March 31, 2013 from 13.73% of revenue as on March 31,
2012.
DEBT RESTRUCTURING
As your Company was growing at a CAGR of 39.1% on consolidated basis
and 32.7% on standalone basis during 2007 to 2012, it had considerably
grown its balance sheet with investment in long term assets funded
partly by equity and debt. In the present phase of economic slowdown,
it became imperative to match the maturity profile of its liabilities
with the long term nature of its assets and return thereon. Therefore,
the Company has opted for a formal method of loan restructuring and in
July 2013, the Company has initiated the process under Corporate Debt
Restructuring (CDR) Mechanism envisaged under the Reserve Bank of India
(RBI) guidelines and has made reference to the CDR Cell. It has filed
the proposal for restructuring its rupee denominated liabilities
through CDR process, The proposal is under consideration by the
Corporate Debt Restructuring - Empowered Group (CDR-EG).
In June 2013, Educomp Infrastructure & School Management Limited,
subsidiary of the Company also approached to the CDR Cell for
restructuring its Debts through CDR process, The proposal is also under
consideration by the Corporate Debt Restructuring - Empowered Group
(CDR-EG).
The CDR process is expected to give your Company critical support to
tide over the present difficult business environment.
4. CHANGES IN CAPITAL STRUCTURE : Authorized Share Capital
Shareholders of the Company in their Extra Ordinary General Meeting
held on 15th November, 2012 approved the increase in Authorised Share
Capital of the Company.
Authorised Share Capital of the Company is Rs.40,00,00,000/- (Rupees
Forty Crores Only) divided into 20,00,00,000 (Twenty Crores) equity
shares of Rs.2/- (Rupees Two Only) each.
Issued and Paid-up Share Capital
During the year under review, the Company allotted 5,55,544 Equity
Shares of face value of Rs.2/- each upon exercise of stock options under
Employee Stock Option Scheme 2006.
During Company has allotted following Equity Shares and Warrants as per
the provisions of Chapter VII of SEBI (ICDR) Regulations, 2009 pursuant
to shareholders approval by way of Special Resolution on 16th July,
2012;
(a) 43,04,661 Equity Shares of the face value of Rs.2/- each at premium
of Rs.191.74 to Promoter Group Entity.
(b) 1,85,03,419 Equity Shares of the face value of Rs.2/- each at premium
of Rs.147.16 to Non Promoter Group.
(c) 1,14,79,096 Warrants at Issue price of Rs.193.74 convertible in to
equal number of Equity Shares of the Face Value of Rs.2/- each to
Promoter Group Entity. 29,79,939 Equity Shares of face value of Rs.2/-
each at a premium of Rs.191.74/- per share were allotted upon conversion
of warrants issued under provisions of chapter VII of SEBI (ICDR)
Regulations, 2009.
Further there were no material variations between the projected and the
actual utilization of the proceeds of the aforesaid preferential issue
as stated in the explanatory statement to the notice of the extra
ordinary general meeting held on 16th July, 2012 for considering the
aforesaid preferential issues.
Post 31st March, 2013 & till 13th August 2013, the Company has allotted
33,575 Equity Shares of face value of Rs.2/- each upon exercise of stock
options by the eligible employees/Directors of the Company/subsidiaries
under Employee Stock Option Scheme 2006.
The paid up capital after taking the effect of aforesaid changes ,
stood at Rs.24,48,82,136/- consisting of 12,24,41,068 of the face value
of Rs.2/- each as on 13th August, 2013.
5. FOREIGN CURRENCY CONVERTIBLE BONDS
Redemption of US$ 80 Million Zero Coupon Foreign Currency Convertible
Bonds
During the Financial Year Company has redeemed the outstanding US$ 78.5
Million Zero Coupon FCCBs at 141.087 redemption premium of principal
amount on 26th July, 2012. Out of US$ 80 Million Zero Coupon FCCBs
raised in Financial Year 2007-08 for 5 years, US$ 1.5 million Zero
coupon FCCBs were converted in to 20,710 Equity shares of Rs.10/- each in
the FY 2007-08.
US$ 10 Million Zero Coupon Foreign Currency Convertible Bonds
During the Financial Year, the Company has raised US$ 10 million, Zero
Coupon FCCBs for redemption of outstanding FCCBs. The Bond holders, as
per the agreement, have the option to convert these bonds into Equity
Shares, at a price of Rs.188.62 per share with in 5 years and 1 day from
the date of disbursement. The FCCBs are redeemable at a premium of
34.07 % on principal after 5 years and 1 day. The FCCBs were raised for
the purposes of redemption of existing FCCBs.
6. SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES & EXTERNAL
COMMERCIAL BORROWINGS.
Non-Convertible Debentures
During the financial year, the Company issued Secured Non-Convertible
Debentures for an aggregate value of Rs.45 Crores. Company allotted 350,
13.5% Secured Non-Convertible Debentures ( Listed on Bombay Stock
exchange) of the face value of Rs.10,00,000/- each aggregating to Rs.35
Crores and 100, 13.25% Secured Non-Convertible Debentures of the face
value of Rs.10,00,000/- each aggregating to Rs.10 Crores.
External Commercial Borrowings
During the Financial Year, the Company has raised US$ 70 million
through External Commercial Borrowing (ECB) comprising US$ 30 million
from International Financial Corporation (IFC) a member of the World
Bank Group and US$ 40 million from Société De Promotion Et De
Participation
Pour La Coopération Ãconomique (PROPARCO), a French development
financial institution. The ECB has a term of 8.5 years with a 3 years
moratorium and the coupon rate is LIBOR 4.5%. The ECB has been raised
for purposes of redemption of existing FCCB.
7. PUBLIC DEPOSITS:
During the year under review, the Company did not accept any deposits
with in the meaning of the provisions of Section 58A of the Companies
Act, 1956.
8. SUBSIDIARIES/JOINT VENTURE/ASSOCIATES
As on March 31, 2013, the Company had 47 Subsidiaries, 2 Joint ventures
having 3 subsidiaries and 1 Associates.
During the year under review, your company as a part of business
transformation agenda had focus on its core businesses which is
(a) digital content & IP offerings and
(b) Asset-backed offerings like schools and colleges and
Business(s) which have been identified as "non-core" were divested or
shut down to arrest loss and cash drain thereof. In the process,
Company has successfully completed sale of stake in Eurokids
International Limited and Authorgen Technologies Limited.
After 31st March 2013 Company sold its entire 50% stake in the loss
making vocational training business (IndiaCan Education Private
Limited), to its JV partner Pearson.
9. PARTICULARS REQUIRED AS PER SECTION 212 OF THE COMPANIES ACT, 1956
& CONSOLIDATED FINANCIAL STATEMENT:
Ministry of Corporate Affairs, vide its circular dated February 8, 2011
has granted general exemption from attaching the Balance Sheet, Profit
and Loss Account and other documents of the subsidiary companies with
the Balance Sheet of the Company.
Board of Directors of the Company in its meeting held on 30th May 2013
consented for not attaching the balance sheet of the subsidiary
companies. A statement containing brief financial details of the
Company''s subsidiaries for the financial year ended March 31, 2013 is
included in the Annual Report. The annual accounts of these
subsidiaries and the related detailed information will be made
available to any member of the Company/its subsidiaries seeking such
information at any point of time and are also available for inspection
by any member of the Company/its subsidiaries at the registered office
of the Company. The annual accounts of the said subsidiaries will also
be available for inspection, as above, at the head offices/registered
offices of the respective subsidiary companies. The Company shall
furnish a copy of details of annual accounts of subsidiaries to any
member on demand.
Further the annual report of the Company contains the consolidated
audited financial statements prepared, pursuant to Clause 41 of The
Listing Agreement entered into with the stock exchanges and prepared in
accordance with the accounting standards notified by Ministry of
Corporate Affairs under Accounting Standard Rules 2006.The financial
data of the subsidiaries has been furnished along with the statement
pursuant to Section 212 of the Companies Act, 1956 forming part of the
Annual Report.
10. DIRECTORS:
As on 31st March 2013 Board of Directors of Educomp Solutions Limited
comprises of two Executive Directors namely Mr. Shantanu Prakash,
Chairman cum Managing Director and Mr. Jagdish Prakash, Whole Time
Director and Four Independent Non-Executive Directors, namely Mr. Shonu
Chandra, Mr. Sankalp Srivastava, Dr. Shayama Chona and Mr. Rajiv
Krishan Luthra & One Non Independent Non Executive Director Mr. Roy
Campbell II
During the year Mr. Gopal Jain had resigned from the Board with effect
from 27th July 2012. Mr. Manav Saraf was appointed as Additional
Directors of the Company w.e.f 26th July 2012 and upon his resignation
w.e.f from 7th November 2012 and nomination by Mount Kellett Mr. Roy
Campbell II was appointed as additional director w.e.f 9th November
2012 by the Board in the category of Non Independent Non-Executive.
After 31st March 2013 Dr. Shayama Chona resigned from the Board and Dr.
Subbarao Valluri Venkata was appointed as Additional Director in the
category of Independent Non Executive Director.
The Board of Directors records its appreciation & recognition of the
valuable contribution and services rendered by Mr. Gopal Jain, Dr.
Shayama Chona & Mr. Manav Saraf.
Mr. Roy Campbell and Dr. Subbarao Valluri Venkata will hold office of
the Additional Director up to the date of the ensuing Annual General
Meeting. The Company has received Notice under Section 257 of the
Companies Act, 1956 from a member signifying his intention to propose
them for the office of Director at the ensuing Annual General Meeting.
As per section 255 and 256 of the Companies Act, 1956 Mr. Sankalp
Srivastava & Mr. Jagdish Prakash are the Directors liable to retire by
rotation and further being eligible, offers themselves for
re-appointment at the ensuing Annual General Meeting.
The brief resume and other details relating to the directors, who are
to be appointed/ re-appointed as stipulated under Clause 49(IV)(G) of
the Listing Agreement, are furnished in the Notice of AGM forming part
of the Annual Report.
The Company also has Audit Committee which is constituted as per
requirement of Section 292A of the Companies Act, 1956 and Clause 49 of
Listing Agreement. Audit Committee has 3 members out of which 2 are
Non-Executive Independent Directors and one is Executive Director.
Chairman of Audit Committee is an Independent Non-Executive Director.
11. STATUTORY DISCLOSURES:
The Company has received Form DD-A from all Directors as required under
the provisions of Section 274(1)(g) of the Companies Act, 1956 read
with Companies (Disqualincation of Directors under Section 274 (1) (g)
of the Companies Act, 1956) Rules, 2003.
None of the Directors of your Company is disqualified as per provision
of Section 274(1)(g) of the Companies Act, 1956. The Directors of the
Company have made necessary disclosures, as required under various
provisions of the Companies Act, 1956 and Clause 49 of the Listing
Agreement.
12. HUMAN RESOURCE MANAGEMENT:
Educomp is an equal opportunity employer with total employee strength
of 16,919 as on 31st March, 2013 as compared to 16,609 as on 31st
March, 2012.
The Company has a suitable recruitment and human resource management
process, which enables us to attract and retain high caliber employees.
Company has created incentive driven remuneration policies which act as
an effective retention tool.
13. DIRECTORS RESPONSIBILITY STATEMENT:
In pursuance of provisions of Section 217(2AA) of the Companies Act,
1956, we hereby confirm that:
1) That in the preparation of the Annual Accounts for the period ended
as on 31st March 2013, the applicable Accounting Standards have been
followed and no material departure has been identified.
2) Accounting Policies have been consistently applied in a reasonable
and prudent manner so as to give true and fair view of the state of
affairs of the Company for the financial year ending 31st March 2013
and of the Profit and Loss Account for the financial year ending as on
31st March 2013
3) Proper and sufficient care has been taken for the maintenance of
adequate records in accordance with the applicable provisions of the
Companies Act, 1956 for safeguarding the assets of the Company
and for preventing and detecting fraud and other irregularities.
4) The Annual Accounts for the Financial Year ended on 31st March 2013
have been prepared on the going concern basis.
14. AUDITORS & AUDITORS'' REPORT:
M/s. Haribhakti & Co., Chartered Accountants statutory auditors of the
Company, will retire at the conclusion of the ensuing Annual General
Meeting of the Company. M/s. Haribhakti & Co., Chartered Accountants
being eligible have expressed their willingness for appointment as
statutory auditors of the company and have confirmed that appointment,
if made, will be within the prescribed limits under Section 224 (1B) of the
Companies Act, 1956.
The Directors refer to the auditors'' observation in the Annexure to
Independent Auditors'' Report and as required under Section 217(3) of
the Companies Act, 1956, provide their explanation as under:
Auditors'' observations and management''s response to auditors''
observations -
(ix) (a) & (b) In respect of auditors'' observation in standalone
financial statements regarding delay in a depositing statutory dues.
It is clarified that the delays arose on account of mismatches of cash
inflows and outflows which were subsequently rectified. This has been
taken to note by the management for compliance.
(xi) In respect of auditors'' observation in standalone financial
statements regarding certain default in repayment of dues to financial
institutions and banks.
It is clarified that the delay in payment of dues was from mismatches
of cash inflows and outflows which are attributable to higher
implementation and finance cost which adversely affected the liquidity,
investment in education subsidiaries with long gestation period, delay
in timely realization of receivables from our customers. However, the
management opines that with improved business scenario, your Company
will be able to meet its obligation in time.
(xix) In respect of auditors'' observation in standalone financial
statements regarding creation of partial security on the Non
Convertible Debentures(NCD), it is clarified this was due to procedural
delay in getting NOC from other lenders.
15. SHARE REGISTRATION ACTIVITY:
Company has appointed "LINK INTIME INDIA PRIVATE LIMITED" a category-I
Registrar and Share Transfer Agent reregistered with SEBI to handle the
work related to Share Registry.
16. CONSOLIDATED FINANCIAL STATEMENTS:
As required under the Listing Agreements with the Stock Exchanges
Consolidated Financial Statements of the Company and all its
subsidiaries are attached. The consolidated Financial statements have
been prepared in accordance with Accounting standard 21 ,Accounting
standard 23 and Accounting standard 27 issued by The Institute of
Chartered Accountants of India and showing the financial resources,
assets, liabilities, income, profits and other details of the Company
and its subsidiaries as a single entity, after elimination of minority
interest.
17. LISTING OF SHARES:
The Equity Shares of your Company are listed on National Stock Exchange
of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The
Listing fee for the financial year 2013-14 has already been paid to BSE
and NSE.
18. QUALITY INITIATIVES:
Reinforcing its commitment to high levels of quality, a ISO 9001:2008
Certification was awarded in application of ICT (Information and
Communication Technology) related to computer- aided learning, training
and computer literacy projects in schools.
19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ADOPTION
AND INNOVATION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars are prescribed under section 217(1) (e) of the
Companies Act, 1956, read with the Companies (Disclosure of particulars
in the report of Board of Directors) Rules, 1988 are set out in an
Annexure A attached to this report.
20. RATINGS, AWARDS, ACHIEVEMENTS & RECOGNITIONS: Ratings
Credit Analysis & Research Ltd, or CARE, has revised the following
ratings in relation to our long term and short term financing
facilities:
Long term facilities: Revised ''CARE A '' (Single A Plus) rating to ''CARE
D'' (Single D) to our long term facilities i.e. facilities having tenure
of more than one year, aggregating to Rs.299.07 Crore.
Short term facilities: Revised CARE A1 ( A One Plus) to CARE D (
Single D) to our short term facilities i.e. facilities having tenure of
less than one year, aggregating to Rs.410 Crore.
Non-Convertible Debentures (NCDs): Revised ''CARE A '' (Single A Plus)
rating to ''CARE D'' (Single D) to our NCD issuance of Rs.45 crore.
In June 2013, India Ratings revised long-term issuer rating from ''Ind
A'' to ''Ind D''.
Awards, Achievements & Recognitions:
In exploring the horizons of what learning can be, accolades and awards
have come our way, awards which have reiterated our resolve to live our
vision everyday and fulfill our mission.
Over the year, Educomp, its affiliates and it leadership has won
recognition from several renowned institutions.
- PricewaterhouseCoopers (PwC) report (May 2013) ranked Educomp at
number 85 amongst the top 100 software vendors in the emerging markets
commanding combined revenue of $797 million and among the 16 Indian
companies that have made it to the list.
- Educomp ranked number 12 in Business World''s India''s fastest growing
companies (May 2013 Issue).
- In Indian Education Awards 2013 Educomp won awards for, ''Best K12
School Chain- National for The Millennium Schools'', ''Innovation in
Early Learning for Little Millennium'' and ''Best Digital Content for
Smartclass''.
- At Navikaran Awards ceremony on 30th January at ''World Schools
Resources Expo 2013'' Educomp was awarded as the "Corporate of the Year"
and Shantanu Prakash, chairman & managing director, Educomp Solutions,
was awarded "Entrepreneur of the Year". The event was organized by
Creative Children Media in partnership with Zee Business.
- On November, 2012, three Learning.com products were selected for the
2012 Tech & Learning Awards of Excellence. Learning. com Marketplace
and Middle School STEM both won awards in the New Product category, and
Aha! Math earned recognition as a Best Upgraded Product in the
prestigious 30-year-old recognition program.
- Kavin Chander of Std X at PSBB Millennium was a winner at the
National Indian Robot Olympiad on 30th of September.
- Educomp was ranked amongst India''s 40 fastest growing companies by
Outlook Business in its 26-May-2012 issue. Shantanu Prakash was
nominated for the highest honour -"Entrepreneur of the Year" Award for
his exceptional vision in uplifting the education sector in India and
bestowing it with much needed change at "Entrepreneur India Awards
2012" organized by Franchise India Holdings Limited on May 18, 2012.
- Educomp Solutions won three prestigious awards - "Best Education
Company to work with," "Best Innovative K 12 School" and "Best
Education Webinar Series" at the Indian Education Awards (IEA) 2012 at
a glittering ceremony on 28th April 2012.
21. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION &
ANALYSIS
Committed to good corporate governance practices, your company fully
conform to standards set out by SEBI and other regulatory authorities
and has implemented and complied with all of its major stipulations. As
per clause 49 of the Listing Agreement, a report on Corporate
Governance along with Compliance Certificate from the Practicing
Company Secretary and Management Discussion and Analysis Report are
annexed and forms part of this Annual Report.
22. CODE OF CONDUCT:
As per Clause 49 (I) (D), the Board of the Company has laid down Code
of Conduct for all the Board members of the Company and Senior
Management as well and the same has been posted on Website of the
Company. Annual Compliance Report for the year ended 31st March 2013
has been received from all the Board members and senior management of
the Company regarding the compliance of all the provisions of Code of
Conduct. Declaration regarding compliance by Board members and senior
management personnel with the Company''s Code of Conduct is hereby
attached as Annexure B to this report.
23. NOTES TO ACCOUNTS:
They are self-explanatory and do not require any explanations.
24. PARTICULARS OF EMPLOYEES:
In Terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are set out
in the Annexure C to the Director''s Report.
25. EMPLOYEES STOCK OPTION SCHEMES (ESOPS)
The growth of the Company has, in large measure, been possible owing to
the wholehearted support, commitment and teamwork of its personnel.
Accordingly, the Company has introduced ESOP-2006, ESOP-2007 , ESOP-
2008, ESOP-2010, ESOP-2011 and ESOP-2012 for its employees and
employees of its subsidiary companies.
The details of options granted under ESOP-2006, ESOP-2007, ESOP - 2008,
ESOP - 2010, ESOP - 2011 and ESOP - 2012 is attached as Annexure D.
During the year, Pursuant to shareholders resolution dated 16th July
2012, Company has implemented ESOP Scheme 2012 and the remuneration
committee of Board of Directors of the Company has granted 26,00,000
Stock Options Employees / Director of the Company and its Subsidiaries
under ESOP Scheme 2012.
A certificate from Statutory Auditors, with respect to the
implementation of the Company Employee''s Stock Option schemes, would be
placed before the shareholders at the ensuing Annual General Meeting,
and a copy of the same shall be available for inspection at the
registered office of the Company.
26. DISCLOSURE PURSUANT TO CLAUSE 5A OF LISTING AGREEMENT
Pursuant to insertion of clause 5A in listing Agreement as per SEBI
notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 the
details in respect of the shares lying in the suspense account till
March 31, 2013 is as under.
All the unclaimed shares are being credited to a DEMAT suspense account
and all the corporate benefits in terms of securities, accruing to on
these unclaimed shares shall be credited to such account. Voting rights
on these shares shall remain frozen till the rightful owner of such
shares claims the shares.
27. CORPORATE GOVERNANCE:
The Company has always been committed to maintain the highest standards
of Corporate Governance and adhere to the Corporate Governance
requirements as set out by Statutory Bodies.
The Ministry of Corporate Affairs, Government of India, introduced the
Corporate Governance Voluntary Guidelines, 2009. These guidelines have
been issued to provide Corporate India a framework to govern themselves
voluntarily as per the highest standards of ethical and responsible
conduct of business. The Guidelines broadly outline conditions for
appointment of directors (including independent directors), guiding
principles to remunerate directors, responsibilities of the Board, risk
management, the enhanced role of Audit Committee, rotation of audit
partners and firms and conduct of secretarial audit. Your company is
already by and large complying with the voluntary guidelines Corporate
Governance various requirements.
28. ACKNOWLEDGEMENT:
Your Directors wish to place on record their appreciation for the
Co-operation and support received from the Government and Semi-
Government agencies.
Your Directors are also thankful to all the bankers and financial
institutions for their support to the Company. The Board places on
record its appreciation for continued support provided by the esteemed
customers, suppliers, consultants and shareholders.
The directors also acknowledge the hard work, dedication and commitment
of the employees of the Company and its subsidiaries. The enthusiasm
and unstinting efforts of the employees have enabled the Company to
continue being a leading player in the Education field.
For and on Behalf of the
Board of Directors
Date : 13th August 2013
Place : Gurgaon (Shantanu Prakash)
Chairman & Managing Director
Mar 31, 2012
Dear Shareholders,
The Directors of your Company have pleasure in presenting herewith the
18th Annual Report of your Company together with the audited accounts
for the Financial Year ended 31st March 2012
1. Financial Performance :
The consolidated and standalone audited financial results for the year
ended 31st March 2012 are as follows:
(Rs. in million)
Particulars Consolidated Standalone
Year Ended Year Ended
Audited Audited
31.03.2012 31.03.2011 31.03.2012 31.03.2011
Sales and other
Income 15,224.36 13970.24 10920.37 10617.73
Profit ( )/Loss(-)
Before 1945.30 4083.07 2444.80 4363.05
tax
Provision for Tax 574.74 677.74 555.77 474.37
Net Profit ( )/Loss(-) 1,370.56 3405.33 1889.03 3888.68
after tax
Minority interest and 15.2 38.61
equity in earnings/
(losses) in affiliates/ Pre
acquisition Loss/(profit)
Net profit for the year 1,355.36 3366.72 1889.03 3888.68
Appropriations
Interim Dividend - 13.20 - -
Proposed Dividend on 45.62 57.59 28.99 57.59
equity shares
Corporate Tax on 5.57 (0.30) 4.70 (0.29)
distributed dividend
Transfer to Debenture 209.39 349.95
Redemption Reserve
Transfer to General 99.45 389.11 94.45 388.87
Reserve
2. Dividend:
Based on the Company's performance, and keeping in view future fund
requirements of the Company, Your Directors have recommended a dividend
of Rs.0.30 per Equity Share (15% on face value of Rs.2/-each) for the
Financial year ended as on 31st March, 2012, which on approval at the
forthcoming Annual General Meeting, will be paid:
(i) to those Equity Shareholders, holding shares in physical form,
whose name appear on the Register of Members of the Company at the
close of business hours on 21st September 2012 after giving effect to
all valid transfers in physical form lodged with the Company or its
Registrar and Share Transfer Agent till 21st September 2012
(ii) to those beneficial owners, holding shares in electronic form,
whose name appear in the statement of beneficial owners furnished by
the Depositories to the Company as at the close of business hours on
21st September 2012
The final dividend on the Equity Shares, if approved by the members
would involve a cash outflow of Rs.41.63 million including dividend tax
for the Financial Year 2011-12 as against total dividend payout of
Rs.66.92 million for the previous year
The register of members and share transfer books will remain closed
from 22nd September 2012 to 26th September 2012 (both days inclusive).
The Annual General meeting of the Company will be held on 26th
September 2012.
3. Transfer to Reserves:
The Company proposes to transfer Rs.94.45 million (Previous year Rs.388.87
million) to the General Reserve out of the amount available for
appropriations. An amount of Rs.9,055.70 million (Previous year Rs.7,294.81
million) has been proposed to be retained in the Profit and Loss
Account.
4. Operating Results and Business:
In year 2011-12, Company's performance was quite satisfactory and has
shown a CAGR over a period of 5 years of 39.1% on consolidated basis
and 32.7% on standalone basis.
We enjoy long-term annuity relationships with both private schools as
well as government customers, ranging from three to five years. Our
revenues are predictable & locked in for three to five years on account
of the contractual nature of our business.
In the smartclass à segment, we have added 6114 new customers taking
the total number of schools to 12652 as on March 31, 2012 as compared
to 6538 as on March 31, 2011.
In Edureach (formerly ICT) business segment, we have an ongoing
partnership with twelve state Governments and are catering to 11535
Government schools in various states as on March 31, 2012 as compared
to 10572 Government schools in various states as on March 31, 2011.
On Standalone basis Company's Total revenue increased to Rs.10,920.37
million as on March 31, 2012 from Rs.10,617.73 million as on March 31,
2011, registering a growth of 2.85%.The profit before tax and after
prior period items stand at Rs.2444.80 million as on March 31, 2012 as
against Rs.4,363.05 million as on March 31, 2011.The profit after tax
stands at Rs.1,889.03 million as on March 31, 2012 as against Rs.3,888.68
million as on March 31, 2011.
On Consolidated basis Company's Total revenue increased to Rs.15,224.36
million as on March 31, 2012 from Rs.13,970.24 million as on March 31,
2011, registering a growth of 8.98%. The profit before tax and after
prior period items stands at Rs.1,945.30 million as on March 31, 2012 as
against Rs.4,083.07 million as on March 31, 2011. The profit after tax,
minority and pre-acquisition profits stands at Rs.1,355.36 million as on
March 31, 2012 as against Rs.3,366.72 million as on March 31, 2011.
Segmental Performance (Standalone):
The EBIT margins in the School learning solutions (SLS) Segment of the
Company for the year amounted to Rs.4,275.39 million or 40.81% of SLS
revenues as on March 31, 2012 as compared to Rs.5,201.96 million or
52.08% of SLS revenues as on March 31, 2011.
The EBIT margins in the Higher learning solutions (HLS) segment of the
Company for the year amounted to Rs.43.48 million or 32.03% of HLS
revenues as on March 31, 2012 as compared to Rs.48.26 million or 28.57%
of professional development revenue as on March 31, 2011.
The EBIT margins in the K-12 Segment of the Company for the year
amounted to Rs.13.81 million or 97.85% of K-12 segment revenues as on
March 31, 2012 as compared to Rs.8.99 million or 34.37% as on March 31,
2011.
The EBIT margins in Online and Retail segment of the Company for the
year amounted to Rs.-19.01 million as on March 31, 2012 as compared to
Rs.-59.48 million of Online and Retail revenues as on March 31, 2011.
Expenditure(Standalone):
Cost of Goods Sold (COGS) has increased to 35.38% of our revenue as on
March 31, 2012 from 26.91% as on March 31, 2011. This increase is on
account of product upgradation and depreciation in rupee.
Personnel expenses have increased to 16.20% of our revenue as on March
31, 2012 from 13.34% as on March 31, 2011. This increase is due to the
fact that our company is growing rapidly.
Administration & other expenses have increased to 13.73% as on March
31, 2012 from 8.61% of our revenue as on March 31, 2011.
Our Profit after tax amounted to Rs.1,889.03 million or 17.30% of revenue
as on March 31, 2012 as compared to Rs.3,888.68 million or 36.62% of
revenue as on March 31, 2011.
5. Changes in Capital Structure :
Authorized Share Capital
Shareholders of the company on 26th July, 2011 by passing special
resolution through postal ballot approved increase in Authorised Share
Capital of the Company.
Authorised Share Capital of the Company is Rs.30,00,00,000/- (Rupees
Thirty crore) divided into 15,00,00,000 (Fifteen crore) equity shares
of Rs.2/- (Rupees Two) each.
Issued and Paid-up Share Capital
During the year under review, the Company allotted 4,84,405 Equity
Shares of face value of Rs.2/- each upon exercise of stock options by the
eligible employees/Directors of the Company/subsidiaries under Employee
Stock Option Scheme 2006.
On 20th April 2011, the Company has allotted 35,129 Equity Shares of
the face value of Rs.2/- each at a premium of Rs.536/- per share on
Preferential Basis under Chapter VII of SEBI (ICDR) Regulations, 2009.
Post 31st March, 2012 & till 13th August 2012, the Company has allotted
5,33,894 Equity Shares of face value of Rs.2/- each upon exercise of
stock options by the eligible employees/Directors of the
Company/subsidiaries under Employee Stock Option Scheme 2006.
Shareholders of the Company through Special Resolution passed in the
Extra Ordinary General Meeting of the Company held on 16th July, 2012
approved Preferential Issue of Equity Shares and Warrants as per the
provisions of Chapter VII of SEBI (ICDR) Regulations, 2009 to Promoter
and Non Promoter Group.
Further the Company has allotted following Equity Shares and Warrants
as per the provisions of Chapter VII of SEBI (ICDR) Regulations, 2009;
(a) 43,04,661 Equity Shares of the face value of Rs.2/- each at premium
of Rs.191.74 to Promoter Group Entity.
(b) 1,85,03,419 Equity Shares of the face value of Rs.2/- each at premium
of Rs.147.16 to Non Promoter Group.
(c) 1,14,79,096 Warrants at Issue price of Rs.193.74 convertible in to
equal number of Equity Shares of the Face Value of Rs.2/- each to
Promoter Group Entity. 25% of the Warrant price have been received and
the balance 75% of the Warrant Price will be payable within a period of
18 months from the date of allotment.
The paid up capital after taking the effect of changes as above, stood
at Rs.23,88,11,808/- consisting of 119,405,904 shares of the face value
of Rs.2/- each as on 13th August 2011.
6. Foreign Currency Convertible Bonds
US$ 80 Million Zero Coupon Foreign Currency Convertible Bonds
Post Balance Sheet date the Company has redeemed outstanding US$ 78.5
Million Zero Coupon FCCBs at 141.087 redemption premium of principal
amount on July 26, 2012. Out of US$ 80 Million Zero Coupon FCCBs raised
in Financial Year 2007-08 for 5 years US$ 1.5 million Zero coupon FCCBs
were converted in to 20,710 Equity shares of Rs.10/- each in the F.Y
2007-08.
US$ 10 Million Zero Coupon Foreign Currency Convertible Bonds
Post Balance Sheet date the Company has raised US$ 10 million, Zero
Coupon Foreign Currency Convertible Bonds for redemption of outstanding
FCCB. The Bond holders, as per the agreement, have the option to
convert these bonds into equity shares, at a price of Rs.188.62 per share
with in 5 years and 1 day from the date of disbursement. The FCCB is
redeemable at a premium of 34.07 % on principal after 5 year and 1 day.
The FCCB has been raised for purposes of redemption of existing FCCB.
7. 13.5% Secured, Redeemable, Non-Convertible Debentures & External
Commercial Borrowings.
Non-Convertible Debentures
The Company on 24th May, 2012 has allotted 350, 13.5% Secured Non-
Convertible Debentures of the face value of Rs.10,00,000/- each
aggregating to Rs.35 crore Above mentioned Debentures are issued in DEMAT
form and are listed on Bombay Stock Exchange Limited.
Further Company on 20th July, 2012 has allotted 100, 13.25% Secured
Non-Convertible Debentures of the face value of Rs.10,00,000/- each
aggregating to Rs.10 crore.
External Commercial Borrowings
After Balance sheet date, the Company has raised US$ 70 million through
External Commercial Borrowing (ECB) comprising US$ 30 million from
International Financial Corporation (IFC) a member of the World Bank
Group and US$ 40 million from Société De Promotion Et De Participation
Pour La Coopération Ãconomique (PROPARCO), a French development
financial institution. The ECB has a term of 8.5 years with a 3 years
moratorium and the coupon rate is LIBOR 4.5%. The ECB has been raised
for purposes of redemption of existing FCCB.
8. Subsidiaries/Joint Venture/Associates of the Company:
As on March 31, 2012, Company had 52 Subsidiaries, 2 Joint ventures
having 3 Subsidiaries & 1 Associates. During the Year the Company has
sold its stake in Zeebo Interactive Studio Pvt Ltd.
9. Particulars required as per section 212 of the Companies Act, 1956:
Ministry of Corporate Affairs, vide its circular dated February 8, 2011
has granted general exemption from attaching the Balance Sheet, Profit
and Loss Account and other documents of the subsidiary companies with
the Balance Sheet of the Company.
Board of Directors of the company in its meeting held on 30th May 2012
consented for not attaching the balance sheet of the subsidiary
companies. A statement containing brief financial details of the
Company's subsidiaries for the financial year ended March 31, 2012 is
included in the Annual Report. The annual accounts of these
subsidiaries and the related detailed information will be made
available to any member of the Company/its subsidiaries seeking such
information at any point of time and are also available for inspection
by any member of the Company/its subsidiaries at the registered office
of the Company. The annual accounts of the said subsidiaries will also
be available for inspection, as above, at the head offices/registered
offices of the respective subsidiary companies. The Company shall
furnish a copy of details of annual accounts of subsidiaries to any
member on demand.
Further the annual report of the Company contains the consolidated
audited financial statements prepared, pursuant to Clause 41 of The
Listing Agreement entered into with the stock exchanges and prepared in
accordance with the accounting standards notified by Ministry of
Corporate Affairs under Accounting Standard Rules 2006.The financial
data of the subsidiaries has been furnished along with the statement
pursuant to Section 212 of the Companies Act, 1956 forming part of the
Annual Report.
10. Directors:
Board of Directors of Educomp Solutions Limited comprises of two
Executive Promoter Directors namely Mr. Shantanu Prakash, Chairman cum
Managing Director and Mr. Jagdish Prakash, Whole Time Director and five
Independent Non-Executive Directors, namely Mr. Shonu Chandra, Mr.
Sankalp Srivastva, Mr. Gopal Jain. Dr. Shayama Chona and Mr. Rajiv
Krishan Luthra.
On 26th July, 2012 Mr. Manav Saraf was appointed as additional
directors by the Board in the category of Non Independent
Non-Executive. Mr. Gopa Jain has resigned from the Board with effect
from 27th July, 2012.
Mr. Manav Saraf will hold office of the Additional Director up to the
date of the ensuing Annual General Meeting. Board proposes to
regularize him as Director in the forthcoming Annual General Meeting.
As per section 255 and 256 of the Companies Act, 1956 Dr. Shayama
Chona, and Mr. Shonu Chandra are the Directors liable to retire by
rotation and further being eligible, offers themselves for
re-appointment at the ensuing Annual General Meeting. Board recommends
their re-appointment for your approval.
The brief resume and other details relating to the directors, who are
to be appointed/ re-appointed as stipulated under Clause 49(IV)(G) of
the Listing Agreement, are furnished in the Notice of AGM forming part
of the Annual Report.
The Company also has Audit Committee which is constituted as per
requirement of Section 292A of the Companies Act, 1956 and Clause 49 of
Listing Agreement. Audit Committee has 4 members out of which 3 are
Non-Executive Independent Directors and one is Executive Director.
Chairman of Audit Committee is Independent Non-Executive Director.
After resignation of Mr. Gopal Jain w.e.f. 27-07-2012 he ceases to be
the member of the Audit Committee.
11. Statutory Disclosures:
None of the Directors of your Company is disqualified as per provision
of section 274(1)(g) of the Companies Act, 1956. The Directors of the
Company have made necessary disclosures, as required under various
provisions of the Act and Clause 49 of the Listing Agreement.
12. Human Resource Management:
Educomp is an equal opportunity employer with total employee strength
of 16,609 as on March 31, 2012 as compared to 13,917 as on March 31,
2011.
Educomp's HR policies and processes are aligned to effectively drive
its expanding business and making inroads into emerging opportunities.
The Company has a suitable recruitment and human resource management
process, which enables us to attract and retain high caliber employees.
Company has created incentive driven remuneration policies which act as
an effective retention tool.
13. Directors Responsibility statement:
In pursuance of provisions of Section 217(2AA), we hereby confirm that:
1) That in the preparation of the Annual Accounts for the period ended
as on 31st March 2012, the applicable Accounting Standards have been
followed and no material departure has been identified.
2) Accounting Policies have been consistently applied in a reasonable
and prudent manner so as to give true and fair view of the state of
affairs of the Company for the financial year ending 31st March 2012
and of the Profit and Loss Account for the financial year ending as on
31st March 2012
3) Proper and sufficient care has been taken for the maintenance of
adequate records in accordance with the applicable provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
4) The Annual Accounts for the Financial Year ended on 31st March 2012
have been prepared on the going concern basis.
14. Auditors & Auditors' Report:
M /s Anupam Bansal & Co, Chartered Accountants & M/s. Haribhakti & Co.,
Chartered Accountants Joint statutory auditors of the Company, will
retire at the conclusion of the ensuing Annual General Meeting of the
Company. M/s Anupam Bansal & Co, Chartered Accountants has shown his
unwillingness for reappointment as Statutory Auditor. M/s. Haribhakti &
Co., Chartered Accountants being eligible have expressed their
willingness for appointment as statutory auditors of the company and
have confirmed that appointment, if made, will be within the prescribed
limits under Section 224 (1B) of the Companies Act, 1956.
The notes on accounts referred to in the auditors' report are self-
explanatory and therefore don't call for any further comments by the
Board of directors.
There are no qualifications or adverse remarks in the Auditors' Report
which require any clarification or explanation.
15. Share Registration Activity:
Company has appointed "LINK INTIME INDIA PRIVATE LIMITED" a category-I
Registrar and Share Transfer Agent reregistered with SEBI to handle the
work related to Share Registry.
16. Consolidated Financial Statements:
As required under the Listing Agreements with the Stock Exchanges
Consolidated Financial Statements of the Company and all its
subsidiaries are attached. The consolidated Financial statements have
been prepared in accordance with Accounting standard 21 ,Accounting
standard 23 and Accounting standard 27 issued by The Institute of
Chartered Accountants of India and showing the financial resources,
assets, liabilities, income, profits and other details of the Company
and its subsidiaries as a single entity, after elimination of minority
interest.
17. Listing of Shares:
The Equity Shares of your Company are listed on National Stock Exchange
of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The
Listing fee for the year 2012-13 has already been paid to BSE and NSE.
19. Quality Initiatives:
Reinforcing its commitment to high levels of quality, a ISO 9001:2008
Certification was awarded in application of ICT (Information and
Communication Technology) related to computer- aided learning, training
and computer literacy projects in schools.
20. Conservation of energy, technology absorption, adoption and
Innovation, foreign exchange earnings and outgo:
The particulars are prescribed under section 217(1) (e) of the
companies Act, 1956, read with the Companies (Disclosure of particulars
in the report of Board of Director s) Rules, 1988 are set out in an
Annexure A attached to this report.
21. Ratings, Awards, Achievements & Recognitions: Ratings
Credit Analysis & Research Ltd, or CARE, has revised/affirmed the
following ratings in relation to our long term and short term financing
facilities:
Long term facilities: Revised 'CARE A' (Single A) rating to 'CARE A '
(Single A Plus) to our long term facilities i.e. facilities having
tenure of more than one year, aggregating to Rs.382.70 crore.
Short term facilities : Revised CARE A1 ( A One) to CARE A1 ( A One )
to our short term facilities i.e. facilities having tenure of less than
one year, aggregating to Rs.410 crore.
Commercial Paper : Reaffirmed CARE A1 ( A One) for the CP Issue for
Rs.100 crore. Reaffirmed CARE A1 ( A One ) for the CP Issue for Rs.80
crore (carved out of working capital issues).
In September 2010, Fitch, Inc. assigned us a long-term issuer rating of
'A (ind)' and an 'F1' rating for both our short-term debt and working
capital facilities.
Dun & Bradstreet assigned a 5A1 rating to us. The rating comprises two
parts, a rating of our financial strength (5A) and a rating based on a
composite credit appraisal (1). The former is an indication of our
tangible net worth whilst the latter is linked to the level of risk in
our business and is an overall evaluation of creditworthiness. The 5A1
rating, in summary, reflects that we have a tangible net worth in
excess of Rs.645,950,000 and that the overall creditworthiness is high.
Awards, Achievements & Recognitions:
Educomp Solutions won three prestigious awards - "Best Education
Company to work with," "Best Innovative K 12 School" and "Best
Education Webinar Series" at the Indian Education Awards (IEA) 2012 at
a glittering ceremony on 28th April 2012. In March 2012 Business Today
featured Educomp is one of the "Top 10 best companies to work for in
2011" in its - People Strong Best Companies to Work For, study.
Educomp featured in Asia's 'Best under a billion' list released by
Forbes Asia (15-Sep-2011). Educomp is among the 35 Indian companies who
have made the mark. In its definitive Ranking of India's Biggest
Companies, Business World (October 24, 2011), chose Educomp in 2 of its
lists of top 500 biggest companies in India. Educomp features in top
500 non financial companies with a rank of 217. We are also ranked 39th
of the top 500 in the list of "The Biggest Employers". Shantanu Prakash
our Managing Director & CEO was conferred with the prestigious Wisitex
International Shiksha Ratna of the Decade Award 2011 (14-Sep-2011).
Malgosia Green who heads our Learnhub business was named one of the 20
Young Women in Power by Canadian Business Magazine (30-Aug-2011).
Our JRE Business School was selected as 'Asia's Promising Business
Schools' by World Brand Congress in Singapore from amongst B-schools of
29 countries on 22nd July 2011. Educomp and its associate companies won
the highest number of awards at the 2011 edition of the prestigious
World Education Awards held on 14th July. Among the awards bagged by
Educomp were Best Public Choice Award for Innovation in Teaching
Pedagogy bagged by Educomp R&D for EFES (Empowering Facilitators with
Effective Strategies); Best Public Choice Award for Learning Initiative
of the Year bagged by Educonnect: Language Connects (Educomp- IndiaCan
English Speaking Program), and AuthorGen Technologies (an Educomp
subsidiary) won the Best Public Choice Award for Innovation in Open &
Distance Learning. On 5th July 2011, Sangeeta Gulati, CFO of Educomp
received the prestigious Business Today Best CFO award in the category
'Sustained Wealth Creation (mid size)' from Finance Minister, Mr.
Pranab Mukherjee. Educomp was conferred with Excellence Award by
Institute of Economic Studies on 30th June 2011 and Soumya Kanti,
President of Edureach (PPP & ICT Division of Educomp) was awarded the
"Udyog Rattan Award". Franchise India presented "Entrepreneur of the
Year" award to Educomp CEO, Mr. Shantanu Prakash in April 2011. The
awards were organized by: Indian Education Awards 2011" to recognize
and acknowledge the initiatives and achievements of certain individuals
and institutions that have contributed significantly towards the growth
of the education sector in India in the recent times. Dare Magazine in
its April 2011 issue chose Shantanu in its list of Inspiring 50
Entrepreneurs à 2011 because "Shantanu Prakash, founder of Educomp, is
the man who is responsible for bringing the much-awaited change in the
Indian education system". In March 2011 Shantanu Prakash, won the
prestigious ET Now 'Leap of Faith' Award in the category of Education.
22. Report on Corporate Governance and Management Discussion &
Analysis
Committed to good corporate governance practices, your company fully
conform to standards set out by SEBI and other regulatory authorities
and has implemented and complied with all of its major stipulations. As
per clause 49 of the Listing Agreement, a report on Corporate
Governance along with Compliance Certificate from the Practicing
Company Secretary and Management Discussion and Analysis Report are
annexed and forms part of this Annual Report.
23. Code of Conduct:
As per Clause 49 (I) (D), the Board of the Company has laid down Code
of Conduct for all the Board members of the Company and Senior
Management as well and the same has been posted on Website of the
Company. Annual Compliance Report for the year ended 31st March 2012
has been received from all the Board members and senior management of
the Company regarding the compliance of all the provisions of Code of
Conduct. Declaration regarding compliance by Board members and senior
management personnel with the Company's Code of Conduct is hereby
attached as annexure to this report.
24. Notes to Accounts:
They are self-explanatory and do not require any explanations.
25. Particulars of employees:
In Terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies(Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are set out
in the annexure to the Director's Report.
26. Group
Pursuant to intimation from the Promoters, the names of the Promoters
and entities comprising 'Group' are disclosed in the Annual Report for
the purpose of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997.
27. Public Deposits:
During the year, The Company has not accepted any deposits within the
meaning of the provisions of Section 58A of the Companies Act, 1956.
28. Employees Stock Option Schemes (ESOPs)
The exponential growth of the Company has, in large measure, been
possible owing to the wholehearted support, commitment and teamwork of
its personnel. Accordingly, the Company has introduced ESOP-2006,
ESOP-2007 , ESOP-2008, ESOP-2010 and ESOP-2011 for its employees and
employees of its subsidiary companies.
The details of options granted under ESOP-2006, ESOP-2007, ESOP Ã 2008,
ESOP Ã 2010 and ESOP Ã 2011 is attached as Annexure B,
Post 31st March 2012, Pursuant to shareholders resolution dated 16th
July 2012, Company has implemented ESOP Scheme 2012 and the
remuneration committee of Board of Directors of the Company has granted
2600000 Stock Options Employees / Director of the Company and its
Subsidiaries under ESOP Scheme 2012
A certificate from Statutory Auditors, with respect to the
implementation of the Company Employee's Stock Option schemes, would be
placed before the shareholders at the ensuing Annual General Meeting,
and a copy of the same shall be available for inspection at the
registered office of the Company.
29. Disclosure Pursuant To Clause 5A of Listing Agreement
Pursuant to insertion of clause 5A in listing Agreement as per SEB
notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 the
details in respect of the shares lying in the suspense account till
March 31, 2012 is as under.
Description No. of Cases No. of Shares
1. Aggregate number of shareholders 3 750
and the outstanding shares
in the initiation of suspense
account.
2. Number of shareholders who 0 0
approached the Company for transfer
of shares from suspense account
during the year 2011-12
3. Number of shareholders to whom 0 0
shares were transferred from suspense
account during the year 2011-12
aggregate number of shareholders and 3 750
the outstanding shares in the suspense
account lying as on March 31, 2012
All the unclaimed shares are being credited to a DEMAT suspense account
and all the corporate benefits in terms of securities, accruing to on
these unclaimed shares shall be credited to such account. Voting rights
on these shares shall remain frozen till the rightful owner of such
shares claims the shares.
30. Corporate Governance:
The Company has always been committed to maintain the highest standards
of Corporate Governance and adhere to the Corporate Governance
requirements as set out by Statutory Bodies.
With a view to strengthening the Corporate Governance framework, the
Ministry of Corporate Affairs has incorporated certain provisions in
the Companies Bill 2009. The Ministry has issued a set of voluntary
guidelines in the second half of December 2009 for adoption by the
companies. The Guidelines broadly outline conditions for appointment
of directors (including independent directors), guiding principles to
remunerate directors, responsibilities of the Board, risk management,
the enhanced role of Audit Committee, rotation of audit partners and
firms and conduct of secretarial audit. Your company is already by and
large complying with the voluntary guidelines Corporate Governance
various requirements, it has initiated appropriate action for
compliance.
31. Acknowledgement:
Your Directors wish to place on record their appreciation for the
Co-operation and support received from the Government and Semi-
Government agencies.
Your Directors are also thankful to all the bankers and financial
institutions for their support to the Company. The Board places on
record its appreciation for continued support provided by the esteemed
customers, suppliers, consultants and shareholders.
The directors also acknowledge the hard work, dedication and commitment
of the employees of the Company and its subsidiaries. The enthusiasm
and unstinting efforts of the employees have enabled the Company to
continue being a leading player in the Education field.
For and on Behalf of the Board of Directors
Place : Gurgaon (Shantanu Prakash)
Date : 13th August, 2012 Chairman & Managing Director
Mar 31, 2011
Dear Shareholders,
The Directors of your Company have pleasure in presenting herewith the
17th Annual Report of your Company together with the audited accounts
for the Financial Year ended 31st March 2011
1. Financial Performance:
The consolidated and standalone audited financial results for the year
ended 31st March 2011 are as follows:
(Rs. in million)
Particulars Consolidated Standalone
Year Ended Year Ended
Audited Audited
31.03.2011 31.03.2010 31.03.2011 31.03.2010
Sales and other Income 13970.24 11650.16 10617.73 8727.12
Profit ( )/Loss(-)
Before tax 4083.07 4391.73 4363.05 3718.27
Provision for Tax 677.74 1584.19 474.37 1499.61
Net Profit ( )/Loss(-)
after tax 3405.33 2807.54 3888.68 2218.66
Minority interest and
equity in earnings/
(losses) in affiliates/
Pre acquisition 38.61 48.90 - -
Loss/(profit)
Net profit for the year 3366.72 2758.64 3888.68 2218.66
Appropriations
Interim Dividend 13.20 103.24 - 94.93
Proposed Dividend on
equity shares 57.59 187.67 57.59 171.72
Corporate Tax on
distributed dividend (0.29) 46.59 (0.29) 43.87
Transfer to Debenture
Redemption Reserve 349.95 0.00 - -
Transfer to General
Reserve 389.11 239.48 388.87 221.87
2. Dividend:
Based on the Company's performance, and keeping in view future fund
requirements of the Company, Your Directors have recommended a dividend
of Rs. 0.60 per Equity Share (30% on face value ofRs. 2/- each) for the
Financial year ended as on 31st March, 2011, which on approval at the
forthcoming Annual General Meeting, will be paid
(i) to those Equity Shareholders, holding shares in physical form,
whose name appear on the Register of Members of the Company at the
close of business hours on 16th September 2011 after giving effect to
all valid transfers in physical form lodged with the Company or its
Registrar and Share Transfer Agent till 16th September 2011
(ii) to those beneficial owners, holding shares in electronic form,
whose name appear in the statement of beneficial owners furnished by
the Depositories to the Company as at the close of business hours on
16th September 2011
The final dividend on the Equity Shares, if approved by the members
would involve a cash outflow ofRs. 66.92 million including dividend tax
for the Financial Year 2010-11 as against total dividend payout of Rs.
305.83 million for the previous year
The register of members and share transfer books will remain closed
from 17th September 2011 to 24th September 2011 (both days inclusive).
The Annual General meeting of the Company will be held on 24th
September 2011.
3. Transfer to Reserves:
The Company proposes to transfer Rs. 388.87 million (Previous year Rs.
221.87 million) to the General Reserve out of the amount available for
appropriations. An amount of Rs. 7294.81 million (Previous year Rs.
3852.30 million) has been proposed to be retained in the Profit and
Loss Account.
4. Operating Results and Business:
In year 2010-11 , Company's performance was quite satisfactory and has
shown a CAGR over a period of 3 years of 28.5% on consolidated basis
and 26.8% on standalone basis.
On Standalone basis Company's Total revenue increased to Rs. 10617.73
million as on March 31, 2011 from Rs. 8727.12 million as on March 31,
2010, registering a growth of 21.66%.The profit before tax and after
prior period items increased to Rs. 4363.05. million (42.75% of Net
Sales) as on March 31, 2011 from Rs. 3,718.27 million (44.68% of Net
Sales) as on March 31, 2010.The profit after tax & prior period items
increased to Rs.3888.68 million (38.10% of Net Sales) as on March 31,
2011 from Rs. 2,218.66 million (26.66 % of Net Sales) as on March 31,
2010.
On Consolidated basis Company's Total revenue increased to Rs.13970.24
million as on March 31, 2011 from Rs. 11,650.15 million as on March 31,
2010, registering a growth of 19.91%.The profit before tax and after
prior period items increased to Rs.4083.07 million (30.22% of Net
Sales) as on March 31, 2011 from Rs. 4,391.73 million (42.25 % of Net
Sales) as on March 31, 2010.The profit after tax, minority and
pre-acquisition profits & prior period items increased to Rs.3366.72
million (24.92% of Net Sales) as on March 31, 2011 from Rs. 2,758.64
million (26.54 % of Net Sales) as on March 31, 2010.
The Company's performance over the years has shown a consistent and
upward trend. The Profit Before Depreciation, Tax & Interest & Misc.
expenditure (operating profit) decreased by Rs. 212.91 million to Rs.
5903.00 million (42.25% of total revenues) as on March 31, 2011 from
Rs. 6,115.91 million (52.50% of total revenues) as on March 31, 2010.
Segmental Performance (Standalone):
The EBIT margins in the School learning solutions (SLS) Segment of the
Company for the year amounted to Rs. 5201.96 million or 52.08% of SLS
revenues as on March 31, 2011 as compared to Rs. 4,517.74 million or
56.27% of SLS revenues as on March 31, 2010.
The EBIT margins in the K-12 Segment of the Company for the year
amounted to Rs.8.99 million or 34.37% of K-12 segment revenues as on
March 31, 2011 as compared to Rs. 6.20 million or 7.11% as on March 31,
2010.
The EBIT margins in the Higher learning solutions (HLS) segment of the
Company for the year amounted toRs. 48.26 million or 28.57% of HLS
revenues as on March 31, 2011 as compared to Rs. 55.93 million or 28%
of professional development revenue as on March 31, 2010.
The EBIT margins in Online and Retail segment of the Company for the
year amounted to Rs.-59.48 million as on March 31, 2011 as compared to
Rs.-5.02 million of Online and Retail revenues as on March 31, 2010.
Expenditure(Standalone):
Personnel expenses have increased from 13.25% of our revenue as on
March 31, 2011 from 11.45% as on March 31, 2010. This increase is due
to the fact that our company is growing rapidly.
Administration & other expenses have decreased to 9.81% as on March 31,
2011 from 12.33% of our revenue as on March 31, 2010.
We have benefited due to economies of scale and our net profits after
tax for the year has registered a growth of 75.27%. Our Profit after
tax amounted to Rs.3888.68 million or 36.62% of revenue as on March 31,
2011 as compared to Rs. 2,218.66 million or 25.42% of revenue as on
March 31, 2010.
We enjoy long-term annuity relationships with both private schools as
well as government customers, ranging from three to five years. Our
revenues are predictable & locked in for three to five years on account
of the contractual nature of our business. In the Smart Classà segment,
we have added 3461 new customers taking the total number of schools to
6538 as on March 31, 2011 as compared to 3077 as on March 31, 2010.
In Edureach (formerly ICT) business segment, we have an ongoing
partnership with twelve state Governments & are catering to 10572
Government schools in various states as on March 31, 2011 as compared
to 15426 Government schools in various states as on March 31, 2010.
5. Changes in Capital Structure:
Authorized Share Capital
Shareholders of the company on 26th July, 2011 by passing special
resolution through postal ballot approved increase in Authorised Share
Capital of the Company.
Authorised Share Capital of the Company as on 4th August 2011 is
Rs.30,00,00,000/- (Rupees Thirty Crore) divided into 15,00,00,000
(Fifteen Crore) equity shares of Rs. 2/-(Rupees Two) each.
Issued and Paid-up Share Capital
During the year under review, the Company allotted 4,74,102 Equity
Shares of face value of Rs.2/- each upon exercise of stock options by
the eligible employees/
Directors of the Company/subsidiaries under Employee Stock Option
Scheme 2006, 2007 & 2008.
On 29th September 2010, Company in accordance with Chapter VII of SEBI
(ICDR) Regulations, 2009, has allotted 55,643 Equity Shares on
Preferential Basis. The said shares are under Lock in for a period of
one year from the date of allotment.
Post 31st March, 2011 & till 4th August 2011, Company has allotted
4,53,434 Equity Shares of Rs.2/- each under Employee Stock Option
Scheme 2006 & on Preferential Basis in accordance with Chapter VII of
SEBI (ICDR) Regulations, 2009
The paid up capital after taking the effect of changes as above, stood
at Rs.19,19,95,660/- as on 4th August 2011.
6. Foreign Currency Convertible Bonds
US$ 80 Million Zero Coupon Foreign Currency Convertible Bonds
In year 2007-08, the company had issued at par 5-year, Zero Coupon
Foreign Currency Convertible Bonds (FCCB) at an exercise price of
Rs.2949.83 per share aggregating to US $ 80 million (Rs.3,237.60
million as on the date of issue) for financing overseas acquisition,
capital expenditure and other expenditure as per RBI regulation. As per
terms and condition of the Offering Circular issued by the company for
FCCB, the Bond are convertible by holders of the Bonds (the
"Bondholders") into fully paid equity shares of the company with full
voting rights with par value Rs.2 per share of the Company (the
"Shares") at any time on or after 4th September 2007 (or such earlier
date as is notified to the Bondholders by the Company) and prior to the
close of business on 19th July 2012, unless previously redeemed,
converted or repurchased and cancelled.
The Bonds may be redeemed in cash in whole, but not in part, at their
Early Redemption Amount, at the option of the Company at any time on or
after 25th July 2009 and on and prior to 19th July 2012, subject to
satisfaction of certain conditions. These bonds are redeemable at
141.087% of the principal amount on July 26, 2012 unless previously
converted, redeemed or purchased and cancelled. As on date US$ 78.5
Million Zero Coupon Foreign Currency Convertible Bonds are outstanding.
The Company intends raise fresh FCCB to utilize the proceeds to pay
existing bondholders and will take necessary regulatory approvals, if
applicable.
7. Subsidiaries/Joint Venture/Associates of the Company:
As on March 31, 2011, Company had 50 Subsidiaries, 2 Joint ventures & 2
Associates . Post March 31st, 2011 Company has acquired majority stake
in Gateforum Education Services Pvt. Ltd. and it has become Subsidiary
of the Company. Company has announced a new Joint Venture with Zeebo
Inc., USA. by investing in Zeebo Interactive Studio Pvt Ltd which is an
Associate Company.
8. Particulars required as per section 212 of the Companies Act, 1956:
Ministry of Corporate Affairs, pursuant to the provision of Section
212(8) of the Act, vide its circular dated February 8, 2011 has granted
general exemption from attaching the Balance Sheet, Profit and Loss
Account and other documents of the subsidiary companies with the
Balance Sheet of the Company.
Board of Directors of the company in its meeting held on 30th May 2011
consented for not attaching the balance sheet of the subsidiary
companies. A statement containing brief financial details of the
Company's subsidiaries for the financial year ended March 31, 2011 is
included in the Annual Report. The annual accounts of these
subsidiaries and the related detailed information will be made
available to any member of the Company/its subsidiaries seeking such
information at any point of time and are also available for inspection
by any member of the Company/its subsidiaries at the registered office
of the Company. The annual accounts of the said subsidiaries will also
be available for inspection, as above, at the head offices/registered
offices of the respective subsidiary companies. The Company shall
furnish a copy of details of annual accounts of subsidiaries to any
member on demand.
Further the annual report of the Company contains the consolidated
audited financial statements prepared, pursuant to Clause 41 of The
Listing Agreement entered into with the stock exchanges and prepared in
accordance with the accounting standards notified by Ministry of
Corporate Affairs under Accounting Standard Rules 2006.The financial
data of the subsidiaries has been furnished along with the statement
pursuant to Section 212 of the Companies Act, 1956 forming part of the
Annual Report.
9. Directors:
Board of Directors of Educomp Solutions Limited comprises of two
Executive Promoter Directors namely Mr. Shantanu Prakash, Chairman cum
Managing Director & CEO and Mr. Jagdish Prakash, Whole Time Director
and five Independent Non-Executive Directors, namely Mr. Shonu Chandra,
Mr. Sankalp Srivastava, Mr. Gopal Jain. Dr. Shayama Chona and Mr. Rajiv
Krishan Luthra.
As per section 255 and 256 of the Companies Act, 1956 Mr. Sankalp
Srivastava and Mr. Rajiv K Luthra are the Directors liable to retire by
rotation and further being eligible, offer themselves for
re-appointment at the ensuing Annual General Meeting. Board recommends
their re-appointment for your approval.
The brief resume and other details relating to the directors, who are
to be appointed/ re-appointed as stipulated under Clause 49(IV)(G) of
the Listing Agreement, are furnished in the Notice of AGM forming part
of the Annual Report.
The Company also has Audit Committee which is constituted as per
requirement of Section 292A of the Companies Act, 1956 and Clause 49 of
Listing Agreement. Audit Committee has 4 members out of which 3 are
Non-Executive Independent Directors and one is Executive Director.
Chairman of Audit Committee is Independent Non-Executive Director.
10. Statutory Disclosures:
None of the Directors of your Company is disqualified as per provision
of section 274(1)(g) of the Companies Act, 1956. The Directors of the
Company have made necessary disclosures, as required under various
provisions of the Act and Clause 49 of the Listing Agreement.
11. Human Resource Management:
Educomp is an equal opportunity employer with total employee strength
of 13,917 as on March 31, 2011 as compared to 12,101 as on March 31,
2010.
Educomp's HR policies and processes are aligned to effectively drive
its expanding business and making inroads into emerging opportunities.
The Company has a suitable recruitment and human resource management
process, which enables us to attract and retain high caliber employees.
Company has created incentive driven remuneration policies which act as
an effective retention tool.
12. Directors Responsibility statement:
In pursuance of provisions of Section 217(2AA), we hereby confirm that:
1) That in the preparation of the Annual Accounts for the period ended
as on 31st March 2011, the applicable Accounting Standards have been
followed and no material departure has been identified.
2) Accounting Policies have been consistently applied in a reasonable
and prudent manner so as to give true and fair view of the state of
affairs of the Company for the financial year ending 31st March 2011
and of the Profit and Loss Account for the financial year ending as on
31st March 2011
3) Proper and sufficient care has been taken for the maintenance of
adequate records in accordance with the applicable provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
4) The Annual Accounts for the Financial Year ended on 31st March 2011
have been prepared on the going concern basis.
13. Auditors & Auditors' Report :
M/s Anupam Bansal & Co, Chartered Accountants & M/s. Haribhakti & Co.,
Chartered Accountants Joint statutory auditors of the Company, will
retire at the conclusion of the ensuing Annual General Meeting of the
Company and being eligible have expressed their willingness for
appointment as joint statutory auditors of the Company. They have
confirmed that their appointment, if made, will be within the
prescribed limits under Section 224 (1B) of the Companies Act, 1956.
The notes on accounts referred to in the auditors' report are
self-explanatory and therefore don't call for any further comments by
the Board of directors.
There are no qualifications or adverse remarks in the Auditors' Report
which require any clarification or explanation.
14. Share Registration Activity:
Company has appointed "LINK INTIME INDIA PRIVATE LIMITED" a category-I
Registrar and Share Transfer Agent reregistered with SEBI to handle the
work related to Share Registry.
15. Consolidated Financial Statements:
As required under the Listing Agreements with the Stock Exchanges
Consolidated Financial Statements of the Company and all its
subsidiaries are attached. The consolidated Financial statements have
been prepared in accordance with Accounting standard 21 ,Accounting
standard 23 and Accounting standard 27 issued by The Institute of
Chartered Accountants of India and showing the financial resources,
assets, liabilities, income, profits and other details of the Company
and its subsidiaries as a single entity, after elimination of minority
interest.
16. Listing of Shares:
The Equity Shares of your Company are listed on National Stock Exchange
of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The
Listing fee for the year 2011-12 has already been paid to BSE and NSE.
17. Strategic Acquisitions / Joint Ventures :
The Company in order to maintain & strengthen its leadership position
in the industry has mad e following acquisitions and strategic
investments
(i) Vidya Mandir Classes
Company acquired a strategic majority stake in Vidya Mandir Classes,
India's leading IITJEE Preparation Company. Vidya Mandir Classes has
built an enviable reputation for providing high quality coaching to
help students achieve success in their IITJEE and other engineering
entrance examinations. Its teaching and learning methodologies are well
recognized in the industry and proven by the high success rate of Vidya
Mandir Classes students in their IITJEE and other engineering
examinations.
(ii) Zeebo Inc
Company entered in to a joint venture with Zeebo Inc., a Qualcomm
funded company to launch the first wireless educational platform for
children in India
(iii) Gate Forum Educational Services Pvt. Ltd
Company acquired a majority stake in Gate Forum Educational Services
Pvt. Ltd, India's leading GATE test preparation company.
(iv) India Education Fund
With a view to pick up strategic minority investments in high growth,
innovative companies in the education and allied sectors, Company has
entered into a contribution agreement in relation to the India
Education Fund (a SEBI registered venture capital fund with a
commitment to invest Rs.500 million in the fund as an anchor
contributor.
18. Quality Initiatives:
Reinforcing its commitment to high levels of quality, a ISO 9001:2008
Certification was awarded in application of ICT (Information and
Communication Technology) related to computer- aided learning, training
and computer literacy projects in schools.
19. Conservation of energy, technology absorption, adoption and
Innovation, foreign exchange earnings and outgo:
The particulars are prescribed under section 217(1) (e) of the
companies Act, 1956, read with the Companies (Disclosure of particulars
in the report of Board of Director s) Rules, 1988 are set out in an
Annexure A attached to this report.
20. Ratings, Awards, Achievements & Recognitions:
Ratings
Credit Analysis & Research Ltd, or CARE, has revised/affirmed the
following ratings in relation to our long term and short term financing
facilities:
Long term facilities: Revised 'CARE A' (Single A) rating to 'CARE A '
(Single A Plus) to our long term facilities i.e. facilities having
tenure of more than one year, aggregating to Rs.339.76 Crore.
Short term facilities : Reaffirmed CARE A1 ( A One) formerly PR1(PR
One) to our short term facilities i.e. facilities having tenure of less
than one year, aggregating to Rs.327 Crore.
Commercial Paper : Reaffirmed CARE A1 ( A One) for the CP Issue for
Rs.70 Crore.
In September 2010, Fitch, Inc. assigned us a long-term issuer rating of
'A (ind)' and an 'F1' rating for both our short-term debt and working
capital facilities.
Dun & Bradstreet assigned a 5A1 rating to us. The rating comprises two
parts, a rating of our financial strength (5A) and a rating based on a
composite credit appraisal (1). The former is an indication of our
tangible net worth whilst the latter is linked to the level of risk in
our business and is an overall evaluation of creditworthiness. The 5A1
rating, in summary, reflects that we have a tangible net worth in
excess of Rs.645,950,000 and that the overall creditworthiness is high.
Awards, Achievements & Recognitions:
Franchise India presented the "Entrepreneur of the Year" award to Mr.
Shantanu Prakash in the Indian Education Awards 2011, organized to
recognize and acknowledge the initiatives and achievements of certain
individuals and institutions that have contributed significantly
towards the growth of the education sector in India in the recent
times.
The April 2011 issue of Dare Magazine chose Shantanu Prakash in its
list of "50 Inspiring Entrepreneurs - 2011" because "Shantanu Prakash,
founder of Educomp, is the man who is responsible for bringing the
much-awaited change in the Indian education system".
In March 2011, Shantanu Prakash won the prestigious ET Now "Leap of
Faith" Award in the category of Education. "Leap of Faith" Awards
attempt to recognize the best and brightest of India's young
entrepreneurs; men and women who have stood against all odds and
emerged winners.
Sangeeta Gulati, our Chief Financial Officer, was presented with the
ICAI Women CFO 2010 Award by the prestigious Institute of Chartered
Accountants of India for exceptional performance and achievements as a
chief financial officer and recently bagged best CFO award in Sustained
Wealth Creation in mid-Size Category hosted by Yes Bank and Business
Today.
Shantanu Prakash won the Dataquest "Pathbreaker of the Year Award" for
2010 in recognition of our business model, which aimed at making
quality education available in schools across different parts of the
country.
15 students trained by IndiaCan secured positions in the top 50 highest
scores in the Chartered Accountancy Intermediate exam results in May
2010.
In September 2010, we were conferred the e-India 2010 "Citizen's Choice
#1 Award for Teaching Learning Paradigm through ICT Intervention" in
Digital Learning Magazine, in recognition of our achievement in
ushering a whole new teaching learning paradigm in schools across
India.
21. Report on Corporate Governance and Management Discussion &
Analysis Committed to good corporate governance practices, your company
fully conform to standards set out by SEBI and other regulatory
authorities and has implemented and complied with all of its major
stipulations. As per clause 49 of the Listing Agreement, a report on
Corporate Governance along with Compliance Certificate from the
Practicing Company Secretary and Management Discussion and Analysis
Report are annexed and forms part of this Annual Report.
22. Code of Conduct:
As per Clause 49 (I) (D), the Board of the Company has laid down Code
of Conduct for all the Board members of the Company and Senior
Management as well and the same has been posted on Website of the
Company. Annual Compliance Report for the year ended 31st March 2011
has been received from all the Board members and senior management of
the Company regarding the compliance of all the provisions of Code of
Conduct. Declaration regarding compliance by Board members and senior
management personnel with the Company's Code of Conduct is hereby
attached as annexure to this report.
23. Notes to Accounts:
They are self-explanatory and do not require any explanations.
24. Particulars of employees:
In Terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies(Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are set out
in the annexure to the Director's Report.
25. Group
Pursuant to intimation from the Promoters, the names of the Promoters
and entities comprising 'Group' are disclosed in the Annual Report for
the purpose of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997.
26. Public Deposits:
During the year, The Company has not accepted any deposits within the
meaning of the provisions of Section 58A of the Companies Act, 1956.
27. Employees Stock Option Schemes (ESOPs)
The exponential growth of the Company has, in large measure, been
possible owing to the wholehearted support, commitment and teamwork of
its personnel. Accordingly, the Company has introduced Employees Stock
Option Scheme 2006 (ESOP-2006), Employees Stock Option Scheme -2007
(ESOP-2007) , Employees Stock Option Scheme-2008 (ESOP-2008) and
Employees Stock Option Scheme-2010 (ESOP-2010) for its employees and
employees of its subsidiary companies.
The details of options granted under ESOP-2006, ESOP-2007, ESOP - 2008
and ESOP - 2010 is attached as Annexure B,
Post 31st March 2011, the remuneration committee of Board of Directors
of the Company has granted 1,11,385 Stock Options Employees / Director
of the Company and its Subsidiaries under ESOP Scheme 2006 and ESOP
Scheme 2007.
A certificate from Statutory Auditors, with respect to the
implementation of the Company Employee's Stock Option schemes, would be
placed before the shareholders at the ensuing Annual General Meeting,
and a copy of the same shall be available for inspection at the
registered office of the Company.
28. Disclosure Pursuant To Clause 5A of Listing Agreement
Pursuant to insertion of clause 5A in listing Agreement as per SEBI
notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 the
details in respect of the shares lying in the suspense account till
March 31, 2011 is as under.
Descrip
-tion No. of
Cases No. of
Shares
1. Aggregate number of shareholders and the outstanding
shares in the initiation of suspense account. 3 750
2. Number of shareholders who approached the Company for
transfer of shares from suspense account 0 0
during the year 2010-11
3. Number of shareholders to whom shares were transferred
from suspense account during the year 0 0
2010-11
4. aggregate number of shareholders and the outstanding
shares in the suspense account lying as on 3 750
March 31, 2011
All the unclaimed shares are being credited to a DEMAT suspense account
and all the corporate benefits in terms of securities, accruing to on
these unclaimed shares shall be credited to such account. Voting rights
on these shares shall remain frozen till the rightful owner of such
shares claims the shares.
29. Corporate Governance:
The Company has always been committed to maintain the highest standards
of Corporate Governance and adhere to the Corporate Governance
requirements as set out by Statutory Bodies.
With a view to strengthening the Corporate Governance framework, the
Ministry of Corporate Affairs has incorporated certain provisions in
the Companies Bill 2009. The Ministry has issued a set of voluntary
guidelines in the second half of December 2009 for adoption by the
companies. The Guidelines broadly outline conditions for appointment of
directors (including independent directors), guiding principles to
remunerate directors, responsibilities of the Board, risk management,
the enhanced role of Audit Committee, rotation of audit partners and
firms and conduct of secretarial audit. Your company is already by and
large complying with the voluntary guidelines Corporate Governance
various requirements, it has initiated appropriate action for
compliance.
30. Acknowledgement:
Your Directors wish to place on record their appreciation for the
Co-operation and support received from the Government and
Semi-Government agencies.
Your Directors are also thankful to all the bankers and financial
institutions for their support to the Company. The Board places on
record its appreciation for continued support provided by the esteemed
customers, suppliers, consultants and shareholders.
The directors also acknowledge the hard work, dedication and commitment
of the employees of the Company and its subsidiaries. The enthusiasm
and unstinting efforts of the employees have enabled the Company to
continue being a leading player in the Education field.
For and on Behalf of the Board of Directors
Date : 04th August 2011 (Shantanu Prakash)
Place : Gurgaon Chairman & Managing Director
Mar 31, 2010
The Directors of your Company have pleasure in presenting herewith the
16th Annual Report of your Company together with the audited accounts
for the Financial Year ended 31st March, 2010.
1. FINANCIAL PERFORMANCE:
The consolidated and standalone audited fnancial results for the year
ended 31st March, 2010 are as follows:
(Rs. in million)
Particulars Consolidated Standalone
Year Ended Year Ended
Audited Audited
31.03.2010 31.03.2009 31.03.2010 31.03.2009
Sales and other Income 11650.15 6598.00 8727.12 5175.30
Proft (+)/Loss(-) Before
tax 4391.73 2172.87 3718.27 2004.74
Provision for Tax 1584.19 769.51 1499.61 688.86
Net Proft (+)/Loss(-)after
tax 2807.54 1403.36 2218.66 1315.88
Minority interest and equi
tyinearnings/ (losses)inaf
liates/ Pre acquisition
Loss/(proft) 48.90 74.42 - -
Net proft for the year 2758.64 1328.94 2218.66 1315.88
Appropriations
Interim Dividend 103.24 7.36 94.93 -
Proposed Dividendonequity
shares 182.98 46.03 167.03 43.28
Corporate Taxondistributed
dividend 46.59 7.36 43.87 7.36
TransfertoDebenture Redem
ption Reserve 0.00 83.76 - -
TransfertoGeneral Reserve 239.48 131.59 221.87 131.59
2 . DIVIDEND:
Keeping in view the current economic scenario and future fund
requirements of the Company, Your Directors have recommended a dividend
of Rs. 1.75 per Equity Share (87.5% on face value of Rs. 2/-) for the
Financial year ended as on 31st March, 2010, which on approval at the
forthcoming Annual General Meeting, will be paid
(i) to those Equity Shareholders, holding shares in physical form,
whose name appear on the Register of Members of the Company at the
close of business hours on 27th September, 2010 after giving efect to
all valid transfers in physical form lodged with the Company or its
Registrar and Share Transfer Agent till 17th September, 2010.
(ii) to those benefcial owners, holding shares in electronic form,
whose name appear in the statement of benefcial owners furnished by the
Depositories to the Company as at the close of business hours on 17th
September, 2010.
The total proposed dividend amount shall be Rs. 194.77 million,
including the dividend tax, for the Financial Year 2009-10 as against
total dividend payout Rs. 50.64 million for the previous year.
During the year, the Company had already paid an interim dividend of
Rs. 1 (50%) per equity share of Rs. 2 each in February, 2010. With
this, the total dividend declared for the year is Rs. 2.75 (137.5%) per
share.
The register of members and share transfer books will remain closed
from 18th September, 2010 to 27th September, 2010 (both days
inclusive). The Annual General meeting of the Company will be held on
27th September, 2010.
3. TRANSFERTO RESERVES:
The Company proposes to transfer Rs.221.87 million (Previous year Rs.
131.59 million) to the General Reserve out of the amount available for
appropriations. An amount of Rs.3856.99 million (Previous year
Rs.2166.04 million) has been proposed to be retained in the Proft and
Loss Account.
4. OPERATING RESULTS AND BUSINESS:
In year 2009-10 ,CompanyÃs performance was quite satisfactory despite
ongoing economic global crisis . Company has shown a CAGR of98.39% over
a period of 3 years.
On Standalone basis CompanyÃs Total revenue increased to Rs. 8,727.12
million as on 31st March, 2010 from Rs. 5,175.30 million as on 31st
March, 2009, registering a growth of 68.63%.The proft before tax and
after prior period items increased to Rs.3,718.27 million (44.68% of
Net Sales) as on 31st March, 2010 from Rs. 2,004.74 million (40.00% of
Net Sales) as on 31st March, 2009.The proft after tax & prior period
items increased to Rs.2,218.66 million (26.66% of Net Sales) as on 31st
March, 2010 from Rs. 1,315.88 million (26.26 % of Net Sales) as on 31st
March, 2009.
On Consolidated basis CompanyÃs Total revenue increased to Rs.11,650.15
million as on 31st March, 2010 from Rs. 6,598.00 million as on 31st
March, 2009, registering a growth of 76.57%.The proft before tax and
after prior period items increased to Rs.4,391.73 million (42.25% of
Net Sales) as on 31st March, 2010 from Rs. 2,172.87 million (34.11 % of
Net Sales) as on 31st March, 2009.The proft after tax, minority and
pre-acquisition profts & prior period items increased to Rs.2,758.64
million (26.54% of Net Sales) as on 31st March, 2010 from Rs. 1,328.94
million (20.86 % of Net Sales) as on 31st March, 2009.
The CompanyÃs performance over the years has shown a consistent and
upward trend. The Proft Before Depreciation, Tax & Interest & Misc.
expenditure (operating proft) increased by Rs.2,825.48 million to Rs.
6,115.91 million (52.50% of total revenues) as on 31st March, 2010 from
Rs.3,290.43 million (49.87% of total revenues) as on 31st March, 2009.
Segmental Performance (Standalone):
The EBIT margins in the School learning solutions (SLS) Segment of the
Company for the year amounted to Rs.4,517.74 million or 56.27% of SLS
revenues as on 31st March, 2010 as compared to Rs. 2,124.12 Million or
49.29% of SLS revenues as on 31st March, 2009.
The EBIT margins in the K-12 Segment of the Company for the year
amounted to Rs.6.20 million or 7.11% of K-12 segment revenues as on
31st March, 2010 as compared to loss of Rs. 8.49 million as on 31st
March, 2009.
The EBIT margins in the Higher learning solutions (HLS) segment of the
Company for the year amounted to Rs.55.93 million or 28% of HLS
revenues as on 31st March, 2010 as compared to Rs.105.39 million or
34.23% of professional development revenue as on 31st March, 2009.
The EBIT margins in Online and Retail segment of the Company for the
year amounted to Rs. -5.02 million as on 31st March, 2010 as compared
to Rs.205.25 million or 76.48% of Online and Retail revenues as on 31st
March, 2009 due to discontiuance of traditional business of selling
CDs/Books/Hardware etc and also making Mathguru free as a part of
companyÃs online strategy.
Expenditure (Standalone):
Personnel expenses have decreased from 11.81% of our total revenue to
11.45% as on 31st March, 2010.
Administration & other expenses have increased from 12.02% of our
revenue to 14.01% as on 31st March, 2010.This increase is due to the
fact that our company is growing rapidly and administrative expensive
is increased on account of increase in Legal and professional expenses,
licensing and royalty fees, and Advertisement expenses.
We have benefted due to economies of scale and our net profts after tax
for the year has registered a growth of 68.61%. Our Proft after tax
amounted to Rs.2,218.66 million or 25.42% of revenue as on 31st March,
2010 as compared to Rs. 1315.88 million or 25.43% of revenue as on 31st
March, 2009.
We enjoy long-term annuity relationships with both private schools as
well as government customers, ranging from three to fve years. Our
revenues are predictable & locked in for three to fve years on account
of the contractual nature of our business. In the Smart Classà segment,
we have added 1340 new customers taking the total number of schools to
3077 as on 31st March, 2010 as compared to 1737 as on 31st March, 2009.
In our Edureach (formerly ICT) business segment, we have an ongoing
partnership with ffteen state Governments & are catering to 15426
Government schools in various states as on 31st March, 2010 as compared
to 12012 Government schools as on 31st March, 2009.
5. CHANGES IN CAPITAL STRUCTURE
Authorised Share Capital
During the year under review, authorized share capital of the Company
has been altered to the efect that authorized share capital of the
Company has been sub-divided and re-classifed as Rs. 25,00,00,000 (
Rupees Twenty Five Crore ) divided into 12,50,00,000 ( Twelve Crore
Fifty Lakh ) equity shares of the nominal value Rs. 2/- ( Two) each
Issued and Paid-up Share Capital
During the year under review, the Company allotted 4,30,610 Equity
Shares of face value of Rs. 2/- each upon exercise of stock options by
the eligible employees/Directors of the Company/subsidiaries under
Employee Stock Option Scheme 2006 & 2007.
Post 31st March, 2010 & till 17th August 2010, Company has allotted
4,33,052 Equity Shares of Rs. 2/- each to the eligible employees of the
Company/subsidiaries under Employee Stock Option Scheme 2006, 2007 &
2008
On 13th July, 2009, Company has allotted 16,20,000 Equity Shares of Rs.
10/- each at a premium of Rs. 3,735/- per share on private placement
basis to Qualifed Institutional Buyers in terms of Chapter XIIIA of the
Securities and Exchange Board of India (Disclosure and Investor
Protection) Guidelines, 2000.
On 19th March, 2010, Company in accordance with Chapter VII of SEBI
(ICDR) Regulations, 2009, has allotted 52,616 Equity Shares to Zaptive
Internet Services Pvt. Ltd. on Preferential Basis for consideration
other than cash as being the part consideration for acquisition of its
domain name Ãstudyplaces.comà and its business contracts etc. The said
shares are under Lock in for a period of one year from the date of
allotment.
The paid up capital after taking the efect of changes as above, stood
at Rs.19,08,95,406/- as on 17th August, 2010.
3. QUALIFIED INSTITUTIONAL PLACEMENT:
During the year , the company had successfully raised 6066.90 million
placed through Qualifed Institutional Placement ( QIP) ,in accordance
with chapter XIII ÃA of the SEBI Guidelines , the issuance of 16,20,000
equity shares of Rs 10 each at a price of Rs 3,745 per equity share
("Issue Price") including a premium of Rs 3,735 per equity share, as
approved by a duly authorized Committee of Board of Directors (the
Committee) in its meeting held on July 09, 2009 .
The Company had incurred an expenditure of Rs.132.87 million towards
issue expenses of these shares .These expenses has been charged to
Securities premium account as provided under section 78 of the
Companies Act, 1956.
As on 31st March, 2010 Rs. 3030 million was parked with various Fixed
deposits schemes of Punjab National Banks(PNB), Bank of India, Andhra
Bank, Canara Bank and HDFC Bank
6. FOREIGN CURRENCY CONVERTIBLE BONDS
US$ 80 Million Zero Coupon Foreign Currency Convertible Bonds
In year 2007-08, the company had issued at par 5-year, Zero Coupon
Foreign Currency Convertible Bonds (FCCB) at an exercise price of Rs.
2949.83 per share
aggregating to US $ 80 million (Rs. 3,237.60 million as on the date of
issue) for fnancing overseas acquisition, capital expenditure and other
expenditure as per RBI regulation. As per terms and condition of the
Ofering Circular issued by the company for FCCB, the Bond are
convertible by holders of the Bonds (the ÃBondholdersÃ) into fully paid
equity shares of the company with full voting rights with par value Rs.
2 per share of the Company (the ÃSharesÃ) at any time on or after 4th
September 2007 (or such earlier date as is notifed to the Bondholders
by the Company) and prior to the close of business on 19th July 2012,
unless previously redeemed, converted or repurchased and cancelled.
The Bonds may be redeemed in cash in whole, but not in part, at their
Early Redemption Amount, at the option of the Company at any time on or
after 25th July, 2009 and on and prior to 19th July, 2012, subject to
satisfaction of certain conditions. These bonds are redeemable at
141.087% of the principal amount on July, 26, 2012 unless previously
converted, redeemed or purchased and cancelled. As on date US$ 78.5
Million Zero Coupon Foreign Currency Convertible Bonds are outstanding.
7. SUBSIDIARIES/JOINTVENTURE/ASSOCIATES OFTHE COMPANY:
As on 31st March, 2010, Company had 43 Subsidiaries , 2 Joint ventures
& 1 Associate . After 31st March, 2010 Knowledge Vistas Ltd. has become
Indirect Subsidiary of the Company and Company has incorporated one
Wholly owned Subsidiary named Educomp Investment Management Limited .
Further Company has transferred its entire investment in Educomp
Learning Hour Pvt. Ltd. and Authorgen Technologies Ltd. to Educomp
Online Supplemental Service Ltd., subsidiary of the Company.
8. PARTICULARS REQUIRED AS PER SECTION 212 OFTHE COMPANIES ACT, 1956:
In terms of the approval granted under Section 212(8) of the Companies
Act, 1956 by the Ministry of Corporate Afairs, Government of India vide
its letter No. 47/578/2010-CL-III dated 14th July, 2010, and dated
12th August, 2010 the Company has been exempted from complying with the
provisions contained in sub- section (1) of Section 212 of the
Companies Act, 1956.
Accordingly, the balance sheet, Proft & Loss Account, Directorsà Report
and Auditorsà Report of the subsidiary companies and other documents
required to be attached under section 212(1) of the Act to the Balance
sheet of the Company are not being attached with the Balance sheet of
the Company.
However, as directed by the Ministry of the Corporate Afairs, some key
information has been disclosed in a brief abstract forming part of this
annual report. Accordingly, the annual report of the Company contains
the consolidated audited fnancial statements prepared, pursuant to
Clause 41 of The Listing Agreement entered into with the stock
exchanges and prepared in accordance with the accounting standards
notifed by Ministry of Corporate Afairs under Accounting Standard Rules
2006.The fnancial data of the subsidiaries has been furnished along
with the statement pursuant to Section 212 of the Companies Act, 1956
forming part of the Annual Report.
Further, the annual accounts of the subsidiary companies and the
related detailed information will be made available to any member of
the Company/its subsidiaries seeking such information at any point of
time. The annual accounts of the subsidiary companies will also be kept
for inspection by any member at the Companys registered ofce and
corporate ofce and that of the respective subsidiary companies.
Accounts of Individual Subsidiary are also placed at companyÃs website
i.e www.educomp.com
9. DIRECTORS:
Board of Directors of Educomp Solutions Limited comprises of two
Executive Promoter Directors namely Mr. Shantanu Prakash, Chairman cum
Managing Director & CEO and Mr. Jagdish Prakash, Whole Time Director
and fve Independent Non-Executive Directors, namely Mr. Shonu Chandra,
Mr. Sankalp Srivastva, Mr. Gopal Jain. Dr. Shayama Chona and Mr. Rajiv
Krishan Luthra.
As per section 255 and 256 of the Companies Act, 1956 Mr. Gopal Jain
and Mr. Shonu Chandra is liable to retire by rotation and, being
eligible, ofers themselves for re-appointment at the ensuing Annual
General Meeting. Board recommends their re-appointment for your
approval.
The brief resume and other details relating to the directors, who are
to be appointed/ re-appointed as stipulated under Clause 49(IV)(G) of
the Listing Agreement, are furnished in the Notice of AGM forming part
of the Annual Report.
The Company also has Audit Committee which is constituted as per
requirement of Section 292A of the Companies Act, 1956 and Clause 49 of
Listing Agreement. Audit Committee has 4 members out of which 3 are
Non-Executive Independent Directors and one is Executive Director.
Chairman of Audit Committee is Independent Non-Executive Director.
10. CHANGES IN LEADERSHIP OF EDUCOMP:
During the year Dr Shyama Chona and Mr. Rajiv Krishan Luthra have
joined the Board as Non-Executive Members.
11. STATUTORY DISCLOSURES:
None of the Directors of your Company is disqualifed as per provision
of section 274(1)(g) of the Companies Act, 1956. The Directors of the
Company have made necessary disclosures, as required under various
provisions of the Act and Clause 49 of the Listing Agreement.
12. HUMAN RESOURCEMANAGEMENT:
Educomp is an equal opportunity employer with total employee strength
of 12,101 as on 31st March, 2010 as compared to 8864 as on 31st March,
2009.
EducompÃs HR policies and processes are aligned to efectively drive its
expanding business and making inroads into emerging opportunities. The
Company has a suitable recruitment and human resource management
process, which enables us to attract and retain high caliber employees.
Company has created incentive driven remuneration policies which act as
an efective retention tool.
13. DIRECTORS RESPONSIBILITY STATEMENT:
In pursuance of provisions of Section 217(2AA), we hereby confrm that:
(1) That in the preparation of the Annual Accounts for the period ended
as on 31st March, 2010, the applicable Accounting Standards have been
followed and no material departure has been identifed.
(2) Accounting Policies have been consistently applied in a reasonable
and prudent manner so as to give true and fair view of the state of
afairs of the Company for the fnancial year ending 31st March, 2010 and
of the Proft and Loss Account for the fnancial year ending as on 31st
March. 2010.
(3) Proper and sufcient care has been taken for the maintenance of
adequate records in accordance with the applicable provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
(4) The Annual Accounts for the Financial Year ended on 31st March 2010
have been prepared on the going concern basis.
14 AUDITORS & AUDITORSÃREPORT:
M/s Anupam Bansal & Co, Chartered Accountants & M/s. Haribhakti & Co.,
Chartered Accountants Joint statutory auditors of the Company, retire
at the conclusion of the ensuing Annual General Meeting of the Company
and have expressed their willingness for appointment as joint statutory
auditors and confrmed that their appointment, if made, will be within
the prescribed limits under Section 224 (1B) of the Companies Act,
1956.
The notes on accounts referred to in the auditorsà report are
self-explanatory and therefore donÃt call for any further comments by
the Board of directors.
There are no qualifcations or adverse remarks in the AuditorsÃReport
which require any clarifcation or explanation.
15. SHARE REGISTRATION ACTIVITY:
Company has appointedÃLINK INTIME INDIA PRIVATE LIMITEDÃa category-I
Registrar and ShareTransfer Agent reregistered with SEBI to handle the
work related to Share Registry.
16. CONSOLIDATED FINANCIAL STATEMENTS:
As required under the Listing Agreements with the Stock Exchanges
Consolidated Financial Statements of the Company and all its
subsidiaries are attached. The consolidated Financial statements have
been prepared in accordance with Accounting standard 21 ,Accounting
standard 23 and Accounting standard 27 issued by the Institute of
Chartered Accountants of India and showing the fnancial resources,
assets, liabilities, income, profts and other details of the Company
and its subsidiaries as a single entity, after elimination of minority
interest.
17. LISTING OF SHARES:
The Equity Shares of your Company are listed on National Stock Exchange
of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) . The
Listing fee for the year 2010-11 has already been paid to BSE and NSE.
18. STRATEGIC ACQUISITIONS / JOINT VENTURES:
The Company has been making the acquisitions or entering into Joint
Ventures either directly or indirectly through its subsidiaries in
order to maintain &strengthen its leadership position in the industry
which your company has created & to remain always ahead of learning
curve. During the year company has entered into Joint venture with
Pearson llc for its vocational business, wherein company has sold its
50% stake in indirect wholly owned company EHIPL , Singapore . During
the year also company has acquired strategic business of zaptive
Internet services private limited to acquire the domain Ã
studyplaces.comà Both strategic alliances are niche in nature & are
presently are making losses , but going forward over 2-3 years will be
EPS accretive .
19. QUALITY INITIATIVES:
Reinforcing its commitment to high levels of quality, a ISO 9001:2008
Certifcation was awarded in application of ICT (Information and
Communication Technology) related to computer- aided learning, training
and computer literacy projects in schools.
20. CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION, ADOPTION AND
INNOVATION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars are prescribed under section 217(1) (e) of the
companies Act, 1956, read with the Companies (Disclosure of particulars
in the report of Board of Director s) Rules, 1988 are set out in an
Annexure A attached to this report.
21. RATINGS & RECOGNITIONS:
The Company continues to have anÃAÃratings andà PR1Ãratings from CARE
in relation to the indebtedness of Educomp aggregating to Rs.5,892
million. Moreover, the Company also haveÃAÃrating & P1 for Commercial
Paper from Crisil .
During the year , company has won top honours in the for-proft category
to win NASSCOM Foundation Social Innovation Honours-2010 for its
exemplary work.
During the year Dun & Bradstreet has done an independent study on Smart
Class & have concluded that directionally Smart_Class has a positive
impact on students with majority of the classes tested having a
statistically signifcant advantage.
22. REPORT ON CORPORATEGOVERNANCEAND MANAGEMENTDISCUSSION&ANALYSIS
Committed to good corporate governance practices, your company fully
conform to standards set out by SEBI and other regulatory authorities
and has implemented and complied with all of its major stipulations. As
per clause 49 of the Listing Agreement, a report on Corporate
Governance along with Compliance Certifcate from the Practicing Company
Secretary and Management Discussion and Analysis Report are annexed and
forms part of this Annual Report.
Code of Conduct:
As per Clause 49 (I) (D), the Board of the Company has laid down Code
of Conduct for all the Board members of the Company and Senior
Management as well and the same has been posted on Website of the
Company. Annual Compliance Report for the year ended 31st March, 2010
has been received from all the Board members and senior management of
the Company regarding the compliance of all the provisions of Code of
Conduct. Declaration regarding compliance by Board members and senior
management personnel with the CompanyÃs Code of Conduct is hereby
attached as annexure to this report.
23. NOTES TO ACCOUNTS:
They are self-explanatory and do not require any explanations.
24. PARTICULARS OF EMPLOYEES:
In Terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies(Particulars of Employees) Rules, 1975 as
amended, the
names and other particulars of the employees are set out in the
annexure to the DirectorÃs Report. Having regard to the provisions of
Section 219(1)(b)(iv) of the said 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 Ofce
of the Company.
23. GROUP
Pursuant to intimation from the Promoters, the names of the Promoters
and entities comprising ÃGroupà are disclosed in the Annual Report for
the purpose of the SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997.
24. PUBLIC DEPOSITS:
During the year, The Company has not accepted any deposits within the
meaning of the provisions of Section 58A of the Companies Act, 1956.
25. EMPLOYEES STOCK OPTION SCHEMES (ESOPS)
The exponential growth of the Company has, in large measure, been
possible owing to the wholehearted support, commitment and teamwork of
its personnel. Accordingly, the Company has introduced Employees Stock
Option Scheme 2006 (ESOP-2006), Employees Stock Option Scheme -2007
(ESOP-2007) , Employees Stock Option Scheme-2008 (ESOP-2008) and
Employees Stock Option Scheme-2010 (ESOP-2010) for its employees and
employees of its subsidiary companies.
The details of options granted under ESOP-2006, ESOP-2007 and ESOP Ã
2008 is attached as Annexure B, However, since the options in ESOP-2010
were granted post 31st March, 2010, the details required to be provided
in terms of Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 have
not been provided for ESOP-2010.
Post 31st March, 2010, the remuneration committee of Board of Directors
of the Company has granted 8,69,250 Stock Options to eligible employees
of the company and its subsidiaries and 1,00,000 Stock Options to
Independent Non-Executive Directors of the Company under ESOP 2010.
A certifcate from Statutory Auditors, with respect to the
implementation of the Company EmployeeÃs Stock Option schemes, would be
placed before the shareholders at the ensuing Annual General Meeting,
and a copy of the same shall be available for inspection at the
registered ofce of the Company.
26. DISCLOSURE PURSUANTTO CLAUSE 5A OF LISTING AGREEMENT
Pursuant to insertion of clause 5A in listing Agreement as per SEBI
notifcation no. SEBI/CFD/DIL/LA/1/2009/24/04 dated 24th April, 2009 the
details in respect of the shares lying in the suspense account till
31st March, 2010 is as under.
All the unclaimed shares are being credited to a DEMAT suspense account
and all the corporate benefts in terms of securities, accruing to on
these unclaimed shares shall be credited to such account. Voting rights
on these shares shall remain frozen till the rightful owner of such
shares claims the shares.
27. CORPORATE GOVERNANCE:
The Company has always been committed to maintain the highest standards
of Corporate Governance and adhere to the Corporate Governance
requirements as set out by Statutory Bodies.
With a view to strengthening the Corporate Governance framework, the
Ministry of Corporate Afairs has incorporated certain provisions in the
Companies Bill 2009. The Ministry has issued a set of voluntary
guidelines in the second half of December 2009 for adoption by the
companies. The Guidelines broadly outline conditions for appointment of
directors (including independent directors), guiding principles to
remunerate directors, responsibilities of the Board, risk management,
the enhanced role of Audit Committee, rotation of audit partners and
frms and conduct of secretarial audit. Though your company is already
by and large complying with these various requirements, it has
initiated appropriate action for compliance.
28. ACKNOWLEDGEMENT:
Your Directors wish to place on record their appreciation for the
Co-operation and support received from the Government and
Semi-Government agencies.
Your Directors are also thankful to all the bankers and fnancial
institutions for their support to the Company. The Board places on
record its appreciation for continued support provided by the esteemed
customers, suppliers, consultants and shareholders.
The directors also acknowledge the hard work, dedication and commitment
of the employees of the Company and its subsidiaries. The enthusiasm
and unstinting eforts of the employees have enabled the Company to
continue being a leading player in the Education feld.
For and on Behalf of the Board of Derictors
Date:17th August,2010 (Shantanu Parakash)
Place:Gurgon CHIRMAN & MANAGING DIRCTOR