Mar 31, 2023
Directors of your Company take great pleasure in presenting the 22nd Annual Report on the business and operations of your Company and the Audited Financial Statements for the financial year ended March 31, 2023.
Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 w.e.f. April 01, 2016. The performance of the Company for the FY 2022-23 is summarized herein below:
('' in million) |
||||
Particulars |
Consolidated FY 2022-23 FY 2021-22 |
Standalone FY 2022-23 FY 2021-22 |
||
Total Income |
61,531.68 |
59,217.08 |
14,094.44 |
16,227.56 |
Profit Before Interest and Depreciation |
9,573.55 |
9,604.13 |
4,148.34 |
5,616.24 |
Interest and Finance Charges |
789.70 |
639.39 |
149.41 |
200.68 |
Depreciation/Amortization |
2,631.70 |
2,493.73 |
888.38 |
881.98 |
Profit Before Tax and share in net profit of associate |
6,152.15 |
6,471.01 |
3,110.55 |
4,533.58 |
Share in net profit of associate |
- |
- |
- |
- |
Profit from ordinary activities before tax and after share in net profit of associate |
6,152.15 |
6,471.01 |
3,110.55 |
4,533.58 |
Provision for Taxation (including Deferred Tax Charge/Credit) |
1,015.03 |
1,105.71 |
627.13 |
657.69 |
Net Profit After Tax |
5,137.12 |
5,365.30 |
2,483.42 |
3,875.89 |
Owners of the Company |
5,137.20 |
5,373.74 |
2,483.42 |
3,875.89 |
Non-controlling Interest |
(0.08) |
(8.44) |
- |
- |
Total |
5,137.12 |
5,365.30 |
2,483.42 |
3,875.89 |
Opening Balance in Profit & Loss Account |
15,524.68 |
13,810.25 |
15,210.92 |
13,669.95 |
Closing Balance in Profit & Loss Account |
17,425.98 |
15,524.68 |
15,241.85 |
15,210.92 |
Earning Per Share (^) - Basic |
7.55 |
7.90 |
3.65 |
5.70 |
Earning Per Share (^) - Diluted |
7.32 |
7.62 |
3.54 |
5.49 |
The consolidated total income increased from ^ 59,217.08 million to ^ 61,531.68 million, an increase of 3.91% over the previous financial year. The consolidated Net Profit After Tax decreased from ^ 5,365.30 million to ^ 5,137.12 million, an decrease of 4.25% over the previous financial year. The detailed analysis of the consolidated results forming part of the Management Discussion and Analysis Report is provided separately in the Annual Report.
The standalone total income decreased from ^ 16,227.56 million to ^ 14,094.44 million, a decrease of 13.15% over the previous financial year. The standalone Profit After Tax decreased from ^ 3,875.89 million to ^ 2,483.42 million, a decrease of 35.93% over the previous financial year.
The Company, on a consolidated basis has 48 global operation centers as on March 31, 2023. The centers are located across the US, the UK, India, the Philippines and the Mexico. 11 of the Company''s operation centers are located in India which includes Chennai (2), Mumbai (2), Bangalore (2), and 1 each in Trichy, Pondicherry, Hyderabad, Indore & Vijayawada cities. 24 in the US, 10 in the UK, 2 in the Philippines and 1 in Mexico.
During the year, the Company incurred capital expenditure of ^ 536.22 million mainly towards refurbishment and maintenance of operation centers, technology upgrade and setting up of new operations centers.
The Company follows global best practices for process excellence and the quality framework is based on COPC principles. The Company uses innovative techniques like Speech & Text Analytics, Robotic Process Automation and Intelligent Action Board to drive improvements across. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.
The Company received the following awards and accolades during the year under review.
⢠Named as ''Disruptor'' in Avasant Banking Process Transformation 2022 RadarView and Avasant Contact Center Business Process Transformation 2022 RadarView.
⢠Named as ''Innovator'' in Avasant Claims Processing Business Process Transformation 2022 RadarView.
⢠Named as Disruptors in Avasant''s Contact Center Business Process Transformation 2022 RadarView.
⢠Named as ''Disruptor'' in HFS Horizons for The Best Service Providers for Retail Banks, 2023.
⢠Listed in select categories as HFS'' Top 10: Healthcare Provider (HCP) Service Providers, 2022.
⢠Listed as ''Disruptor'' in HFS Horizons'' Healthcare Payer Service Providers, 2022.
⢠Named as ''Leader'' in UK & Europe Quadrant in ISG Provider Lens⢠Contact Center - Customer Experience Services 2022.
⢠Named ''Leaders'' in ISG Provider Lens⢠Healthcare Digital Services Study 2022 U.S.
⢠Named ''Leaders'' in ISG Provider Lens⢠Healthcare Payer Digital Services Study.
⢠Named as ''Major Contender'' by Everest Group for Everest Healthcare Customer Experience Management (CXM) Services in North America PEAK Matrix.
⢠Mentioned in Everest Group BPS Top 50⢠2022.
⢠Named as ''Leader'' in Mortgage and Loan Services 2022 NEAT results by NelsonHall.
⢠Recognized in Bloomberg Gender-Equality Index 2022.
⢠Gold winner for Customers at the Heart of Everythingâ¢, Customer Driven Business Change and Transformation and Best Customer Service by European CXA''22 Customer Experience Awards.
⢠Awarded for our ''Strong Leverage of Tier 2 & Tier 3 Cities'' at the NASSCOM Business Process Innovation Awards 2022.
⢠Awarded Silver at the Brandon Hall HCM excellence awards 2022 for Best Hybrid Learning.
⢠Rated ''A-100'' by SecurityScorecard ⢠- for our robust security posture across technology platforms, cloud solutions and applications, and our best practices-based security protocols.
⢠Recognized as a Level 3 Disability Confident Leader in the UK.
⢠Recognized as Top Mortgage Employer by Mortgage Professional America, 2022.
⢠Silver winner for the ''Most Effective Learning and Development Initiative'' by European Contact Centre & Customer Service Awards (ECCCSA).
⢠Achieved SILVER in the Most Effective Distributed Workforce category by UK National Contact Center Awards, 2022.
⢠Awarded with Business Services Project of the Year by Global Sourcing Association, UK.
⢠Received CSR Leadership Award at the 4th Edition Corporate Social Responsibility Summit & Awards 2022.
⢠Ranked second in the COVID-19 Warrior category by India CSR Leadership Summit 2022.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with Section 129(3) of the Companies Act, 2013 and
in view of notification issued by the Ministry of Corporate Affairs
on Ind-AS, the Company has prepared consolidated financial statements of the Company and all its subsidiaries as per Ind-AS, which forms part of this Annual Report.
The Board approved and declared an interim dividend on February 02, 2023 at the rate of 35% i.e. ^ 3.5 per share of ^ 10/- each.
The interim dividend for FY 2022-23 aggregated to ^ 2,219.06 million (net of applicable TDS).
The Dividend Distribution Policy of the Company was approved by the Board at its meeting held on August 08, 2017 and is available on the Company''s website at
https://www.firstsource.com/wp-content/uploads/2023/03/
Dividend-Distribution-Policy.pdf
The Board of Directors of the Company (hereinafter referred to as the "Board") have not recommended transfer of any amount of profit to reserves during the year under review. Hence, the remaining amount of profit for the financial year under review has been carried forward to the Statement of Profit & Loss.
On a consolidated basis, the Company has 23,018 employees as of March 31, 2023.
PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES:
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 ("Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure I.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
During the year under review, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2023.
PARTICULARS OF LOANS, INVESTMENTS,GUARANTEES AND SECURITIES:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the standalone financial statements. (Please refer to Note No. 6 and 31 to the standalone financial statements).
CREDIT RATINGS: |
|
During the year under review, the rating given by CARE and CRISIL are mentioned herein below: |
|
(i) CARE Rating: |
|
Long/Short term Bank Facilities |
CARE A :Stable/CARE A1 (Single A plus; Outlook:Stable/A One plus) |
Commercial Paper |
CARE A1 (A One plus) |
(ii) CRISIL Rating: |
|
Long/Short term Bank Facilities |
CRISIL A /Stable |
Commercial Paper |
CRISIL A1 |
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Company seeks to be a good corporate citizen in all aspects of its operations and activities. The Company commits to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders. Our CSR Policy is governed and guided by our Group''s corporate vision to enable inclusive growth and our aspiration to be India''s leading business group serving multiple market segments, for our customers, shareholders, employees and community. The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.
The Board constituted a Corporate Social Responsibility (CSR) Committee, pursuant to Section 135 of the Act, consisting of Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, Mr Subrata Talukdar and Mr Anjani K. Agrawal as its members. The CSR Committee meets at least once in a year. During the year under review, the Committee met once. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available on the website of the Company at the link
https://www.firstsource.com/wp-content/uploads/2023/04/
The Annual Report on CSR Activities, as stipulated under the Act and the SEBI (LODR) Regulations, 2015 forms an integral part of this Report and is appended as Annexure II. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.
The CSR activities, as per the provisions of the Act, may also be undertaken by the Company through a registered trust. Accordingly, "RP - Sanjiv Goenka Group CSR Trust" ("Group CSR Trust") was formed along with other Group Companies to pursue CSR activities as mentioned in the CSR Policy of the Company.
During the year, the Company has spent an amount of ^ 17.68 million. The Company has been contributing a portion of amount of its CSR obligation every year for the project to set up an International Baccalaureate School in Kolkata taken up by the Group CSR Trust which is identified as an ''ongoing project'' as defined in the Companies (Corporate Social Responsibility Policy) Rules, 2014. Accordingly, the Company had transferred ^ 50.68 million. to Group CSR Trust for the above mentioned cause towards CSR expenditure for FY 2022-23 before March 31, 2023.
The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company looks to engage employees in focus areas where possible through programmes such as employee volunteering, payroll giving, participating in fundraising events, partnering with NGO''s and response to disasters.
⢠Launched "Every Leader a Volunteer" campaign in Firstsource to promote volunteering at the top level. In the first year launch of this campaign, the Company saw 17% across globe participating in various programs contributing 600 hours;
⢠Leaders have empowered young minds through Mentorship session, Virtual classroom teaching, Career guidance, Women Empowerment session, livelihood support projects along with sharing their deep expertise providing Probono support in the area of Tech and Consulting and also supporting launch and milestones of our CSR Projects;
⢠Structured high impact projects in partnership with nonprofits was started. FFE Mentorship Program and eVidyaloka Program are some examples where our employee volunteers committed to support on a long term projects spanning 3-6 months teaching or mentoring students;
⢠Volunteers supported Govt. school students by enabling various skill development sessions by giving their time and knowledge. Experts from HR team conducted mock interview & resume building sessions to graduates from Youth Empowerment Programs;
⢠Volunteers took part in varied virtual awareness sessions on aerobic way of home composting, recycling & reusability, waste management, ocean and its importance, growing microgreens, sign language, Cyber safety, Tangram making, Women rights and safety;
⢠As part of observing International day for People with Disability, the Company had organized Industrial visit for differently abled students who are supported by Samarthanam Trust in Bangalore and Hyderabad. 250 Tactile greeting cards for blind schools were made in Bangalore, Chennai, Hyderabad and Vijayawada offices;
⢠As part of International Women''s Day, volunteers participated in various initiatives to empower women beneficiaries like -Virtual Menstrual hygiene session for the girl students from underrepresented communities, enabling corporate visits to women beneficiaries, financial literacy and motivational sessions by women leaders. Further, felicitation function was planned across our centres for women supporting staffs to recognize their efforts;
⢠Volunteers continued their support by enabling various upskilling activities to the beneficiaries from varied groups of Community such as women elderly, People with Disability and women beneficiary in Sandhya Kirana, Sandhesh Foundation, Baale Mane and Cheshire home.
⢠Employee volunteers from Manila, Philippines visited Father Luis Amigo home and engaged the children by organizing ''Poster making activity'' on the topic ''The world that I want to see tomorrow'';
⢠Firstsource volunteers supported the REAVO volunteers with F&B requirements during Sinulog Grand Festival;
⢠Volunteers from Cebu took part in beach clean-up activity organized in partnership with REAVO NGO which works towards Disaster and Rescue operations in the Philippines;
⢠Volunteers supported in donation of food and essentials to Ready Relief which aims to lend help to families headed by Solo Parents.
⢠Volunteers took part in donation drive and collected Blankets, Towel sets, bath mats, shower caps, curtains, hygiene products, pots and pans, cleaning supplies, laundry detergent, Gift cards, new board, card games, colouring books, Mindfulness journal, Backpacks, Markers, coloured pencils and pencils through in-kind donation for Gateway Longview charity;
⢠On the occasion of Halloween, US opened up an employee payroll donation and open donation of candies at the Companies US Lousiville office. Around 25 employees contributed through their payroll deduction program while a few of the employees dropped in candies at office for Norton Children''s hospital;
⢠As part of Black History Month campaign, US volunteers reviewed the LinkedIn profiles of Black youth. The goal was to celebrate their achievements and provide valuable feedback to help improve their professional profiles.
⢠As part of international women''s day celebration, in collaboration with Goodera NGO UK volunteers participated in Trivia night on women''s history in pop culture and gained awareness about the inspiring achievements of famous women in pop culture;
⢠UK volunteers took part in fundraising activity for Breast Cancer Now NGO with their Wear it Pink day to raise money for those going through breast cancer and to raise awareness on how to check for early signs of breast cancer throughout the site. They also had set up a bun sale to sell buns as a ''Pay what you can'' initiative and had 2 bakers who provided home made goods to be included in the stall;
⢠UK Firstsourcers supported a local football team Don Bosco''s under 8 & Newell FC in the Foyle cup tournament as part of promoting sport;
⢠As part of Pride Month celebrations, volunteers from UK participated in virtual volunteering opportunity to support the LGBTQIA community by creating impactful digital posters.
Our employees across globe continued to show their love and
affection for communities by contributing regularly for charity
through various fund raising and payroll program.
Purpose led Employee Giving projects in India: In India through Give India Payroll program 12K Lives impacted through various projects such as Gift a Smile, Book A Smile, Art truck project, Groceries support and Donation of Sports Equipment for Children Home.
US Fund Raising: US employees supported fund raising for various causes such as Norton Candy Drive, Susan G Koman Cancer patient support fund drive.
UK Payroll Giving and Fund Raising: Employees donate to regular payroll program along with supporting fund raising for UK charity organizations by taking part in charity football matches, baking buns & cakes, taking part in 5K run/walk and raffle fundraisers.
Right To Education Act: 5 full time employees (LGBQT ) helped in reaching 5,052 parents and identified 1,294 eligible children and enabled 774 of them to get admission in reputed private schools though RTE act.
BHUMI''s Scholarship support: 3 full time employees (LGBQT ) made 266 calls through which 50 students were identified for BHUMI scholarship which amounted to ^ 1.06 million.
Supporting Women Scholars: In a first of its kind, during the month of July, the Company have on-boarded 12 female scholars pursuing their graduation. A few days ago, a non-profit organization named HopeWorks Foundation, requested that the Company provide part-time employment opportunities for their girl scholars who are from economically underrepresented communities.
Badminton tournament for people with disability: Supported Deaf enabled foundation team in organizing the Badminton tournament for students with speech and hearing impairment through a one-time donation of ^ 0.05 million.
Job Fair support: One of our full time employees (LGBTQ ) supported the "We are your Voice" team by making calls to 70 PWD candidates to help them in registering for Job fair.
The Company has implemented a comprehensive and fully integrated ''Enterprise Risk Management'' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.
The Enterprise Risk Management drives a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management and Internal Audit methodologies and processes in order to maximize enterprise value of the Company and ensure high value creation for our stakeholders over a time.
The details of the ''Enterprise Risk Management'' framework with details of the principal risks and the plans to mitigate the same are given in the ''Risk Management Report'' section of the ''Management Discussion and Analysis Report'' which forms part of this Annual Report.
Further in view of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), effective April 01, 2019, the Board constituted a Risk Management Committee on February 04, 2019 to monitor & mitigate the Risk.
The Company has in place adequate internal financial controls with reference to financial statements. Such internal financial controls over financial reporting are operating effectively and the Statutory Auditor has also expressed their opinion on the same in the Annexures to the Auditors Report.
The Company has a Whistle Blower Policy (the "WB Policy") with a view to provide vigil mechanism to Directors, Employees and other Stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. The WB Policy also states that this mechanism provides for adequate safeguards against victimization of Director(s)/Employees who avail of the mechanism and also provides for direct access to the Chairperson of the Audit Committee in exceptional cases. The WB Policy has been posted on the website of the Company and the details of the same are provided in the ''Report on Corporate Governance'' forming part of this Annual Report.
The WB Policy is available on the website of the Company at
https://www.firstsource.com/wp-content/uploads/2023/03/
PREVENTION OF SEXUAL HARRASSMENT POLICY:
The Company has a ''Prevention of Sexual Harassment Policy'' in force in compliance with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.
It is confirmed that during the year under review, the Company has complied with applicable provisions in relation to sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, including the provisions relating to the constitution of Internal Complaints Committee under the said act.
During the year under review, the following are the changes in the Board of Directors:
⢠Mr Pradip Kumar Khaitan (DIN 00004821) retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting ("AGM").
⢠The Board appointed Mr Utsav Parekh (DIN 00027642) as an Additional Director (Non-Executive, Independent) on the Board of the Company w.e.f. November 02, 2022. His appointment was approved by members through Postal Ballot on December 15, 2022 for a term of three (3) consecutive years, effective from November 02, 2022. The Company has received the declaration from Mr Utsav Parekh confirming that he meets the criteria of independence as prescribed under Section 149(6) of the Act.
⢠Ms Grace Koshie ceased to be an Independent Director on account of completion of her term with effect from the closing of business hours on February 08, 2023 by afflux of
time. The Board places on record its appreciation towards valuable contribution made by her during her tenure as a Director of the Company.
⢠All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.
BOARD AND AUDIT COMMITTEE MEETINGS:
During the FY 2022-23, the following four (4) Board Meetings were held on:
1. May 05, 2022
2. August 03, 2022
3. November 02, 2022
4. February 02, 2023
During the FY 2022-23, the following four (4) Audit Committee Meetings were held on:
1. May 05, 2022
2. August 02, 2022
3. November 02, 2022
4. February 02, 2023
Time gap between any two meetings was not more than one hundred twenty (120) days.
The full details of the said meetings are given in the ''Report on Corporate Governance'' forming part of this Annual Report.
THE FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS:
The Company has put in place a system to familiarise its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarisation programmes are put up on the website of the Company at the below link:
https://www.firstsource.com/wp-content/uploads/2023/03/
Policy-on-familiarisation-of-Independent-Directors.pdf
BOARD EVALUATION:(i) Performance Evaluation of the Independent Directors and Other Individual Directors:
The Company has framed a policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance ("Board Evaluation Policy"). The said policy sets out criteria for performance evaluation of Independent Directors, other Non-Executive Directors and the Executive Directors.
Pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Board carries out the performance evaluation of all the Directors (including Independent Directors) on the basis of recommendation of the Nomination and Remuneration Committee and the criteria mentioned in the Board Evaluation Policy. The Board decided that the performance evaluation of Directors should be done by the entire Board
of Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors'' performance:
⢠Attendance and active participation in the Meetings;
⢠Bringing one''s own experience to bear on the items for discussion;
⢠Governance covering Awareness and Observance; and
⢠Value addition to the business aspects of the Company.
(ii) Performance Evaluation of Executive Director:
The performance of the MD & CEO is evaluated on the basis of achievement of performance targets/criteria given to him by the Board from time to time.
(iii) Performance Evaluation by the Board of its own performance and its Committees:
The performance of the Board is evaluated by the Board in the overall context of understanding by the Board of the Company''s principle and values, philosophy and mission statement, strategic and business plans and demonstrating this through its action on important matters, the effectiveness of the Board and the respective Committees in providing guidance to the Management of the Company and keeping them informed, open communication, the constructive participation of members and prompt decision making, level of attendance in the Board meetings, constructive participation in the discussion on the Agenda items, monitoring cash flow, profitability, income & expenses, productivity & other financial indicators, so as to ensure that the Company achieves its planned results, effective discharge of the functions and roles of the Board, etc.
The performance of the Committees is evaluated by the members of the respective Committees on the basis of the Committee effectively performing the responsibility as outlined in its Charter, Committee meetings held at appropriate frequency, length of the meetings being appropriate, open communication & constructive participation of members and prompt decision-making, etc.
POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The criteria for Directors'' appointment and for determining qualification, positive attributes and independence of a Director as mentioned in the ''Policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance'' in terms of Section 178(3) of the Act is mentioned below:
Appointment criteria and qualifications:
⢠The Nomination and Remuneration Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, Key Managerial Personnel ("KMP") or at Senior Management level and recommend the same to the Board for appointment, if found suitable;
⢠A person should possess adequate qualifications, expertise and experience for the position he/she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person are sufficient/satisfactory for the concerned position; and
⢠The Company shall not appoint or continue the employment of any person as Managing Director/Whole-Time Director who has attained the age of seventy years, provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the statement pursuant to the provisions of Section 102 of the Act annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.
Meeting of Independent Directors:
There should be atleast one meeting of Independent Directors in a year, without the attendance of non-independent Directors and members of the Management. One (1) meeting of the Independent Directors of the Company was held on February 01, 2023.
The Independent Directors in the meeting:
⢠Review the performance of non-independent Directors including MD & CEO and the Board as a whole;
⢠Review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and NonExecutive Directors; and
⢠Assess the quality, quantity and timeliness of the flow of information between the Company''s Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
The Board, on the recommendation of the Nomination and Remuneration Committee framed a Remuneration Policy for Non-Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and other Employees of the Company. The details of Remuneration Policy for Non-Executive Directors and Independent Directors are provided as Annexure IIIA and details of Remuneration Policy for Key Managerial Personnel and Other employees of the Company are provided as Annexure IIIB to this Report.
A detailed note on the Board and its Committees is provided in the ''Report on Corporate Governance'' forming part of this Annual Report. The composition of the major Committee/(s) is as follows:
As on March 31, 2023, the Audit Committee comprised of three (3) Independent Directors viz. Ms Grace Koshie (Chairperson), (ceased to be a Chairperson and Member on the closing of business hours on February 08, 2023 by efflux of time), Mr Utsav Parekh (appointed as a Member and Chairman w.e.f. February 09, 2023), Mr Anjani K. Agrawal, Mr Sunil Mitra and one (1) NonIndependent Director, Mr Subrata Talukdar.
Nomination and Remuneration Committee:
As on March 31, 2023, the Nomination and Remuneration Committee comprised of two (2) Independent Directors viz. Mr Anjani K. Agrawal (Chairman), Mr Pratip Chaudhuri and one (1) Non-Independent Director, Mr Subrata Talukdar.
Corporate Social Responsibility Committee:
As on March 31, 2023, Corporate Social Responsibility Committee comprised of four (4) members viz Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO,
Mr Subrata Talukdar, Non-Executive, Non-Independent Director and one (1) Independent Director, Mr Anjani K. Agrawal.
Stakeholders Relationship Committee:
As on March 31, 2023, Stakeholders Relationship Committee comprised of three (3) members viz. Mr Subrata Talukdar (Chairman), Mr Vipul Khanna, MD & CEO, and one (1) Independent Director, Mr Anjani K. Agrawal.
As on March 31, 2023, Investment Committee comprised of three (3) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO and one (1) Non-Independent Director, Mr Subrata Talukdar.
As on March 31, 2023, Strategy Committee comprised of three (3) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO and one (1) Non-Independent Director, Mr Subrata Talukdar.
As on March 31, 2023, Risk Management Committee comprised of five (5) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO, one (1) Independent Director, Ms Grace Koshie, (upto the the closing of business hours on February 08, 2023 by efflux of time), Ms Vanita Uppal (appointed as a Member w.e.f. February 09, 2023), Mr Dinesh Jain and Mr Arun Tyagi, Officials of the Company.
All the contracts/arrangements/transactions that were entered into by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business and none of such related party transactions required the approval of the Board of Directors or the Shareholders as per the Act or LODR Regulations. Further, there were no materially significant related party transactions that may have potential conflict of interests of the Company at large. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm''s length. All Related Party Transactions are placed before the Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board is available on the website of the Company at the link:
https://www.firstsource.com/wp-content/uploads/2023/03/
Related-Party-Transactions-Policy.pdf
The details of the related party transactions as required under the Act and the Rules are attached in Form AOC-2 as Annexure IV.
EMPLOYEES STOCK OPTION SCHEME:
The Company grants share-based benefits to eligible employees with a view to attracting and retaining the best talent, encouraging employees to align individual performances with the Company objectives, and promoting increased participation by them. With a view to provide an opportunity to the employees of the Company, to share the growth of the Company and to create long term wealth, the Company has an Employee Stock Option Scheme (ESOS), viz., the Firstsource Solutions Employee Stock Option
Scheme, 2003 (ESOS 2003). The Scheme is applicable to all eligible employees and Directors of the Company and its Subsidiary Companies. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SBEB&SE), as amended from time to time.
FIRSTSOURCE SOLUTIONS LIMITED EMPLOYEE STOCK OPTION PLAN 2019 ("ESOP 2019 PLAN"):
The Company has established the ESOP 2019 Plan, pursuant to approval of shareholders at the Annual General Meeting on August 02, 2019, to allow our employees to acquire greater proprietary stake in our success and growth, and to encourage our employees to continue their association with us. The ESOP 2019 Plan is in compliance with SEBI (SBEB&SE) Regulations 2021, as amended from time to time.
As per the ESOP 2019 Plan, the Nomination and Remuneration Committee will issue stock options to the identified eligible employees/Director(s) of the Company and its Subsidiaries at an exercise price which will be the face value of the Shares or any higher price which may be decided by the Nomination and Remuneration Committee considering the prevailing market conditions and the norms as prescribed by SEBI and other relevant regulatory authorities. Further, the stock options under the said plan would vest & be exercisable in tranches as determined by the Nomination and Remuneration Committee basis the power given to the Nomination and Remuneration Committee in line with the ESOP 2019 Plan.
LONG TERM INCENTIVE STRUCTURE GRANTS UNDER ESOP 2019 PLAN:
In continuation of the Company''s philosophy of aligning employee interests with shareholder value creation and in line with global practices, the Nomination and Remuneration Committee of the Board of Directors has approved the Long Term Incentive Structure ("LTI") in the form of ESOP grants which will be granted to identified eligible employees as per ESOP 2019 Plan. This unique plan is a combination of tenure and performance based ESOPs aligned to shareholder value creation which will deepen employee ownership in the Company.
A) Tenure based Structure (ESOP Structure):
Options in this structure will be granted to identified eligible employees, basis the below criteria:
1. Drives ownership of employees in Company''s fortunes for better engagement and retention;
2. Seen as part of the total compensation package, in line with competition/market practice;
3. Quantum of grants is based on the performance and potential of the individual employee.
Vesting Schedule in the given structure is:
Period within which options will vest unto the participant |
% of options that will vest |
End of 12 months from the date of grant of options |
25% |
At the end of every quarter after year 1, till end of year 4 from date of grant |
6.25% |
B) Performance based Structure (PSU Structure):
Option in this structure is granted to identified eligible employees
- Functional and Business heads, basis the below criteria:
1. Attainment of options can range between 0% and 150% of tranche eligible for vesting for the respective performance measurement period. Each tranche is separate. Performance and vesting in one performance period has no bearing on performance and vesting in another performance period;
2. Subject to terms and conditions of the scheme, the performance-based component of the grant is measured basis the Performance targets as agreed annually by the Management.
Vesting Schedule in the given structure is:
Period within which options will vest unto the participant |
% of options that will vest |
End of 12 months from the date of grant of options |
25% |
At the end of every year after year 1, till end of year 4 from date of grant |
25% |
Under both the above structures, grants will be issued at face value of the shares or any higher price which may be decided by the Nomination and Remuneration Committee and will have an exercise period up to three (3) years as per the ESOP 2019 Plan and as determined by the Nomination and Remuneration Committee.
Under the ESOP 2019 Plan, as on March 31, 2023, the Nomination and Remuneration Committee has approved grant of 3,326,500 options which are a mix of tenure based and performance-based structure options to its senior leadership team and employees.
FIRSTSOURCE EMPLOYEE BENEFIT TRUST UNDER ESOP 2019 PLAN:
The ESOP 2019 Plan shall be implemented through the Trust which will be administered under the guidance, advice and direction of the Nomination and Remuneration Committee in accordance with the provisions of the Companies Act, 2013 and SEBI (SBEB&SE) Regulations.
The Board of Directors has facilitated setting up of Employee welfare trust, viz "Firstsource Employee Benefit Trust" ("ESOP Trust") to implement the ESOP 2019 Plan which has been formed by the Company. The Company shall provide financial assistance to the ESOP Trust for secondary acquisition of equity shares of the Company for the purpose of implementation of ESOP 2019 Plan. The terms and conditions for the financial assistance provided shall be in compliance with the Companies Act, 2013 read with Companies (Share Capital and Debenture) Rules, 2014 and SEBI (SBEB&SE) Regulations 2021.
As on March 31, 2023, the ESOP Trust holds 15,589,182 equity shares purchased through secondary market.
As on March 31, 2023, your Company has 21 subsidiaries and 1 Associate Company:
1. Firstsource Process Management Services Limited [Wholly Owned Subsidiary ("WOS") of the Company];
International Subsidiaries: (20)
2. Firstsource Solutions UK Limited, UK (WOS of the Company);
3. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource Solutions UK Limited)
4. Firstsource BPO Ireland Limited (WOS of Firstsource Solutions UK Limited)
5. Firstsource Group USA, Inc., USA (Subsidiary of the Company)
6. Firstsource Business Process Services, LLC, USA (WOS of Firstsource Group USA, Inc)
7. Firstsource Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC)
8. One Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC)
9. MedAssist Holding, LLC, USA (WOS of Firstsource Group USA, Inc)
10. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding, LLC) Plans
11. Firstsource Health Plans and Healthcare Services, LLC, USA (Formerly known as Firstsource Transaction Services, LLC) (WOS of Firstsource Solutions USA, LLC)
12. Sourcepoint, Inc. (WOS of Firstsource Group USA, Inc)
13. Sourcepoint Fulfillment Services, Inc. (WOS of Sourcepoint, Inc.)
14. Firstsource Dialog Solutions (Private) Limited (Subsidiary of the Company)
15. PatientMatters LLC (WOS of Firstsource Solutions USA, LLC)
16. Kramer Technologies, LLC (WOS of PatientMatters LLC)
17. Medical Advocacy Services For Healthcare, Inc. (WOS of PatientMatters LLC)
18. The StoneHill Group, Inc. (WOS of Sourcepoint, Inc.)
19. American Recovery Service Incorporated (WOS of Firstsource Business Process Services, LLC, USA)
20. Firstsource Solutions Mexico, S. de R.L. de C.V (Subsidiary Company of Firstsource Group USA, Inc.)
21. Firstource Solutions Jamaica Limited (WOS of Firstsource Group USA, Inc.)
1. Nanobi Data and Analytics Private Limited
Firstsource Solutions Jamaica Limited was incorporated as a
Wholly Owned Subsidiary Company of Firstsource Group USA,
Inc., (Subsidiary of the Company), on April 13, 2022. On account
of this, Firstsource Solutions Jamaica Limited became a step down
subsidiary of the Company.
The Company has no other joint venture company. No company has ceased to be a joint venture or associate during the FY 2022-23.
Report on the Performance and Financial Position of Subsidiaries:
A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC - 1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company has a policy on material subsidiaries pursuant to Regulation 16(1)(c) of the Listing Regulations. The same is available on the website of the Company viz:
https://www.firstsource.com/wp-content/uploads/2023/04/
Material-Subsidiary-Policy-IN.pdf
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:
With effect from the FY 2022-23, the requirement of submitting Business Responsibility Report is discontinued and replaced with Business Responsibility and Sustainability Report (BRSR) for the top one thousand listed entities based on market capitalization. Since your company is falling under this category, the Company has adopted the BRSR as stipulated under Regulation 34(2(f) of the Listing Regulations and forms part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE:
The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider Management and is further maintained across the entire functioning of the Company.
The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI.
The report on Corporate Governance as stipulated under provisions of Chapter IV & Schedule V of the Listing Regulations is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate governance is attached to the Report on Corporate Governance.
Pursuant to amendment of Rule 12 of Companies (Management and Administration) Rules, 2014 by MCA, wherein, instead of attaching an extract of annual return (to be prepared in Form MGT - 9) to the Directors'' Report, the Company can host a copy of annual return on the website of the Company and a web link of the same to be given in the Directors'' Report.
Accordingly, a copy of Annual Return is available on the website of the Company at the below link:
https://www.firstsource.com/wp-content/uploads/2023/07/
STATUTORY DISCLOURES OF PARTICULARS:A) Conservation of Energy:
The Company continues to make progress towards energy conservation across all its operation centres by adopting efficient Air-conditioning management system, usage of Energy efficient LED and efficient power back-up system. The Company is continuously monitoring earlier initiatives of reducing energy consumption within data centre/(s) and across its'' operation centres. The Company, similar to its previous year''s initiatives of GREEN IT, continued to replace the normal Desktops and old Thin clients with Mini Desktops/Zero thin-clients in US Geography as the power consumption of mini desktop & Zero thin-clients was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts have been deployed where possible to shut down the Desktops/Thin clients which are not being used for more than 1 hour which helps conserve energy.
Cloud-First Initiatives: As part of Company''s Cloud-First and Digital-First-Digital-Now (DFDN) journey, the Company continues to migrate a significant part of its Operations and Deliveries, across the geographies and business units, to cloud. Over the past few years, the Company has adopted multiple state-of-the-art technologies by partnering with Global Cloud Services Platforms. Be it for Infrastructure As A Service (IaaS) where the Company partner with leading global CSPs such as Microsoft Azure, AWS and Google or adopting SaaS solutions such as Sales Force, SAP Success Factors or Office365 or companies like Zscaler which provide cloud based Zero Trust Security solutions. Most of Company''s client facing applications are deployed on MultiCloud environment to make them more Scalable, Resilient and Fault-tolerant.
Digital Enabled Contact center (DECC): As part of our DECC implementation, the Company has implemented multiple Next Generation Contact dc (NGCC) across the global and business units. The DECC and Omni Channel Platform is further enhanced with Digital Capabilities, such as AI, Social Integration, Chat-Bot, Analytics etc. These state-of-art technologies are implemented to enhance and automate call handling capabilities by Digital/AI interference, thus enhancing the Customer Experience (CX);
NextGen Cybersecurity: Firstsource has also deployed various technical controls at the perimeter, Endpoints, Data center and end user computing;
Threat and Vulnerability Management: Early Detection of vulnerability on Core Infra structure and proactive mitigation -
⢠Comprehensive Technical Compliance check through 3rd party covering the following:
o Vulnerability Assessment and Penetration Test
o Web Application Security Assessment
o ASV Scans for PCI DSS o Desktop Scans for PCI DSS o Source Code Review o Cloud Infrastructure review o Network Config review
⢠Security Operations Center & Digital Footprint Monitoring -Continuous Monitoring.
⢠24/7 continuous monitoring and helps increase Firstsource organization security posture while preventing, detecting, analyzing, and responding to cybersecurity incidents.
⢠Digital Footprint monitoring is done through Security Scorecard that rates cybersecurity postures of corporate entities through completing scored analysis of cyber threat intelligence.
⢠The end users are required to go through Cisco AnyConnect - VPN, High Secure Network Access, Cisco Duo - Two Factor Authentication and the end user computing are protected with Cisco AMP - EDR for Endpoints and Servers and the end user *internet and DNS are Cisco Umbrella - DNS Layer Security, Internet gateways using Cisco WSA - Blocking risky sites and al emails are protected by Cisco Mail Security -protects emails from Malware, Spam, Phishing, Ransomware, Spoofing, and more.
C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans:
The Company''s income is diversified across a range of geographies and industries. During the year, 92.11 % of the Company''s standalone total revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.
FOREIGN EXCHANGE EARNED AND USED:
The Company''s Foreign Exchange Earnings and Outgo during the year were as under:
('' in million) |
||
Particulars |
FY2023 |
FY2022 |
Foreign Exchange Earnings |
12,671.78 |
13,618.21 |
Foreign Exchange Outgo (including |
61.52 |
163.11 |
capital goods and imports) |
SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company obtained Secretarial Audit Report from MMJB & Associates LLP (CP No. 8968), Company Secretaries for the FY 2022-23. The Secretarial Audit Report is annexed to this Report as Annexure V.
ANNUAL SECRETARIAL COMPLIANCE REPORT:
SEBI vide its Circular No. CIR/CFD/CMD1/27/2019 dated February 08, 2019 read with Regulation 24(A) of the Listing Regulations, directed listed entities to conduct Annual Secretarial Compliance Audit from a Practicing Company Secretary of all applicable SEBI Regulations and circulars/guidelines issued thereunder. The said Secretarial Compliance report is in addition to the Secretarial Audit Report issued by Practicing Company Secretaries under Form MR - 3 and is required to be submitted to Stock Exchanges within 60 days of the end of the financial year. The Company has engaged the services of MMJB & Associates LLP (CP No. 8968), Company Secretaries for providing this certification.
STATUTORY AUDITORS AND AUDITORS'' REPORT:
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, bearing Registration Number: 117366W/W-100018, were re-appointed as the Statutory Auditors of the Company by the members at their 21st Annual General Meeting (AGM) for a second term of consecutive five (5) years i.e. till the conclusion of 26th AGM.
The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.
During the year under review, there were no material or serious instances of fraud falling within the purview of Section 143 (12) of the Companies Act, 2013 and rules made thereunder, by officers or employees reported by the Statutory Auditors of the Company during the course of the audit conducted and therefore no details are required to be disclosed under Section 134 (3)(ca) of the Act.
GENERAL:
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the FY 2022-23:
⢠Issue of equity shares with differential rights as to dividend, voting or otherwise;
⢠Issue of shares to employees of the Company under any scheme save and except Employees Stock Option Schemes as referred to in this Report;
⢠No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company''s operations in future.
⢠There were no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Report.
Further, your Directors would like to mention that the MD & CEO received ^ 158.95 million as remuneration during the year from Firstsource Group USA Inc. subsidiary of the Company.
The disclosure pursuant to Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with Circular No. CIB/CFD/Policy/CELL/2, 2015 dated June 16, 2015, will be placed on the website of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134(3) (c) and 134(5) of the Companies Act, 2013, Directors of your Company state and confirm that:
1. In the preparation of the annual accounts for the FY 202223, the applicable Ind-AS accounting standards have been followed and there are no material departures from the same;
2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for year ended on that date;
3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safe-guarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. The Directors had prepared the annual accounts on a going concern basis;
5. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
APPLICATION/PROCEEDING PENDING UNDER IBC:
None of the application has been made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year.
The Board wishes to place on record its sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Board also expresses its gratitude to the Department of Telecommunications, Collector of Customs and Excise, Director of Special Economic Zone, Ministry of Labour, Ministry of Corporate Affairs, Software Technology Parks of India, and various Governmental departments and organisations for their help and cooperation.
Further, the Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.
Mar 31, 2022
Directors of your Company take great pleasure in presenting the 21st Annual Report on the business and operations of your Company and the Audited Financial Statements for the financial year ended March 31, 2022.
Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 w.e.f. April 01, 2016. The performance of the Company for the FY 2021-22 is summarised herein below:
(? in million) |
||||
Consolidated |
Standalone |
|||
Particulars |
FY 2021-22 |
FY 2020-21 |
FY 2021-22 |
FY 2020-21 |
Total Income |
59,217.08 |
50,792.46 |
16,227.56 |
13,529.55 |
Profit Before Interest and Depreciation |
9,604.13 |
8,054.71 |
5,616.24 |
5,204.22 |
Interest and Finance Charges |
639.39 |
522.30 |
200.68 |
153.00 |
Depreciation/ Amortization |
2,493.73 |
2,063.52 |
881.98 |
797.95 |
Profit Before Tax and exceptional items |
6,471.01 |
5,468.89 |
4,533.58 |
4,253.27 |
Exceptional items |
- |
1,150.55 |
- |
- |
Share in net profit of associate |
- |
- |
- |
- |
Profit from ordinary activities before tax and after share in net profit of associate |
6,471.01 |
4,318.34 |
4,533.58 |
4,253.27 |
Provision for Taxation (including Deferred Tax Charge/ Credit) |
1,105.71 |
701.57 |
657.69 |
586.74 |
Net Profit After Tax |
5,365.30 |
3,616.77 |
3,875.89 |
3,666.53 |
Owners of the Company |
5,373.74 |
3,616.86 |
3,875.89 |
3,666.53 |
Non-controlling Interest |
(8.44) |
(0.09) |
- |
- |
Total |
5,365.30 |
3,616.77 |
3,875.89 |
3,666.53 |
Opening Balance in Profit & Loss Account |
13,810.25 |
12,076.46 |
13,669.95 |
11,886.49 |
Closing Balance in Profit & Loss Account |
15,524.68 |
13,810.25 |
15,210.92 |
13,669.95 |
Earning Per Share (?) - Basic |
7.90 |
5.31 |
5.70 |
5.38 |
Earning Per Share (?) - Diluted |
7.62 |
5.13 |
5.49 |
5.20 |
The consolidated total income increased from ? 50,792.46 million to ? 59,217.08 million, an increase of 16.59% over the previous financial year. The consolidated Net Profit After Tax increased from ? 3,616.77 million to ? 5,365.30 million, an increase of 48.35% over the previous financial year. The detailed analysis of the consolidated results forming part of the Management Discussion and Analysis Report is provided separately in the Annual Report.
The standalone total income increased from ? 13,529.55 million to ? 16,227.56 million, an increase of 19.94% over the previous financial year. The standalone Profit After Tax increased from ? 3,666.53 million to ? 3,875.89 million, an increase of 5.71% over the previous financial year.
Earlier, Firstsource Solutions Limited Employee Stock Option Scheme 2003 (hereinafter referred to as the "ESOS 2003") provided for its implementation through primary issuance of the Company''s shares to the employees of the Company. However, with a view to
ensure better efficacy and administration of the ESOS 2003, it was proposed that the ESOS 2003 can be dealt with and implemented through trust route. Accordingly, during the year, your Company implemented the ESOS 2003 through trust route i.e., Firstsource Employee Benefit Trust, to align the interests of its employees with the long-term interests of the Company by motivating the employees with incentives and reward opportunities under the ESOS 2003 and create a sense of ownership and participation amongst the employees in the sustained growth of the Company.
Your Company issued/ allotted 891,610 equity shares of the face value of ? 10/- each on the exercise of stock options under ESOS 2003. Consequently, the outstanding, issued, subscribed and paid-up capital of the Company has increased from 696,099,216 shares to 696,990,826 shares of ? 10/- each aggregating to ? 6,969.90 million as on March 31, 2022.
The Company, on a consolidated basis has 43 global operation centers as on March 31, 2022. The centers are located across the US, the UK, India, the Philippines and the Mexico. 15 of the
Company''s operation centers are located in Chennai (2), Mumbai (3), Bangalore (4), Trichy (2) and 1 each in Pondicherry, Hyderabad, Indore & Vijayawada cities in India, 16 in the US, 9 in the UK, 2 in the Philippines and 1 in Mexico.
During the year, the Company incurred capital expenditure of ? 850.30 million mainly towards refurbishment and maintenance of operation centers, technology upgrade and setting up of new operations centers.
The Company follows global best practices for process excellence and the quality framework is based on COPC principles. The Company uses innovative techniques like Speech & Text Analytics, Robotic Process Automation and Intelligent Action Board to drive improvements across. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.
The Company received the following awards and accolades during the year.
Won an award for ''Best Citizen Developer Program'' at the 2021 edition.
Won Bronze Award in the Best Small Customer Service Team category.
Won awards in Best Outsourced Contact Centre category and Best Trainer category for Jack Pengelly-Ivins from the Capability Development Team.
Won in four categories: Innovation in Retention Strategy; Best Use of CSR Practices; Innovation in Recruitment; and Best Service Provider in HR.
Our Talent Development Team won the People Development Award, while Firstsourcers Julia O''Neill won the Support Manager of the Year award and Christopher Phillips won a Silver in the Trainer of the Year category.
Sarah Johnson won Gold and Anne MacGowan won Bronze.
Dawn Elmore, Head of Strategic Initiatives, Sourcepoint named one of ''2021 Powerful Women of Mortgage Banking'' by the Mortgage Banker magazine in the US.
Firstsource''s Vice President, Client Services, Sourcepoint was honored as a ''Woman of Influence 2021'' by the HousingWire magazine in the US.
Gold in the Financial Services category alongside our client Post Office.
Industry recognitions:
¦ Positioned as a ''Leader'' NelsonHall in its ''Intelligent Automation in Banking NEAT 2021'' report.
¦ Leader in Everest Group''s Mortgage Operations PEAK Matrix®.
¦ Ranked as top Business Process Services (BPS) provider in its ''BPS Top 50â¢'' report by Everest Group. Firstsource was also placed as Top 10 Service Providers by Growth by the industry research firm.
¦ Received Investors in People (IIP) Gold accreditation for its UK operations.
¦ Named a Leader in the Payer Digital Transformation Services category and a Rising Star in the Payer Business-Processes-as-a-Service (BPaaS) Services category by Information Services Group (ISG) in their quadrant report on Healthcare Digital Services - ISG Provider Lensâ¢.
¦ I ncluded in 2022 Bloomberg Gender-Equality Index for its commitment to transparency in gender-data reporting and creating a workplace conducive for diverse talent to succeed.
¦ Leader in Everest Group''s Healthcare Payer Operations PEAK Matrix® Assessment 2022.
¦ Ranked #1 in the 2022 Best in KLAS®: Software & Services Report, and noted as a leader in the Eligibility and Enrollment Services category.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with Section 129(3) of the Companies Act, 2013 and in view of notification issued by the Ministry of Corporate Affairs on Ind-AS, the Company has prepared consolidated financial statements of the Company and all its subsidiaries as per Ind-AS, which forms part of this Annual Report.
The Board approved and declared an interim dividend on February 04, 2022 at the rate of 35% i.e. ? 3.50 per share of ? 10/- each.
The interim dividend for FY 2021-22 aggregated to ? 2,219.95 million (net of applicable TDS).
The Dividend Distribution Policy of the Company was approved by the Board at its meeting held on August 08, 2017 and is available on the Company''s website at https://www.firstsource.com/wp-content/uploads/2021/12/Dividend-Distribution-Policv.pdf.
The Board of Directors of the Company (hereinafter referred to as the "Board") have not recommended transfer of any amount of profit to reserves during the year under review. Hence, the
remaining amount of profit for the financial year under review has been carried forward to the Statement of Profit & Loss.
On a consolidated basis, the Company has 26,557 employees as of March 31, 2022.
PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES:
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 ("Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure I.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
During the year under review, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2022.
PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the standalone financial statements. (Please refer to Note No. 6 and 31 to the standalone financial statements).
During the year under review, the rating given by CARE and CRISIL are mentioned herein below:
(i) CARE Rating: |
|
Long/ Short term Bank Facilities |
CARE A :Stable/CARE A1 (Single A plus; Outlook:Stable/A One plus) |
Short Term Bank Facilities |
CARE A1 |
(A One plus) |
|
(ii) CRISIL Rating: |
|
Long/ Short term Bank Facilities |
CRISIL A /Stable |
Short Term Bank Facilities |
CRISIL A1 |
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Company seeks to be a good corporate citizen in all aspects of its operations and activities. The Company commits to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders.
Our CSR Policy is governed and guided by our Group''s corporate vision to enable inclusive growth and our aspiration to be India''s leading business group serving multiple market segments, for our customers, shareholders, employees and community. The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.
The Board constituted a Corporate Social Responsibility (CSR) Committee, pursuant to Section 135 of the Act, consisting of Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, Mr Subrata Talukdar and Mr Pradip Roy (ceased to be an Independent Director w.e.f. July 29, 2021 by efflux of time), Mr Anjani K. Agrawal (appointed as a member w.e.f. July 30, 2021) as its members. The CSR Committee meets at least once in a year. During the year under review, the Committee met once. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available on the website of the Company at the link https://www.firstsource.com/wp-content/uploads/2022/03/ CSR-Report-FY21-22.pdf.
The Annual Report on CSR Activities, as stipulated under the Act and the SEBI (LODR) Regulations, 2015 forms an integral part of this Report and is appended as Annexure II. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.
The CSR activities, as per the provisions of the Act, may also be undertaken by the Company through a registered trust. Accordingly, "RP - Sanjiv Goenka Group CSR Trust" ("Group CSR Trust") was formed along with other Group Companies to pursue CSR activities as mentioned in the CSR Policy of the Company.
During the year, the Company has spent an amount of ? 15.55 million on CSR activities, as mentioned in the CSR Policy. The Company has been contributing a portion of amount of its CSR obligation every year for the project to set up an International Baccalaureate School in Kolkata taken up by the Group CSR Trust which is as an ''ongoing project'' as defined in the Companies (Corporate Social Responsibility Policy) Rules, 2014. Accordingly, the Company had transferred ? 40.16 million to Unspent CSR Account for the above mentioned cause towards CSR expenditure for FY 2021-22.
The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company looks to engage employees in focus areas where possible through programmes such as employee volunteering, payroll giving, participating in fundraising events, partnering with NGO''s and response to disasters.
¦ Volunteers did live translation in Tamil, Hindi, Kannada and Telugu for the "Living Beyond Barriers", a guidance session for persons with disabilities to live life on their terms;
¦ On the occasion of World Disability day volunteers and leaders took part in the Tactile Library preparation at our Chennai, Bangalore, Mumbai, Gandhinagar and Hyderabad offices;
¦ To mark contribution towards environment, volunteers from Chennai, Mumbai and Bangalore planted over 6000 trees across and involved in various beach cleanup activities;
¦ Volunteers supported Govt. school students by enabling various skill development sessions by giving their time and knowledge. Experts from HR team conducted mock interview & resume building sessions to graduates from Youth Empowerment Programs. We also had leaders conducting career guidance and mentoring session to Govt. school students;
¦ Volunteers took part in varied virtual awareness sessions on My Body is My Body, Sign language, Cyber safety, paper bag making, home composting, bio-fertilizer, Tangram making, Women rights and safety;
¦ As part of International Women''s Day, volunteers participated in various initiatives to empower women beneficiaries like - Virtual Menstrual hygiene session for the girl students from underrepresented communities, spreading awareness through digital poster making on strong women icons, financial literacy and motivational sessions by women leaders.
¦ On the occasion of International Volunteers Day, volunteers from Cebu and Manila took part in the session on Destinayson, a session for volunteers about What is Volunteering;
¦ Donated non-perishable daily essentials to women and children who were in need;
¦ Volunteers supported COVID-19 vaccination awareness campaign and also helped in distribution of Food Starter Kits and health kits in Cebu and Manila;
¦ Volunteers supported in donation of food and essentials to community pantry for the survivors of human trafficking.
¦ Salvation Army for a Bedroom and Bathroom item drive;
¦ Volunteers donated books and sanitizers to schools in need, as part of feed and read initiative;
¦ "Fill Your Backpack" special collection drive was enabled by our volunteers to support back to school program at US
¦ Volunteers involved in Blood donation drive at various US offices;
¦ Volunteers participated in a virtual expert session to spread awareness on breaking the biases against women and to have inclusion in diversity;
¦ As part of Black History Month, volunteers from the US recorded stories for Black protagonists.
¦ Volunteers enabled food bank collection for South Belfast Foyle, Southampton Foodbanks;
¦ Volunteers involved in raising funds for GLOW & EDA and donating to JustGiving;
¦ Volunteers participated in hair shave and hair donation for the Little Princess Trust in support of cancer patients;
¦ Volunteers participated raffle for Mothering Sunday to buy goods for Women''s Aid;
¦ As part of International Women''s Day, volunteers from the UK created flashcards on family planning and safe pregnancy. These cards were used by Goodera, a Global organization to spread awareness among rural women in Kenya;
¦ As part of International Women''s Day celebrations, volunteers created digital posters on strong women icons who fought for equality and women''s rights throughout history. These posters were used by Goodera on their social media pages to inspire fellow women.
During last financial year four mega payroll donation was held: COVID Fundraiser, 20 Years of Partnership with Sky Fundraiser, Compassion for Cebu Fundraiser and UK Payroll Giving Program
COVID Fundraiser: During most peak covid19 second wave our employees opened their heart and wallet and donated around 4 million to help colleagues and communities. Around 735 employees donated for this campaign.
20 Years of Partnership Campaign: Firstsource completes 20 glorious years of partnership with UK based telecommunications and media giant. This partnership was celebrated with a purpose where 1301 employees donated 0.46 mllion which was spent in various causes such as helping children homes with groceries, hygienic kits, helping needy patients get cataract surgeries, helping women''s in slum get livelihood opportunities.
UK Payroll Giving: To enable volunteers to give back to society, through payroll giving program 611 UK employees contributed £34,990.00 for the Financial year March 2021-April 2022. This amount was donated to the charities of employee choice.
Last year as COVID was rapidly spreading across world, one thing was very much needed that is remote helplines to follow and help COVID patients. Project Stepone, a volunteer led NGO started an unique project to support Govt by setting virtual helplines across India. Firstsource as a BPM giant showcased their business acumen by providing expertise as well as full time paid volunteers to support government to manage COVID better.
Project StepOne 2nd Wave Helpline: Around 110 employees where half were hired specifically for this project worked for 78 Days doing 10000~ critical calls throughout and helping Bangalore zone in managing COVID.
Project StepOne 3rf Wave Helpline: Integrating inclusion and CSR, a team of 5 LGBQT resource were hired who are currently supporting StepOne team in managing 3rd Wave as well as managing Vaccination Program.
Chennai Volunteers (CV) Helpline: Tiruvallur District Collector requested our non-profit partner to help with volunteers who can monitor COVID patients on a daily basis and provide necessary support. An exclusive 5 member LGBQT batch was setup to support them for two months. Around 5500 Calls were made and request and escalations were relayed to District Health Officials.
RISK MANAGEMENT:
The Company has implemented a comprehensive and fully integrated ''Enterprise Risk Management'' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.
The Enterprise Risk Management drives a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management and Internal Audit methodologies and processes in order to maximize enterprise value of the Company and ensure high value creation for our stakeholders over a time.
The details of the ''Enterprise Risk Management'' framework with details of the principal risks and the plans to mitigate the same are given in the ''Risk Management Report'' section of the ''Management Discussion and Analysis Report'' which forms part of this Annual Report.
Further in view of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), effective April 01, 2019, the Board constituted a Risk Management Committee on February 04, 2019 to monitor & mitigate the Risk.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls with reference to financial statements. Such internal financial controls over financial reporting are operating effectively and the Statutory Auditor has also expressed their opinion on the same in the Annexures to the Auditors Report.
WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy (the"WB Policy") with a view to provide vigil mechanism to Directors, Employees and other Stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. The WB Policy also states that this mechanism provides for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provides for direct access to the Chairperson of the Audit Committee in exceptional cases. The WB Policy has been posted on the website of the Company and the details of the same are provided in the ''Report on Corporate Governance'' forming part of this Annual Report.
The WB Policy is available on the website of the Company at https://www.firstsource.com/wp-content/uploads/2022/02/ WHISTLE-BLOWER-POLICY-Jan-2022.pdf
PREVENTION OF SEXUAL HARRASSMENT POLICY:
The Company has a ''Prevention of Sexual Harassment Policy'' in force in compliance with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.
It is confirmed that during the year under review, the Company has complied with applicable provisions in relation to sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, including the provisions relating to the constitution of Internal Complaints Committee under the said Act.
During the year under review, the following are the changes in the Board of Directors:
¦ Mr Shashwat Goenka (DIN: 03486121) retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting ("AGM").
¦ Mr Charles Richard Vernon Stagg (DIN: 07176980) ceased to be an Independent Director on account of completion of his term on May 05, 2022. The Board places on record its appreciation towards valuable contribution made by him during his tenure as a Director of the Company.
¦ The Board appointed Ms Vanita Uppal (DIN: 07286115) as an Additional Director (Non-Executive, Woman Independent) on the Board of the Company w.e.f. May 05, 2022. She holds office up to this AGM. The Board recommends appointment of Ms Vanita Uppal as an Independent Director for a term of three (3) consecutive years, effective from May 05, 2022 for approval of members of the Company at this AGM. The Company has received the declaration from Ms Vanita Uppal confirming that she meets the criteria of independence as prescribed under Section 149(6) of the Act.
¦ All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.
During the FY 2021-22, the following four (4) Board Meetings were held on:
1. May 11, 2021
2. July 29, 2021
3. November 10, 2021
4. February 04, 2022
During the FY 2021-22, the following four (4) Audit Committee Meetings were held on:
1. May 11, 2021
2. July 28 & 29, 2021*
3. November 10, 2021
4. February 03, 2022
*Audit Committee Meeting held on July 28, 2021 was adjourned to July 29, 2021.
Time gap between any two meetings was not more than one hundred twenty (120) days.
The full details of the said meetings are given in the ''Report on Corporate Governance'' forming part of this Annual Report.
The Company has put in place a system to familiarise its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarisation programmes are put up on the website of the Company at the below link: https:// www.firstsource.com/wp-content/uploads/2021/12/Policy-on-familiarisation-of-Independent-Directors.pdf.
The Company has framed a policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance ("Board Evaluation Policy"). The said policy sets out criteria for performance evaluation of Independent Directors, other Non-Executive Directors and the Executive Directors.
Pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Board carries out the performance evaluation of all the Directors (including Independent Directors) on the basis of recommendation of the Nomination and Remuneration Committee and the criteria mentioned in the Board Evaluation Policy. The Board decided that the performance evaluation of Directors should be done by the entire Board of Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors'' performance:
¦ Attendance and active participation in the Meetings;
¦ Bringing one''s own experience to bear on the items for discussion;
¦ Governance covering Awareness and Observance; and
¦ Value addition to the business aspects of the Company.
The performance of the MD & CEO is evaluated on the basis of achievement of performance targets/ criteria given to him by the Board from time to time.
(iii) Performance Evaluation by the Board of its own performance and its Committees:
The performance of the Board is evaluated by the Board in the overall context of understanding by the Board of the Company''s principle and values, philosophy and mission statement, strategic and business plans and demonstrating this through its action on important matters, the effectiveness of the Board and the respective Committees in providing guidance to the Management of the Company and keeping them informed, open communication, the
constructive participation of members and prompt decision making, level of attendance in the Board meetings, constructive participation in the discussion on the Agenda items, monitoring cash flow, profitability, income & expenses, productivity & other financial indicators, so as to ensure that the Company achieves its planned results, effective discharge of the functions and roles of the Board, etc.
The performance of the Committees is evaluated by the members of the respective Committees on the basis of the Committee effectively performing the responsibility as outlined in its Charter, Committee meetings held at appropriate frequency, length of the meetings being appropriate, open communication & constructive participation of members and prompt decision-making, etc.
POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The criteria for Directors'' appointment and for determining qualification, positive attributes and independence of a Director as mentioned in the ''Policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance'' in terms of Section 178(3) of the Act is mentioned below:
Appointment criteria and qualifications:
¦ The Nomination and Remuneration Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, Key Managerial Personnel ("KMP") or at Senior Management level and recommend the same to the Board for appointment, if found suitable;
¦ A person should possess adequate qualifications, expertise and experience for the position he/ she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person are sufficient/ satisfactory for the concerned position; and
¦ The Company shall not appoint or continue the employment of any person as Managing Director/ Whole-Time Director who has attained the age of seventy years, provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the statement pursuant to the provisions of Section 102 of the Act annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.
Meeting of Independent Directors:
There should be atleast one meeting of Independent Directors in a year, without the attendance of non-independent Directors and members of the Management. One (1) meeting of the Independent Directors of the Company was held on February 04, 2022.
The Independent Directors in the meeting:
¦ Review the performance of non-independent
Directors including MD & CEO and the Board as a whole;
¦ Review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and
¦ Assess the quality, quantity and timeliness of the flow of information between the Company''s Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
The Board, on the recommendation of the Nomination and Remuneration Committee framed a Remuneration Policy for Non-Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and other Employees of the Company. The details of Remuneration Policy for Non-Executive Directors and Independent Directors are provided as Annexure IIIA and details of Remuneration Policy for Key Managerial Personnel and Other employees of the Company are provided as Annexure IIIB to this Report.
A detailed note on the Board and its Committees is provided in the ''Report on Corporate Governance'' forming part of this Annual Report. The composition of the major Committee/(s) is as follows:
As on March 31, 2022, the Audit Committee comprised of three (3) Independent Directors viz. Ms Grace Koshie (Chairperson), Mr Pradip Roy (ceased to be a member w.e.f. July 30, 2021) Mr Anjani K. Agrawal (appointed as a member w.e.f. July 30, 2021), Mr Sunil Mitra and one (1) Non-Independent Director, Mr Subrata Talukdar.
As on March 31, 2022, the Nomination and Remuneration Committee comprised of two (2) Independent Directors viz. Mr Pradip Roy (ceased to be Chairman and member w.e.f. July 30, 2021), Mr Anjani K. Agrawal (appointed as a Chairman and member w.e.f. July 30, 2021), Mr Pratip Chaudhuri and one (1) Non-Independent Director, Mr Subrata Talukdar.
As on March 31, 2022, Corporate Social Responsibility Committee comprised of four (4) members viz Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO, Mr Subrata Talukdar and one (1) Independent Director, Mr Pradip Roy (ceased to member w.e.f. July 30, 2021) and Mr Anjani K. Agrawal (appointed as a member w.e.f July 30, 2021).
Stakeholders Relationship Committee:
As on March 31, 2022, Stakeholders Relationship Committee comprised of three (3) members viz. Mr Subrata Talukdar (Chairman), Mr Vipul Khanna, MD & CEO, and one (1) Independent Director, Mr Pradip Roy (ceased to be a member w.e.f. July 30, 2021) and Mr Anjani K. Agrawal (appointed as a member w.e.f. July 30, 2021).
Investment Committee:
As on March 31, 2022, Investment Committee comprised of three (3) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO and one (1) Non-Independent Director, Mr Subrata Talukdar.
As on March 31, 2022, Strategy Committee comprised of three (3) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO and one (1) Non-Independent Director, Mr Subrata Talukdar.
As on March 31, 2022, Risk Management Committee comprised of five (5) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO, one (1) Independent Director, Ms Grace Koshie, Mr Dinesh Jain and Mr Arun Tyagi, Officials of the Company.
All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business and none of such related party transactions required the approval of the Board of Directors or the Shareholders as per the Act or SEBI LODR. Further, there were no materially significant related party transactions that may have potential conflict of interests of the Company at large. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm''s length. All Related Party Transactions are placed before the Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board is available on the website of the Company at the link: https://www.firstsource.com/wp-content/uploads/2022/03/FSL-Related-Partv-Transaction-Policv.pdf.
The details of the related party transactions as required under the Act and the Rules are attached in Form AOC-2 as Annexure IV.
EMPLOYEES STOCK OPTION SCHEME:
The Company grants share-based benefits to eligible employees with a view to attracting and retaining the best talent, encouraging employees to align individual performances with the Company objectives, and promoting increased participation by them. With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long term wealth, the Company has an Employee Stock Option Scheme (ESOS), viz., the Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The Scheme is applicable to all eligible employees and Directors of the Company and its Subsidiary Companies. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, (SEBI (SBEB) Regulations), as amended.
Earlier, Firstsource Solutions Limited Employee Stock Option Scheme 2003 (hereinafter referred to as the "ESOS 2003") provided for its implementation through primary issuance of the Company''s shares to the employees of the Company. However, with a view to ensure better efficacy and administration of the Scheme, it was proposed that the Scheme can be dealt with and implemented through trust route. Accordingly, during the year, your Company implemented the ESOS 2003 through trust route
i.e., Firstsource Employee Benefit Trust, to align the interests of its employees with the long-term interests of the Company by motivating the employees with incentives and reward opportunities under the Scheme and create a sense of ownership and participation amongst the employees in the sustained
growth of the Company. The ESOS 2003 is applicable to all eligible employees and Directors of the Company and its Subsidiary Companies. The ESOS 2003 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, (SEBI (SBEB) Regulations), as amended.
The Company has established the ESOP 2019 Plan, pursuant to approval of shareholders at the Annual General Meeting on August 02, 2019, to allow our employees to acquire greater proprietary stake in our success and growth, and to encourage our employees to continue their association with us. The ESOP 2019 Plan is in compliance with SEBI (SBEB) Regulations, as amended.
As per the ESOP 2019 Plan, the Nomination and Remuneration Committee will issue stock options to the identified eligible employees/ Director(s) of the Company and its Subsidiaries at an exercise price which will be the face value of the Shares or any higher price which may be decided by the Nomination and Remuneration Committee considering the prevailing market conditions and the norms as prescribed by SEBI and other relevant regulatory authorities. Further, the stock options under the said plan would vest & be exercisable in tranches as determined by the Nomination and Remuneration Committee basis the power given to the Nomination and Remuneration Committee in line with the ESOP 2019 Plan.
In continuation of the Company''s philosophy of aligning employee interests with shareholder value creation and in line with global practices, the Nomination and Remuneration Committee of the Board of Directors has approved the Long Term Incentive Structure ("LTI") in the form of ESOP grants which will be granted to identified eligible employees as per ESOP 2019 Plan. This unique plan is a combination of tenure and performance based ESOPs aligned to shareholder value creation which will deepen employee ownership in the Company.
Options in this structure will be granted to identified eligible employees, basis the below criteria:
1. Drives ownership of employees in Company''s fortunes for better engagement and retention;
2. Seen as part of the total compensation package, in line with competition/ market practice;
3. Quantum of grants is based on the performance and potential of the individual employee.
Period within which options will vest unto the participant |
% of options that will vest |
|
End of 12 months from the date of |
25% |
|
grant of options |
||
At the end of every quarter after year |
6.25% |
|
1, till end of year 4 from date of grant |
Option in this structure is granted to identified eligible employees - Functional and Business heads, basis the below criteria:
1. Attainment of options can range between 0% and 150% of tranche eligible for vesting for the respective performance measurement period. Each tranche is separate. Performance and vesting in one performance period has no bearing on performance and vesting in another performance period;
2. Subject to terms and conditions of the scheme, the performance-based component of the grant is measured basis the Performance targets as agreed annually by the Management.
Under both the above structures, grants will be issued at face value of the shares or any higher price which may be decided by the Nomination and Remuneration Committee and will have an exercise period up to three (3) years as per the ESOP 2019 Plan and as determined by the Nomination and Remuneration Committee.
Under the ESOP 2019 Plan, as on March 31, 2022, the Nomination and Remuneration Committee has approved grant of 4,522,250 options which are a mix of tenure based and performance-based structure options to its senior leadership team and employees.
FIRSTSOURCE EMPLOYEE BENEFIT TRUST UNDER ESOP 2019 PLAN:
The ESOP 2019 Plan shall be implemented through the Trust which will be administered under the guidance, advice and direction of the Nomination and Remuneration Committee in accordance with the provisions of the Companies Act, 2013 and SEBI (SBEB) Regulations.
The Board of Directors has facilitated setting up of Employee welfare trust, viz "Firstsource Employee Benefit Trust" ("ESOP Trust") to implement the ESOP 2019 Plan which has been formed by the Company. The Company shall provide financial assistance to the ESOP Trust for secondary acquisition of equity shares of the Company for the purpose of implementation of ESOP 2019 Plan. The terms and conditions for the financial assistance provided shall be in compliance with the Companies Act, 2013 read with Companies (Share Capital and Debenture) Rules, 2014 and SEBI (SBEB) Regulations.
As on March 31, 2022, the ESOP Trust holds 17,011,351* equity shares purchased through secondary market.
* Includes 61,875 equity shares credited to ESOP holders post March 31, 2022.
Period within which options will vest unto the participant |
% of options that will vest |
|
End of 12 months from the date of |
25% |
|
grant of options |
||
At the end of every year after year 1, till |
25% |
|
end of year 4 from date of grant |
As on March 31, 2022, your Company has 20 subsidiaries and 1
Associate Company:
1. Firstsource Process Management Services Limited [Wholly Owned Subsidiary ("WOS") of the Company];
2. Firstsource Solutions UK Limited, UK (WOS of the Company);
3. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource Solutions UK Limited);
4. Firstsource BPO Ireland Limited (WOS of Firstsource Solutions UK Limited);
5. Firstsource Group USA, Inc., USA (WOS of the Company);
6. Firstsource Business Process Services, LLC, USA (WOS of Firstsource Group USA, Inc);
7. Firstsource Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC);
8. One Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC);
9. MedAssist Holding, LLC, USA (WOS of Firstsource Group USA, Inc);
10. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding, LLC);
11. Firstsource Health Plans and Healthcare Services, LLC, USA (Formerly known as Firstsource Transaction Services, LLC) (WOS of Firstsource Solutions USA, LLC);
12. Sourcepoint, Inc. (WOS of Firstsource Group USA, Inc);
13. Sourcepoint Fulfillment Services, Inc. (WOS of Sourcepoint, Inc.);
14. Firstsource Dialog Solutions (Private) Limited (Subsidiary of the Company);
15. PatientMatters LLC (WOS of Firstsource Solutions USA, LLC);
16. Kramer Technologies, LLC (WOS of PatientMatters LLC);
17. Medical Advocacy Services For Healthcare, Inc. (WOS of PatientMatters LLC);
18. The StoneHill Group, Inc (WOS of Sourcepoint, Inc.);
19. American Recovery Services, Inc. (WOS of Firstsource Business Process Services, LLC, USA);
20. Firstsource Solutions Mexico, S. de R.L. de C.V (WOS of Firstsource Group USA, Inc.).
Associate Company: (1)
1. Nanobi Data and Analytics Private Limited
Note:
1. Sourcepoint, Inc., a step down subsidiary of the Company, had executed a stock purchase agreement dated November 09, 2021 to acquire 100% stake in The StoneHill Group, Inc. a leading US mortgage services provider focused on
quality control and due diligence. On account of this, The StoneHill Group, Inc. became a step down subsidiary of the Company.
2. Firstsource Business Process Services, LLC, a step-down subsidiary of the Company, had executed a stock purchase agreement dated December 29, 2021 to acquire 100% stake in American Recovery Service Incorporated ("ARSI"), a leading US legal collection service provider. On account of this, ARSI became a step down subsidiary of the Company.
3. Firstsource Solutions Mexico, S. de R.L. de C.V. ("Firstsource Solutions Mexico") was incorporated as a subsidiary of Firstsource Group USA Inc., Subsidiary of the Company, on December 13, 2021. On account of this, Firstsource Solutions Mexico became a step down subsidiary of the Company.
The Company has no other joint venture Company. No company has ceased to be a joint venture or associate during the FY 2021-22.
A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC -1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company has a policy on material subsidiaries pursuant to Regulation 16(1)(c) of the Listing Regulations. The same is available on the website of the Company viz: https://www.firstsource.com/wp-content/ uploads/2021/12/Material-Subsidiarv-Policv.pdf.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT:
Business Responsibility Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE:
The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider Management and is further maintained across the entire functioning of the Company.
The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI.
The report on Corporate Governance as stipulated under provisions of Chapter IV & Schedule V of the Listing Regulations is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate governance is attached to the Report on Corporate Governance.
Pursuant to amendment of Rule 12 of Companies (Management and Administration) Rules, 2014 by MCA, wherein, instead of
attaching an extract of annual return (to be prepared in Form MGT - 9) to the Directors'' Report, the Company can host a copy of annual return on the website of the Company and a web link of the same to be given in the Directors'' Report.
Accordingly, a copy of Annual Return is available on the website of the Company at the below link: https://www.firstsource.com/ wp-content/uploads/2022/07/Annual-Return-FY-2021-22-1.pdf
STATUTORY DISCLOURES OF PARTICULARS:
A) Conservation of Energy:
The Company continues to make progress towards energy conservation across all its operation centres by adopting efficient Air-conditioning management system, usage of Energy efficient LED and efficient power back-up system. The Company is continuously monitoring earlier initiatives of reducing energy consumption within data centre/(s) and across its'' operation centres. The Company, similar to its previous year''s initiatives of GREEN IT, continued to replace the normal Desktops and old Thin clients with Mini Desktops/ Zero thin-clients in US Geography as the power consumption of mini desktop & Zero thin-clients was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts have been deployed where possible to shut down the Desktops/ Thin clients which are not being used for more than 1 hour which helps conserve energy.
¦ Cloud-First Initiatives: As part of Company''s Cloud-First and Digital-First-Digital-Now (DFDN) journey, the Company has moved significant part of its Operations and Deliveries, across the geographies and business units, to cloud. Over the past few years, the Company has adopted multiple state-of-the-art technologies by partnering with Global Cloud Services Platforms (e.g. Amazon Web Services, Microsoft Azure, Google cloud etc.) to move its applications and digital workload to a Multi-Cloud environment. Most of Company''s client facing application are deployed on Multi-Cloud environment to make them more Scalable, Resilient and Fault-tolerant;
¦ Digital Enabled Contact Center (DECC): As part of our DECC implementation, the Company has implemented multiple Next Generation Contact Centres (NGCC) across the global and business units. The DECC and Omni Channel Platform is further enhanced with Digital Capabilities, such as AI, Social Integration, ChatBot, Analytics etc. These state-of-art technologies are implemented to enhance and automate call handling capabilities by Digital/ AI interference, thus enhancing the Customer Experience (CX);
¦ NextGen Cybersecurity: The Company has also invested significantly in a cloud based Next Generation Cyber-Security solution, covering the entire horizon of endpoints, servers and network security, integrated with Cisco Threat Response and Threat Intelligence. The security solution provides complete protection to endpoints, servers in Data Centre and also Company''s cloud platform. The Company is also evaluating a Cloud based Zero Trust Security and Network solution that will further improve the security posture and resiliency.
C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans:
The Company''s income is diversified across a range of geographies and industries. During the year, 85.54% of the Company''s standalone total revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.
FOREIGN EXCHANGE EARNED AND USED:
The Company''s Foreign Exchange Earnings and Outgo during the year were as under:
(^ in million) |
|||
Particulars |
1 |
FY 2021-22 |
FY 2020-21 |
Foreign Exchange Earnings |
13,618.21 |
11,541.17 |
|
Foreign (including imports) |
Exchange Outgo capital goods and |
163.11 |
62.39 |
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company obtained Secretarial Audit Report from MMJB & Associates LLP (CP No. 8968), Company Secretaries for the FY 2021-22. The Secretarial Audit Report is annexed to this Report as Annexure V.
ANNUAL SECRETARIAL COMPLIANCE REPORT:
SEBI vide its Circular No. CIR/CFD/CMD1/27/2019 dated February 08, 2019 read with Regulation 24(A) of the Listing Regulations, directed listed entities to conduct Annual Secretarial Compliance Audit from a Practicing Company Secretary of all applicable SEBI Regulations and circulars/ guidelines issued thereunder. The said Secretarial Compliance report is in addition to the Secretarial Audit Report by Practicing Company Secretaries under Form MR - 3 and is required to be submitted to Stock Exchanges within 60 days of the end of the financial year. The Company has engaged the services of MMJB & Associates LLP (CP No. 8968), Company Secretaries for providing this certification.
STATUTORY AUDITORS AND AUDITORS'' REPORT:
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, bearing Registration Number: 117366W/W-100018, who were appointed as the Statutory Auditors of the Company by the members at their 16th Annual General Meeting (AGM) for a term of consecutive five (5) years will complete their present term on conclusion of the ensuing 21st AGM of the Company.
The Board, on the recommendation of the Audit Committee, recommended for the approval of the Members, the re-appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, bearing Registration Number: 117366W/W-100018, as the Statutory Auditors of the Company for a second term of five (5) years from the conclusion of the ensuing 21st AGM till the conclusion of the 26th AGM of the Company to be held in the year 2027.
The proposed Auditors have confirmed their willingness and eligibility in terms of provisions of Section 141 and other relevant provisions of the Act.
The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.
During the year under review, there were no material or serious instances of fraud falling within the purview of Section 143 (12) of the Companies Act, 2013 and rules made thereunder, by officers or employees reported by the Statutory Auditors of the Company during the course of the audit conducted and therefore no details are required to be disclosed under Section 134 (3)(ca) of the Act.
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the FY 2021-22:
¦ Issue of equity shares with differential rights as to dividend, voting or otherwise;
¦ I ssue of shares to employees of the Company under any scheme save and except Employees Stock Option Schemes as referred to in this Report;
¦ No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company''s operations in future.
Further, your Directors would like to mention that the MD & CEO received ? 158.78 million as remuneration during the year from Firstsource Group USA Inc. subsidiary of the Company.
The disclosure pursuant to Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with Circular No. CIB/ CFD/Policy/CELL/2, 2015 dated June 16, 2015, will be placed on the website of the Company.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134(3) (c) and 134(5) of the Companies Act, 2013, Directors of your Company state and confirm that:
1. In the preparation of the annual accounts for the FY 2021-22, the applicable Ind-AS accounting standards have been followed and there are no material departures from the same;
2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the Company for year ended on that date;
3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safe-guarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. The Directors had prepared the annual accounts on a going concern basis;
5. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
APPLICATION/PROCEEDING PENDING UNDER IBC:
None of the application has been made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year.
The Board wishes to place on record its sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Board also expresses its gratitude to the Department of Telecommunications, Collector of Customs and Excise, Director of Special Economic Zone, Ministry of Labour, Ministry of Corporate Affairs, Software Technology Parks of India, and various Governmental departments and organisations for their help and cooperation.
Further, the Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.
COVID-19 extracted a huge toll on lives and livelihoods of million of people in India and other parts of the world. COVID-19 pandemic continues to pose considerable risks across the globe. The Company had implemented its business continuity strategies, including work from home, and has put in place processes and guidelines to ensure safety of workplace for functioning offices. The Company is also in continuous engagement with its clients to ascertain the COVID-19 situation and is accordingly devising strategy to mitigate the impact.
As a result of continuous monitoring of the situation and formulation of its business strategies on an ongoing basis during difficult times the Company''s financial result for the year 2021-22 has been encouraging.
Your directors specially thank the employees in the front line and support staffs who had acted selflessly to keep the business continuity during the challenging times of COVID-19 and have supported to serve our clients and other stakeholders in the challenging times.
Chairman (DIN: 00074796)
Mumbai May 05, 2022
Mar 31, 2018
Directorsâ Report
Dear Members,
Directors of your Company take great pleasure in presenting the 17th Annual Report on the business and operations of your Company and the Audited Financial Statements for the financial year ended March 31, 2018.
FINANCIAL RESULTS:
Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016. The performance of the Company for the FY2017-18 is summarized below:
(Rs, in Million)
Particulars |
Consolidated |
Standalone |
||
FY2017-18 |
FY2016-17 |
FY2017-18 |
FY2016-17 |
|
Total Income |
35,406.78 |
35,588.15 |
8,739.79 |
9,548.51 |
Profit Before Interest and Depreciation |
4,643.37 |
4,411.95 |
2,470.18 |
2,445.43 |
Interest and Finance Charges (net) |
404.03 |
453.16 |
62.32 |
67.75 |
Depreciation/ amortization |
659.24 |
589.61 |
215.30 |
190.32 |
Profit Before Tax |
3,580.10 |
3,369.18 |
2,192.56 |
2,187.36 |
Share in net (loss) of associate |
(0.01) |
(0.01) |
- |
- |
Profit from ordinary activities before tax and after share in net loss |
3,580.09 |
3,369.17 |
2,192.56 |
2,187.36 |
Provision for Taxation (including Deferred Tax Charge/ Credit) |
314.31 |
576.79 |
273.40 |
302.77 |
Net Profit After Tax |
3,265.78 |
2,792.38 |
1,919.16 |
1,884.59 |
Profit attributable to: |
||||
Owners of the Company |
3,265.19 |
2,799.96 |
1,919.16 |
1,884.59 |
Non-controlling Interest |
0.59 |
(7.58) |
- |
- |
Total |
3,265.78 |
2,792.38 |
1,919.16 |
1,884.59 |
Balance in Profit & Loss Account |
7,199.79 |
4,407.93 |
11,499.91 |
9,615.32 |
Closing Balance in Profit & Loss Account |
10,493.72 |
7,199.79 |
13,447.81 |
11,499.91 |
Earning Per Share (Rs.) - Basic |
4.78 |
4.14 |
2.81 |
2.79 |
Earning Per Share (Rs.) - Diluted |
4.73 |
4.08 |
2.78 |
2.75 |
RESULT OF OPERATIONS:
The consolidated total income decreased from INR 35,588.15 Million to INR 35,406.78 Million, a decrease of 0.51% over the previous financial year. The consolidated Net Profit after Tax increased from INR 2,792.38 Million to INR 3,265.78 Million, a growth of 16.95% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis Report provided separately as part of the Annual Report.
The standalone total income decreased from INR 9,548.51 Million to INR 8,739.79 Million, a decrease of 8.47% over the previous financial year. The standalone Profit after Tax increased from INR 1,884.59 Million to INR 1,919.16 Million, an increase of 1.83% over the previous financial year
INCREASE IN SHARE CAPITAL:
During the year, your Company issued/ allotted 5,214,482 equity shares of the face value of INR 10/- each on the exercise of stock options under First source Solutions Employee Stock Option Scheme 2003 (ESOS 2003). Consequently, the outstanding, issued, subscribed and paid up capital of the Company has increased from 681,308,337 shares to 686,522,819 shares of INR 10/- each aggregating to INR 6,865.22 Million as on March 31, 2018.
DIVESTITURE OF THE DOMESTIC BUSINESS:
During the year under review, a Business Transfer Agreement was signed on July 7, 2017 with Vertex Customer Management India Private Limited to sell a portion of Company''s India domestic business and the said transaction/(s) has been closed successfully during the period under review.
GLOBAL OPERATION CENTERS:
The Company, on a consolidated basis have 37 global operation centers as on March 31, 2018. The centers are located across India, US, UK and Philippines. 10 of the Company''s operation centers are located in 7 cities in India, 18 in US, 7 in UK and 2 in Philippines.
During the year, the Company incurred capital expenditure of INR 625.05 Million mainly towards refurbishment and maintenance of operation centers, technology upgrade and setting up of new operations centers.
QUALITY INITIATIVES:
The Company follows the global best practices for process excellence and the quality framework is based on COPC principles. The Company uses innovative techniques like Speech & Text Analytics, Robotic Process Automation and Intelligent action board to drive improvements across. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.
AWARDS AND ACCOLADES:
The Company received the following awards and accolades during the year.
Awards:
- Triple awards at the Welsh Contact Centre (WCC) Awards 2018 in the UK: Gold in ''Outsourced Contact Centre of the Year''; Gold in ''People Engagement'' for the Caridff HR teams and Individual award in the ''Trainer of the Year'' categories. The awards recognize the teams'' commitment to delivering great customer experiences and making First source an employer of choice.
- Won the award for ''Best Personal Entertainment and Telecoms'' at the prestigious UK Complaint Handling (UKCH) Awards 2018. The award recognizes the company''s partnership with riffraff, the community-run network which delivered record breaking results for the telecoms company in a highly competitive marketplace.
- Won multiple awards at the North East Contact Centre Awards 2017: Gold in the ''Contact Centre of the Year (under 250 seats)'' category. This award recognizes the First source Middles rough team''s commitment to understanding and responding to customer needs and delivering great customer experiences. Silver for the Middlesbrough HR team in the ''Recruitment Champion'' category, for its commitment to making First source an Employer of choice, while delivering value to clients and contributing to First source''s overall business performance. Individual awards in the categories of ''Inspirational Leader 2017'' and the ''Customer Experience Champion of the Year''.
- Won 3 awards at the European Contact Centre and Customer Service Awards (ECCCSA''s) 2017: Gold in Medium Contact Centre of the Year, Silver in Outsourcing Partnership of the Year for work done with Sky and Silver in Outsourced Contact Centre of the Year for work done out of the Middles rough office in the UK. The awards recognize the team''s commitment to understanding and responding to customer needs and delivering great customer experiences.
- Awarded the ''BPO Contract of the Year'' at the Global Sourcing Association (GSA) Awards 2017, in recognition of the on-going work with Sky. This win recognizes First sourceâs long-term partnership with Sky and the success achieved by creating a joint operational management structure, transparent culture and the innovative use of technology and approach to customer experience.
- Won two awards at the UK Customer Experience Awards 2017: Gold in the Large Contact Centre category in partnership with Sky and CX Professional of the Year for Kathryn Chivers, VP - Sales Operations, UK. The wins celebrate First sourceâs work in Cardiff office in the UK to deliver top quality customer experiences.
- Won the prestigious ''Customer Service Excellence Award'' at the NASSCOM BPM Strategy Summit 2017. This award in the ''Return on Investment (ROI)'' category recognizes First sourceâs focus on providing agile solutions across channels and creating immense RoI for its client.
Analyst Recognition:
- Recognized as a ''Major Contender'' in Everest Group''s Mortgage BPS Service Provider Landscape with Services PEAK Matrix⢠Assessment 2017. The positioning recognizes First source''s focus on excellence and delivery, and highlights the company''s commitment to providing a smart and collaborative partnership for clients.
- Healthcare Provider and Payer businesses were also recognized as ''Major Contender'' in Everest Group''s Service Provider Landscape PEAK Matrix⢠Assessment 2017. The positioning recognizes the investments and strides made in the digital arena, especially with RPA deployment for Payer and automation solutions for Provider services.
- Recognized as a ''Major Contender'' in Everest Group''s Contact Centre Outsourcing (CCO) PEAK Matrix⢠Assessment 2017. This positioning recognizes First sourceâs focus on excellence and delivery while highlighting the organizationâs commitment to building smart and collaborative partnership with clients.
- Recognized as a ''Major Contender'' in Banking BPO-Service Provider Landscape by Everest Group''s PEAK Matrix⢠Assessment 2017. This recognition acknowledges the organizationâs focus on excellence and celebrates its'' capabilities to consistently enhance customer experience.
- Ranked as a ''Leader'' in the Telecoms market by Nelson Hall in one of their industry reports. The ranking as ''Leader'' significantly improves the organizationâs performance from a ''High Achiever'' in the past.
Industry Recognition:
- First source is the first BPM Company in the U.K to achieve the ''Gold'' standard by Investors in People (IIP). The standard defines what it takes to lead, support and manage people for sustained success. The organization is now in the top 7% of businesses in the UK, which falls under this Gold accreditation.
- First source recognized as a ''Leader'' in the International
Association of Outsourcing Professionals'' (IAOP) Global Outsourcing 100 List for 2017. In addition, it has also been named a ''Superstar of the Global Outsourcing 100'', because of its'' exceptional performance and high scores achieved during the IAOP evaluation.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with Section 129(3) of the Companies Act, 2013 and in view of notification issued by the Ministry of Corporate Affairs on Ind-AS, the Company has prepared consolidated financial statements of the Company and all its subsidiaries as per Ind-AS, which forms part of this Annual Report.
DIVIDEND:
Your Company takes immense pleasure to inform that the Board of Directors at its meeting held on May 7, 2018 recommended final maiden dividend at the rate of 15% i.e. INR 1.50 per share of INR 10/- each fully paid up equity shares of the Company for the FY2017-18.
APPLICABILITY OF DIVIDEND DISTRIBUTION POLICY:
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2016 dated July 8, 2016, the top five hundred listed entities based on market capitalization (calculated as on March 31 of every financial year) shall formulate a Dividend Distribution Policy which shall be disclosed in their annual reports and on their websites.
The Board of Directors of the Company has approved the draft of Dividend Distribution Policy at its meeting held on August 8, 2017. The applicability of the said policy will be effective from FY 2016-17 to the Company and the same is available on the website of the Company at the link http://www.First source.com/blog/wp-content/ uploads/2017/10/Dividend-Distribution-Policy.pdf.
TRANSFER TO RESERVE:
The Board of Directors of the Company (hereinafter referred to as the "Board") have not recommended transfer of any amount of profit to reserves during the year under review other than as mentioned above. Hence, the remaining amount of profit for the financial year under review has been carried forward to the Statement of Profit and Loss.
HUMAN RESOURCES:
On a consolidated basis, the Company has 18,703 employees as of March 31, 2018.
PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES:
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 ("Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure I.
The statement containing particulars of employees as required under Section197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
PUBLIC DEPOSITS:
During the year under review, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2018.
PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the standalone financial statements. (Please refer to Note 5 & 28 to the standalone financial statements).
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Company seeks to be a good corporate citizen in all aspects of its operations and activities. We commit to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders. Our CSR Policy is governed and guided by our Group''s corporate vision to enable inclusive growth and our aspiration to be India''s leading business group serving multiple market segments, for our customers, shareholders, employees and community. The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.
The Board constituted a Corporate Social Responsibility (CSR) Committee, pursuant to Section 135 of the Act, consisting of Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and Pradip Roy (Independent Director) as its members. The CSR Committee meets once in a year. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available on the website of the Company at the link http://First source.com/blog/wp-content/uploads/2016/06/ fsl-corporate-social-responsibility-policy.pdf. The Annual Report on CSR Activities, as stipulated under the Act and the Listing Agreement forms an integral part of this Report and is appended as Annexure II. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.
The CSR activities, as per the provisions of the Act, may also be undertaken by the Company through a registered trust. Accordingly, "RP - Sanjiv Goenka Group CSR Trust" ("CSR Trust") was formed along with other group companies to pursue CSR activities as mentioned in the CSR Policy of the Company. During the year, the Company has spent an amount of INR 34.51 Million, being 2% of the average net profits of the Company for the last 3 years on CSR activities as mentioned in the CSR Policy. Out of the said amount, majority of the amount has been contributed by the Company towards the corpus of the CSR Trust, which would be spent by the CSR Trust on the focus areas as mentioned in the CSR Policy of the Company.
The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company looks to engage employees in our focus areas where possible through programmes such as Employee Volunteering, Payroll Giving, Participating in fundraising events, Partnering with NGO''s and Response to disasters.
India:
- As part of the ''Give India'' Payroll Giving Program, First source employees contribute towards various charities on a monthly basis. The total contribution this FY year was around INR 2 Million;
- First source donated INR 0.5 Million towards ''Wheels of Change''. They work in the disability space and have a novel cab service called ''Kickstart''. The donation was towards modification of one of their cabs to make it accessible for people with disability;
- First source donated INR 0.25 Million towards Light of Life trust for organizing a fundraiser event "Kalpataru - A Musical". This is a platform for the underprivileged children to showcase their talent and the proceedings from this event was utilized for their education;
- First source donated INR 0.2 Million towards Foundation For Excellence for providing Scholarship for underprivileged Engineering students;
- In Indore, employees participated in a plantation drive organized by the Government of Madhya Pradesh. The team went to Devguradiya to plant trees and were felicitated by the Forest department officials;
- Employees in Chennai office visited Christ Faith Home, a shelter for more than 100 homeless children. The team members distributed provision items to the shelter and they had a chance to interact and conduct fun activities for the children;
- In Mumbai, employees visited Shram Yash Charitable Trust, a shelter home for 32 children. The volunteers distributed snacks and collected stationery materials. They also had interacted with the children and conducted some fun activities for them;
- Employees in Pondicherry visited a service home and spent quality time with children;
- The First source Dream source Committee at Trichy, visited ''Hope of the Hopeless'' orphanage which is home to 90 odd orphans. They spent quality time with the children and also donated provisions as part of the ''Joy of giving'' initiative;
- Employees from Bangalore office visited Swanthana, an NGO for underprivileged and differently abled girls. With the support and contribution of fellow First sourcers, the volunteers who visited the NGO donated groceries, a washing machine, blenders, cleaning solutions, blankets and bed sheets. The remaining funds were issued to the NGO through a cheque to assist them in construction of a section that was damaged due to rains;
- First source joined hands with Shine Treechy- an NGO dedicated to Environmental conservation and Social development in Trichy. 2000 Palm saplings were planted in a pre-identified area.
Philippines:
- Employees in Philippines visited Bahay Punlaan as part of the CSR initiative called ''Plant-a-Tree for Mother Earth''. This initiative helped in replanting and restoring the rainforest;
- A CSR activity was held in partnership with the Department of Labour and Employment at ''Bahay Aruga'', Manila and pooled in resources to provide for school supplies and other provisions for the children at the orphanage;
- Employees of the Company''s office in Manila, for more than 3 years in a row have been sponsoring the Chosen Children Village Foundation, Inc., an internationally acclaimed facility geared towards securing the future children with special needs. Our employees supported this foundation by selling Christmas Cards painted by the children of the foundation. A total of 321 Christmas cards were sold and PHP 16,050 was raised to support the foundation.
UK:
- Super shoes fundraising were our annual charity of choice. First sourcers have been actively supporting Super shoes a charity which empowers children fighting cancer. Fundraising has involved activities like Waterside Half Marathon, Errigal Peak Challenge, cake sales, Funky Shoe Weeks, Ice Bucket Challenge, Onesie day, Raffle to win tickets to the Wales vs Georgia rugby match, etc. A total of GBP 3,556.33 was raised towards Super shoes in FY17-18;
- To mark World Suicide Prevention Day, Aware NI held ''Mood Walk'' in Derry with the aim of raising money for AWARE and the services they provide in the local area;
- Black Eye fundraising boxing match was organized and a total of GBP 1,460 was raised to support the Altnagelvin Neonatal Intensive Care Unit (NICU);
- During Christmas employees participated in donations of toys and gifts to support disadvantaged children in conjunction with the Business in The Community Cares @ Christmas initiative across Northern Ireland sites. In Warrington, ticket sale donations following the site''s Christmas Party, were given towards Saint Rocco''s Hospice;
- Staff across first sourceâs offices took part in various activities namely ''Wear Pink to Work'' day, Dress down day and bake sale to create awareness around breast cancer care;
- During the cold spell referred to as the ''Beast from the East,'' staff in Cardiff raised well over GBP 672, which was enough to buy 100 sleeping bags, 100 rucksacks and 150 pairs of socks for the homeless;
- Staff in Cardiff took part in a litter picking activity in partnership with Business in the Community. This organization works closely with businesses to tackle a wide range of issues that are essential to building a fairer society and a more sustainable future.
USA:
- Multiple events were organized for Making Strides for Breast Cancer. Over USD 14,000 was raised from bake sales, raffles, yard sales, Annual walks, lunch events, selling breast cancer prevention items, jeans day, penny wars, etc.;
- Louisville employees raised funds for Toys for Tots. Managers and supervisors all volunteered to receive a pie for every USD 15 that was placed in their jar. Total USD 230.66 was raised for the charity;
- To assist the hurricane affected in US Virgin Islands and Puerto Rico, employees decided to act quickly and raise donations. Two shipments were sent by boat and one shipment via freight company (all through donated time/efforts). School Supply drives were organized at multiple offices. For Hurricane Harvey affected, all offices in US encouraged donation;
- As part of Back to school campaign, Louisville employees donated binders and notebooks to local schools and Colorado Springs office donated over 540 school supply items;
- In association with Habitat for Humanity in Louisville, community clean up was helped by cleaning up around homes, planting and yard maintenance in specific areas;
- Blood donation drive was carried out in association with UNYTS. Employees donated a total of 36 Whole Blood Units and 8 Double Red Cell Products. Also, 13 employees signed up to be organ donors;
- Employees from multiple offices donated a variety of items for all ages to local homeless/women''s shelters, and also partnered with YWCA women''s shelter to provide mittens;
- As part of the "Adopt a family" initiative, employees adopted a child for the holiday season and donated clothing and toys so that children could have a nice Christmas holiday;
- First source Advantage employees in association with Salvation Army organized various fundraising events. During the past year First source has done multiple food drives with proceeds going towards the Salvation Army Food Bank. Participation was done in Pack a Backpack initiative which helped support 20 young children in need of school supplies;
- The Company held multiple 50/50s throughout the year, and raised a total of USD 2,264 for American heart organization, American Red Cross, American Cancer Society etc.
RISK MANAGEMENT:
The Company has implemented a comprehensive and fully integrated ''Enterprise Risk Management'' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.
The Company has introduced several improvements to Enterprise Risk Management and processes to drive a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management and Internal Audit methodologies and processes in order to maximize enterprise value of the Company and ensure high value creation for our stakeholders over a time.
The details of the ''Enterprise Risk Management'' framework with details of the principal risks and the plans to mitigate the same are given in the ''Risk Management Report'' section of the ''Management Discussion and Analysis Report'' which forms part of this Annual Report.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls with reference to financial statements. Such internal financial controls over financial reporting are operating effectively and the Statutory Auditor has also expressed their opinion on the same in the Annexure to the Auditors Report.
WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy (the "WB Policy") with a view to provide vigil mechanism to Directors, Employees and other Stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. The WB Policy also states that this mechanism provides for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The WB Policy has been posted on the website of the Company and the details of the same are explained in the ''Report on Corporate Governance'' forming part of this Annual Report. The WB Policy is available at the website of the Company at the below link http://First source.com/ blog/wp-content/uploads/2016/06/Whistle-Blower-Policy.pdf
PREVENTION OF SEXUAL HARRASSMENT POLICY:
The Company has a ''Prevention of Sexual Harassment Policy'' in force in compliance to the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.
BOARD OF DIRECTORS:
1. Subrata Talukdar (DIN 01794978) retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting("AGM");
2. Re-appointment of Mr. Pradip Roy (DIN 00026457) as an Independent Director on the Board of the Company for a term of three (3) consecutive years, subject to Member''s approval.
All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.
Board and Audit Committee Meetings:
During the FY2017-18, the following 4 Board Meetings and Audit Committee Meetings were held on:
1. May 5, 2017;
2. August 8, 2017;
3. November 1, 2017; and
4. February 7, 2018.
Time gap between any two meetings was not more than one hundred twenty (120) days.
The full details of the said meetings are given in the ''Report on Corporate Governance'' forming part of this Annual Report.
The Familiarization Programmes for Independent Directors:
The Company has put in place a system to familiarize its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarization programmes are put up on the website of the Company at the below link: http://First source.com/blog/wp-content/uploads/2016/06/fsl-details-of-independent-directors familiarisation-programme.pdf.
BOARD EVALUATION:
(i) Performance Evaluation of the Independent Directors and Other Individual Directors:
The Company has framed a policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance ("Board Evaluation Policy"). The said policy sets out criteria for performance evaluation of Independent Directors, other Non Executive Directors and the Executive Directors.
Pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Board carries out the performance evaluation of all the Directors (including Independent Directors) on the basis of recommendation of the Nomination and Remuneration Committee and the criteria mentioned in the Board Evaluation Policy. The Board decided that the performance evaluation of Directors should be done by the entire Board of
Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors'' performance:
a. Attendance and active participation in the Meetings;
b. Bringing one''s own experience to bear on the items for discussion;
c. Governance - i) Awareness ii) Observance; and
d. Value addition to the business aspects of the Company.
(ii) Performance Evaluation of Executive Director:
The performance of the Managing Director & CEO is evaluated on the basis of achievement of performance targets/ criteria given to him by the Board from time to time.
(iii) Performance Evaluation by the Board of its own performance and its Committees:
The performance of the Board is evaluated by the Board in the overall context of understanding by the Board of the Company''s principle and values, philosophy and mission statement, strategic and business plans and demonstrating this through its action on important matters, the effectiveness of the Board and the respective Committees in providing guidance to the management of the Company and keeping them informed, open communication, the constructive participation of members and prompt decision-making, level of attendance in the Board meetings, constructive participation in the discussion on the Agenda items, monitoring cash flow, profitability, income & expenses, productivity & other financial indicators, so as to ensure that the Company achieves its planned results, effective discharge of the functions and roles of the Board etc.
The performance of the Committees is evaluated by the members of the respective Committees on the basis of the Committee effectively performing the responsibility as outlined in its Charter, Committee meetings held at appropriate frequency, length of the meetings being appropriate, open communication & constructive participation of members and prompt decision-making etc.
POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The criteria for Directors'' appointment and for determining qualification, positive attributes and independence of a Director as mentioned in the ''Policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance'' in terms of Section 178(3) of the Act is mentioned below:
Appointment criteria and qualifications:
1. The Nomination and Remuneration Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, Key Managerial Personnel ("KMP") or at Senior Management level and recommend the same to the Board for appointment, if found suitable;
2. A person should possess adequate qualifications, expertise and experience for the position he/ she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person
are sufficient/ satisfactory for the concerned position; and
3. The Company shall not appoint or continue the employment of any person as Managing Director/ Whole time Director who has attained the age of seventy years, provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.
Meeting of Independent Directors:
There should be at least one meeting of Independent Directors in a year, without the attendance of non-independent Directors and members of the Management.
The Independent Directors in the meeting:
i. Review the performance of non-independent Directors including Managing Director & CEO and the Board as a whole;
ii. Review the performance of the Chairperson of the Company, taking into account the views of executive Directors and nonexecutive Directors; and
iii. Assess the quality, quantity and timeliness of the flow of information between the Company''s management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
Remuneration Policy:
The Board, on the recommendation of the Nomination and Remuneration Committee framed a Remuneration Policy for Non-Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and other Employees of the Company. The details of Remuneration Policy for Non-Executive Directors and Independent Directors are provided as Annexure IIIA and details of Remuneration Policy for Key Managerial Personnel and Other employees of the Company are provided as Annexure IIIB to this Report.
COMMITTEES OF THE BOARD:
A detailed note on the Board and its Committees is provided in the ''Report on Corporate Governance'' forming part of this Annual Report. The composition of the major Committee/(s) is as follows:
Audit Committee:
As on March 31, 2018, the Audit Committee comprised of 3 Independent Directors namely Y. H. Malegam (Chairman), Charles Miller Smith and Ms. Grace Koshie and 1 Non - Independent Director, namely Subrata Talukdar.
Nomination and Remuneration Committee:
As on March 31, 2018, the Nomination and Remuneration Committee comprised of 3 Independent Directors viz. Y. H. Malegam (Chairman), Charles Miller Smith and Pradip Roy and (1) Non Independent Director, namely Subrata Talukdar
Corporate Social Responsibility (CSR Committee):
As on March 31, 2018, CSR Committee comprised of Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and 1 Independent Director, namely Pradip Roy.
Stakeholders Relationship Committee:
As on March 31, 2018, Stakeholders Relationship Committee comprised of members viz. Subrata Talukdar (Chairman) and Rajesh Subramaniam.
Investment Committee:
As on March 31, 2018, Investment Committee comprised of members viz. Y. H.Malegam (Chairman), Rajesh Subramaniam and 1 Non-Independent Director, namely Subrata Talukdar
Strategy Committee:
As on March 31, 2018, Strategy Committee comprised of members viz. Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and 1 Independent Director, namely Donald W. Layden Jr.
RELATED PARTY TRANSACTIONS:
All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material, requiring approval of the Board/shareholders, in accordance with the policy of the Company on materiality of related party transactions. All Related Party Transactions are placed before the Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board is available on website of the Company at the below link: http:// First source.com/blog/wp-content/uploads/2016/06/Related-Party-Transaction-Policy.pdf.
Details of Related Party Transactions are given at Note No. 24 to the Standalone Financial Statements. None of the Directors of the Company has any pecuniary relationships or transactions vis-a-vis the Company.
EMPLOYEES STOCK OPTION SCHEME:
With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long-term wealth, the Company has an Employee Stock Option Scheme (ESOS), namely, the First source Solutions Employee Stock Option Scheme 2003 (ESOS 2003). The Scheme is applicable to the eligible employees that include Employees and Directors of the Company and its Subsidiary Companies. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("SEBI ESOP Regulations"), as amended. There has not been any material change in the Scheme during the financial year. The disclosure pursuant to SEBI ESOP Regulations read with Circular No CIB/CFD/Policy/CELL/2,2015 dated June 16, 2015, are given on the website of the Company (http://www.First source. com/us/investors-corporate-governance).
SUBSIDIARY COMPANIES:
As on March 31, 2018, your Company has 15 subsidiaries and 1 Associate Company:
Domestic Subsidiary: (1)
1. First source Process Management Services Limited (Formerly known as Anunta Tech Infrastructure Services Limited) [Wholly Owned Subsidiary ("WOS") of the Company]
International Subsidiaries: (14)
1. First source Solutions UK Limited, UK (WOS of the Company)
2. First source Solutions S.A., Argentina (Subsidiary of First source Solutions UK Limited)
3. First source Group USA, Inc., USA (WOS of the Company)
4. Med Assist Holding, LLC, USA (WOS of First source Group USA, Inc)
5. First source Business Process Services, LLC, USA (WOS of First source Group USA, Inc)
6. First source Advantage, LLC, USA (WOS of First source Business Process Services, LLC)
7. One Advantage, LLC, USA (WOS of First source Business Process Services, LLC)
8. First source Solutions USA, LLC, USA (WOS of Med Assist Holding, LLC)
9. First source Transaction Services, LLC, USA (WOS of First source Solutions USA, LLC)
10. ISGN Solutions Inc. (WOS of First source Group USA, Inc)
11. ISGN Fulfillment Services, Inc. (WOS of ISGN Solutions Inc.)
12. ISGN Fulfillment Agency, LLC (WOS of ISGN Fulfillment Services, Inc.)
13. First source BPO Ireland Limited (WOS of the Company)
14. First source Dialog Solutions (Private) Limited (Subsidiary of the Company)
Associate Company: (1)
1. Nanobi Data and Analytics Private Limited
The Company has no other joint venture Company. No company has ceased to be a joint venture or associate during the FY 2017-18.
Report on the Performance and Financial Position of Subsidiaries:
A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC - 1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company has a policy on material subsidiaries pursuant to Regulation 16(1)(c)of the Listing Regulations. The same is available on website of the Company viz: http://First source.com/blog/wp-content/uploads/2016/06/ Material-Subsidiary-Policy.pdf.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT:
Business Responsibility Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE:
The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider management and is further maintained across the entire functioning of the Company.
The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI.
The report on Corporate Governance as stipulated under provisions of Chapter IV & Schedule V of the Listing Regulations is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate governance is attached to the Report on Corporate Governance.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in Form MGT- 9 is annexed herewith as Annexure IV.
STATUTORY DISCLOSURES OF PARTICULARS:
A) Conservation of Energy:
The Company continues to make progress towards energy conservation across all its operation centers. The Company is continuously monitoring earlier initiatives of reducing energy consumption within data center/(s) and across its'' operation centers. The Company, similar to its previous year''s initiatives of GREEN IT, continued to replace the normal Desktops and old Thin clients with Mini Desktops/ Zero thin-clients in US Geography as the power consumption of mini desktop & Zero thin-clients was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts have been deployed where possible to shut down the Desktops/ Thin clients which are not being used for more than 1 hour which helps conserve energy.
B) Absorption of Technology:
The Company has been innovating consistently to absorb newer technology offerings which can benefit business to improve operational efficiency with a cost effective manner. During the year, the Company has invested on newer technology with Software defined network with Cisco on Cisco''s M5 next generation blade infrastructure. The Company is also migrating it''s vast range of physical servers across multiple data centers in India, US & UK on to virtual servers as a result of which there will be savings of Power costs on account of reduction in power consumption and cooling costs. This is the first step towards hosting our Applications to cloud and ease of management of our Data center Infrastructure and Applications.
C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans:
The Company''s income is diversified across a range of geographies and industries. During the year, 66.23% of the Company''s standalone total revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.
FOREIGN EXCHANGE EARNED AND USED:
The Company''s Foreign Exchange Earnings and Outgo during the year were as under:
(Standalone figures in Rs, Million)
Particulars |
FY2018 |
FY2017 |
Foreign Exchange Earnings |
5,788.20 |
5,683.29 |
Foreign Exchange Outgo |
293.15 |
155.59 |
(including capital goods and imports) |
SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company obtained Secretarial Audit Report from Rathi & Associates, a Company Secretaries in Practice for the FY2017-18. The Secretarial Audit Report is annexed to this Report as Annexure V.
STATUTORY AUDITORS AND AUDITORS'' REPORT:
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, bearing Registration Number: 117366W/W-100018, were appointed as the Statutory Auditors of the Company by the members at their 16th Annual General Meeting (AGM) for a term of consecutive five (5) years i.e. till the conclusion of 21st AGM. In view of the amendment effective from May 7, 2018 the first proviso to Section 139(1) has been omitted and as a effect, ratification of the appointment of the Statutory Auditors at the 17th AGM has not been considered.
The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark. However, there is Emphasis of Matter in the Auditors'' Report which is self-explanatory.
GENERAL:
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the FY2017-18:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise;
2. Issue of shares to employees of the Company under any scheme save and except Employees Stock Option Scheme as referred to in this Report;
3. The Managing Director & CEO does not receive any remuneration or commission from any of its subsidiaries; and
4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company''s operations in future.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134(3) (c) and 134(5) of the Companies Act, 2013, Directors of your Company state and confirm that:
1. In the preparation of the annual accounts for the FY2017- 18, the applicable Ind-AS accounting standards have been followed and there are no material departures from the same;
2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for year ended on that date;
3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. The Directors had prepared the annual accounts on a going concern basis;
5. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGMENTS:
The Board wishes to place on record its sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Board also expresses its gratitude to the Ministry of Telecommunications, Collector of Customs and Excise, Director - Special Economic Zone and various Governmental departments and organizations for their help and cooperation.
Further, the Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Sanjiv Goenka
Chairman
Kolkata May 7, 2018
Mar 31, 2017
Dear Members,
Directors of your Company take great pleasure in presenting the 16th Annual Report on the business and operations of your Company and the Audited Financial Statements for the financial year ended 31 March 2017.
FINANCIAL RESULTS:
Pursuant to the notification dated 16 February 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules 2015 with effect from 1 April 2016. The performance of the Company for the financial year 2016-17 is summarized below:
(Rs, in Millions)
Particulars |
Consolidated |
Standalone |
||
- FY 2016-17 |
FY 2015-16 | |
FY 2016-17 |
FY 2015-16 |
|
Total Income |
35,588.15 |
32,266.97 |
9,548.51 |
8,932.03 |
Profit Before Interest and Depreciation |
4,411.95 |
3,995.31 |
2,445.43 |
2,163.23 |
Interest and Finance Charges (net) |
453.16 |
524.38 |
67.75 |
89.08 |
Depreciation |
589.61 |
608.82 |
190.32 |
318.09 |
Profit Before Tax |
3,369.18 |
2,862.11 |
2,187.36 |
1,756.06 |
Share in net (loss) of associate |
(0.01) |
- |
- |
- |
Profit from ordinary activities before tax and after share in net loss |
3,369.17 |
2,862.11 |
2,187.36 |
1,756.06 |
Provision for Taxation (including Deferred Tax Charge/ Credit) |
576.79 |
252.86 |
302.77 |
243.83 |
Net Profit After Tax |
2,792.38 |
2,609.25 |
1,884.59 |
1,512.23 |
Profit attributable to: |
||||
Owners of the Company |
2,799.96 |
2,604.87 |
1,884.59 |
1,512.23 |
Non-controlling Interest |
(7.58) |
4.38 |
- |
- |
Total |
2,792.38 |
2,609.25 |
1,884.59 |
1,512.23 |
Balance in Profit & Loss Account |
4,439.41 |
1,830.16 |
9,647.35 |
8,135.12 |
Closing Balance in Profit & Loss Account |
7,231.79 |
4,439.41 |
11,531.94 |
9,647.35 |
Earnings Per Share (?) - Basic |
4.14 |
3.89 |
2.79 |
2.26 |
Earnings Per Share (?) - Diluted |
4.08 |
3.72 |
2.75 |
2.16 |
RESULT OF OPERATIONS:
The consolidated total income increased from Rs, 32,266.97 Million to Rs, 35,588.15 Million, an increase of 10.29% over the previous financial year The consolidated Net Profit after Tax increased from Rs, 2,609.25 Million to Rs, 2,792.38 Million, a growth of 7.02% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis Report provided separately as part of the Annual Report.
The standalone total income increased from Rs, 8,932.03 Million to Rs, 9,548.51 Million, an increase of 6.90% over the previous financial year. The standalone Profit after Tax increased from Rs, 1,512.23 Million to Rs, 1,884.59 Million, an increase of 24.63% over the previous financial year
INCREASE IN SHARE CAPITAL:
During the year, your Company issued/ allotted 79,93,425 equity shares of the face value of Rs, 10/- each on the exercise of stock options under First source Solutions Employee Stock Option Scheme 2003 (ESOS 2003). Consequently, the outstanding, issued, subscribed and paid up capital of the Company has increased from 67,33,14,912 shares to 68,13,08,337shares of Rs, 10/- each aggregating to Rs, 6,813.08 Million as on 31 March 2017.
ASSOCIATE COMPANIES AND SUBSIDIARIES:
During the year under review, Company''s holdings in Nanobi Data and Analytics Private Limited ("Nanobi") exceeded 20% and the said holdings, post conversion, will be part of the Equity Share Capital of Nanobi.
Accordingly it became an Associate Company pursuant to the provisions of Section 2(6) of the Companies Act 2013.
Further, during the year under review, First source Dialog Solutions (Pvt) Limited, Sri Lanka, a subsidiary of First source Solutions Limited have successfully completed the Assets transfer to Dialog Business Solutions (an entity of Dialog Axiata).
GLOBAL OPERATION CENTERS:
The Company, on a consolidated basis had 48 global operation centers as on 31 March 2017. The centers are located across India, US, UK and Philippines. 20 of the Company''s operation centers are located in 13 cities in India, 18 in US, 8 in UK and 2 in Philippines.
During the year, the Company incurred capital expenditure of '' 856 Million mainly towards refurbishment and maintenance of operation centers, technology upgrade and setting up of new operations centers.
QUALITY INITIATIVES:
The Company follows the global best practices for process excellence and the quality framework is based on COPC principles. The Company uses innovative techniques like Speech & Text Analytics, Robotic Process Automation and
Intelligent action board to drive improvements across. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.
AWARDS AND ACCOLADES:
The Company received the following awards and accolades during the year.
- Welsh Contact Centre Awards 2017
Won in three categories including Diverse Workplace Award, Trainer of the year and Special Industry Champion.
- Global HR Excellence Awards 2017
Won in Innovation in Retention Strategy category.
- Asiaâs Best Employer Brand Awards 2016
Won the Best Employer Brand Award for excellence in building the Employer Brand as an Employer of Choice.
- European Contact Centre & Customer Service Awards 2016
Honored with the Bronze award in the ''Customer Service Team of the Year'' in partnership with our client riffraff.
- 100 Best Companies for Women in India
Recognized in the 100 Best Companies for Women in India by the 2016 Working Mother & AVTAR Best Companies for Women in India.
- Times Ascent - Asia Pacific HRM Congress Awards 2016
Recognized in the Innovative HR practices award category for initiatives in Analytics, Talent Management, GES, Wings Within, INSIGHT -Knowledge capsules, JetSet and First source Academy offerings.
- Business in the Community Awards
Honored as ''Employer of Choice'' at the Business In The Community Northern Ireland Awards in Belfast.
- Best Adversity Management Stories of Asia 2016
Secured the 1st Runner-up position at the ''Best Adversity Management Stories of Asia'' 2016 Awards for response to the Chennai floods in Nov-Dec 2015.
- Asiaâs Best Employer Brand Awards 2016
Recognized in three categories - ''Best B-school recruiting programme'', ''Organization with Innovative HR Practices'' and ''Best HR Strategy in line with Business''.
- UK Customer Experience Awards 2016
Won in the Technology & Telecoms category in partnership with NOW TV client and received the silver award in the ''Engaging Customers Online'' category in partnership with riffraff client.
- Aer Lingus Viscount Awards
Received Employee Champion Award at the Aer Lingus Viscount Awards in association with Ulster Business.
CONSOLIDATED FINANCIAL STATEMENTS:
In accordance with Section 129(3) of the Companies Act and in view of notification issued by the Ministry of Corporate Affairs on Ind-AS, the Company has prepared consolidated financial statements of the Company and all its subsidiaries as per Ind-AS, which form part of this Annual Report.
DIVIDEND:
With a view to conserve cash reserves to meet current financial obligations of the Company, the Directors of your Company do not recommend any dividend for financial year 2016-17.
TRANSFER TO RESERVE:
The Board of Directors of the Company (hereinafter referred to as the "Board") have not recommended transfer of any amount of profit to reserves during the year under review other than as mentioned above. Hence, the remaining amount of profit for the financial year under review has been carried forward to the Statement of Profit and Loss.
HUMAN RESOURCES:
On a consolidated basis, the Company has 26,116 employees as of 31 March 2017.
Particulars of the Employees and Related Disclosures:
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act 2013 ("Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 form part of this Report and are annexed as Annexure I.
The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.
PUBLIC DEPOSITS:
During the year under review, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of 31 March 2017.
PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the standalone financial statements. (Please refer to Note 6 & 31 to the standalone financial statements).
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
The Company seeks to be a good corporate citizen in all aspects of its operations and activities. We commit to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders. Our CSR Policy is governed and guided by our Group''s corporate vision to enable inclusive growth and our aspiration to be India''s leading business group serving multiple market segments, for our customers, shareholders, employees and community. The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.
The Board constituted a Corporate Social Responsibility (CSR) Committee, pursuant to Section 135 of the Act, consisting of Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and Pradip Roy (Independent Director) as its members. The CSR Committee meets once in a year. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available on the website of the Company at the link http://First source .com/blog/wp-content/uploads/2016/06/fsl-corporate-social-responsibility-policy.pdf. The Annual Report on CSR Activities, as stipulated under the Act and the Listing Agreement forms an integral part of this Report and is appended as Annexure
III. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.
The CSR activities, as per the provisions of the Act, may also be undertaken by the Company through a registered trust. Accordingly, "RP - Sanjiv Goenka Group CSR Trust" ("CSR Trust") was formed along with other group companies to pursue CSR activities as mentioned in the CSR Policy of the Company. During the year, the Company has spent an amount of '' 30.31 million, being 2% of the average net profits of the Company for the last 3 years on CSR activities as mentioned in the CSR Policy. Out of the said amount, majority of the amount has been contributed by the Company towards the corpus of the CSR Trust, which would be spent by the CSR Trust on the focus areas as mentioned in the CSR Policy of the Company.
The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company looks to engage employees in our focus areas where possible through programmes such as Employee Volunteering, Payroll Giving, Participating in fundraising events, Partnering with NGO''s and Response to disasters.
India:
- The Company participated in the India Smile Challenge 2016 along with hundreds of other corporate during the Joy of Giving week. Also, the Company initiated a Fundraising drive and encouraged employees to contribute to the NGOs identified for this cause i.e.: National Society For Equal Opportunities for the Handicapped (NASEOH) and The Akanksha Foundation. The Company collected a total of Rs, 9.49 Lacs and won the 1st place in the ''New donor count'' (5201) and ''Total funds Raised'' categories for corporate with over 5000 employees;
- As part of the ''Give India'' Payroll Giving Program, on an average 1,400 employees contributed towards various charities on a monthly basis. The total contribution this fiscal year was around Rs, 20 Lacs;
- The Company donated Rs, 2.5 Lacs towards "Light of Life" trust. The sponsorship was used towards covering the cost of a fundraiser event, the proceeds of which will go towards education of children who are school dropouts;
- As part of the CSR Theme "Education" volunteers across centreâs visited various NGO''s. They spent quality time with the children and donated books, stationery items and other essential school supplies. In Mumbai employees raised '' 41,502 for "Prem Sadan" - an NGO which supports education of the girl child. The funds raised were donated towards sponsorship of education for 4 girl children; and
- As part of the CSR Theme "Environment", employees participated in various activities such as Tree Plantation Drive, Photography Competition on Environment Theme, Free Emission check for vehicles of employees and "Save the Planet" - Drawing Competition.
Philippines:
- Employees of the Company''s office in Manila for more than 3 years in a row have been sponsoring the Chosen Children Village Foundation, Inc., an internationally acclaimed facility geared towards securing the future of the children with special needs. Apart from the yearly donation campaign, a fund raising campaign was launched, where Christmas cards painted by the children of the foundation were sold by the employees in order to help the foundation keep its operations running;
- Another initiative "Dream in a Bag" was launched and the funds raised were used to procure school supplies for Grade two students of chosen school, Almanza Elementary School;
- "Plant-A-Tree for Mother Earth"- as part of the part of the CSR Theme Environment" employees planted approximately 300 tree seedlings in the watershed area in Quezon City. The Company also participated in the "Earth Hour" Campaign where all lights in common areas in the office were switched off for an hour with the rest of the world; and
- On an annual basis since 2012, Company''s offices in the Philippines have been participating in the blood donation campaign with the Philippine Red Cross.
UK:
- With over 100 events hosted in the last fiscal year, a total of GBP 33,410.80 was raised internally for over 50 charities. Mentioned below is a brief overview of how funds were raised for the top 5 charities:
- GBP 6,199.37 was raised for the Prince''s Trust Million Makers project in Cardiff through a series of events which included a charity football tournament, silent auctions, raffles, plus ticket sales and more. The most successful event was the Charity Ball, where staff from all levels of the company attended the black-tie function, raising GBP 2,190.50;
- The Company raised GBP 5,207.19 for Marie Curie''s national ''Blooming Great Tea Party'', ''Christmas Jumper day'' events and a number of Peak Challenge events in 2017 via summer party ticket sales and a sponsored walk in Belfast; which involved staff walking up local mountain ranges;
- GBP 2,927.31 was raised for Teesside Hospice by staff in Middlesbrough, through a dress down day with a raffle and some games and fundraising in sponsorship of colleagues'' participation in a local 5K run;
- GBP 1,800 was raised for Foyle Search and Rescue, a group of volunteers in Derry who work to protect human life in and around the River Foyle. The amount was raised through fundraising activities including an Easter raffle, a Bake-off competition and a charity football tournament for Company''s colleagues;
- In Derry-Londonderry, employees across levels participated in a charity boxing match in aid of the neo-natal intensive care unit at the local hospital. In total, GBP 1,500 was raised by Company''s staff, for spending on new state-of-the-art technology for the ward.
- As part of the Payroll Giving Program 1,537 members of staff made donation pledges to 210 chosen charities, raising a total of GBP 62,814.75;
- In partnership with Business In The Community (BITC) staff from Belfast and Derry helped out with grounds maintenance at a nearby donkey sanctuary and a local country park respectively as part of BITC''s ''Give and Gain Day''. They also undertook maintenance at other locations during BITC''s ''Be a Saint Day''. Staff in Middlesbrough visited a local home for adults with physical disabilities, spending time with the residents, talking and playing games before they enjoyed their Christmas party;
- In partnership with BITCNI, The Leadership and Management Development (LMD) team provided training to local students. Part of the programme involved running interview skills training, C.V. workshops and a module on Customer Service; and
- A new focus on biodiversity encouraged staff to think about the environment and in particular, the importance of bees and pollination. Members of staff in Northern Ireland were even offered the opportunity to take part in beekeeper training programmes, paid for by the Company.
USA:
- Employees across US office participated in a variety of Fundraising activities and events to support the American Cancer Society Making Strides for Breast Cancer Charity. The Company raised a total of USD 8,891.26 and had 174 walkers participating in this event;
- Colorado Springs office had multiple bake sales and raised USD 2,590 for St. Baldrick''s, which is a foundation that funds children''s cancer research;
- The Ride for Roswell 2016 - Amherst Employees helped raise USD 1,061 for funding cancer research for Roswell Park Cancer Institute;
- Amherst employees participated in "Help Children Succeed in School" fundraiser in association with Salvation Army. They got school supplies which were filled in backpacks and distributed to the children from low-income group;
- Employees in Rockford office held a Craft and Bake Sale in addition to a 50/50 raffle in order to raise money for local school children in need. The funds collected helped in sponsoring 11 children with School Uniforms. Employees in Tampa donated school supplies and monetary donation of USD 150 for a local school, Crestwood Elementary;
- In Miami employees organized a collection drive for the children at a local homeless shelter, just in time for Halloween. They collected 20 Halloween costumes and 3 large bags of candy which were delivered to the shelter a few days before Halloween. Employees in Louisville collected over USD 300 for Kosair charities to purchase candy and toys for children in the hospital during Halloween;
- During the holiday season employees in Kingston, NY (US) raised USD 250 in cash donations as well as close to 100 toys for the Toys
4 Tots charity and Amherst employees held a 50/50 in which half of the proceeds totaling USD 540 was spent on toys for the Toys 4 Tots charity. The mission of this program is to collect new, unwrapped toys and distribute those toys as Christmas gifts to the less fortunate children in the community;
- In Rockford, IL employees collected non-perishable food items for families in the Rockford area during Christmas. They also adopted 24 people (children and adults) at Christmas time 25 employees bought and wrapped over 100 gifts for these three families;
- Employees in Louisville supported the Franciscan Kitchen to help the homeless. They raised a total of USD 650 and collected 319 blankets, 30 coats/jackets, 30 hats/scarfs and 15 pairs of gloves to help those on the streets keep warm through the winter;
- Employees in Palm Bay office organized a collection drive for a Women''s Shelter "Serene Harbor" where they collected clothing, toys, toiletries, books and shoes; and
- Upstate New York Transplant Services (Unyts) blood drive had 32 total donors with a total of 28 whole blood units collected and 13 first time donors and Rockford Payer office blood drive had 31 people donate thus saving 93 lives with the said donations.
RISK MANAGEMENT:
The Company has implemented a comprehensive and fully integrated ''Enterprise Risk Management'' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.
The Company has introduced several improvements to Enterprise Risk Management and processes to drive a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management and Internal Audit methodologies and processes in order to maximize enterprise value of the Company and ensure high value creation for our stakeholders over a time.
The details of the ''Enterprise Risk Management'' framework with details of the principal risks and the plans to mitigate the same are given in the ''Risk Management Report'' section of the ''Management Discussion and Analysis Report'' which forms part of this Annual Report.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls with reference to financial statements. Such internal financial controls over financial reporting are operating effectively and the Statutory Auditor has also expressed their opinion on the same in the Annexure to the Auditors Report.
WHISTLE BLOWER POLICY:
The Company has a Whistle Blower Policy (the "WB Policy") with a view to provide vigil mechanism to Directors, Employees and other Stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. The WB Policy also states that this mechanism should also provide for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The WB Policy has been posted on the website of the Company and the details of the same are explained in the ''Report on Corporate Governance'' forming part of this Annual Report. The WB Policy is available at the website of the Company at the link http://First source .com/blog/wp-content/uploads/2016/06/Whistle-Blower-Policy.pdf.
PREVENTION OF SEXUAL HARRASSMENT POLICY:
The Company has a ''Prevention of Sexual Harassment Policy'' in force in compliance to the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.
BOARD OF DIRECTORS:
Pradip Kumar Khaitan (DIN 00004821) retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting ("AGM").
All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.
Board and Audit Committee Meetings:
During the year, the following 4 Board Meetings and Audit Committee Meetings were held on:
1. 12 May, 2016;
2. 26 July 2016;
3. 27 October 2016; and
4. 31 January 2017.
Time gap between any two meetings was not more than 4 months.
The full details of the said meetings are given in the ''Report on Corporate Governance'' forming part of this Annual Report.
The Familiarization Programmes for Independent Directors:
The Company has put in place a system to familiarize its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarization programmes are put up on the website of the Company at the link: http://First source . com/blog/wp-content/uploads/2016/06/fsl-details-of-independent-directors familiarisation-programme.pdf.
BOARD EVALUATION: (i) Performance Evaluation of the Independent Directors and Other Individual Directors:
The Company has framed a policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance ("Board Evaluation Policy"). The said policy sets out criteria for performance evaluation of Independent Directors, other Non-Executive Directors and the Executive Directors.
Pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 ("Listing Regulations"), the Board carries out the performance evaluation of all the Directors (including Independent Directors) on the basis of recommendation of the Nomination and Remuneration Committee and the criteria mentioned in the Board Evaluation Policy. The Board decided that the performance evaluation of Directors should be done by the entire Board of Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors'' performance:
a. Attendance and active participation in the Meetings;
b. Bringing one''s own experience to bear on the items for discussion;
c. Governance - i) Awareness ii) Observance; and
d. Value addition to the business aspects of the Company.
(ii) Performance Evaluation of Executive Director:
The performance of the Managing Director & Chief Executive Officer is evaluated on the basis of achievement of performance targets/ criteria given to him by the Board from time to time.
(iii) Performance Evaluation by the Board of its own performance and its Committees:
The performance of the Board is evaluated by the Board in the overall context of understanding by the Board of the Company''s principle and values, philosophy and mission statement, strategic and business plans and demonstrating this through its action on important matters, the effectiveness of the Board and the respective Committees in providing guidance to the management of the Company and keeping them informed, open communication, the constructive participation of members and prompt decision-making, level of attendance in the Board meetings, constructive participation in the discussion on the Agenda items, monitoring cash flow, profitability, income & expenses, productivity & other financial indicators, so as to ensure that the Company achieves its planned results, effective discharge of the functions and roles of the Board, etc.
The performance of the Committees is evaluated by the members of the respective Committees on the basis of the Committee effectively performing the responsibility as outlined in its Charter, Committee meetings held at appropriate frequency, length of the meetings being appropriate, open communication & constructive participation of members and prompt decision-making, etc.
KEY MANAGERIAL PERSONNEL:
During the year under review, Ms. Pooja Nambiar has been appointed as the Company Secretary & Compliance Officer of the Company in Board Meeting held on 31 January 2017. She has been appointed in place of Mr. Sanjay Gupta, who resigned from the post of Company Secretary & Compliance Officer of the Company w.e.f.17 August 2016.
POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION:
The criteria for Directors'' appointment and for determining qualification, positive attributes and independence of a Director as mentioned in the ''Policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance'' in terms of Section 178(3) of the Act is mentioned below:
Appointment criteria and qualifications:
1. The Nomination and Remuneration Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, Key Managerial Personnel ("KMP") or at Senior Management level and recommend the same to the Board for appointment, if found suitable;
2. A person should possess adequate qualifications, expertise and experience for the position he/ she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person are sufficient/ satisfactory for the concerned position; and
3. The Company shall not appoint or continue the employment of any person as Managing Director/ Whole time Director who has attained the age of seventy years, provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.
Meeting of Independent Directors:
There should be at least one meeting of Independent Directors in a year, without the attendance of non-independent Directors and members of the Management.
The Independent Directors in the meeting:
i. Review the performance of non-independent Directors including Managing Director & CEO and the Board as a whole;
ii. Review the performance of the Chairperson of the Company, taking into account the views of executive Directors and non-executive Directors; and
iii. Assess the quality, quantity and timeliness of the flow of information between the Company''s management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
Remuneration Policy:
The Board, on the recommendation of the Nomination and Remuneration Committee framed a Remuneration Policy for Non-Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and other Employees of the Company. The details of Remuneration Policy for Non-Executive Directors and Independent Directors are provided as Annexure IIIA and details of Remuneration Policy for Key Managerial Personnel and Other employees of the Company are provided as Annexure IIIB to this Report.
COMMITTEES OF THE BOARD:
A detailed note on the Board and its Committees is provided in the ''Report on Corporate Governance'' forming part of this Annual Report. The composition of the major Committee/(s) is as follows:
Audit Committee:
As on 31 March 2017, the Audit Committee comprised of 3 Independent Directors namely Y. H. Malegam (Chairman), Charles Miller Smith & Ms. Grace Koshie and 1 Non - Independent Director namely Subrata Talukdar
Nomination and Remuneration Committee:
As on 31 March 2017, the Nomination and Remuneration Committee comprised of 3 Independent Directors viz. Y. H. Malegam (Chairman), Charles Miller Smith and Pradip Roy and 1 Non-Independent Director namely Subrata Talukdar.
Corporate Social Responsibility (CSR Committee):
As on 31 March 2017, CSR Committee comprised of Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and 1 Independent Director namely Pradip Roy.
Stakeholders Relationship Committee:
As on 31 March 2017, Stakeholders Relationship Committee comprised of members viz. Subrata Talukdar (Chairman) and Rajesh Subramaniam.
Investment Committee:
As on 31 March 2017, Investment Committee comprised of members viz. Y. H. Malegam (Chairman), Rajesh Subramaniam and 1 Non-Independent Director namely Subrata Talukdar,
Strategy Committee:
As on 31 March 2017, Strategy Committee comprised of members viz. Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and 1 Independent Director namely Donald W. Layden Jr..
RELATED PARTY TRANSACTIONS:
All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material, requiring approval of the Board/ shareholders, in accordance with the policy of the Company on materiality of related party transactions. All Related Party Transactions are placed before the Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board is available on website of the Company at the link: http://First source .com/blog/wp-content/uploads/2016/06/Related-Party-Transaction-Policy.pdf.
Details of Related Party Transactions are given at Note No. 26 to the Standalone Financial Statements. None of the Directors of the Company has any pecuniary relationships or transactions vis-a-vis the Company.
EMPLOYEES STOCK OPTION SCHEME:
With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long-term wealth, the Company has an Employee Stock Option Scheme (ESOS), namely, the First source Solutions Employee Stock Option Scheme 2003 (ESOS 2003). The Scheme is applicable to the eligible employees that include Employees and Directors of the Company and its Subsidiary Companies. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014 ("SEBI ESOP Regulations"), as amended. There has not been any material change in the Scheme during the financial year. The disclosure pursuant to SEBI ESOP Regulations read with Circular No CIB/ CFD/Policy/CELL/2,2015 dated 16 June 2015, are given on the website of the Company (http://www.First source .com/us/investors-corporate-governance).
SUBSIDIARY COMPANIES:
As on 31 March 2017, your Company has 15 subsidiaries:
Domestic Subsidiary: (1)
1. First source Process Management Services Limited (Formerly known as Anunta Tech Infrastructure Services Limited) [Wholly Owned Subsidiary ("WOS") of the Company]
International Subsidiaries: (14)
1. First source Solutions UK Limited, UK (WOS of the Company)
2. First source Solutions S.A., Argentina (Subsidiary of First source Solutions UK Limited)
3. First source Group USA, Inc., USA (WOS of the Company)
4. MedAssist Holding, LLC, USA (WOS of First source Group USA, Inc.)
5. First source Business Process Services, LLC, USA (WOS of First source Group USA, Inc.)
6. First source Advantage, LLC, USA (WOS of First source Business Process Services, LLC)
7. One Advantage, LLC, USA (WOS of First source Business Process Services, LLC)
8. First source Solutions USA, LLC, USA (WOS of MedAssist Holding, LLC)
9. First source Transaction Services, LLC, USA (WOS of First source Solutions USA, LLC)
10. ISGN Solutions Inc. (WOS of First source Group USA, Inc.)
11. ISGN Fulfillment Services, Inc. (WOS of ISGN Solutions Inc.)
12. ISGN Fulfillment Agency, LLC (WOS of ISGN Fulfillment Services, Inc.)
13. First source BPO Ireland Limited (WOS of the Company)
14. First source Dialog Solutions (Private) Limited (Subsidiary of the Company)
ISGN Solutions Inc, ISGN Fulfillment Services, Inc. and ISGN Fulfillment Agency, LLC have consequently become subsidiaries of the Company.
During the financial year 2016-17, Nanobi Data and Analytics Private Limited has become Associate Company.
Report on the Performance and Financial Position of Subsidiaries:
A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC - 1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company has a policy on material subsidiaries pursuant to Regulation 16(1)(c) of the Listing Regulations. The same is available on website of the Company viz:http://First source .com/blog/wp-content/uploads/2016/06/Material-Subsidiary-Policy.pdf.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT:
Business Responsibility Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE:
The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider management and is further maintained across the entire functioning of the Company.
The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI.
The report on Corporate Governance as stipulated under provisions of Chapter IV & Schedule V of the Listing Regulations is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate governance is attached to the Report on Corporate Governance.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in Form MGT- 9 is annexed herewith as Annexure IV,
STATUTORY DISCLOURES OF PARTICULARS: A) Conservation of Energy:
The Company continues to make progress towards energy conservation across all its operation centers. The Company is continuously monitoring earlier initiatives of reducing energy consumption within data centre(s) and across its'' operation centers. The Company, similar to its previous years initiatives of GREEN IT, continued to replace the normal Desktops and old Thin clients with Mini Desktops in UK Geography as the power consumption of mini desktop was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts have been deployed where possible to shut down the Desktops / Thin clients which are not being used for more than 1 hour which helps conserve energy.
B) Absorption of Technology:
The Company has been innovating consistently to absorb newer technology offerings which can benefit business to improve operational efficiency with a cost effective manner. During the year, the Company has reduced considerable resources from onsite to remote support for Desktop, server support and enterprise - email / domain support services for UK and US Geography. The Company has moved on the Horizon migration with migrating about 1500 end points to Horizon Virtual Desktop Infrastructure (VDI). The Company also has used virtualization technology and has successfully implemented this for new customer wins. These new technologies have helped the Company to have a cost effective solution. The Company has also upgraded its gateway/ perimeter security controls across all locations with the deployment of A Next-Generation Firewall (NGFW), an integrated network platform that is a part of the third generation of firewall technology, combining a traditional firewall with other network device filtering functionalities, such as an application firewall using in-line Deep Packet Inspection (DPI), an Intrusion Prevention System (IPS) to ensure a strong perimeter defense and also ensure compliance requirements of the organization. On the telephony side, the Company has made significant development in migration from Time-division Multiplexing (TDM) to Internet Protocol (IP) architecture allowing it to offer a single platform for voice, email, back office & chat applications.
C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans:
The Company''s income is diversified across a range of geographies and industries. During the year, 59.52% of the Company''s standalone total revenues was derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.
FOREIGN EXCHANGE EARNED AND USED:
The Company''s Foreign Exchange Earnings and Outgo during the year were as under:
(Standalone figures in Rs, million)
Particulars |
Fiscal 2017 |
Fiscal 2016 |
Foreign |
5,683.29 |
5,084.05 |
Exchange Earnings |
||
Foreign Exchange Outgo |
155.59 |
144.68 |
(including capital goods and imports) |
SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company obtained Secretarial Audit Report from Ms. Amrita D.C. Nautiyal, a Company Secretary in Practice for the financial year 2016-17. The Secretarial Audit Report is annexed to this Report as Annexure V,
STATUTORY AUDITORS AND AUDITORSâ REPORT:
As per the provisions of Section 139(2) of the Companies Act 2013, the existing statutory auditors B S R & Co. LLP, Chartered Accountants were appointed by the members of the Company at the last Annual General Meeting to hold the office of the Statutory Auditors up to the date of ensuing Annual General Meeting.
B S R & Co. LLP, Chartered Accountants, have been the Statutory Auditors of the Company since inception i.e. for more than 15 years and had already completed tenure of more than two terms of five consecutive years.
As per the provisions Section 139(1) & (2) of the Companies Act 2013, a listed company shall not appoint or re-appoint an audit firm as the Statutory auditors for more than two terms of five consecutive years with ratification by members at every AGM and therefore in view of above the new Statutory Auditors would be appointed for a period of five years.
The Board as per the recommendation of the Audit Committee and after detailed scrutiny of statement based on the terms and conditions, background of the Firm vis-a-vis requirements of the Company based on the Industry in which it operates and experience of the Firm, has recommended the name of Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No.117366W/W-100018) as Statutory Auditors. As per the provisions of Section 139 of the Companies Act 2013 tenure of Deloitte Haskins & Sells LLP, Chartered Accountants as the Statutory Auditors of the Company will be for a period of five years to hold office from the conclusion of 16th AGM until the conclusion of 21st AGM of the Company to be held for financial year 2021 22, subject to ratification in every Annual General Meeting.
The proposed Auditors have confirmed their willingness and eligibility in terms of provisions of Section 141 and other relevant provisions of the Act.
The Board places on record its appreciation for the services rendered by B S R & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company.
The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark. However, there is Emphasis of Matter in the Auditors'' Report which are self-explanatory.
GENERAL:
Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the financial year 2016-17:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise;
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees Stock Option Scheme as referred to in this Report;
3. The Managing Director & CEO does not receive any remuneration or commission from any of its subsidiaries; and
4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company''s operations in future.
DIRECTORSâ RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134(3)(c) and 134(5) of the Companies Act 2013, Directors of your Company state and confirm that:
1. In the preparation of the annual accounts for the financial year 201617, the applicable Ind-AS accounting standards have been followed and there are no material departures from the same;
2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2017 and of the profit of the Company for year ended on that date;
3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. The Directors had prepared the annual accounts on a going concern basis;
5. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENTS:
The Board wishes to place on record its sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Board also expresses its gratitude to the Ministry of Telecommunications, Collector of Customs and Excise, Director - Special Economic Zone and various Governmental departments and organizations for their help and co-operation.
The Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Sanjiv Goenka
Chairman
Kolkata
5 May 2017
Mar 31, 2015
Dear Members,
Directors of your Company take great pleasure in presenting the
Fourteenth Annual Report on the business and operations of your
Company and the Audited financial statements for the financial
year ended March 31, 2015.
FINANCIAL RESULTS
The performance of the Company for the financial year 2014-15 is
summarised below:
(Rs in Million)
Consolidated
Particulars FY 2014-15 FY 2013-14
Total Income 30,411.75 31,078.80
Profit Before Interest and
Depreciation 3,872.85 3,641.29
Interest and Finance Charges (net) 710.86 851.47
Depreciation 721.82 757.02
Profit Before Tax 2,440.17 2,032.80
Provision for Taxation (including
Deferred Tax Charge/ Credit) 95.40 100.89
Profit After Tax Before Minority
Interest 2,344.77 1,931.91
Minority Interest 1.59 2.29
Net Profit After Tax 2,343.18 1,929.62
Balance in Profit & Loss Account 9,347.43 7,417.81
Adjustment of Amalgamation
Deficit Account (3,691.34) -
(Refer Note 13 to Consolidated
Financial Statements)
Closing Balance in Profit & Loss
Account 7,999.27 9,347.43
Earning Per Share (Rs) - Basic 3.53 2.93
Earning Per Share (Rs) - Diluted 3.34 2.82
(Rs in Million)
Standalone
Particulars FY 2014-15 FY 2013-14
Total Income
Profit Before Interest and 9,328.06 9,325.41
Depreciation
Interest and Finance Charges (net) 2,265.71 2,049.08
Depreciation 202.23 177.19
Profit Before Tax 464.30 527.19
Provision for Taxation (including 1,599.18 1,344.70
Deferred Tax Charge/ Credit)
Profit After Tax Before Minority (38.36) -
Interest
Minority Interest 1.637.54 1,344.70
Net Profit After Tax
Balance in Profit & Loss Account 1.637.54 1,344.70
Adjustment of Amalgamation 6,543.28 5,198.58
Deficit Account
(Refer Note 13 to Consolidated
Financial Statements)
Closing Balance in Profit & Loss 8,180.82 6,543.28
Account
Earning Per Share (Rs) - Basic 2.47 2.04
Earning Per Share (Rs) - Diluted 2.33 1.96
RESULT OF OPERATIONS
The consolidated total income decreased from Rs. 31,078.80 Million to Rs.
30,411.75 Million, reduction of 2.1% over the previous financial year.
The consolidated Net Profit After Tax increased from Rs. 1,929.62 Million
to Rs. 2,343.18 Million, a growth of 21.4% over the previous financial
year. The detailed analysis of the consolidated results forms part of
the Management Discussion & Analysis Report provided separately as part
of the Annual Report.
The standalone total income increased from Rs. 9,325.41 Million to Rs.
9,328.06 Million, an increase of 0.03% over the previous financial
year. The standalone Profit After Tax increased from Rs 1,344.70
Million to Rs. 1,637.54 Million, an increase of 21.8% over the previous
financial year.
With a view to conserve cash reserves to meet current financial
obligations of the Company, the Directors of your Company do not
recommend any dividend for financial year 2014-15.
INCREASE IN SHARE CAPITAL
During the year, your Company issued 6,556,583 equity shares of the
face value of Rs. 10/- each on the exercise of stock options under
Firstsource Solutions Employee Stock Option Scheme, 2002 (ESOS 2002)
and Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS
2003). Consequently, the outstanding, issued, subscribed and paid up
capital of the Company has increased from 659,734,876 shares to
666,291,459 shares of Rs. 10/- each aggregating to Rs. 6,662.91
Million as on March 31, 2015.
GLOBAL DELIVERY FOOTPRINT
The Company, on a consolidated basis had 47 global delivery centers as
on March 31, 2015. The centers are located across India, USA, UK,
Philippines and Sri Lanka. 22 of the Company''s delivery centers are
located in 16 cities in India, 15 in the USA, 6 in UK, 3 in Philippines
and 1 in Sri Lanka. The Company''s established global delivery
footprint enables it to deliver wide range of services and strengthen
relationships with existing customers.
During the year, the Company incurred capital expenditure of Rs. 687
Million mainly towards refurbishment and maintenance of delivery
centers and establishment of new centers in USA.
QUALITY INITIATIVES
The Company follows the global best practices for process
excellence and is certified by COPC Inc. (Customer Operations
Performance Center). Firstsource Dialog Solutions (Pvt.) Limited, joint
venture subsidiary of the Company in Sri Lanka has been recertified for
COPC (5.0a) Standard. Also, as part of the Quality Management System,
the Company has embraced ISO 9001:2008. The Company continues to
follow process improvement methodologies like Six Sigma, Lean and
Kaizen.
AWARDS AND ACCOLADES
The Company received the following awards and accolades during the
year.
-Awarded the ''Outsourcing Partnership of the Year'' at the
European Call Centre and Customer Service Awards 2014 (ECCCSA) for our
long-standing relationship with giffgaff.
-The "Outsourcing Excellence Award 2014" for the "Best Business
Process" category in partnership with BSkyB.
-Received the "Innovator of the Year" for Excellence in Voice of
Customer Analytics by Verint Technologies. This award is in recognition
for the First Customer Intelligence (FCI) solution.
-Received the awards for - "Best Outsourced Customer Service
Team" and "Best Business Process Outsourcing" at National
Outsourcing Association''s Outsourcing Professional Awards (Global) in
partnership with giffgaff.
-Awarded the "Telecommunications Utilities and High-Tech
Outsourcing Project of the Year Award 2014" for the partnership with
giffgaff at the National Outsourcing Association''s (NOA) awards 2014.
-First Customer Intelligence, the Company''s flagship product, won
the "2014 Technology Leadership Award" at the 2014 Ventana Research
Summit. The award was for the development of First Customer
Intelligence (FCI) solution, using Verint technology.
-The Company has been ranked #12 by The International Association of
Outsourcing Professionals (IAOP) in the 2014 Global Outsourcing 100®
rankings.
-The Company has been ranked #16 in Business World''s biggest
employers List.
-The Company has retained 7th position in the Top 15 BPM Exporters
rankings released by NASSCOM for 2014.
HUMAN RESOURCES
On a consolidated basis, the Company has 25,080 employees as of March
31, 2015.
Particulars of the Employees and Related Disclosures:
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 form
part of this Report and are annexed as Annexure I.
In terms of the provisions of Section 197(12) of the Act read with
Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, a statement showing the names and
other particulars of the employees drawing remuneration in excess of
the limits set out in the said rules form part of this Report and is
annexed as Annexure II.
PUBLIC DEPOSITS
During the year, your Company has not accepted any deposits under
Section 73 of the Act (herein after referred to as the "Act") and
as such, no amount on account of principal or interest on public
deposits was outstanding as of March 31, 2015.
PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES
Particulars of loans given, investments made, guarantees given and
securities provided along with the purpose for which the loan or
guarantee or security is proposed to be utilised by the recipient are
provided in the notes to the standalone financial statement. (Please
refer to Note 12, 16, 19 & 32 to the standalone financial statement)
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Company seeks to be a good corporate citizen in all aspects of its
operations and activities. The Company seeks to undertake programmes in
the areas of Healthcare, Education, Environment, Arts & Culture,
Promotion of Sports as well as support initiatives towards Gender
Equality and Empowerment of Women.
The Board of Directors of the Company (hereinafter referred to as the
"Board") constituted a Corporate Social Responsibility (CSR)
Committee during the year, pursuant to section 135 of the Act,
consisting of Shashwat Goenka (Chairman) and Rajesh Subramaniam,
Subrata Talukdar & Pradip Roy (Independent Director) as its members.
The CSR Committee held 3 meeting during the year. The details of CSR
Committee and its meetings are given in Report on Corporate Governance
forming part of the Annual Report. The CSR Committee has framed and
formulated a CSR Policy indicating the activities to be undertaken by
the Company, in accordance with schedule VII of the Act and the
Companies (Corporate Social Responsibility Policy) Rules, 2014 issued
under the Act. The same has also been approved by the Board. The CSR
policy is available at the website of the Company at the link
http://www.firstsource.com/articles/
fsl-corporate-social-responsibilitv-policv.pdf . The Annual Report on
CSR Activities, as stipulated under the Act and the Listing Agreement
forms an integral part of this Report and is appended as Annexure III.
The details of focus areas of engagement as mentioned in the CSR Policy
of the Company are mentioned in the said Annual Report on CSR
Activities.
The CSR activities, as per the provisions of the Act, may also be
undertaken by the Company through a registered trust. Accordingly,
"RP - Sanjiv Goenka Group CSR Trust" ("CSR Trust") was formed
by the Company, along with other group companies to pursue CSR
activities as mentioned in the CSR Policy of the Company which include
promoting healthcare, education, skill development, livelihood
opportunities to improve the overall quality of life, promotion of
sports, arts, etc. During the year, the Company has spent an amount of
Rs. 18.25 million, being 2% of the average net profits of the Company for
the last 3 years on CSR activities as mentioned in the CSR Policy. Out
of the said amount, majority of the amount has been contributed by the
Company towards the corpus of the CSR Trust, which would be spent by
the CSR Trust on the focus areas as mentioned in the CSR Policy of the
Company.
Besides the focus areas of engagement as mentioned in the CSR Policy of
the Company, the Company also voluntary undertakes various CSR
activities. The CSR at the Company is a platform for giving back to the
communities in which we live and work. The Company through its
employee engagement activities has contributed in a variety of areas.
Our Social Initiative areas across the geographies are as follows:
1. Employee Volunteering
2. Payroll Giving
3. Response to disasters
4. Participating in popular fundraising events
Joy of Giving:
-Donated rice of over 6 tonnes to help the flood victims of Jammu &
Kashmir.
-Raised funds from employees of the Company through centers in India
for a Bangalore based NGO "Unnati," which works towards developing
the livelihood skills of deprived youth.
-The Company has partnered with the organization "Grow Trees" to
help employees plant a tree. The first 200 employees to participate
received an e-certificate stating that trees have been planted on
behalf of the employees and paid for by the Company. 200 trees were
planted on behalf of the Company via the Organisation Grow Tree.
The Company is a Global Company & operates in various geographies
through its overseas subsidiaries and branch offices. Some of the
highlights of its CSR initiatives in other countries in which the
Company operates through its subsidiaries are as follows:
UK & Ireland:
Fund raising activities
-World Autism Day: Employees in Belfast office organised a ''wear
blue'' dress day for the National Autistic Society of Northern
Ireland.
-National Society for the Prevention of Cruelty towards Children:
Employees in Cardiff supported this charity.
-Cork Penny Dinners:
i.The office in Cork Organised a "Wax or Sponge" event in the aid
of the charity which provides hot meals for the homeless and needy.
ii.Employees volunteered to be waxed by a beautician or sponged by
their colleagues in aid of this.
-Irish Heart Foundation: Employees in Dublin organised an Easter
Hamper Raffles to support this charity.
-Mc Millan Cancer Group: Employees of Belfast & Derry gathered to
support local Man Darren Rob''s Sail for Cancer Initiatives for Mc
Milan Cancer, the group that supported him in his battle against
cancer.
-CLIC Sargent: Employees from Linenhall and Oyster Housein Belfast
took partin the team relay race in the Belfast Deep River rockMarat to
support CLIC, a charity that provides support to young people and
children living with cancer.
-Butterwick Hospice:
i.Middlesbroughorganised a charity event for this local organisation
which offers wide range supportive measures to terminally ill people
and their families.
ii.Employees came to work wearing yellow; a tambola event with prizes
including chocolates were organized.
Food bank collection at Cardiff
-As the harsh winter months increase everyone''s expenditure on
heating, many of the least privileged people in society rely on food
banks in order to survive. This inspired HR in Cardiff to encourage
staff to donate non-perishable goods to Cardiff Food bank.
- Between January 26 and January 29, 2015, colleagues at the
Discovery House centre donated over 400 items of food which were then
put on display in the reception area in the form of a 5ft castle for
all staff and visitors to see how successful the campaign was. The
Cardiff Food Bank receives donations from schools,churches, businesses,
individuals, and through supermarket collections.
USA:
Annual Book Bag Challenge
-In the Company''s office in La Porte, USA, Employees conducted
their ''Annual Book Bag Challenge'', where essential school supplies
are gifted to children in need.
-The employees formed five teams and competed to see which team can
put together the highest number of ''book bags''.
-A total of 72 complete book bags filled with school supplies were
collected at the end of the event.Fundraising at Birmingham
-A group of local business people in the Helena, AL community, a
suburb of Birmingham, AL, undertook a fundraiser to raise money for
"The Wounded Warrior Project" to raise awareness and enlist the
public''s aid for the needs of injured service members. The Employees
raised USD 6,437 which was donated directly to the project.
Sri Lanka:
FDS Water Project
-Fundraiser organised the Water Project to aid victims of the
drought.
-All employees got together and raised funds to purchase 10,000
Litres of pure drinking water which was then distributed across 500
families in need.
Philippines:
Turning the Frowns upside down
-Employees of the Company''s office in Manila embarked on a CSR
journey as part of its annual CSR programme, in collaboration with the
Chosen Children Village Foundation, Inc., an internationally acclaimed
facility geared towards securing the future of the physically,
mentally, and emotionally challenged children.
-The village is founded to support children who are abandoned at an
early age- 8 months and below.
-As the employees arrived at the location, they were first given a
tour of the village, which houses multiple classrooms, libraries, art
rooms, crafts and artifacts museum, mini-canteen, indoor basketball
court, children''s nursery, an aqua therapy pool, indoor and outdoor
playground and an activity centre.
RISK MANAGEMENT
The Company has implemented a comprehensive and fully integrated
''Enterprise Risk Management'' framework in order to anticipate,
identify, measure, manage, mitigate, monitor and report the principal
risks and uncertainties that can impact its ability to achieve its
strategic business objectives.
The Company has introduced several improvements to Enterprise Risk
Management and processes to drive a common integrated view of risks and
optimal risk mitigation responses. This integration is enabled by
alignment of Risk Management, Internal Audit, Legal and compliance
methodologies and processes in order to maximise enterprise value of
the Company and ensure high value creation for our stakeholder over a
time.
The details of the Enterprise Risk Management framework with details of
the principal risks and the plans to mitigate the same are given in the
''Risk Management Report'' section of the ''Management Discussion
and Analysis Report'' which forms part of this Annual Report.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with
reference to financial statements. Such controls were tested during the
financial year and no material weaknesses in the design or operation
were observed.
WHISTLE BLOWER POLICY
The Company has a Whistle Blower Policy (the "WB Policy") with a
view to provide vigil mechanism to Directors, employees and other
stakeholders to disclose instances of wrongdoing in the workplace and
report instances of unethical behavior, actual or suspected fraud or
violation of the Company''s code of conduct or ethics policy. The WB
Policy also states that this mechanism should also provide for adequate
safeguards against victimization of Director(s)/ Employees who avail of
the mechanism and also provide for direct access to the Chairman of the
Audit Committee in exceptional cases. The Whistle Blower Policy has
been posted on the website of the Company and the details of the same
are explained in the Report on Corporate Governance forming part of
this Annual Report. The Whistle Blower Policy is available at the
website of the Company at the link http://www.firstsource.com/
articles/Whistle-Blower-Policy.pdf
PREVENTION OF SEXUAL HARRASSMENT POLICY
The Company has a Prevention of Sexual Harassment Policy in force in
terms of Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013. The objective of this Policy is
to ensure a safe, secure and congenial work environment where employees
will deliver their best without any inhibition, threat or fear. The
Company has Zero Tolerance to any form of harassment especially if it
is sexual in nature. The complaints filed under the Policy are
reported to the Audit Committee at its quarterly meetings with details
of action taken thereon.
BOARD OF DIRECTORS
During the year, K. P. Balaraj resigned as a Director of the Company
w.e.f. May 21, 2014, Ananda Mukerji resigned w.e.f. August 18, 2014,
Haigreve Khaitan resigned w.e.f. September 19, 2014 and Dr. Shailesh J.
Mehta resigned w.e.f. March 30, 2015. The Board places on record its
appreciation for the contribution made by them during their tenure as
Directors of the Company.
The Board appointed V. K. Sharma and Ms. Grace Koshie (Woman Director)
as Additional Directors as Independent Directors with effect from
November 14, 2014 and February 9, 2015 respectively. They hold office
upto the date of forthcoming Annual General Meeting (AGM). Pradip Kumar
Khaitan was appointed as non- executive non-independent Director w.e.f.
November 14, 2014 in the casual vacancy caused by resignation of
Haigreve Khaitan
and holds office upto the date of forthcoming AGM. He represents Spen
Liq Private Limited, the Promoter, on the Board of the Company. The
Company has received notices alongwith the requisite deposit from these
Directors pursuant to Section 160(1) of the Act signifying their
candidature for appointment as Directors of the Company at the
forthcoming AGM.
The Board recommends appointment of V. K. Sharma and Ms. Grace Koshie
as Independent Directors for a period of 5 years expiring on November
13, 2019 and February 8, 2020 respectively, for approval of members of
the Company at the AGM. The Company has received the declarations from
V. K. Sharma and Ms. Grace Koshie confirming that they meet the
criteria of independence as prescribed under Section 149(6) of the Act
and clause 49 Listing Agreement .
The other Independent Director of the Company have also given
declarations that they meet the criteria of independence as laid down
under Section 149(6) of the Act and Clause 49 of the Listing Agreement.
Subrata Talukdar retires by rotation and being eligible, has offered
himself for re-appointment at the forthcoming AGM.
Board and Audit Committee Meetings
During the year, 4 Board Meetings were held on May 2, August 1 &
November 14 in 2014 and on February 9 in 2015. Time gap between any two
meetings was not more than 4 months. Further, 4 meetings of the Audit
Committee were held during the year on May 2, July 31 & November 13 in
2014 and February 9 in 2015. The time gap between any two meetings was
not more than 4 months. The full details of the said meetings are given
in the Report on Corporate Governance forming part of this Annual
Report.
The Familiarisation Programmes for Independent Directors
The Company has put in place a system to familiarise its Independent
Directors with the Company, their roles, rights & responsibilities in
the Company, nature of the industry in which the Company operates,
business model of the Company, etc. The details of such familiarisation
programmes are put up on the website of the Company at the link:
http://www.firstsource.com/
articles/policy-on-familiarisation-of-independent-directors.pdf
BOARD EVALUATION
(i) Performance Evaluation of the Independent Directors and other
Individual Directors
The Board, on the recommendation of the Nomination & Remuneration
Committee, has framed a Policy for Appointment of Directors and Senior
Management and Evaluation of Directors'' Performance. The said Policy
sets out criteria for performance evaluation of Independent Directors,
other Non-Executive Directors and the Executive Director(s).
Pursuant to the provisions of the Act and Clause 49 of the Listing
Agreement, the Board has carried out an annual evaluation of the
performance of Directors individually. The evaluation of the
performance of the Non-Independent Directors including the Managing
Director and CEO and the Chairman of the Board was carried out by the
Independent Directors of the Company. The evaluation of performance of
the Independent Directors and other individual Directors was also made
by the entire Board on the basis of recommendation of the Nomination
and Remuneration Committee and the criteria mentioned in the Policy for
Appointment of Directors and Senior Management and Evaluation of
Directors'' Performance. The Board decided that the performance
evaluation of Directors should be done by the entire Board of Directors
excluding the Director being evaluated and unanimously agreed on the
following assessment criteria for evaluation of Directors''
performance:
a.Attendance and participation in the Meetings
b.Preparedness for the Meetings
c.Understanding of the Company and the external environment in which it
operates and contribution to strategic direction
d.Raising of valid concerns to the Board and constructive contribution
to issues and active participation at meetings
e.Engaging with and challenging the management team without being
confrontational or obstructionist
The criteria for Directors'' appointment and for determining
qualification , positive attributes , independence of a director and
for evaluation of performance of Directors as mentioned in the Policy
for Appointment of Directors and Senior Management and Evaluation of
Directors'' Performance are mentioned below:
Appointment criteria and qualifications:
1.The Committee shall identify and ascertain the integrity,
qualifications, expertise and experience of the person for appointment
as Director, KMP or at Senior Management level and recommend to the
Board his / her appointment.
2.A person should possess adequate qualifications, expertise and
experience for the position he / she is considered for appointment. The
Committee has discretion to decide whether qualifications, expertise
and experience possessed by a person are sufficient / satisfactory for
the concerned position.
3.The Company shall not appoint or continue the employment of any
person as Managing Director/ Whole time Director who has attained the
age of seventy years. Provided that the term of the person holding this
position may be extended beyond the age of seventy years with the
approval of shareholders by passing a special resolution based on the
explanatory statement annexed to the notice or such motion indicating
the justification for extension of appointment beyond seventy years.
Performance Evaluation:
The performance evaluation of Independent Directors shall be done by
the entire Board of Directors (excluding the director being evaluated).
On the basis of the report of performance evaluation, it shall be
determined whether to extend or continue the term of appointment of the
Independent Director.
The Independent Directors of the Company shall hold at least one
meeting in a year, without the attendance of non independent Directors
and members of management.
The Independent Directors in the meeting shall:
i.Review the performance of non independent Directors and the Board as
a whole.
ii.Review the performance of the Chairperson of the Company, taking
into account the views of executive Directors and non executive
Directors.
Criteria for Evaluation of Independent Directors and the Board
Following are the criteria for evaluation of performance of Independent
Directors and the Board:
(A)Executive Directors
The performance of Managing Director and Chief Executive Officer and
other Executive Directors, if any, shall be evaluated on the basis of
achievement of performance targets/ criteria given to them by the Board
from time to time.
(B)Non Executive Directors including Independent Directors
The performance of Non Executive Directors including Independent
Directors shall be evaluated on the basis of the following criteria
i.e. whether they:
(a)Act objectively and constructively while exercising their duties;
(b) Exercise their responsibilities in a bona fide manner in the
interest of the company;
(c)Devote sufficient time and attention to their professional
obligations for informed and balanced decision making;
(d)Do not abuse their position to the detriment of the Company or its
shareholders or for the purpose of gaining direct or indirect personal
advantage or advantage for any associated person;
(e)Refrain from any action that would lead to loss of his independence;
(f)Inform the Board immediately when they lose their independence;
(g)Assist the Company in implementing the best corporate governance
practices;
(h)Strive to attend all meetings of the Board of Directors and its
Committees of which they are chairpersons or members;
(i)Participate constructively and actively in the Committees of the
Board in which they are chairpersons or members;
(j)Strive to attend the general meetings of the Company;
(k)Keep themselves well informed about the Company and the external
environment in which it operates;
(l)Does not unfairly obstruct the functioning of an otherwise proper
Board meeting or Committee meeting of the Board;
(m)Moderate and arbitrate in the interest of the Company as a whole, in
situations of conflict between management and shareholders'' interest;
(n)Abide by Company''s Memorandum and Articles of Association,
Company''s policies and procedures including Code of Conduct, Insider
Trading Code etc."
(ii)Performance Evaluation by the Board of its own performance and its
Committees:
Pursuant to the provisions of the Act and Clause 49 of the Listing
Agreement, the Board also carried out an annual evaluation of its own
performance and that of its Committees namely the Audit Committee, the
Nomination & Remuneration Committee, the Stakeholders Relationship
Committee and the Corporate Social Responsibility Committee.
The evaluation was made in the overall context of the effectiveness of
the Board and the respective Committees in providing guidance to the
operating management of the Company, level of attendance in the Board/
Committee meetings, constructive participation in the discussion on the
Agenda items, effective discharge of the functions and roles of the
Board/ Committees. A detailed discussion followed on the basis of the
aforesaid criteria and the Board collectively agreed that the Board and
all its Committees fulfilled the above criteria and positively
contributed in the decision making process at the Board/ Committee
level.
COMMITTEES OF THE BOARD
A detailed note on the Board and its Committees is provided in the
Report on Corporate Governance forming part of this Annual Report. The
composition of the major Committees is an follows :
Audit Committee
As at March 31, 2015, the Audit Committee comprised of 2 Independent
Directors namely Y. H. Malegam (Chairman) & Charles Miller Smith and 1
Non-Independent Director namely Subrata Talukdar. At the Board meeting
held on May 5, 2015, Ms. Grace Koshie, a woman Independent Director
was also inducted as a member of the Audit Committee. All the
recommendations made by the Audit Committee were accepted by the Board.
Further details relating to Audit Committee are given in the Report on
Corporate Governance forming part of this Annual Report.
Nomination and Remuneration Committee
As at March 31, 2015, the Nomination and Remuneration Committee
comprised of 2 Independent Directors namely Y. H. Malegam & Charles
Miller Smith and 1 Non-Independent Director namely Subrata Talukdar. At
the Board meeting held on May 5, 2015, Pradip Roy, an Independent
Director was also inducted as a member of the Nomination and
Remuneration Committee and Y. H. Malegam was appointed as the Chairman
of the Committee in place of Dr. Shailesh J. Mehta, who resigned as a
Director w.e.f. March 30, 2015.
Corporate Socal Responsibility Committee (CSR Committee)
As at March 31, 2015, CSR Committee comprised of Shashwat Goenka
(Chairman), Rajesh Subramaniam, Subrata Talukdar and Pradip Roy
(Independent Director).
Stakeholders Relationship Committee
As at March 31, 2015, Stakeholders Relationship Committee comprised of
Subrata Talukdar and Rajesh Subramaniam. Dr. Shailesh J. Mehta, who
was Chairman of the Committee, resigned as a Director w.e.f. March 30,
2015. The Board, at its meeting held on May 5, 2015, appointed Subrata
Talukdar (Non-Executive Director), as Chairman of the Committee.
REMUNERATION POLICY
The Board, on the recommendation of the Nomination & Remuneration
Committee framed a Remuneration Policy for Non Executive Directors
(including Independent Directors) and a Remuneration Policy for Key
Managerial Personnel and Other Employees of the Company. The
Remuneration Policy for Non Executive Directors is provided as Annexure
IVA and Remuneration Policy for Key Managerial Personnel and Other
employees of the Company is provided as Annexure IVB to this Report.
RELATED PARTY TRANSACTIONS
All the contracts/ arrangements/ transactions that were entered into by
the Company during the financial year with related parties were on an
arm''s length basis and in the ordinary course of business. During the
year, the Company had not entered into any contract/ arrangement/
transaction with related parties which could be considered material in
accordance with the policy of the Company on materiality of related
party transaction. All Related Party Transactions are placed before the
Audit Committee for approval.
The policy on Related Party Transactions as approved by the Board is
available on website of the Company at the link: http://
www.firstsource.com/articles/Related-Partv-Transaction-Policv. pdf
Details of Related Party Transactions are given at Note No. 28 to the
Standalone Financial Statements. None of the Directors of
the Company has any pecuniary relationships or transactions vis-a-vis
the Company.
EMPLOYEES STOCK OPTION SCHEME
With a view to provide an opportunity to the employees of the Company
to share the growth of the Company and to create long-term wealth, the
Company has an Employee Stock Option Scheme (ESOS), namely, the
Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003).
The earlier ESOS introduced in 2002 is in force for the limited purpose
of exercise of options granted pursuant to the scheme. The Scheme is
applicable to the eligible employees that include employees and
Directors of the Company and its subsidiary companies. Disclosures in
compliance with Clause 12 of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Regulations, 1999, as amended, are set out below:
ESOS 2003
a)Total number of options under the Plan: 66,204,769
b)Options granted during the year 2014-15: 5,900,000
c)Pricing formula: The ''Pricing formula'' or ''Exercise Price''
for the purpose of the grant of Options shall be the ''market price''
within the meaning set out in the SEBI (Employee Stock Option Scheme &
Employee Stock Purchase Scheme) Guidelines, 1999 i.e., the latest
available closing price, prior to the date when options are
granted/shares are issued, on that Stock Exchange where there is
highest trading volume on the said date. The Compensation Committee has
the power to change/modify the exercise price or pricing formula and
fix the exercise price at such discount to the market price of the
equity shares as may be deemed appropriate provided that the
grant/exercise price shall not be below the face value of the shares
and shall be in accordance with the applicable laws in this regard.
d)Options vested during the year 2014-15: 10,747,500
e)Options exercised during the year 2014-15: 6,484,083* (including
20,000 stock options which were exercised in March, 2015 and were
pending for allotment of shares)
f)Total number of shares arising as a result of exercise of options
during the year 2014-15: 6,526,583
g)Options lapsed during the year 2014-15: 4,713,500#
(#The stock options which are cancelled/ lapsed/ forfeited can be re-
issued by the Company)
h)Exercise Price (for 5,900,000 Options granted during the year
2014-15)
No. of options Exercise price(Rs)
5,000,000 28.90
500.000 31.30
400.000 40.35
i)Variation of terms of options during the year 2014-15: Nil
j)Money realised by exercise of options during the year 2014- 15
(Amount in Rs.): 112,555,047@
(@Including money realised with respect to 20,000 options which were
exercised in March, 2015 and shares are pending for allotment as at
March 31, 2015)
k)Total number of options in force: 42,308,052
l)Employee wise details of options granted during the year 2014-15 to:
i)Key Managerial Persons: Rajesh Subramaniam (Managing Director & CEO)
- 1,000,000, Dinesh Jain (CFO) - 250,000, Sanjay Gupta (Company
Secretary) - 50,000
ii) Other Senior Managerial personnel*: Sanjay Venkataraman - 250,000,
Venkataraman K R - 250,000, Shalabh Jain - 175,000, Ms. Stephanie
Wilson - 175,000, Satish M - 175,000, Ms. Stephen W. Ogilvie- 100,000,
Arjun Mitra - 75,000 and Gavin Snell - 500,000
(* Options granted to employes who resigned during the year have not
been considered).
iii)Any other employee, who has been granted options amounting to 5% or
more of options granted during the year 2014-15: Nil
iv)Identified employees who were granted options, equal to or exceeding
1% of the issued capital of the Company, during the year 2014-15: Nil
m)Diluted Earnings Per Share (EPS) pursuant to issue of shares on
exercise of options calculated in accordance with Accounting Standard
(AS) 20 - ''Earnings Per Share'': i) Standalone EPS - Rs. 2.33 per
share. ii) Consolidated EPS - Rs 3.34 per share.
n)Where the Company has calculated the employee compensation cost using
the intrinsic value of the stock options, the difference between the
employee compensation cost so computed and the employee compensation
cost that shall have been recognised if it had used the fair value of
the options. The impact of this difference on profits and on EPS of the
Company: Please refer to Note No. 27 of the Standalone Financial
Statements.
o)Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - Rs. 26.06 per option. ii) Weighted average fair
value as per the Black Scholes Model - Rs. 13.97 per option.
p)A description of the method and significant assumptions used during
the year to estimate the fair values of options, including the
following weighted average information: a) Risk free interest rate b)
Expected life c) Expected dividends and d) The price of the underlying
share in market at the time of option grant: Please refer to Note No.
27 of the Standalone Financial Statements.
Prior to the Initial Public Offering (IPO), the Company had granted
options to employees at the fair market value, as certified by an
independent valuer. Post IPO, the exercise
price of the options granted equals the market price of the stock i.e.
the latest available closing price, prior to the date when options are
granted, on that Stock Exchange where there is highest trading volume
on the said date.
ESOS 2002
a)Total number of options under the Plan : 2,347,500
b)Options granted during the year 2014-15 : Nil
c)Options vested during the year 2014-15 : Nil
d)Options exercised during the year 2014-15: Nil
e)Total number of shares arising as a result of exercise of op- tion
during the year 2014-15: 30,000#
(#These 30,000 options were exercised in March, 2014 and allotment was
made in September, 2015)
f)Options lapsed during the year 2014-15: Nil
g)Variation in the terms of option during the year 2014-15: Nil
h)Money realised by exercise of options during the year 2014- 15
(Amount in Rs.): Nil@ (@Money for 30,000 options exercised in March, 2014
was re- alised in the same month. However, shares were pending for
allotment)
i)Total number of options in force: Nil
j)Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - Nil ii) Weighted average fair value as per the
Black Scholes Mod- el - N.A.
SUBSIDIARY COMPANIES
As on March 31, 2015, your Company had 12 subsidiaries:
Domestic subsidiaries:
1. Anunta Tech Infrastructure Services Limited [Wholly Owned Subsidiary
(WOS) of the Company]
International subsidiaries:
1.Firstsource Solutions UK Limited, UK (WOS of the Company)
2.Firstsource Solutions S.A., Argentina (Subsidiary of First- source
Solutions UK Limited)
3.Firstsource Group USA, Inc., USA (WOS of the Company)
4.MedAssist Holding LLC, USA* (WOS of Firstsource Group USA, Inc)
5.Firstsource Business Process Services, LLC, USA (WOS of Firstsource
Group USA, Inc.)
6.Firstsource Advantage LLC, USA (WOS of Firstsource Busi- ness Process
Services, LLC)
7.One Advantage LLC, USA** (WOS of Firstsource Business Pro- cess
Services, LLC)
8.Firstsource Solutions USA, LLC, USA (WOS of MedAssist Hold- ing LLC)
9.Firstsource Transaction Services, LLC, USA (WOS of First- source
Solutions USA, LLC)
10.Firstsource BPO Ireland Limited (WOS of the Company)
11.Firstsource Dialog Solutions (Private) Limited (Subsidiary of the
Company)
Notes:
1.MedAssist Holding, Inc., USA got merged with MedAssist Acquisition,
LLC, a new entity formed as WOS of Firstsource Group USA, Inc., w.e.f.
March 31, 2015. Post merger, the name of this entity was changed to
MedAssist Holding, LLC.
2.One Advantage LLC was incorporated as a WOS of First- source Business
Process Services, LLC, USA a subsidiary of the Company, during the
year. Consequently, One Advan- tage LLC also became a subsidiary of the
Company.
Names of the companies which have become subsidiaries of the Company
during the year:
1.One Advantage LLC, USA
2.MedAssist Holding, LLC, USA
Names of the companies which have ceased to be subsidiaries of the
Company during the year:
1. MedAssist Holding, Inc., USA Further, no company has become/ ceased
to be a joint venture or associate during the financial year 2014-15.
Report on the Performance and Financial Position of Subsidiaries:
A report on the performance and financial position of each of the
subsidiaries as per the Act, in the prescribed format AOC - 1 is
annexed to the consolidated financial statement and hence not repeated
here for the sake of brevity. The Policy for determining material
subsidiaries may be accessed on the Company''s website at the link:
http://www.firstsource.com/ articles/Material-Subsidiarv-Policv.pdf
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year as stipulated
under Clause 49 of the Listing Agreement is separately given and forms
part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE
The adherence to the corporate governance practices by the Company not
only justifies the legal obedience of the laws but dwells deeper
conforming to the ethical leadership and stability. It is the sense of
good governance that our leaders portray, which trickles down to the
wider management and is further maintained across the entire
functioning of the Company. The Company is committed to maintain the
highest standards of corporate governance and adhere to the corporate
governance requirements set out by SEBI. The report on Corporate
Governance as stipulated under Clause 49 of the Listing Agreement is
separately given and forms part of this Annual Report. The requisite
certificate from a Practicing Company Secretary confirming compliance
of the conditions of corporate
governance is attached to the Report on Corporate Governance.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with section 129(3) of the Act and Accounting Standard
(AS) - 21 on Consolidated Financial Statements, the Company has
prepared consolidated financial statements of the Company and all its
subsidiaries, which form part of this Annual Report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form
MGT- 9 is annexed herewith as Annexure V.
STATUTORY DISCLOSURES OF PARTICULARS
A) Conservation of Energy
The Company has made progress towards energy conservation across all
its delivery centers. The Company is continuously monitoring the
earlier initiatives of reducing energy consumption in the computers
which are used in its delivery centers. All the CRT monitors were
replaced with LCD/TFT monitors and the Physical standalone servers are
being replaced by the Virtual Servers and Storages. These initiatives
have contributed in reducing energy consumption. The Company, similar
to its previous years'' initiatives of GREEN IT, continued to replace
the normal Desktops with Mini Desktops as the power consumption of mini
desktop was 2.5 times less than the power consumed by normal desktops
and nearly 5 times less during standby mode. Scripts are being tested
out to shut down the Desktops/Thin clients which are not being used for
more than 1 hour and would be successfully implemented in coming months
which would save lot of energy.
B) Absorption of Technology
The Company has been innovating consistently to absorb newer technology
offerings which can benefit business to improve operational efficiency
with a cost effective manner. During the year, the Company started
using the Hosted Shared Desktops (HSDs) through which with the same
hardware, more people can use the shared desktops by sharing the
resources more efficiently. The Company also started using new
technology, as part of preventing data loss or intrusion due to virus
infection, by using offline AntiVirus Software tool, which would help
to scan the endpoint with fewer resources. These new technologies have
helped the Company to have a cost effective end points with more
computing speed.
C) Foreign Exchange Earnings and Outgo Activities relating to exports,
initiatives taken to increase exports, development of new export
markets for services and export plans.
The Company''s income is diversified across a range of geographies and
industries. During the year, 49.7% of the Company''s revenues were
derived from exports. The Company provides BPO services mostly to
clients in North America, UK and Asia Pacific region. The Company has
established direct marketing network around the world to boost its
exports.
SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Act and The Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
Company has appointed Ms. Amrita D.C. Nautiyal, a Company Secretary in
Practice to undertake the Secretarial Audit of the Company. The
Secretarial Audit Report is annexed to this Report as Annexure VI.
There is no qualification, reservation or adverse remark(s) in the
Secretarial Audit Report.
STATUTORY AUDITORS AND AUDITORS'' REPORT
M/s. B S R & Co. LLP, Chartered Accountants, who were appointed as the
Statutory Auditors of the Company by the Members at their previous
Annual General Meeting (AGM), shall retire on conclusion of the ensuing
AGM and are eligible for re-appointment. Members are requested to
consider their re-appointment for a period of 2 years from the
conclusion of forthcoming Annual General Meeting (AGM) until the
conclusion of AGM for the financial year 2016-17, subject to
ratification by members at the next AGM, at a remuneration to be
decided by Audit Committee of the Board of Directors. The Company has
received a letter of confirmation from M/s. B S R & Co. LLP, Chartered
Accountants to the effect that their appointment, if made, will be
within the limits of Section 139 of the Act.
The Notes on financial statement referred to in the Auditors'' Report
are self-explanatory and do not call for any further comments. The
Auditors'' Report does not contain any qualification, reservation or
adverse remark. However, there are Emphasis of Matter in the
Auditors'' Report which are self explanatory.
GENERAL
Your Directors state that no disclosure or reporting is required in
respect of the following matters as there were no transactions on these
matters during the financial year 2014-15:
1. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except Employees Stock Option Scheme
as referred to in this Report.
3. The Managing Director & CEO does not receive any remuneration or
commission from any of its subsidiaries.
4. No significant or material orders were passed by the
Regulators or Courts or Tribunals which impact the going concern status
and the Company''s operations in future.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134 of the Act, Directors of
your Company state and confirm that:
(a) In the preparation of the annual accounts for the financial year
2014-15, the applicable accounting standards have been followed and
there are no material departures from the same;
(b) The directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at 31st March, 2015 and of the profit and loss of the
Company for year ended on that date;
(c) The directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safe guarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(d) The directors had prepared the annual accounts on a going concern
basis; and
(e) The directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and were operating effectively.
(f) The directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
ACKNOWLEDGEMENTS
The Directors wish to place on record their sincere appreciation for
the support and co-operation extended by all the customers, vendors,
bankers and business associates. The Company also expresses its
gratitude to the Ministry of Telecommunications, Collector of Customs
and Excise, Director - Software Technology Parks of India and various
Governmental departments and organisations for their help and
co-operation.
The Board places on record its appreciation to all the employees for
their dedicated service. The Board appreciates and values the
contributions made by every member across the world and is confident
that with their continued support, the Company will achieve its
objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Sanjiv Goenka
Chairman
Mumbai
May 5, 2015
Mar 31, 2014
Dear Members,
The Directors of your Company take great pleasure in presenting the
Thirteenth Annual Report on the business and operations of your Company
and the Audited financial statements for the financial year ended March
31, 2014.
FINANCIAL RESULTS
The performance of the Company for the financial year 2013-14 is
summarised below:
(Rs. in Million)
Particulars Consolidated Standalone
FY 2013-14 FY 2012-13 FY 2013-14 FY 2012-13
Total Income 31,078.80 28,649.30 9,325.41 9,733.91
Profit Before Interest
and Depreciation 3,641.29 3,259.57 2,049.08 2,278.45
Interest and Finance
Charges (net) 851.47 783.65 177.19 527.98
Depreciation 757.02 883.98 527.19 576.58
Profit Benefit Tax 2,032.80 1,591.94 1,344.70 1,173.89
Provision for Taxation
(including Deferred
Tax Charge/ 100.89 129.23 - -
Credit)
Profit After Tax Before
Minority Interest 1,931.91 1,462.71 1,344.70 1,173.89
Minority Interest 2.29 -3.21 - -
Net Profit After Tax 1,929.62 1,465.92 1,344.70 1,173.89
Balance Brought Forward 7,417.81 6,285.13 5,198.58 3,401.52
Accumulated Balance of
Rev IT Systems Private
Limited - - - 623.17
brought forward pursuant
to Scheme of
Amalgamation
Total Profits available
for Appropriations 9,347.43 7,751.05 6,543.28 5,198.58
Adjustment of
Amalgamation Deficit
pursuant to Scheme - 333.24 - -
of Amalgamation of Rev
IT Systems Private
Limited with the
Company
Accumulated Balance in
Profit & Loss Account 9,347.43 7,417.81 6,543.28 5,198.58
Earning Per Share
(Rs.) - Basic 2.93 2.91 2.04 2.33
Earning Per Share
(Rs.) - Diluted 2.82 2.82 1.96 2.29
RESULT OF OPERATIONS
The consolidated total income increased from 28,649.30 Million to
31,078.80 Million, a growth of 8.5% over the previous financial year.
The consolidated Net Profit After Tax increased from 1,465.92 Million
to 1,929.62 Million, a growth of 31.6% over the previous financial
year. The detailed analysis of the consolidated results forms part of
the Management Discussion & Analysis (MD&A) Report provided separately
as part of the Annual Report.
The standalone total income reduced from 9,733.91 Million to 9,325.41
Million, a decline of 4.2% over the previous financial year. The
standalone Profit After Tax increased from 1,173.89 Million to 1,344.70
Million, an increase of 14.5% over the previous financial year.
With a view to conserve cash reserves to meet current financial
obligations of the Company, the Directors of your Company do not
recommend any dividend for financial year 2013-14.
INCREASE IN SHARE CAPITAL
During the year, your Company issued 2,061,125 equity shares of the
face value of 10/- each on the exercise of stock options under
First source Solutions Employee Stock Option Scheme, 2003. Consequently,
the outstanding, issued, subscribed and paid up capital of the Company
has increased from 657,673,751 shares to 659,734,876 shares of 10/-
each aggregating to 6,597.35 Million as on March 31, 2014.
GLOBAL DELIVERY FOOTPRINT
The Company, on a consolidated basis had 46 global delivery centres as
on March 31, 2014. The centres are located across India, USA, UK,
Philippines and Sri Lanka. 22 of the Company''s delivery centres are
located in 16 cities in India, 14 are in the USA, 6 in UK, 3 in
Philippines and 1 in Sri Lanka. The Company''s established global
delivery footprint enables it to deliver wide range of services and
strengthens relationships with existing customers.
During the year, the Company incurred capital expenditure of 357
Million mainly towards refurbishment and maintenance of delivery
centres and establishment of new centres in Philippines and USA.
QUALITY INITIATIVES
The Company follows the global best practices in process excellence and
is certified by COPC Inc. (Customer Operations Performance Centre).
First source Dialog Solutions (Pvt.) Limited, joint venture subsidiary
of the Company in Sri Lanka, has been recertified for COPC (5.0a)
Standard. Also, as part of the Quality Management System, the Company
has embraced ISO 9001:2008. The Company continues to follow process
improvement methodologies like Six Sigma, Lean and Kaizen.
AWARDS AND ACCOLADES
The Company received the following awards and accolades during the
year.
- The Silver accreditation by Investors-in-People (IIP) in the UK. This
achievement highlights and benchmarks our good practices in relation to
investing in people and commitment to continuous improvement.
- Featured among the 100 best BPO companies by Global Services Annual
GS100 2013. This recognition highlights Company''s commitment and
efforts in going the extra mile to meet client satisfaction. The
Company has received this recognition for the third year in a row.
- The Company has been ranked #24 by The International Association of
Outsourcing Professionals (IAOP) in the 2013 Global Outsourcing 100®
rankings.
- Received the Frost & Sullivan 2013 North American - "New Product
Innovation award" for Contact Center Outsourcing for its analytics
proposition - First Customer Intelligence.
- Recognised as one of UK''s leading outsourcing providers by the
National Outsourcing Association (NOA) Awards. The Company also won two
other prestigious awards:
- BPO Project of the Year 2013 (for our work with Sky)
- Outsourcing Service Provider of the Year.
- Awarded the ''Outsourcing Partnership of the Year'' in the European
Call Centre and Customer Service Awards 2013 for our longstanding
relationship with Sky.
- ''Employer of the Year 2013'' in Northern Ireland by the UTV Business
Eye Awards. This is in addition to the Business in the
Community'' Employer of Choice'' and Irish News'' Innovative Employer''.
- The "Outsourcing Excellence Award 2013"atthe 17th Annual Outsourcing
Excellence Awards held in Texas, US, for the "Best Business
Process" category in partnership with Giffgaff Ltd.
- Awarded the Employer of Choice at the annual Business in the
Community Northern Ireland (BITCNI) Awards in Belfast, Northern
Ireland.
- The lrish News Workplace and Employment Awards awarded the Company with
the Innovative Employer Award 2013 in Ireland.
HUMAN RESOURCES
On a consolidated basis, the Company has 27,666 employees as of March
31, 2014.
The statement of particulars of employees required in accordance with
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, as amended, forms part of this
Report. However, as permitted under section 219(1)(b)(iv) of the
Companies Act, 1956, the Annual Report is being sent to all members and
other entitled persons thereto excluding the above statement. Any
member interested in obtaining a copy of the said statement may write
to the Company Secretary at the Registered Office of the Company. The
said statement is also available for inspection at the Registered
Office during working hours upto the date of the forthcoming Annual
General Meeting (AGM).
PUBLIC DEPOSITS
During the year, your Company has not accepted any deposits under
Section 58A of the Companies Act, 1956 and as such, no amount on
account of principal or interest on public deposits was outstanding as
of March 31, 2014.
BOARD OF DIRECTORS
Mr. Ananda Mukerji and Mr. Shashwat Goenka retire by rotation and,
being eligible, have offered themselves for re-appointment at the
forthcoming AGM.
Pursuant to section 149 of the Companies Act, 2013 ("the Act") the
tenure of the Independent Directors is upto five consecutive years from
the commencement of the Act.
The Board recommends appointment of Mr. Y. H. Malegam, Dr. Shailesh J.
Mehta, Mr. Charles Miller Smith, Mr. Donald W. Layden Jr. and Mr.
Pradip Roy as Independent Directors for a term of upto 5 consecutive
years for approval of members of the Company at the ensuing Annual
General Meeting. The Company has received the declarations from all the
Independent Directors of the Company confirming that they meet the
criteria of independence as prescribed under Section 149 (6) of the Act.
EMPLOYEES STOCK OPTION SCHEME
With a view to provide an opportunity to the employees of the Company
to share the growth of the Company and to create long-term wealth, the
Company has an Employee Stock Option Scheme (ESOS), namely, the
First source Solutions Employee Stock Option Scheme, 2003 (ESOS 2003).
The earlier ESOS introduced in 2002 is in force for the limited purpose
of exercise of options granted pursuant to the scheme. The Scheme is
applicable to the eligible employees that include employees and
Directors of the Company and its subsidiary companies. Disclosures in
compliance with Clause 12 of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999, as amended, are set out below:
ESOS 2003
a) Total number of options under the Plan: 65,018,269
b) Options granted during the year 2013-14: 11,075,000
c) Pricing formula: The ''Pricing formula'' or ''Exercise Price'' for the
purpose of the grant of Options shall be the ''market price'' within the
meaning set out in the SEBI (Employee Stock Option Scheme & Employee
Stock Purchase Scheme) Guidelines, 1999 i.e., the latest available
closing price, prior to the date when options are granted/ shares are
issued, on that Stock Exchange where there is highest trading volume on
the said date. The Compensation Committee has the power to change/
modify the exercise price or pricing formula and fix the exercise price
at such discount to the market price of the equity shares as may be
deemed appropriate provided that the grant/ exercise price shall not be
below the face value of the shares and shall be in accordance with the
applicable laws in this regard.
d) Options vested during the year 2013-14: 9,413,750
e) Options exercised during the year 2013-14: 2,123,625*
*Including 62,500 stock options which were exercised in March, 2014 and
shares are pending for allotment.
f) Total number of shares arising as a result of exercise of options
during the year 2013-14: 2,061,125
g) Options lapsed during the year 2013-14: 9,294,272# #The stock
options which are cancelled/ lapsed/ forfeited can be re- issued by the
Company.
h) Variation of terms of options during the year 2013-14: Nil
i) Money realised by exercise of options during the year 2013-14
(Amount in ): 26,210,225@
@Including money realised with respect to 25,000 options which
were exercised on March 21, 2014 and shares are pending for allotment.
j) Total number of options in force: 47,605,635
k) Employee wise details of options granted to: i) Senior Managerial
personnel during the year 2013-14: Mr. Rajesh Subramaniam - 2,000,000,
Mr. Sanjay Venkataraman - 400,000, Mr. Dinesh Jain - 400,000, Ms.
Stephanie Wilson - 500,000, Mr. Shalabh Jain - 250,000, Mr. Joseph C
Gibson - 200,000, Mr. Peter Van Riper - 375,000, Mr. Deep Babur-
150,000, Mr. Vishwajit Negi - 200,000, Mr. Iain Regan - 100,000, Mr.
Arjun Mitra - 100,000, Mr. Venkataraman K R - 400,000, Ms. Mitzi
Winters - 230,000, Mr. Satish M - 250,000, Ms. Gayatri Anandh - 150,000
and Mr. Stephen W. Ogilvie- 200,000 ii) Any other employee, who has
been granted options amounting to 5% or more of options granted during
the year 2013-14: Nil iii) Identified employees who were granted
options, equal to or exceeding 1% of the issued capital of the Company,
during the year 2013-14: Nil
l) Diluted Earnings Per Share (EPS) pursuant to issue of shares on
exercise of options calculated in accordance with Accounting Standard
(AS) 20 - ''Earnings Per Share'': i) Standalone EPS - 1.96 per share. ii)
Consolidated EPS - 2.82 per share.
m) Where the Company has calculated the employee compensation cost
using the intrinsic value of the stock options, the difference between
the employee compensation cost so computed and the employee
compensation cost that shall have been recognised if it had used the
fair value of the options. The impact of this difference on profits and
on EPS of the Company: Please refer to Note No. 26 of the Standalone
Financial Statements.
n) Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - 23.66 per option. ii) Weighted average fair
value as per the Black Scholes Model - 12.87 per option.
o) A description of the method and significant assumptions used during
the year to estimate the fair values of options, including the
following weighted average information: a) Risk free interest rate b)
Expected life c) Expected dividends and d) The price of the underlying
share in market at the time of option grant: Please refer to Note No.
26 of the Standalone Financial Statements.
Prior to the Initial Public Offering (IPO), the Company had granted
options to employees at the fair market value, as certified by an
independent valuer. Post IPO, the exercise price of the options granted
equals the market price of the stock i.e. the latest available closing
price, prior to the date when options are granted, on that Stock
Exchange where there is highest trading volume on the said date.
ESOS 2002
a) Total number of options under the Plan: 2,347,500
b) Options granted during the year 2013-14: Nil
c) Options vested during the year 2013-14: Nil
d) Options exercised during the year 2013-14: 30,000
(These 30,000 options were exercised in March, 2014 and shares are
pending for allotment)
e) Total number of shares arising as a result of exercise of option
during the year 2013-14: Nil
f) Options lapsed during the year 2013-14: 41,250
g) Variation in the terms of option during the year 2013-14: Nil
h) Money realised by exercise of options during the year 2013-14
(Amount in ): 337,500
(This amount is with respect of 30,000 options which were exercised and
shares are pending for allotment.)
i) Total number of options in force: Nil
j) Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - Nil ii) Weighted average fair value as per the
Black Scholes Model - N.A.
SUBSIDIARY COMPANIES
As on March 31, 2014, your Company had 11 subsidiaries:
DOMESTIC SUBSIDIARIES:
1. Anunta Tech Infrastructure Services Limited [wholly owned subsidiary
("WOS") of the Company]
INTERNATIONAL SUBSIDIARIES:
1. First source Solutions UK Limited, UK (WOS of the Company)
2. First source Solutions S.A., Argentina (Subsidiary of First source
Solutions UK Limited)*
3. First source Group USA, Inc., USA (WOS of the Company)
4.. First source Business Process Services, LLC, USA (WOS of First source
Group USA, Inc.)
5. First source Advantage LLC, USA (WOS of First source Business Process
Services, LLC.)
6. Med Assist Holding, Inc., USA (WOS of First source Group USA, Inc.)
7. First source Solutions USA, LLC USA (WOS of Med Assist Holding Inc.)
8. First source Transaction Services, LLC (WOS of First source Solutions
USA, LLC)
9. First source BPO Ireland Limited (WOS of the Company)
10. First source Dialog Solutions (Private) Limited (Subsidiary of the
Company)
Note:
1. #First source Solutions S.A., Argentina, a subsidiary of First source
Solutions UK Limited, was sold during the financial year ended March
31, 2013. However, the option to exercise the sale with the buyer has
lapsed and hence the investment has been restated in the books of
account.
2. Twin Lakes Property, LLC - I and Twin Lakes Property, LLC - II,
subsidiaries of First source Advantage, LLC, were dissolved w.e.f. March
27, 2014.
PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT
The Ministry of Corporate Affairs, Government of India, vide General
Circular No. 2/2011 dated February 8, 2011, has granted a general
exemption from compliance with section 212 of the Companies Act, 1956,
subject to fulfilment of conditions stipulated in the circular. Your
Company has satisfied the conditions stipulated in the circular and
hence is entitled to the exemption. The financial data of the
subsidiaries have been furnished under ''Details of Subsidiaries''
forming part of the Annual Report. Consolidated Financial Statements of
the Company and its subsidiaries for the year ended March 31, 2014,
together with reports of Auditors thereon and the statement pursuant to
Section 212 of the Companies Act, 1956, forms part of the Annual
Report. The Annual Accounts and the related detailed information of
subsidiary companies will be made available to the Members of the
Company and subsidiary companies seeking such information at any point
of time. The Annual Accounts of the subsidiary companies will also be
available for inspection by any member at the registered/ head office
of the Company and that of the subsidiary concerned.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Reports on Corporate Governance and Management Discussion and Analysis
as stipulated under Clause 49 of the Listing Agreement are separately
given and form part of the Annual Report.
STATUTORY DISCLOURES OF PARTICULARS
A) Conservation of Energy
The Company has made progress towards energy conservation across all
its delivery centers. For optimal utilisation of energy, stringent
monitoring of usage of electric devices and lightings is done to avoid
unwanted usages. These initiatives have contributed in reducing energy
consumption and helped in reducing the overall power consumption by
2.5%. With the implementation of such initiatives, the Company, like
previous years, continues its legacy of pursuing GREEN IT and endeavours
to innovate energy conservation methods in future.
B) Absorption of Technology
The Company has been innovating consistently to absorb newer technology
offerings which can benefit business to improve operational efficiency
with greater quality in a cost effective manner.
During the year, the Company started using the remote desktops which is
a new and enhanced architecture with virtualisation advantages and
makes a flexible solution for remote access. The Company also started
using new technologies as part of virtualisation which leverage the
elasticity of hybrid clouds and the security of mobile device
management. These new technologies have helped the Company to have a
cost effective solution which delivered secure virtual desktops to the
users with reduced risk of data loss or intrusion.
C) Foreign Exchange Earnings and Outgo Activities relating to exports,
initiatives taken to increase exports, development of new export
markets for services and export plans.
The Company''s income is diversified across a range of geographies and
industries. During the year, 49.7% of the Company''s standalone revenues
were derived from exports. The Company provides BPM services mostly to
clients in North America, UK and Asia Pacific region. The Company has
established direct marketing network around the world to boost its
exports.
AUDITORS
M/s. B S R & Co. LLP (formerly known as B S R & Co.), Chartered
Accountants, who were appointed as the Statutory Auditors of the
Company by the Members at their previous Annual General
Meeting (AGM), shall retire on conclusion of the ensuing AGM and are
eligible for re-appointment. Members are requested to consider their
re-appointment from the conclusion of ensuing Annual General Meeting
(AGM) upto the conclusion of next AGM at a remuneration to be decided
by Audit Committee of the Board of Directors of the Company. The
Company has received confirmation from M/s. B S R & Co. LLP, to the
effect that their appointment, if made, will be within the limits of
Section 139 of the Companies Act, 2013.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement,
Directors of your Company confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed there under proper explanation
relating to material departures, if any;
2. 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 or
loss of the Company for that period;
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safe- guarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
4. The annual accounts were prepared on a going-concern basis.
ACKNOWLEDGEMENTS
The Directors wish to place on record their sincere appreciation for
the support and co-operation extended by all the customers, vendors,
bankers and business associates. The Company also expresses its
gratitude to the Ministry of Telecommunications, Collector of Customs
and Excise, Director - Software Technology Parks of India and various
Governmental departments and organisations for their help and co
operation.
The Board places on record its appreciation to all the employees for
their dedicated service. The Board appreciates and values the
contributions made by every member across the world and is confident
that with their continued support, the Company will achieve its
objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Sanjiv Goenka
Chairman
Mumbai
May 2, 2014
Mar 31, 2013
Dear Members,
Directors of your Company take great pleasure in presenting the Twelfth
Annual Report of your Company on its business and operations during the
year alongwith the audited financial statements for the financial year
ended March 31, 2013.
FINANCIAL RESULTS
The performance of the Company for the Financial Year 2012-13 is
summarised below:
(Rs. in Million)
Particulars Consolidated Standalone
FY 2012-13 FY 2011-12 FY 2012-13 FY 2011-12
Total Income 28,649.3 22,936.4 9,733.9 8,561.8
Profit Before Interest
and Depreciation 3,259.6 2,237.3 2,278.4 1,673.0
Interest and Finance
Charges (net) 783.7 584.9 527.9 655.6
Depreciation 884.0 892.6 576.6 598.8
Profit Before Tax 1,591.9 759.8 1,173.9 418.6
Provision for Taxation
(including Deferred
Tax Charge/ Credit) 129.2 137.7 - -35.0
Profit After Tax Before
Minority Interest 1,462.7 622.1 1,173.9 453.6
Minority Interest -3.2 1.8 - -
Profit After Tax before
Adjustment of Results
of Rev IT Systems Private - - 1,173.9 -
Limited amalgamated with
the Company during the year
Profit After Tax of Rev
IT Systems Private Limited - - 185.8
Net Profit After Tax 1,465.9 620.3 1,359.7 453.6
Balance Brought Forward 6,285.1 5,664.8 3,401.5 2,947.9
Accumulated balance of
Rev IT Systems Private
Limited brought - - 437.4 -
forward pursuant to
Scheme of Amalgamation
Total Profits available
for Appropriations 7,751.0 6,285.1 5,198.6 3,401.5
Adjustment of
Amalgamation Deficit
pursuant to Scheme of 333.2 - - -
Amalgamation of Rev
IT Systems Private
Limited with the Company
Accumulated Balance in
Profit & Loss Account
at the end of the year 7,417.8 6285.1 5,198.6 3,401.5
Earning Per Share
(Rs.) - Basic 2.91 1.44 2.70 1.05
Earning Per Share
(Rs.) - Diluted 2.82 1.44 2.66 1.05
RESULT OF OPERATIONS
The consolidated total income increased from Rs. 22,936.4 Million to
Rs. 28,649.3 Million, a growth of 24.9% over the previous financial
year. The consolidated Net Profit After Tax increased from Rs. 620.3
Million to Rs. 1,465.9 Million, a growth of 136.3% over the previous
financial year. The detailed analysis of the consolidated results forms
part of the Management Discussion & Analysis Report provided separately
as part of the Annual Report.
The standalone total income increased from Rs. 8,561.8 Million to Rs.
9,733.9 Million, a growth of 13.7% over the previous financial year.
The standalone Profit After Tax increased from Rs. 453.6 Million to Rs.
1,359.7 Million, a growth of 199.8% over the previous financial year.
With a view to conserve cash reserves to meet current financial
obligations of the Company, the Directors of your Company do not
recommend any dividend for financial year 2012-13.
PREFERENTIAL ALLOTMENT
During the year under review, your Company issued and allotted, on
Preferential allotment basis, 226,897,444 equity shares of face value
of Rs. 10/- each at an issue price of Rs. 12.10/- per share,
aggregating to Rs. 2,745.5 Million (including a Premium of Rs. 476.5
Million), to Spen Liq Private Limited, wholly owned subsidiary of CESC
Limited, part of RP-Sanjiv Goenka Group.The issue proceeds were fully
utilised for redemption of outstanding Foreign Currency Convertible
Bonds ("FCCBs") which were due for redemption on December 4, 2012.
AMALGAMATION
During the year, the Board approved the amalgamation of Rev IT Systems
Private Limited (''''Rev IT"), a wholly owned subsidiary of the
Company, with the Company, owing to beneficial impacts from synergies
of operations, cost savings, strengthening of financial position and
optimum utilisation of assets. The Hon''ble High Court of judicature
of Bombay, dispensing the meetings of Members and Creditors of both the
Companies, vide its order dated November 5, 2012, sanctioned the Scheme
of Amalgamation of Rev IT with the Company. The Company and Rev IT
filed certified copies of the order of Hon''ble High Court with the
Registrar of Companies, Maharashtra. Consequently Rev IT stood
amalgamated with the Company during the year as per the scheme of
Amalgamation with appointed date being April 1, 2011.
SHARE CAPITAL
As a result of amalgamation of Rev IT Systems Private Limited with the
Company, the Authorised share capital of your Company increased from
Rs. 8500 Million to Rs. 8,720 Million by addition of 22,000,000 equity
shares of Rs. 10/- each.
Further, after issue of 226,897,444 equity shares to Spen Liq Private
Limited on preferential allotment basis, the issued, subscribed and
paid-up equity share capital of the Company has increased from
430,776,307 shares to 657,673,751 shares of Rs. 10/- each aggregating
to Rs. 6,576.7 Million.
CHANGE IN CONTROL
The Preferential Allotment of equity shares to Spen Liq Private Limited
("Spen Liq"), wholly owned subsidiary of CESC Limited, constituted
34.50% of the paid up equity share capital of the Company. Further, 3
major shareholders viz. ICICI Bank Limited, Metavante Investments
(Mauritius) Limited ("Metavante") and Aranda Investments Mauritius
Pte. Limited ("Aranda") sold 5% each of their shareholding
aggregating to 15% of the paid- up equity share capital to Spen Liq.
This entitled Spen Liq to 49.50% of the paid-up share capital of the
Company resulting in change in control over the Company by Spen Liq
with effect from December 5, 2012. Further, Spen Liq alongwith its
holding company, CESC Limited became Promoter of the Company in place
of ICICI Bank Limited as per SEBI (Issue of Capital & Disclosure
Requirements) Regulations, 2009, from the said date.
In terms of the provisions of SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 2011, Spen Liq along with Person Acting in
Concert viz. CESC Limited, issued a Public Announcement for Open Offer
to acquire equity shares of the Company. The Open Offer opened on
January 4, 2013 and closed on January 17, 2013. Spen Liq acquired
48,428,165 equity shares from public shareholders of the Company at a
price of Rs. 12.20/- per equity share under the Open Offer aggregating
to 7.36% of post preferential issue paid-up equity capital of the
Company.
As a result of above transactions, Spen Liq held 56.86% of total paid
up capital of your Company post Open Offer. Accordingly, the Company is
now a subsidiary of Spen Liq and Spen Liq being a subsidiary of CESC
Limited, the Company is also a subsidiary of CESC Limited.
REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS
The Company had issued Zero Coupon Foreign Currency Convertible Bonds
("FCCBs") of USD 275 Million in December 2007. The FCCBs had a
maturity period of 5 years and 1 day and they were listed on Singapore
Exchange Securities Trading Limited. The nominal amount of outstanding
FCCBs as on March 31, 2012 was USD 169.8 Million with a maturity value
of USD 236.65 Million at the time of redemption due on December 4,
2012. It is a great pleasure to announce that the said outstanding
FCCBs were duly redeemed in full in cash on due date, completely
discharging your Company from its obligation towards the Bondholders.
GLOBAL DELIVERY FOOTPRINT
The Company, on a consolidated basis had 47 global delivery centers as
on March 31, 2013. The centers are located across India, USA, UK,
Philippines and Sri Lanka. 24 of the Company''s delivery centers are
located in 16 cities in India, 14 are in the USA, 6 are in UK, 2 in
Philippines and 1 in Sri Lanka. The Company''s established global
delivery footprint enables it to deliver wide range of services and
strengthens relationships with existing customers.
During the year, the Company incurred capital expenditure of Rs. 515.3
Million mainly towards refurbishment and maintenance of delivery
centers and creation of additional capacity in Philippines, India, USA
and UK.
QUALITY INITIATIVES
The Company follows the global best practices for process excellence
and is certified by COPC Inc. (Customer Operations Performance Center).
The Company''s delivery centers in Chennai and Bangalore in India are
recertified for COPC® 2000 Standard v 4.4. Firstsource Dialog
Solutions (Pvt.) Limited, joint venture subsidiary of the Company in
Sri Lanka is certified for COPC® 2000 Standard v 4.4. Also, as part
of the Quality Management System, the Company has embraced ISO
9001:2008. The Company continues to follow process improvement
methodologies like Six Sigma, Lean and Kaizen.
AWARDS AND ACCOLADES
The Company received the following awards and accolades during the
year.
Best Outsourced center by Welsh Contact Centre Awards, 2012
National Outsourcing Association Awards, 2012, in following prestigious
categories:
- Telecommunications, Utilities and High-Tech Outsourcing Project of
the Year
- Innovation in Outsourcing
- Outsourcing Contact Centre Provider of the Year
"Outsourcer of the Year" at the European Call Centre and Customer
Service Awards, 2012
"Contact Centre Agency of the Year Award" by Marketing Magazine''s
Awards, 2012
Ranked # 22 in Global Outsourcing 100® rankings in 2012 by The
International Association of Outsourcing Professionals
As per NASSCOM''s Annual rankings:
- Ranked amongst the Top 5 ITES-BPO companies in 2012
- Ranked amongst the Top 15 IT- BPO employers in India in 2012
Ranked amongst top Indian BPO companies in 7th Annual Global Services
GS100
HUMAN RESOURCES
On a consolidated basis, the Company has grown from 30,086 fulltime
employees as on March 31, 2012 to 31,872 employees as of March 31,
2013.
The statement of particulars of employees required in accordance with
Section 217(2A) of the Companies Act, 1956 ("the Act"), read with
the Companies (Particulars of Employees) Rules, 1975, as amended, the
names and other particulars of employees forms part of this Report.
However, as permitted under the Act, this Annual Report is being sent
to all members and other entitled persons thereto excluding the above
statement. Any Member interested in obtaining a copy of the said
statement may write to the Company Secretary at the Registered Office
of the Company. The said statement is also available for inspection at
the Registered Office during working hours upto the date of the
forthcoming Annual General Meeting (AGM).
PUBLIC DEPOSITS
During the year, your Company has not accepted any deposits under
Section 58A of the Companies Act, 1956 and as such, no amount on
account of principal or interest on public deposits was outstanding as
on March 31, 2013.
BOARD OF DIRECTORS
During the year under review, Mr. Rajesh Subramaniam was appointed as
Managing Director & Chief Executive Officer ("MD & CEO") of the
Company w.e.f. May 16, 2012 to succeed Mr. Alexander Matthew Vallance,
who resigned as MD & CEO w.e.f. May 15, 2012. The Directors place on
record their deep appreciation for valuable contribution made by Mr.
Alexander Matthew Vallance as MD & CEO.
Mr. Pravir Vohra, representing ICICI Bank Limited, erstwhile Promoter,
Mr. Ram V. Chary, representing equity investor Metavante and Mr. Mohit
Bhandari, representing equity investor Aranda, resigned as Directors of
your Company w.e.f. December 5, 2012. The Directors place on record
warm appreciation for services rendered by them.
With the successful consummation of both the preferential allotment of
34.50% of the post preferential issue equity share capital of the
Company and secondary purchase of 15% in aggregate of the post issue
capital from 3 major shareholders, Spen Liq held 49.50% of the post
issue capital of the Company. Accordingly, Mr. Sanjiv Goenka was
appointed as an Additional Director on the Board on December 3, 2012
and Mr. Shashwat Goenka, Mr. Haigreve Khaitan and Mr. Subrata Talukdar
were appointed in the casual vacancies caused by resignation of Mr.
Pravir Vohra, Mr. Ram V. Chary and Mr. Mohit Bhandari respectively,
effective December 5, 2012. Mr. Pradip Roy was also appointed as an
Additional Director effective December 3, 2012.
Dr. Shailesh Mehta stepped down as the Chairman of the Board of
Directors w.e.f. December 3, 2012. The Directors place on record deep
sense of appreciation for the services rendered by Dr. Mehta during his
tenure as Chairman. However, Dr. Mehta continues as a Director on the
Board. Mr. Sanjiv Goenka who was appointed as Director on the same
date, succeeded Dr. Mehta as the Chairman of Board of Directors of the
Company.
Pursuant to the provisions of Section 260 of the Companies Act, 1956
("the Act"), Mr. Pradip Roy and Mr. Sanjiv Goenka hold office till
the conclusion of the forthcoming Annual General Meeting. The Company
has received notices along with the requisite deposits from the members
of the Company pursuant to Section 257 of the Companies Act, 1956,
proposing appointment of Mr. Pradip Roy, Mr. Sanjiv Goenka, Mr.
Shashwat Goenka, Mr. Subrata Talukdar and Mr. Haigreve Khatian as
Directors at the ensuing Annual General Meeting of the Company. We seek
your support in confirming these appointments.
Mr. Y. H. Malegam and Mr. Charles Miller Smith, retire by rotation and
being eligible, have offered themselves for re-appointment at the
ensuing Annual General Meeting.
EMPLOYEES STOCK OPTION SCHEME
With a view to provide an opportunity to the employees of the Company
to share the growth of the Company and to create long- term wealth, the
Company has an Employee Stock Option Scheme (ESOS), namely, the
Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003).
The earlier ESOS introduced in 2002 is in force for the limited purpose
of exercise of options granted pursuant to the scheme. The Scheme is
applicable to the eligible employees that include employees and
Directors of the Company and its subsidiary companies. Disclosures in
compliance with Clause 12 of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999, as amended, are set out below:
ESOS 2003
a) Total number of options under the Plan: 63,237,541
b) Options granted during the year 2012-13: 12,675,000
c) Pricing formula: The ''Pricing formula'' or ''Exercise Price''
for the purpose of the grant of Options is the ''market price''
within the meaning set out in the SEBI (Employee Stock Option Scheme &
Employee Stock Purchase Scheme) Guidelines, 1999 i.e., the latest
available closing price, prior to the date when options are granted/
shares are issued, on that Stock Exchange where there is highest
trading volume on the said date. The Compensation Committee has the
power to change/ modify the exercise price or pricing formula and fix
the exercise price at such discount to the market price of the equity
shares as may be deemed appropriate provided that the grant/ exercise
price shall not be below the face value of the shares and shall be in
accordance with the applicable laws in this regard.
d) Options vested during the year 2012-13: 15,784,375
e) Options exercised during the year 2012-13: Nil
f) Total number of shares arising as a result of exercise of options
during the year 2012-13: Nil
g) Options lapsed during the year 2012-13: 18,686,188-
-The stock options which are cancelled/ lapsed/ forfeited can be re-
issued by the Company.
h) Variation of terms of options during the year 2012-13: Nil
i) Money realised by exercise of options during the year 2012-13
(Amount in Rs.): Nil
j) Total number of options in force: 47,948,532
k) Employee wise details of options granted to: i) Senior Managerial
personnel during the year 2012-13: Mr. Rajesh Subramaniam - 2,000,000,
Mr. David Matthew Strickler - 750,000, Mr. Sanjay Venkataraman -
500,000, Mr. T.N. Shekar - 400,000, Mr. Kiran Kosaraju - 400,000 and
Mr. Satish M - 400,000 ii) Any other employee, who has been granted
options amounting to 5% or more of options granted during the year
2012-13: Nil iii) Identified employees who were granted options, equal
to or exceeding 1% of the issued capital of the Company, during the
year 2012-13: Nil
l) Diluted Earnings Per Share (EPS) pursuant to issue of shares on
exercise of options calculated in accordance with Accounting Standard
(AS) 20 - ''Earnings Per Share'': i) Standalone EPS - Rs. 2.66 per
share. ii) Consolidated EPS - Rs. 2.82 per share.
m) Where the Company has calculated the employee compensation cost
using the intrinsic value of the stock options, the difference between
the employee compensation cost so computed and the employee
compensation cost that shall have been recognised if it had used the
fair value of the options. The impact of this difference on profits and
on EPS of the Company: Please refer to Note No. 28 of the Standalone
Financial Statements.
n) Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - Rs. 25.74 per option. ii) Weighted average
fair value as per the Black Scholes Model - Rs. 10.01 per option.
o) A description of the method and significant assumptions used during
the year to estimate the fair values of options, including the
following weighted average information:
a) Risk free interest rate
b) Expected life
c) Expected dividends and
d) The price of the underlying share in market at the time of option
grant: Please refer to Note No. 28 of the Standalone Financial
Statements.
Prior to the Initial Public Offering (IPO), the Company had granted
options to employees at the fair market value, as certified by an
independent valuer. Post IPO, the exercise price of the options granted
equals the market price of the stock i.e. the latest available closing
price, prior to the date when options are granted, on that Stock
Exchange where there is highest trading volume on the said date.
ESOS 2002
a) Total number of options under the Plan: 2,388,750
b) Options granted during the year 2012-13: Nil
c) Options vested during the year 2012-13: Nil
d) Options exercised during the year 2012-13: Nil
e) Total number of shares arising as a result of exercise of option
during the year 2012-13: Nil
f) Options lapsed during the year 2012-13: 15,625
g) Variation in the terms of option during the year 2012-13: Nil
h) Money realised by exercise of options during the year 2012-13
(Amount in Rs.): Nil
i) Total number of options in force: 71,250
j) Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - Rs. 11.50 per option
ii) Weighted average fair value as per the Black Scholes Model -N.A.
SUBSIDIARY COMPANIES
As on March 31, 2013, your Company had 13 subsidiaries:
Domestic subsidiaries:
1. Anunta Tech Infrastructure Services Limited [wholly owned subsidiary
("WOS") of the Company]
International subsidiaries:
1. Firstsource Solutions UK Limited, UK (WOS of the Company)
2. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource
Solutions UK Limited)-
3. Firstsource Group USA, Inc., USA (WOS of the Company)
4. Firstsource Business Process Services, LLC, USA (WOS of Firstsource
Group USA, Inc.)
5. Firstsource Advantage LLC, USA (WOS of Firstsource Business Process
Services, LLC)
6. Twin Lakes Property, LLC - I, USA @(WOS of Firstsource Advantage,
LLC)
7. Twin Lakes Property, LLC - II, USA -@(WOS of Firstsource Advantage,
LLC)
8. MedAssist Holding, Inc., USA (WOS of Firstsource Group USA, Inc.)
9. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding Inc.)
10. Firstsource Transaction Services, LLC, USA (WOS of Firstsource
Solutions USA, LLC)
11. Firstsource BPO Ireland Limited, Ireland (WOS of the Company)
12. Firstsource Dialog Solutions (Private) Limited, Sri Lanka
(Subsidiary of the Company)
Following changes in the subsidiaries of the Company took place during
the year:
I. The Hon''ble High Court of Bombay approved Scheme of Amalgamation
of Rev IT Systems Private Limited, wholly owned subsidiary of the
Company, with the Company vide its order dated November 5, 2012 and
consequently Rev IT was amalgamated with the Company w.e.f. November
30, 2012.
II. #Firstsource Solutions S.A., Argentina, a subsidiary of
Firstsource Solutions UK Limited, has been sold during the first
quarter of financial year ended March 31, 2013, pending transfer of
shares to buyer.
III. -Twin Lakes Property LLC - II became the subsidiary of Firstsource
Advantage, LLC ("FAL") w.e.f. April 1, 2012 wherein 80% stake was
held by FAL.
IV. @On December 29, 2012, FAL increased its stake in Twin Lakes
Property, LLC - I and Twin Lakes Property LLC - II to 100% making them
wholly owned subsidiaries of FAL.
PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT
The Ministry of Corporate Affairs, Government of India, vide General
Circular No. 2/2011 dated February 8, 2011, granted a general exemption
from compliance with Section 212 of the Companies Act, 1956 ("the
Act"), subject to fulfilment of conditions stipulated in the
circular. Your Company has satisfied the conditions stipulated in the
circular and hence is entitled to the exemption. The financial data of
the subsidiaries has been furnished under ''Details of Subsidiaries''
forming part of the Annual Report. Consolidated Financial Statements of
the Company and its subsidiaries for the year ended March 31, 2013,
together with reports of Auditors thereon and the statement pursuant to
Section 212 of the Act, form part of the Annual Report. The Annual
Accounts and the related detailed information of subsidiary companies
will be made available to the Members of the Company and subsidiary
companies seeking such information at any point of time. The Annual
Accounts of the subsidiary companies will also be available for
inspection by any member at the registered/ head office of the Company
and that of the subsidiary concerned.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Reports on Corporate Governance and Management Discussion and Analysis
as stipulated under Clause 49 of the Listing Agreement are separately
given and form part of the Annual Report.
STATUTORY DISCLOURES OF PARTICULARS
A) Conservation of Energy
The Company has made progress towards energy conservation across all
its delivery centers. For optimal utilisation of energy, more than 1800
old IT equipment (CRT monitors, desktops, servers etc.) were replaced
with new energy efficient ones and 12 high energy consuming servers
were consolidated. Further physical servers & desktops were migrated
into Virtual Servers & Virtual Desktops. Avoiding physical desktops &
servers enabled the Company to mitigate overall power consumption as
well as cooling requirements for production centers and data centers.
Consolidation of delivery centers was also carried out.
All these initiatives have contributed immensely in reducing energy
consumption. These initiatives have helped reduce power consumption by
25%. With the implementation of such initiatives, the Company, like
previous years, continues its legacy of pursuing GREEN IT and
endeavours to innovate energy conservation methods in future.
B) Absorption of Technology
The Company has been innovating consistently to absorb newer technology
offerings which can benefit business to improve operational efficiency
with greater quality in a cost effective manner.
During the year, the Company embarked upon setting up Remote
Infrastructure Management (RIM). RIM refers to remotely managing
information technology (IT) infrastructure such as workstations
(desktops, laptops, notebooks, etc.), servers, network devices, storage
devices, IT security devices, etc.
Major sub-services included in RIM setup at the Company are:
Service desk/ Help desk
Proactive monitoring of server and network devices
Workstation management
Server management
Storage management
Application support
IT security management
C) Foreign Exchange Earnings and Outgo
Activities relating to exports, initiatives taken to increase exports,
development of new export markets for services and export plans.
The Company''s income is diversified across a range of geographies and
industries. During the year, 60.2% of the Company''s revenues were
derived from exports. The Company provides BPO services mostly to
clients in North America, UK and Asia Pacific regions. The Company has
established direct marketing network around the world to boost its
exports.
Foreign Exchange earned and used
The Company''s foreign exchange earnings and outgo during the year
were as under:
AUDITORS
M/s. B S R & Co., Chartered Accountants, who were appointed as the
Statutory Auditors of the Company by the Members at their previous
Annual General Meeting (AGM), shall be retiring on conclusion of the
ensuing AGM and are eligible for re-appointment. Members are requested
to consider their re-appointment from the conclusion of ensuing AGM
upto the conclusion of AGM for the financial year 2013-14 at a
remuneration to be decided by Audit Committee of the Board. The Company
has received confirmation from M/s. B S R & Co., to the effect that
their appointment, if made, will be within the limits of Section
224(1B) of the Companies Act, 1956.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement,
Directors of your Company confirm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures, if any;
2. 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 or
loss of the Company for that period;
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safe-guarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
4. The annual accounts were prepared on a going-concern basis.
ACKNOWLEDGEMENTS
The Directors wish to place on record their sincere appreciation for
the support and co-operation extended by all the customers, vendors,
bankers and business associates. The Company also expresses its
gratitude to the Ministry of Telecommunications, Collector of Customs
and Excise, Director - Software Technology Parks of India and various
Governmental departments and organisations for their help and
co-operation.
The Board places on record its appreciation to all the employees for
their dedicated service. The Board appreciates and values the
contributions made by every member across the world and is confident
that with their continued support the Company will achieve its
objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Sanjiv Goenka
Chairman
Mumbai
May 7, 2013
Mar 31, 2012
Dear Members,
The Directors take great pleasure in presenting their Eleventh Annual
Report on the business and operations of your Company and the audited
financial statements for the year ended March 31, 2012.
FINANCIAL RESULTS
The performance of the Company for the financial year 2011-12 is
summarized below:
(Rs.in Million)
Particulars Consolidated Standalone
FY 2011-121 FY 2010-11 FY 2011-12 FY 2010-11
Total Income 22,936.4 20,759.1 8,561.8 7,589.2
Profit Before
Interest and
Depreciation 2237.3 3038.2 1673.0 1537.5
Interest and
Finance Charges
(net) 584.9 394.4 655.6 268.1
Depreciation 892.6 890.8 598.8 573.8
Profit Before Tax 759.8 1,753.0 418.6 695.6
Provision for
Taxation (including
Deferred Tax
Charge/ Credit) 137.7 349.3 -35.0 32.7
Profit After Tax
Before Minority
Interest 622.1 1,403.7 453.6 662.9
Minority Interest 1.8 18.6 - -
Net Profit After
Tax 620.3 1,385.1 453.6 662.9
Balance Brought
Forward 5,664.8 4,279.7 2,947.9 2,285.0
Appropriations - -
Accumulated
Balance in
Profit & Loss
Account 6285.1 5,664.8 3,401.5 2,947.9
Earnings Per
Share (Rs.)
- Basic 1.44 3.22 1.05 1.54
Earnings Per
Share (Rs.)
- Diluted 1.44 2.91 1.05 1.52
RESULT OF OPERATIONS
The consolidated total income increased from Rs 20759.1 Million to Rs
22,936.4 Million, a growth of 10.5% over the previous financial year.
The consolidated Net Profit After Tax reduced from Rs 1,385.1 Million to
Rs 620.3 Million, decline of 55.2% over the previous financial year.
The detailed analysis of the consolidated results forms part of the
Management Discussion & Analysis (MD&A) Report provided separately as
part of the Annual Report.
The standalone total income increased from Rs 7,589.2 Million to Rs
8561.8 Million, a growth of 12.8% over the previous financial year.
The standalone Profit After Tax declined from Rs 662.9 Million to Rs
453.6 Million, decline of 31.6% over the previous financial year.
The reduction in net profits in the financial year 2011-12 was due to
increase in finance charges and overall escalation in costs during the
year under review. With a view to conserve cash reserves to meet the
current financial obligations of the Company, the Directors do not
recommend any dividend for fiscal 2012.
CHANGE IN REGISTERED OFFICE
During the year, the Company has shifted its Registered Office from 6th
Floor, Peninsula Chambers, Ganpatrao Kadam Marg, Lower Parel, Mumbai -
400 013 to 5th Floor, Paradigm 'B' Wing, Mindspace, Link Road, Malad
(West), Mumbai - 400 064.
INCREASE IN SHARE CAPITAL
During the year, the Company issued 138,125 equity shares of the face
value of Rs10 each on the exercise of stock options under the Employee
Stock Option Schemes of the Company. Consequently, the outstanding,
issued, subscribed and paid-up equity share capital of the Company
increased from 430,638,182 shares to 430,776,307 shares of Rs 10 each as
on March 31, 2012.
REPURCHASE OF FOREIGN CURRENCY CONVERTIBLE BONDS
The Company had issued Zero Coupon Foreign Currency Convertible Bonds
(FCCBs) of USD 275 Million in December 2007. The FCCBs have a maturity
period of 5 years and 1 day and they are listed on Singapore Exchange
Securities Trading Limited. Up to March 31, 2012, the Company had
repurchased and cancelled its FCCBs of the nominal amount of USD 105.2
Million. The nominal amount of Bonds outstanding after cancellation as
on March 31, 2012 was USD 169.8 Million.
GLOBAL DELIVERY FOOTPRINT
The Company, on a consolidated basis had 48 global delivery centers as
on March 31, 2012. The centers are located across India, USA, UK,
Philippines and Sri Lanka. 26 of the Company's delivery centers are
located in 15 cities in India, 14 are in the USA, 5 are in UK and 2 in
Philippines and 1 in Sri Lanka. The Company's established global
delivery footprint enables it to deliver wide range of services and
strengthens relationships with existing customers.
During the year, the Company incurred capital expenditure of Rs 582.6
Million mainly towards refurbishment and maintenance of existing
delivery centers and creation of additional capacity in Philippines,
India, USA, UK and Sri Lanka.
QUALITY INITIATIVES
The Company follows the global best practices for process excellence
and is certified by COPC Inc. (Customer Operations Performance Center).
The Company's delivery centers in Bangalore and Chennai in India and
First source Dialog Solutions (Pvt.) Limited, joint venture subsidiary
of the Company in Sri Lanka have been recertified for COPCî 2000 CSP
Standard v 4.4. Also, as part of the Quality Management System, the
Company has embraced ISO 9001:2008. The Company continues to follow
process improvement methodologies like Six Sigma, Lean and Kaizen.
AWARDS AND ACCOLADES
The Company received the following awards and accolades during the
year:
- 2011 CII Quality Awards Winners in Service Category
- 2011 Golden Peacock Award for Innovation Management in IT, BPO
sector
- 2012 UHG Semi Annual Quality Challenge Winner
HUMAN RESOURCES
On a consolidated basis, the Company has grown from 26,413 full- time
employees as of March 31, 2011 to 30,086 employees as of March 31,
2012. The statement of particulars required pursuant to Section 217
(2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Amendment Rules, 2011, forms part of this Report. However,
as permitted under the Companies Act, 1956, this Report and Accounts
are being sent to all members and other entitled persons excluding the
above statement. Those interested in obtaining a copy of the said
statement may write to the Company Secretary at the Registered Office.
The statement is also available for inspection at the registered office
during working hours up to the date of the forthcoming Annual General
Meeting (AGM).
PUBLIC DEPOSITS
During the year, the Company has not accepted any deposits under
Section 58A of the Companies Act, 1956.
DIRECTORS
During the year, Mr. Rajesh Subramaniam was appointed as Deputy
Managing Director & Chief Financial Officer (Dy. MD & CFO) of the
Company w.e.f. August 1, 2011.
Mr. Alexander Matthew Vallance, Managing Director & CEO (MD & CEO)
resigned effective May 15, 2012 and the Board approved appointment of
Mr. Rajesh Subramaniam as MD & CEO of the Company effective May 16,
2012 to succeed Mr. Vallance. Mr. Vallance was appointed as Jt.
Managing Director of the Company w.e.f. January 25, 2010 and was
appointed as MD & CEO of the Company w.e.f. July 28, 2010 consequent
upon resignation of Mr. Ananda Mukerji as MD & CEO of the Company.
Mr. Ananda Mukerji, Mr. Donald W Layden Jr., and Mr. Ram V. Chary
retire by rotation at the ensuing Annual General Meeting and are
eligible for re-appointment.
EMPLOYEES STOCK OPTION SCHEME
With a view to provide an opportunity to the employees of the Company
to share the growth of the Company and to create long-term wealth, the
Company has an Employee Stock Option Scheme (ESOS), namely, the
First source Solutions Employee Stock Option Scheme, 2003 (ESOS 2003).
The earlier ESOS introduced in 2002 is in force for the limited purpose
of exercise of options granted pursuant to the scheme. The Scheme is
applicable to the eligible employees that include employees and
directors of the Company and its subsidiary companies. Disclosures in
compliance with Clause 12 of the Securities and Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999, as amended, are set out below:
ESOS 2003
a) Total number of options under the Plan: 69,248,729
b) Options granted during the year 2011-12: 7,200,000
c) Pricing formula: The 'Pricing formula' or 'Exercise Price' for
the purpose of the grant of Options shall be the 'market price'
within the meaning set out in the SEBI (Employee Stock Option Scheme &
Employee Stock Purchase Scheme) Guidelines, 1999 i.e., the latest
available closing price, prior to the date when options are granted/
shares are issued, on that Stock Exchange where there is highest
trading volume on the said date. The Compensation Committee has the
power to change/ modify the exercise price or pricing formula and fix
the exercise price at such discount to the market price of the equity
shares as may be deemed appropriate provided that the grant/ exercise
price shall not be below the face value of the shares and shall be in
accordance with the applicable laws in this regard.
d) Options vested during the year 2011-12: 11,036,875
e) Options exercised during the year 2011-12: 138,125
f) Total number of shares arising as a result of exercise of options
during the year 2011-12: 138,125
g) Options lapsed during the year 2011-12: 6,100,625*
*The stock options which are cancelled/ lapsed/ forfeited can be re-
issued by the Company.
h) Variation of terms of options during the year 2011-12: Nil
i) Money realized by exercise of options during the year 2011-12
(Amount in Rs): 2,514,456
j) Total number of options in force: 53,959,720
k) Employee wise details of options granted to:
i) Senior Managerial personnel during the year 2011-12: Mr. Rajesh
Subramanian - 4,000,000 and Mr. Thomas Watters: 1,000,000
ii) Any other employee, who has been granted options amounting to 5% or
more of options granted during the year 2011-12: Nil
iii) Identified employees who were granted options, equal to or
exceeding 1% of the issued capital of the Company, during the year
2011-12: Nil
l) Diluted Earnings Per Share (EPS) pursuant to issue of shares on
exercise of options calculated in accordance with Accounting Standard
(AS) 20 - 'Earnings Per Share': i) Standalone EPS - Rs 1.05 per share.
ii) Consolidated EPS - Rs 1.44 per share.
m) Where the Company has calculated the employee compensation cost
using the intrinsic value of the stock options, the difference between
the employee compensation cost so computed and the employee
compensation cost that shall have been recognized if it had used the
fair value of the options. The impact of this difference on profits and
on EPS of the Company: Please refer to Note No. 27 of the Standalone
Financial Statements.
n) Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - Rs 30.67 per option. ii) Weighted average fair
value as per the Black Sholes Model - Rs 12.09 per option.
o) A description of the method and significant assumptions used during
the year to estimate the fair values of options, including the
following weighted average information: a) Risk free interest rate b)
Expected life c) Expected dividends and d) The price of the underlying
share in market at the time of option grant: Please refer to Note No.
27 of the Standalone Financial Statements.
Prior to the Initial Public Offering (IPO), the Company had granted
options to employees at the fair market value, as certified by an
independent velour. Post IPO, the exercise price of the options granted
equals the market price of the stock i.e. the latest available closing
price, prior to the date when options are granted, on that Stock
Exchange where there is highest trading volume on the said date.
ESOS 2002
a) Total number of options under the Plan: 2,404,375
b) Options granted during the year 2011-12: Nil
c) Options vested during the year 2011-12: Nil
d) Options exercised during the year 2011-12: Nil
e) Total number of shares arising as a result of exercise of option
during the year 2011-12: Nil
f) Options lapsed during the year 2011-12: 3,750
g) Variation in the terms of option during the year 2011-12: Nil
h) Money realized by exercise of options during the year 2011-12
(Amount in Rs): Nil
i) Total number of options in force: 86,875
j) Weighted average exercise price and weighted average fair value of
options separately for options whose exercise price either equals or
exceeds or is less than the market price of the stock: i) Weighted
average exercise price - Rs 11.74 per option ii) Weighted average fair
value as per the Black Scholes Model - N.A.
SUBSIDIARY COMPANIES
As on March 31, 2012, the Company had 13 subsidiaries:
Domestic subsidiaries:
1. Rev IT Systems Private Limited*{wholly owned subsidiary (WOS) of
the Company}
2. Anunta Tech Infrastructure Services Limited**(WOS of the Company)
International subsidiaries:
1. First source Solutions UK Limited, UK (WOS of the Company)
2. First source Solutions S.A., Argentina (Subsidiary of First source
Solutions UK Limited)
3. First source Group USA, Inc., USA (WOS of the Company)
4. First source Business Process Services, LLC, USA (WOS of First source
Group USA, Inc.)
5. First source Advantage LLC, USA***(WOS of First source Business
Process Services, LLC.)
6. Twin Lakes Property, LLC (Subsidiary of First source Advantage LLC)
7. Med Assist Holding, Inc., USA (WOS of First source Group USA, Inc.)
8. First source Solutions USA, LLC USA (WOS of Med Assist Holding Inc.)
9. First source Transaction Services, LLC#(WOS of First source Solutions
USA, LLC)
10. First source BPO Ireland Limited ##(WOS of the Company)
11. First source Dialog Solutions (Private) Ltd.###(Subsidiary of the
Company)
Following changes in the subsidiaries of the Company took place during
the year:
I. * The Board approved Amalgamation of Rev IT Systems Pvt.
Ltd., WOS of the Company, with the Company vide a circular resolution
passed on April 28, 2012. The Company has applied to the Stock
Exchanges for their 'in- principalRs approval to the said
Amalgamation.
II. ** The Board vide a circular resolution passed on April 19, 2012,
approved divestment of Anunta Tech Infrastructure Services Limited, WOS
of the Company.
III. *** First source Financial Solutions LLC merged with First source
Advantage LLC on September 28, 2011.
IV. # First source Transaction Services, LLC (FTSL) was incorporated as
WOS of First source Solutions USA, LLC, a step down subsidiary of the
Company in USA. As a result, FTSL became subsidiary of the Company.
V. ## First source BPO Ireland Limited, was incorporated as a wholly
owned subsidiary of the Company with its registered office located in
Dublin, Ireland.
VI. ###The Company acquired 74% stake in First source - Dialog
Solutions (Private) Limited (FDS), Sri Lanka [formerly known as Dialog
Business Services (Private) Limited], a joint venture between the
Company and Dialog Axiata, a leading Sri Lankan telecom service
provider.
PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT
The Ministry of Corporate Affairs, Government of India, vide General
Circular No. 2/2011 dated February 8, 2011, has granted a general
exemption from compliance with section 212 of the Companies Act, 1956,
subject to fulfillment of conditions stipulated in the circular. The
Company has satisfied the conditions stipulated in the circular and
hence is entitled to the exemption. The financial data of the
subsidiaries have been furnished under 'Details of Subsidiaries'
forming part of the Annual Report. Consolidated Financial Statements of
the Company and its subsidiaries for the year ended March 31, 2012,
together with reports of Auditors thereon and the statement pursuant to
Section 212 of the Companies Act, 1956, form part of the Annual Report.
The Annual Accounts and the related detailed information of subsidiary
companies will be made available to the Members of the Company and
subsidiary companies seeking such information at any point of time. The
Annual Accounts of the subsidiary companies will also be available for
inspection by any member at the registered/ head office of the Company
and that of the subsidiary concerned.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Reports on Corporate Governance and Management Discussion and Analysis
as stipulated under Clause 49 of the Listing Agreement are separately
given and form part of the Annual Report.
STATUTORY DISCLOURES OF PARTICULARS
A) Conservation of Energy
The Company has been making significant efforts year after year towards
energy conservation across all its delivery centers. Several new
initiatives taken up by the Company during the financial year included
Servers & Desktops Virtualization, Server Consolidation, replacement of
more than 2500 old desktops and Cathode Ray Tube monitors with Thin
Clients and Thin Film Transistor monitors, replacement of more than
5000 old IT equipment with new energy efficient one, changing the old
lighting units to new energy saving units and installation of movement
sensors for switching on and off the lights.
All these initiatives have contributed tremendously in reducing energy
consumption. We have reduced 350 physical servers and 1000 desktops by
vitalizing. Reduction of physical servers also lowered the data
centre cooling requirement and moving from Desktops to Thin Clients has
led to reduction of power consumption by 40%.
B) Absorption of Technology
The Company has been innovating consistently to absorb newer technology
offerings which can benefit business to improve operational efficiency
with greater quality in a cost effective manner.
The Company has been able to save USD 2 Million in Capex and USD half
Million per annum in Opex for our server virtualization. The Company
has virtualized 400 servers. On desktops, ratio was 1:55 (Physical to
Virtual desktop) due to which the Company was able to save on
operational costs. Currently, the Company has deployed 1000 virtual
desktops. In addition to above, CPU utilization has increased from 5%
to 55% in the virtualized environment. The high available solutions
like clustering and dynamic resourcing pooling was implemented with 80%
lesser Capex as compared to the traditional implementation of cluster
solutions. Reduction in 350 physical servers has released 35 racks
space in the Data Center. Further, the Company has reduced the desktop
requirement by 30% by implementing the just-in time desktop delivery.
C) Foreign Exchange Earnings and Outgo
Activities relating to exports, initiatives taken to increase exports,
development of new export markets for services and export plans.
The Company's income is diversified across a range of geographies and
industries. During the year, 59.8% of the Company's revenues were
derived from exports. The Company provides BPO services mostly to
clients in North America, UK and Asia Pacific regions. The Company has
established direct marketing network around the world to boost its
exports.
Foreign Exchange earned and used
The Company's foreign exchange earnings and outgo during the year were
as under:
(Standalone figures in Rs.Millions)
Particulars Fiscal 2012 Fiscal 2011
Foreign Exchange earnings 5117.9 4,863.8
Foreign Exchange outgo
(including 362.0 313.8
capital goods and imports)
AUDITORS
M/s. B S R & Co., Chartered Accountants, who were appointed as the
Statutory Auditors of the Company by the Members at their previous
Annual General Meeting (AGM), shall be retiring on conclusion of the
ensuing AGM and are eligible for re-appointment. Members are requested
to consider their re-appointment from the conclusion of ensuing Annual
General Meeting (AGM) up to the conclusion of AGM for the financial year
2012-13 at a remuneration to be decided by the Board of Directors or
Audit Committee of the Board. The Company has received confirmation
from M/s. B S R & Co., to the effect that their appointment, if made,
will be within the limits of Section 224(1B) of the Companies Act,
1956.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, the
Directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation
relating to material departures, if any;
2. 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 or loss of the Company for that period;
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with
the provisions of the Companies Act, 1956, for safe-guarding the
assets of the Company and for preventing and detecting fraud and
other irregularities; and
4. The annual accounts were prepared on a going-concern basis.
ACKNOWLEDGEMENTS
The Directors wish to place on record their sincere appreciation for
the support and co-operation extended by all the customers, vendors,
bankers and business associates. The Company also expresses its
gratitude to the Ministry of Telecommunications, Collector of Customs
and Excise, Director - Software Technology Parks of India and various
Governmental departments and organizations for their help and co-
operation.
The Board places on record its appreciation to all the employees for
their dedicated service. The Board appreciates and values the
contributions made by every member across the world and is confident
that with their continued support the Company will achieve its
objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Dr. Shailesh J. Mehta
Chairman
Mumbai
May 15, 2012
Mar 31, 2011
The Directors take great pleasure in presenting their Tenth Annual
Report on the business and operations of the Company and the audited fi
-nancial statements for the year ended March 31, 2011.
FINANCIAL RESULTS
The performance of the Company for the financial year 2010-11 is
summarised below:
(Rs. in Million)
Particulars Consolidated Standalone
FY 2010-11 FY 2009-10 FY 2010-11 FY 2009-10
Total Income 20,694.7 19,918.0 7,198.0 6,832.0
Profit Before
Interest and
Depreciation 2,973.8 2,931.3 1,146.3 1,423.9
Interest and Finance
Charges (net) 330.0 455.8 -123.1 277.8
Depreciation 890.8 872.7 573.8 524.4
Profit Before Tax 1,753.0 1,602.8 695.6 621.7
Provision for Taxation
(including Deferred
Tax Charge/Credit) 349.3 237.6 32.7 -51.6
Profit After Tax Before
Minority Interest 1,403.7 1,365.2 662.9 673.3
Minority Interest 18.6 4.5 - -
Net Profit After Tax 1,385.1 1,360.7 662.9 673.3
Balance Brought
Forward 4,279.7 2,919.0 2,285.0 1,611.7
Appropriations - - - -
Accumulated Balance in
Profit & Loss Account 5,664.8 4,279.7 2,947.9 2,285.0
Earning Per Share (Rs.)
- Basic 3.22 3.17 1.54 1.57
Earning Per Share (Rs.)
- Diluted 2.91 2.84 1.52 1.51
RESULT OF OPERATIONS
The consolidated total income increased fromRs. 19,918 Million toRs.
20,694.7 Million, a growth of 3.9% over the previous financial year.
The consolidated Net Profit After Tax increased from Rs. 1,360.7 Million
to Rs. 1,385.1 Million, up by 1.8% over the previous financial year. The
detailed analysis of the consolidated results forms part of the
Management Discussion & Analysis (MD&A) Report provided separately as
part of the Annual Report.
The standalone total income increased from Rs. 6,832 Million to Rs. 7,198
Million, a growth of 5.4% over the previous financial year. The
standalone Profit After Tax declined from Rs. 673.3 Million to Rs. 662.9
Million, reduced marginally by 1.5% over the previous financial year.
The decrease in net Profits in the financial year 2010-11 was due to
higher taxation during the year under review.
With a view to conserve cash reserves to meet the current financial
obligations of the Company, the Directors do not recommend any dividend
for fi scal 2011.
INCREASE IN SHARE CAPITAL
During the year, the Company issued 1,428,500 equity shares of the face
value of Rs.10 each on the exercise of stock options under the Employee
Stock Option Schemes of the Company. Consequently, the outstanding,
issued, subscribed and paid-up equity share capital of the Company
increased from 429,209,682 shares to 430,638,182 shares of Rs. 10 each as
on March 31, 2011.
REPURCHASE OF FOREIGN CURRENCY CONVERTIBLE BONDS
The Company had issued Zero Coupon Foreign Currency Convertible Bonds
(FCCBs) of USD 275 Million in December 2007. The FCCBs have a maturity
period of 5 years and 1 day. The FCCBs are listed on Singapore Exchange
Securities Trading Limited. Upto March 31, 2011, the Company had
repurchased and cancelled its FCCBs of the nominal amount of USD 62.6
Million. The repurchase was made at an average discount of 46% and was
funded out of External Commercial Borrowing (ECB) from ICICI Bank, UK
and Internal cash flows of the Company. The nominal amount of Bonds
outstanding after cancellation as on March 31, 2011 was USD 212.4
Million.
GLOBAL DELIVERY FOOTPRINT
The Company, on a consolidated basis had 42 global delivery centers as
on March 31, 2011. The centers are located across India, USA, UK and
Philippines. 25 of the Companys delivery centers are located in 15
cities in India, 14 are in the USA (including seven operational hubs of
MedAssist), 2 are in UK and 1 center is in Philippines. The Companys
established global delivery footprint enables it to deliver wide range
of services and strengthen relationships with existing customers.
During the year, the Company incurred capital expenditure of Rs. 470.9
Million mainly towards refurbishment and maintenance of existing
delivery centers and creation of additional capacity in Phillippines,
India and UK.
QUALITY INITIATIVES
The Company follows the global best practices for process excellence
and is certified by COPC Inc. (Customer Operations Performance
Center). The Companys delivery centers RMZ and Pritech, Bangalore have
been recertified for COPC î 2000 CSP Standard v 4.3. The Company
continues to follow process improvement methodologies like Six Sigma,
Lean and Kaizen.
AWARDS AND ACCOLADES
The Company received the following awards and accolades during the
year:
- 2010 American Society for Quality (ASQ) Summit: Two recognitions for
best team sprit and team alignment to organisation goals
- 2010 Qimpro Conventions: QualTech prize for Best Improvement Project
- 2010 Saakal Awards: Won Best project at International Location
- 2010 National Institute of Quality and Reliability, India: three
technical papers recognised across three different categories.
- 2011 International Quality & Productivity Center (IQPC) Orlando, USA
à Winners in following categories:
- Best Process Improvement Project in Service and Transaction for Small
to Medium Sised Corporations
- Best Process Improvement Project in Service and Transaction Category
for Large Corporations
- Process Improvement Awards - Best BPO Program
- Master Black Belt of the Year
- 2011 Isixsigma USA: Winner for Most Successful Re-energised Lean Six
Sigma Program
- 2011 IQPC London UK: Winners in Best BPM Programme (Business process
management) category and Honorary Mention in the Best Lean
Transformation category.
HUMAN RESOURCES
On a consolidated basis, the Company has grown from 24,860 full-time
employees as of March 31, 2010 to 26,413 employees as of March 31,
2011. The statement of particulars required pursuant to Section 217
(2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Amendment Rules, 2011, forms part of this Report. However,
as permitted under the Companies Act, 1956, this Report and Accounts
are being sent to all members and other entitled persons excluding the
above statement. Those interested in obtaining a copy of the said
statement may write to the Company Secretary at the Registered Office.
The statement is also available for inspection at the registered offi
ce during working hours upto the date of the forthcoming Annual General
Meeting (AGM).
PUBLIC DEPOSITS
During the year, the Company has not accepted any deposits under
Section 58A of the Companies Act, 1956.
DIRECTORS
During the year, Dr. Ashok Ganguly, Chairman, resigned as Chairman and
Director w.e.f July 27, 2010 and Dr. Shailesh J. Mehta, Director was
appointed as the Chairman on the same date. Dr. Ashok Ganguly led the
Company as Chairman for a long period of over 8 years. He had enormous
experience in the industry and deep understanding of the Company and
its operations. The Board places on record its sincere appreciation for
the invaluable contribution made by him to the Company by his able
leadership, experience and expertise.
Mr. Ananda Mukerji, Managing Director & CEO, resigned from his position
w.e.f. July 27, 2010 and Mr. Alexander Matthew Vallance, Joint Managing
Director of the Company then, was appointed as the Managing Director &
CEO of the Company w.e.f July 28, 2010. Mr. Ananda Mukerji continues to
be associated with the Company as the Non-Executive Vice - Chairman of
the Board of Directors w.e.f. July 28, 2010.
Ms. Lalita D. Gupte, Director, representing ICICI Bank Limited,
Promoter of the Company, resigned w.e.f. July 27, 2010 and Mr. Pravir
Vohra was appointed as a Director, representing ICICI Bank Limited, in
the casual vacancy caused by the resignation of Ms. Lalita D. Gupte.
The Board places on record its appreciation for the contribution made
by Ms. Lalita D. Gupte during her tenure as Director of the Company.
The Company has received notices along with the requisite deposits from
the members of the Company pursuant to Section 257 of the Companies
Act, 1956, proposing the appointment of Mr. Pravir Vohra and Mr. Mohit
Bhandari as the Directors of the Company at the forthcoming AGM.
Dr. Shailesh J. Mehta and Mr. K. P. Balaraj retire by rotation at the
forthcoming AGM and are eligible for re-appointment.
EMPLOYEES STOCK OPTION SCHEME
With a view to provide an opportunity to the employees of the Company
to share the growth of the Company and to create long-term wealth, the
Company has an Employee Stock Option Scheme (ESOS), namely, the
Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003).
The earlier ESOS introduced in 2002 is in force for the limited purpose
of exercise of options granted pursuant to the scheme. The Scheme is
applicable to the eligible employees which include employees and
directors of the Company and its subsidiary companies.
Disclosures in compliance with Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee
SUBSIDIARY COMPANIES
As on March 31, 2011, the Company had 11 subsidiaries:
Domestic subsidiaries:
1. Rev IT Systems Private Limited {wholly owned subsidiary (WOS) of
the Company}
2. Anunta Tech Infrastructure Services Limited* (WOS of the Company)
International subsidiaries:
1. Firstsource Solutions UK Limited, UK (WOS of the Company)
2. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource
Solutions UK Limited)
3. Firstsource Group USA, Inc., USA (WOS of the Company)
4. Firstsource Business Process Services, LLC, USA (WOS of Firstsource
Group USA, Inc.)
5. Firstsource Advantage LLC, USA (WOS of Firstsource Business Process
Services, LLC)
6. Twin Lakes Property, LLC** (Subsidiary of Firstsource Advantage
LLC)
7. MedAssist Holding, Inc., USA (WOS of Firstsource Group USA, Inc.)
8. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding Inc.)
9. Firstsource Financial Solutions, LLC, USA (WOS of Firstsource
Solutions USA, LLC) Following changes in the subsidiaries of the
Company took place during the year:
I. *Anunta Tech Infrastructure Services Limited (formerly known as
Firstsource Computing Solutions Limited) was incorporated as a WOS of
the Company for the purpose of carrying on the business of providing
and facilitating an entire range of Information Technology (IT) and IT
enabled services, delivering technology-driven business solutions and
all other value added services related to IT in India and in Foreign
Countries.
II. Asset sale of Pipal Research Corporation USA to CRISIL and stake
sale of Pipal Research Analytics and Information Services India Private
Limited to Irevna Limited, a division of CRISIL took place at a
consolidated sale consideration of USD 12.75 Million.
III. **Firstsource Advantage LLC, USA (FAL), a stepdown subsidiary of
the Company in USA, acquired 80% stake in Twin Lakes Properties LLC
(Twin Lakes). As a result, Twin Lakes became subsidiary of FAL as also
of the Company.
PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT
The Ministry of Corporate Affairs, Government of India, vide General
Circular No. 2/2011 dated February 8, 2011, has granted a general
exemption from compliance with section 212 of the Companies Act, 1956,
subject to fulfi lment of conditions stipulated in the circular. The
Company has satisfi ed the conditions stipulated in the circular and
hence is entitled to the exemption. The financial data of the
subsidiaries have been furnished under Details of Subsidiaries
forming part of the Annual Report. Consolidated Financial Statements of
the Company and its subsidiaries for the year ended March 31, 2011,
together with reports of Auditors thereon and the statement pursuant to
Section 212 of the Companies Act, 1956, form part of the Annual Report.
The Annual Accounts and the related detailed information of subsidiary
companies will be made available to the Members of the Company and
subsidiary companies seeking such information at any point of time. The
Annual Accounts of the subsidiary companies will also be available for
inspection by any member at the registered/head Office of the Company
and that of the subsidiary concerned.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Reports on Corporate Governance and Management Discussion and Analysis
as stipulated under Clause 49 of the Listing Agreement are separately
given and form part of the Annual Report.
STATUTORY DISCLOURES OF PARTICULARS
A) Conservation of Energy
The Company has been making signifi cant efforts year after year
towards energy optimisation across all its delivery centers. Several
new initiatives taken up by the Company during the year included
conversion of 1,500 desktops to low energy consuming secure Personal
Computers (Thin clients), which resulted in a direct power saving of
1.5 lacs units/month. Further, the Company continues to transform
Cathode Ray Tube (CRT) into Thin Film Transistor (TFT) resulting in
power savings of 15,000 units/month. The Company has also initiated a
server consolidation exercise which helped it in releasing 40 servers
and migrating few of them to virtual environment which resulted in
further savings in power and cooling requirements.
B) Absorption of Technology
The Company has been innovating consistently to absorb newer technology
offerings which can benefit business to improve operational effi
ciency with greater quality in a cost effective manner which includes
migration to Multi Protocol Label Switching (MPLS) network. MPLS
technology has been extremely benefi cial as it allows the
consolidation of multiple technologies and applications such as voice,
video and data thereby simplifying the network infrastructure of the
Company. The ability of MPLS to apply QoS parameters to high priority
applications ensures that business critical data has guaranteed
delivery over the network. It also provides enhanced security,
scalability and high availability. The Company has migrated majority of
the Wide Area Network (WAN) infrastructure to MPLS network and the
transformed network is well equipped to support the new business
requirement.
The Company has also installed the Tele presence in key locations which
increased productivity creating stronger relationships through closer
and more effi cient communication like a face to face meet, reduced
direct costs associated with travel expenses and improved the quality
of communications and collaboration with Business Partners and
Customers. The Company has also adopted i-Leverage, an integrated web
based solution to record and retain customer interactions.
All international delivery centers in India are ISO27001 certified.
During the year, the Companys centers at Tek Meadows- Chennai and Raja
Towers- Trichy have received ISO27001 certifi cation. Further, the
Companys centers at Paradigm -Mumbai and Barclaycard UK Ã Manila have
received Payment Card Industry Data Security Standard (PCI DSS) Level 1
Certifi cation (SISA and Security Metrics respectively).
AUDITORS
M/s. B S R & Co., Chartered Accountants, who were appointed as the
Statutory Auditors of the Company by the Members at their previous AGM,
shall be retiring on conclusion of the forthcoming AGM and are eligible
for re-appointment. Members are requested to consider their
re-appointment from the conclusion of forthcoming AGM upto the
conclusion of AGM for the financial year 2011-12 at a remuneration to
be decided by the Board of Directors or Committee thereof. The Company
has received confi rmation from M/s. B S R & Co., to the effect that
their appointment, if made, will be within the limits of Section
224(1B) of the Companies Act, 1956.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, the
Directors confi rm that:
1. In the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures, if any;
2. 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 or
loss of the Company for that period;
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
4. The annual accounts were prepared on a going-concern basis.
ACKNOWLEDGEMENTS
The Directors wish to place on record their sincere appreciation for
the support and co-operation extended by all the customers, vendors,
bankers and business associates. The Company also expresses its
gratitude to the Ministry of Telecommunications, Collector of Customs
and Excise, Director à Software Technology Parks of India and various
Governmental departments and organisations for their help and
co-operation.
The Board places on record its appreciation to all the employees for
their dedicated service. The Board appreciates and values the
contributions made by every member across the world and is confi dent
that with their continued support the Company will achieve its
objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Dr. Shailesh J. Mehta
Chairman
Mumbai
April 27, 2011
Mar 31, 2010
The Directors take great pleasure in presenting their Ninth Annual
Report on the business and operations of the Company and the audited
fnancial statements for the year ended March 31, 2010.
FINANCIAL RESULTS
The performance of the Company for the fnancial year 2009-10 is
summarised below:
(Rs. in Million)
Particulars Consolidated Standalone
FY 2009-10 FY 2008-09 FY 2009-10 FY 2008-09
Total Income 19,918.0 17,791.9 6,832.0 5,980.2
`Profit Before Interest
and Depreciation 2,931.3 2,504.2 1,423.9 1,330.7
Interest and Finance
Charges 455.8 1,036.0 277.8 676.4
Depreciation 872.7 961.3 524.4 522.4
`Profit Before Tax 1,602.8 506.9 621.7 131.9
Provision for Taxation
(including deferred tax
charge/credit) 237.6 199.1 -51.6 -19.2
`Profit Afiter Tax Before
Minority Interest 1,365.2 307.8 673.3 151.1
Minority Interest 4.5 1.1 - -
Net `Profit Afiter Tax 1,360.7 306.7 673.3 151.1
Balance Brought Forward 2,919.0 2,612.3 1,611.7 1,460.6
Appropriations - - - -
Accumulated Balance in
`Profit & Loss Account 4,279.7 2,919.0 2,285.0 1,611.7
Earning Per Share (Rs.)
- Basic 3.17 0.72 1.57 0.35
Earning Per Share (Rs.)
- Diluted 2.84 0.72 1.51 0.35
RESULTS OF OPERATIONS
The consolidated total income increased from Rs.17,791.9 Million to
Rs.19,918 Million, a growth of 11.9% over the previous fnancial year.
The consolidated Net `Profit Afiter Tax increased from Rs.306.7 Million to
Rs.1,360.7 Million, up by 343.6% over the previous fnancial year. The
detailed analysis of the consolidated results forms part of the
Management Discussion & Analysis (MD&A) Report provided separately as
part of the Annual Report.
The standalone total income increased from Rs.5,980.2 Million to
Rs.6,832 Million, a growth of 14.2% over the previous fnancial year.
The standalone `Profit Afiter Tax increased from Rs.151.1 Million to
Rs.673.3 Million, up by 345.6% over the previous fnancial year. The Net
`Profit of the Company in the previous fnancial year was negatively
impacted on account of non-cash mark to market loss on Foreign Currency
Convertible Bonds (FCCBs) amounting to Rs.778.2 Million and mark to
market foreign exchange loss on undesignated derivative fnancial
instruments of Rs.236.2 Million. There was also a net gain of Rs.635
Million on account of FCCBs buyback of USD 49.7 Million in fnancial
year 2008-09 as compared to a net gain of only Rs.73.9 Million in
fnancial year 2009-10 on account of buyback of FCCBs worth USD 12.9
Million. Besides the impact of the above factors, the increase in net
`Profits in the fnancial year 2009-10 was primarily due to business
growth in international business delivered offshore and domestic
business in India, partly offset by increase in fnance charges in
fnancial year 2009-10.
INCREASE IN SHARE CAPITAL
During the year, the Company issued 1,020,000 equity shares of the face
value of Rs.10 each on the exercise of stock options under the Employee
Stock Option Schemes of the Company. Consequently, the outstanding,
issued, subscribed and paid-up equity share capital of the Company
increased from 428,189,682 shares to 429,209,682 shares of Rs.10 each
as of March 31, 2010.
REPURCHASE OF FOREIGN CURRENCY CONVERTIBLE BONDS
The Company had issued Zero Coupon Foreign Currency Convertible Bonds
(FCCBs) of USD 275 Million in December 2007. The FCCBs have a maturity
period of 5 years and 1 day. The FCCBs are listed on Singapore Exchange
Securities Trading Limited. During the fnancial year 2009-10, the
Company repurchased and cancelled its FCCBs of the nominal amount of
USD 12.9 Million to avail the benefits of the prevailing discount in the
rates of FCCBs. Upto March 31, 2010, the Company had repurchased and
cancelled its FCCBs of the nominal amount of USD 62.6 Million. The
repurchase was made at an average discount of 46% and was funded out of
External Commercial Borrowings (ECB) from ICICI Bank, UK and internal
cash flows of the Company. The nominal amount of FCCBs outstanding afiter
cancellation as on March 31, 2010 was USD 212.4 Million.
GLOBAL DELIVERY FOOTPRINT
The Company, on a consolidated basis had 42 global delivery centers as
of March 31, 2010. The centers are located across India, USA, UK and
Philippines. 25 of the Companys centers are located in 17 cities in
India, 14 are in USA (including seven operational hubs of MedAssist), 2
are in Northern Ireland, UK and 1 center is in Philippines. The
Companys established global delivery footprint enables it to deliver
wide range of services and deepen relationships with existing
customers.
During the year, the Company incurred capital expenditure of Rs.480.1
Million mainly towards refurbishment and maintenance of delivery
centers and creation of additional capacity in Philippines, Bengaluru
and Bhopal.
QUALITY INITIATIVES
The Company follows the global best practices for process excellence
and is certifed by COPC Inc. (Customer Operations Performance Center).
The Companys delivery center at Tidel Park, Chennai has been
recertifed for version 4.1 COPC 2000î standard for Healthcare and
Publishing verticals & delivery center at RMZ, Bengaluru has been
recertifed for version 4.1 COPC 2000î Standard for Inbound Customer
Service vertical, Inbound Customer Service and BPO (Non-Media and
Entertainment). The Companys delivery center at Pritech, Bengaluru has
been recertifed for 4.2 COPC 2000î Standard for Inbound Customer
Contact Center Services. The Company continues to follow process
improvement methodologies like Six Sigma, Lean and Kaizen.
AWARDS AND ACCOLADES
The Company received the following awards and accolades during the
year:
- Winner of the UK Trade & Investments (UKTI) Investor of the Year
award at the UK-India Business Awards.
- Recognised amongst the top 25 companies in India for excellence in
Corporate Governance by the Institute of Company Secretaries of India
(ICSI) in 2009.
- Ranked amongst Top 100 companies in the world for innovative use of
IT by CIO Magazine.
- National Outsourcing Association (NOA), UK Awards: Best Telecom,
Utilities & Hi-Tech outsourcing project, 2009.
- Winner in the Deployment Leader of the Year category at
International Quality and Productivity Center (IQPC) Six Sigma
Excellence Awards, Orlando.
- Winner in the Best Process Improvement in Service & Transaction
Project category at IQPC Six Sigma Excellence Awards, Orlando.
HUMAN RESOURCES
On a consolidated basis, the Company has grown from 21,570 employees as
of March 31, 2009 to 24,860 employees as of March 31, 2010. The
statement of particulars required pursuant to Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
(Amendment) Rules, 2002, forms part of the Report. However, as
permitted under the Companies Act, 1956, the Report and Accounts are
being sent to all members and other entitled persons excluding the
above statement. Those interested in obtaining a copy of the said
statement may write to the Company Secretary at the registered offce.
The statement is also available for inspection at the registered offce
during working hours upto the date of the forthcoming Annual General
Meeting (AGM).
PUBLIC DEPOSITS
During the year, the Company has not accepted any deposits under
Section 58A of the Companies Act, 1956.
DIRECTORS
Mr. Donald W. Layden Jr., Mr. Y. H. Malegam and Mr.Charles Miller Smith
retire by rotation at the forthcoming Annual General Meeting (AGM) and
are eligible for re-appointment.
During the year, Mr. Alexander Matthew Vallance, Managing
Director-Europe and President-Banking, Financial Services & Insurance
(BFSI) and Telecom & Media was inducted to the Board as Additional
Director designated as Joint Managing Director of the Company. Mr. Ram
V. Chary was appointed as Additional Director, representing equity
investor Metavante Investments (Mauritius) Ltd. (Metavante) in place of
Mr. Donald W. Layden Jr. In terms of provisions of Section 260 of the
Companies Act, 1956, they hold offce till the conclusion of the
forthcoming AGM of the Company and are eligible for appointment. The
Company has received notices along with the requisite deposit from some
of the members of the Company pursuant to Section 257 of the Companies
Act, 1956, proposing their appointment at the forthcoming AGM of the
Company. The Board recommends their appointment as Directors.
During the year, Mrs. Shikha Sharma, Director, representing ICICI Bank
Ltd., Promoter of the Company, resigned w.e.f. May 26, 2009. The Board
places on record its appreciation for the valuable services rendered by
Mrs. Shikha Sharma during her tenure as Director. Consequently, ICICI
Bank Ltd. informed that Mrs. Lalita D. Gupte, Director, would represent
ICICI Bank Ltd. on the Companys Board. As a result, Mrs. Lalita D.
Gupte ceased to be an Independent Director w.e.f. May 26, 2009. Mr.
K.P. Balaraj who was representing WestBridge Ventures I Investment
Holdings (WestBridge), ceased to represent WestBridge as a consequence
of WestBridge divesting its entire shareholding in the Company. Keeping
in view the valuable services rendered, vast professional experience
and expertise of Mr. K.P. Balaraj and Mr. Donald W. Layden Jr., Board
considered it desirable to continue to avail their services.
Accordingly, Mr. K.P. Balaraj and Mr. Donald W. Layden Jr. continued on
the Board as Independent Directors.
Mr. Ananda Mukerji, Managing Director & CEO, at the Board Meeting held
on April 8, 2010, resigned as the Managing Director & CEO of the
Company to be effective from July 27, 2010. However, Mr. Ananda Mukerji
would continue to be associated with the Company and contribute towards
its value creation as the Non-Executive Vice Chairman of the Board of
Directors w.e.f. July 28, 2010. Consequently, the Board decided to
appoint Mr. Alexander Matthew Vallance, Joint Managing Director as the
Managing Director & CEO of the Company w.e.f. July 28, 2010.
EMPLOYEES STOCK OPTION SCHEME
With a view to provide an opportunity to the employees of the Company
to share the growth of the Company and to create long-term wealth, the
Company has an Employee Stock Option Scheme (ESOS), namely, the
Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003).
The ESOS introduced in 2002 is in force for the limited purpose of
exercise of options granted pursuant to the scheme.
SUBSIDIARY COMPANIES
As on March 31, 2010, the Company had 11 subsidiaries:
Domestic subsidiaries:
1. RevIT Systems Private Limited. [wholly owned subsidiary (WoS) of
the Company]
2. Pipal Research Analytics and Information Services India Private
Limited (WOS of Pipal Research Corporation, USA, a subsidiary of the
Company).
International subsidiaries:
1. Firstsource Solutions UK Limited, UK (WoS of the Company)
2. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource
Solutions UK Limited)
3. Firstsource Group USA, Inc., USA (WoS of the Company)
4. Firstsource Business Process Services, LLC, USA (WOS of Firstsource
Group USA, Inc.)
5. Firstsource Advantage LLC, USA (WOS of Firstsource Business Process
Services, LLC.)
6. Pipal Research Corporation, USA
7. MedAssist Holding, Inc., USA (WOS of Firstsource Group USA, Inc.)
8. MedAssist, LLC, USA* (WOS of MedAssist Holding Inc.)
9. Firstsource Financial Solutions, LLC, USA (WOS of MedAssist LLC,
USA)
*The name of MedAssist, LLC, has been changed to Firstsource Solutions,
USA, LLC w.e.f. April 1, 2010.
Pursuant to corporate restructuring for better business synergies,
administrative & operational effciency, tax, effcient cash flows, the
Company incorporated Firstsource Group USA, Inc. (FGU) as a WOS on
November 25, 2009, which further incorporated Firstsource Business
Process Services, LLC (FBPS) as its WOS on the same date. FirstRing
Inc., USA was merged with FBPS effective December 31, 2009.
The following mergers took place amongst the subsidiary Companies
effective March 31, 2010:
i) Firstsource Solutions USA, Inc. merged with Firstsource Group USA,
Inc.
ii) MedAssist Intermediate Holding, Inc. merged with MedAssist Holding
Inc.
iii) Twin Medical Transaction Services Inc. merged with MedAssist,
Incorporated.
iv) MedAssist, Incorporated merged with a newly incorporated WOS
MedAssist Acquisition LLC in the name of MedAssist LLC.
v) Firstsource Financial Solutions, Inc. merged with newly incorporated
WOS Firstsource Financial Solutions Acquisition, LLC in the name of
Firstsource Financial Solutions, LLC.
PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT
The Company has made an application to the Central Government under
Section 212(8) of the Companies Act, 1956, for receiving exemption from
attaching copies of the Balance Sheet, `Profit and Loss Account, Reports
of the Board of Directors and Auditors of the subsidiaries of the
Company with the Balance Sheet of the Company. The fnancial data of the
subsidiaries have been furnished under Details of Subsidiaries
forming part of the Annual Report. Further, pursuant to Accounting
Standard AS-21 issued by the Institute of Chartered Accountants of
India, consolidated fnancial statements of the Company and its
subsidiaries for the year ended March 31, 2010, together with reports
of Auditors thereon and the statement pursuant to Section 212 of the
Companies Act, 1956, form part of the Annual Report. The Annual
Accounts and the related detailed information of subsidiary companies
will be made available to the members of the Company and its subsidiary
companies seeking such information at any point of time. The annual
accounts of the subsidiary companies will also be available for
inspection by any member at the registered offce of the Company and
that of the subsidiary concerned.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Reports on Corporate Governance and Management Discussion and Analysis
as stipulated under Clause 49 of the Listing Agreement are separately
given and form part of the Annual Report.
STATUTORY DISCLOURES OF PARTICULARS
A) Conservation of Energy
The Company has been driving energy optimisation initiatives year afiter
year and it has now become a way of life for the Company. Every product
purchased is looked at in respect of its energy effciency. Every
technician inducted undergoes energy optimisation training. Several new
initiatives taken up by the Company during the year included optimal
running of utilities, installation of timers in processes with fxed
occupancy and timings to automate the electricity usage, cutting down
the area of underutilised data centres and right sizing
air-conditioning requirements resulting in energy conservation.
B) Absorption of Technology
In July 2009, the Company commissioned state of the art Enterprise
Nerve Center (ENC) at Mumbai. This enabled the Company to centrally
monitor, manage and control its global technology services. ENC
technology infrastructure is built on a highly reliable and robust
virtual platform. At ENC, the Company has adopted the Information
Technology Infrastructure Library (ITIL) and ISO20000 processes through
which it centrally manages the business process availability, Crisis
and Information Security Management for operation process across the
Companys global locations.
During the year, the Companys centers at Manila - Philippines,
Rockford- Illinois, North America, Tek Meadows-Chennai and
Pritech-Bengaluru have received ISO 27001 certifcation. Further, the
Companys centers at Amherst -New York and Colorado Springs, North
America have received Payment Card Industry Data Security Standard (PCI
DSS) V1.2 Level 1 Certifcation (External Assessment by Security
Metrics).
C) Foreign Exchange Earnings and Outgo
Activities relating to exports, initiatives taken to increase exports,
development of new export markets for services and export plans
The Companys income is diversifed across a range of geographies and
industries. During the year, 58.65% of the Companys revenues were
derived from exports. The Company provides BPO services mostly to
clients in North America, UK and Asia Pacifc regions. The Company has
established direct marketing network around the world to boost its
exports.
Foreign Exchange earned and used
The Companys foreign exchange earnings and outgo during the year were
as under:
(Standalone figures in Rs. Millions)
Particulars Fiscal 2010 Fiscal 2009
Foreign Exchange earnings 4,006.7 3,601.2
Foreign Exchange outgo 266.4 188.6
(including capital goods and imports)
AUDITORS
M/s. B S R & Co., Chartered Accountants, who were appointed as the
Statutory Auditors of the Company by shareholders at their previous
Annual General Meeting (AGM), shall be retiring on conclusion of the
forthcoming AGM and are eligible for re-appointment. Members are
requested to consider their re-appointment for the fnancial year ending
March 31, 2011 at a remuneration to be decided by the Board of
Directors or Committee thereof. The Company has received confrmation
from M/s. B S R & Co., to the effect that their appointment, if made,
will be within the limits of Section 224(1B) of the Companies Act,
1956.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confrm:
1. That in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures, if any;
2. That the Directors have selected such accounting policies and
applied them consistently and made judgements 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 fnancial year and of the
`Profit or loss of the Company for that period;
3. That the Directors have taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
4. That the annual accounts were prepared on a going-concern basis.
ACKNOWLEDGEMENTS
The Board of Directors thank the Companys customers, investors,
vendors, bankers and business associates for their support and
assistance. The Company also expresses its gratitude to the Ministry of
Telecommunications, Collector of Customs and Excise, Director Ã
Sofitware Technology Parks of India and various Government departments
and organisations for their help and co-operation.
The Board places on record its appreciation to all the employees for
their dedicated service. The Board appreciates and values the
contributions made by every member across the world and is confdent
that with their continued support the Company will achieve its
objectives and emerge stronger in the coming years.
For and on behalf of the Board of Directors
Mumbai Dr. Ashok S. Ganguly
April 29, 2010 Chairman
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